-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JM1O8X6u28oLcWC4LOMDq4o9vVyuJKdiZOjCBJIjFgHfwLSw7ay0YbUsi3+fSuAi LJpQJlHf24IAI4HsM13C4w== 0000025095-95-000008.txt : 19950517 0000025095-95-000008.hdr.sgml : 19950517 ACCESSION NUMBER: 0000025095-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950401 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COTTER & CO CENTRAL INDEX KEY: 0000025095 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE [5072] IRS NUMBER: 362099896 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-20910 FILM NUMBER: 95540024 BUSINESS ADDRESS: STREET 1: 2740 N CLYBOURN AVE CITY: CHICAGO STATE: IL ZIP: 60614 BUSINESS PHONE: 3129752700 MAIL ADDRESS: STREET 1: 2740 N CLYBOURN AVE CITY: CHICAGO STATE: IL ZIP: 60614 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 1995 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 2-20910 ------- COTTER & COMPANY (Exact Name of Registrant as Specified in Its Charter) DELAWARE 36-2099896 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2740 North Clybourn Avenue Chicago, Illinois 60614 (Address of Principal Executive Offices) (Zip Code) (312) 975-2700 (Registrant's Telephone Number, Including Area Code) Not applicable (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of each of the issuer's classes of common stock, as of April 29, 1995. Class A Common Stock, $100 Par Value. 61,030 Shares. Class B Common Stock, $100 Par Value. 1,129,586 Shares. 2 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS COTTER & COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (000's Omitted)
April 1, December 31, 1995 1994 -------- ------------ (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 1,298 $ 1,831 Accounts and notes receivable 350,965 294,663 Inventories 407,873 384,747 Prepaid expenses 13,030 7,861 ------- ------- Total current assets 773,166 689,102 Properties owned, less accumulated depreciation 163,494 164,261 Properties under capital leases, less accumulated amortization 4,234 4,691 Other assets 11,123 10,731 -------- -------- TOTAL ASSETS $952,017 $868,785 ======== ========
See Notes to Condensed Consolidated Financial Statements. 3 COTTER & COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (000's Omitted)
April 1, December 31, 1995 1994 -------- ------------ (UNAUDITED) LIABILITIES AND CAPITALIZATION Current liabilities: Accounts payable and accrued expenses $404,998 $379,772 Short-term borrowings 87,554 9,329 Current maturities of notes, long-term debt and lease obligations 60,123 60,564 Patronage dividends payable in cash (Estimated at April 1, 1995) 2,570 18,383 ------- ------- Total current liabilities 555,245 468,048 ------- ------- Long-term debt and obligations under capital leases 74,456 75,756 ------- ------- Capitalization: Estimated patronage dividends to be distributed principally by the issuance of promissory (subordinated) notes and redeemable Class B nonvoting common stock 2,437 -- Promissory (subordinated) and instalment notes 196,146 199,099 Redeemable Class A common stock and partially paid subscriptions (Authorized 100,000 shares; issued and fully paid, 62,480 and 63,350 shares) 6,281 6,370 Redeemable Class B nonvoting common stock and paid-in capital (Authorized 2,000,000 shares; issued and fully paid, 1,138,584 and 1,047,756 shares; issuable as partial payment of patronage dividends, 104,275 shares as of December 31, 1994) 115,264 116,663 Retained earnings 3,137 3,764 ------- ------- 323,265 325,896 Foreign currency translation adjustment (949) (915) ------- ------- Total capitalization 322,316 324,981 ------- ------- TOTAL LIABILITIES AND CAPITALIZATION $952,017 $868,785 ======== ========
See Notes to Condensed Consolidated Financial Statements. 4 COTTER & COMPANY CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED (000's Omitted) (UNAUDITED)
April 1, April 2, 1995 1994 -------- -------- Revenues $625,939 $607,300 -------- -------- Cost and expenses: Cost of revenues 573,265 554,564 Warehouse, general and administrative 37,098 36,152 Interest paid to Members 5,217 5,759 Other interest expense 2,514 1,796 Other expense(income), net (221) 88 Income tax expense 115 105 ------- ------- 617,988 598,464 ------- ------- Net margins $ 7,951 $ 8,836 ======== ========
See Notes to Condensed Consolidated Financial Statements. 5 COTTER & COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED (000's Omitted) (UNAUDITED)
April 1, April 2, 1995 1994 -------- ------- Operating activities: Net margins $ 7,951 $ 8,836 Adjustments to reconcile net margins to cash and cash equivalents from operating activities: Statement of operations components not affecting cash and cash equivalents 6,140 6,790 Net change in working capital components (66,806) (25,161) ------- ------- Net cash and cash equivalents used for operating activities (52,715) (9,535) ------- ------- Investing activities: Additions to properties owned (3,986) (3,328) Changes in other assets (392) (100) ------- ------- Net cash and cash equivalents used for investing activities (4,378) (3,428) ------- ------- Financing activities: Proceeds from short-term borrowings 78,225 31,600 Payment of annual patronage dividend (18,383) (16,614) Payment of notes, lease obligations, and Class A common stock (3,282) (2,968) ------- ------- Net cash and cash equivalents provided by financing activities 56,560 12,018 ------- ------- Net decrease in cash and cash equivalents (533) (945) Cash and cash equivalents at beginning of the year 1,831 1,314 ------- ------- Cash and cash equivalents at end of the period $ 1,298 $ 369 ======= =======
See Notes to Condensed Consolidated Financial Statements. 6 COTTER & COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - GENERAL The condensed consolidated balance sheet, statement of operations, and statement of cash flows at and for the period ended April 1, 1995 and the condensed consolidated statement of operations and statement of cash flows for the period ended April 2, 1994 are unaudited and, in the opinion of the management of Cotter & Company (the Company), include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of financial position, results of operations and cash flows for the respective interim periods. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. This financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 1994 included in the Company's Post-Effective Amendment No.4 to Form S-2 Registration Statement (No. 33-39477) and in the Company's 1994 Annual Report on Form 10-K. NOTE 2 - ESTIMATED PATRONAGE DIVIDENDS Patronage dividends are declared and paid by the Company after the close of each fiscal year. It is estimated that, based on past experience, the 1995 annual patronage dividend will be distributed through a payment of 30% of the total distribution in cash, with the balance being paid through the issuance of the Company's Class B nonvoting common stock and five-year promissory (subordinated) notes. Such patronage dividends, consisting of substantially all of the Company's patronage source income, have been paid since 1949. The estimated patronage dividend for the thirteen weeks ended April 1, 1995 is $8,578,000 compared to $8,680,000 for the corresponding period in 1994. NOTE 3 - INVENTORIES
Inventories consisted of: April 1, December 31, 1995 1994 -------- ------------ (UNAUDITED) (000's Omitted) Manufacturing inventories: Raw materials $ 14,154 $ 12,986 Work-in-process and finished goods 51,604 60,094 -------- -------- 65,758 73,080 Merchandise inventories 342,115 311,667 -------- -------- $407,873 $384,747 ======== ========
7 NOTE 4 - DISPOSITION OF ASSETS On January 13, 1995, the Company announced the sale of certain inventory of its V&S Variety division to a national wholesaler who has also agreed to supply the majority of the V&S stores. Also, on January 31, 1995, the Company agreed to sell certain assets of its outdoor power equipment manufacturing division to a nationally recognized company and secured a favorable supply agreement for such equipment. These transactions will not have a material impact on the Company's results of operations or financial position. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED APRIL 1, 1995 COMPARED TO THIRTEEN WEEKS ENDED APRIL 2, 1994 RESULTS OF OPERATIONS: Revenues increased by $18,639,000 or 3.1% compared to the same period last year. The improvement resulted from increased merchandise shipments to existing True Value Members from the Company's regional distribution network and paint manufacturing facilities. Gross margins remained comparable with the same period last year. Gross margins as a percentage of revenues declined from 8.7% to 8.4% for the same period last year, due to a change in the Company's sales mix, pricing strategy, and more promotionally-oriented merchandising programs. Warehouse, general and administrative expenses increased by $946,000 but as a percent of revenues, decreased from 6.0% to 5.9% for the same period last year. The decrease resulted from the Company's continuing efforts to reduce operating costs. Interest paid to Members decreased by $542,000 or 9.4% primarily due to a lower principal balance and a lower average interest rate. Net margins were $7,951,000 compared to $8,836,000 for the same period last year. THIRTEEN WEEKS ENDED APRIL 1, 1995 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1994 LIQUIDITY AND CAPITAL RESOURCES: The Company has a seasonal need for cash. During the first quarter of the year, as seasonal inventories are purchased for resale or manufacture and shipment, cash and cash equivalents are used for operating activities. In subsequent quarterly periods, the Company anticipates that cash and cash equivalents will be provided by operating activities and financing activities, if necessary. During the first quarter of 1995, inventories increased by $23,126,000 to support anticipated future orders of seasonal merchandise. Accounts and notes receivable increased by $56,302,000 attributable to increased revenues and the result of seasonal payment terms for merchandise extended to the Company's Members. Short-term borrowings increased by $78,225,000 and accounts payable and accrued expenses increased by $25,226,000 in support of the increased inventories and favorable seasonal terms obtained from vendors which were passed on to the Company's Members. 8 At April 1, 1995, net working capital decreased to $217,921,000 from $221,054,000 at December 31, 1994. The current ratio decreased to 1.39 at April 1, 1995 compared to 1.47 at December 31, 1994. Short-term lines of credit under informal agreements with lending banks, cancelable by either party under specific circumstances, amounted to $112,865,000. Borrowing under these agreements was $87,554,000 at April 1, 1995. The Company's capital is primarily derived from redeemable Class A common stock and retained earnings, together with promissory (subordinated) notes and redeemable nonvoting Class B common stock issued in connection with the Company's annual patronage dividend. Funds derived from these capital resources are usually sufficient to satisfy long-term capital needs. Total capital expenditures, including those made under capital leases, were $3,986,000 for the thirteen weeks ended April 1, 1995 compared to $3,328,000 during the comparable period in 1994. These capital expenditures relate to additional equipment and technological improvements at the regional distribution centers and the National Headquarters. Funding of any additional 1995 capital expenditures is anticipated to come from operations and external sources, if necessary. The effects of all recent tax legislation have been reflected in the condensed consolidated financial statements included elsewhere herein. Additionally, the Company has reviewed the impact of all new accounting standards issued as of April 1, 1995 that will be adopted at a future date, and has determined that these will not have a material impact on the Company's operating results and financial position. PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of stockholders was held on April 4, 1995. (b) The annual meeting involved the election of five Directors for a term of three years and the election of one new Director for a one-year term. The following Directors were reelected for a term of three years: William M. Halterman George V. Sheffer Kenneth W. Noble* John M. West, Jr. Richard L. Schaefer *(Kenneth W. Noble was elected as a Director for a three-year term to replace Jeremiah J. O'Connor who had completed his term of office as prescribed by the Company's By-Laws. Mr. Noble operates True Value hardware stores in New York.) The number of affirmative votes cast were 3,026, the number of negative votes cast were 167, and the number of abstentions were 106. Dennis A. Swanson was elected as a Director for a one-year term to replace Michael P. Cole who retired as Director of the Company. Mr. Swanson operates True Value hardware stores in Colorado and Illinois. The number of affirmative votes cast were 2,979, the number of negative votes cast were 153, and the number of abstentions were 167. 9 In addition to the foregoing, the following persons were, on April 4, 1995, Directors of the Company whose terms of office continued after the annual meeting: William M. Claypool, III Robert J. Ladner Samuel D. Costa, Jr. Lewis W. Moore Daniel A. Cotter Robert G. Waters Leonard C. Farr Donald E. Yeager Jerrald T. Kabelin (c) The annual meeting involved the appointment of Ernst & Young LLP, independent public accountants, as auditor of the Company for fiscal year 1995. The number of affirmative votes cast were 3,048, the number of negative votes cast were 80, and the number of abstentions were 171. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 4. Instruments defining the rights of security holders, including indentures; incorporated herein by reference those items included as Exhibits 4A through 4G, inclusive, in the Company's Post- Effective Amendment No.4 to form S-2 Registration Statement (No. 33- 39477) filed with the Securities and Exchange Commission on March 18, 1995. (b) Reports on Form 8-K No reports on Form 8-K have been filed during the period for which this report is filed. 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. COTTER & COMPANY Date: May 15, 1995 By /s/ KERRY J. KIRBY ------------------------------------ Kerry J. Kirby Vice President, Treasurer and Chief Financial Officer (Mr. Kirby is the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.)
EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-30-1995 APR-01-1995 1,298 0 350,965 0 407,873 773,166 364,711 196,983 952,017 555,245 74,456 121,545 0 0 200,771 952,017 625,939 625,939 573,265 573,265 36,877 0 7,731 8,066 115 7,951 0 0 0 7,951 0 0
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