UNITED STATES
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 May 31, 2002
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 0-12490
ACR GROUP, INC.
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(Exact name of registrant as specified in its charter)
Texas 74-2008473
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 Wilcrest Drive, Suite 440, Houston, Texas 77042-6039
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(Address of principal executive offices) (Zip Code)
(713) 780-8532
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(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No ___
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Shares of Common Stock outstanding at June 30, 2002 - 10,681,294.
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PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
ACR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
May 31, February 28,
2002 2002
---------- ------------
(Unaudited)
Current assets:
Cash $ 123 $ 129
Accounts receivable, net 20,307 16,858
Inventory 28,402 25,987
Prepaid expenses and other 430 275
Deferred income taxes 1,131 812
--------- ---------
Total current assets 50,393 44,061
--------- ---------
Property and equipment, net of accumulated
depreciation 5,203 5,405
Deferred income taxes 453 648
Goodwill, net of accumulated amortization 5,258 5,991
Other assets 550 525
--------- ---------
$ 61,857 $ 56,630
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt
and capital lease obligations $ 737 $ 898
Accounts payable 24,302 19,411
Accrued expenses and other liabilities 2,349 2,027
--------- ---------
Total current liabilities 27,388 22,336
Long-term debt and capital lease obligations,
less current maturities 23,927 23,728
--------- ---------
Total liabilities 51,315 46,064
--------- ---------
Shareholders' equity:
Common stock 107 107
Additional paid-in capital 41,691 41,691
Accumulated deficit (31,256) (31,232)
--------- ---------
Total shareholders' equity 10,542 10,566
--------- ---------
$ 61,857 $ 56,630
========= =========
The accompanying notes are an integral part
of these condensed financial statements.
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ACR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended
May 31,
------------------------
2002 2001
---------- ----------
Sales $ 42,869 $ 39,709
Cost of sales 33,659 31,108
---------- ----------
Gross profit 9,210 8,601
Selling, general and administrative expenses (8,263) (7,626)
---------- ----------
Operating income 947 975
Interest expense (448) (634)
Other non-operating income 115 90
---------- ----------
Income before income taxes 614 431
Provision for income taxes:
Current 30 35
Deferred 125 -
---------- ----------
Income before cumulative effect of accounting change 459 396
Cumulative effect of change in accounting
principle, net of tax (483) -
---------- ----------
Net income (loss) $ (24) $ 396
========== ==========
Basic and diluted earnings (loss) per share:
Earnings per share before cumulative effect of
accounting change .04 .04
Cumulative effect of accounting change (.04) -
---------- ----------
Earnings per share $ - $ .04
========== ==========
Weighted average shares outstanding:
Basic 10,681 10,681
========== ==========
Diluted 10,681 10,681
========== ==========
The accompanying notes are an integral part
of these condensed financial statements.
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ACR GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
May 31,
------------------------
2002 2001
--------- -----------
Operating activities:
Net income (loss) $ (24) $ 396
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Cumulative effect of change in accounting principle 483 -
Depreciation and amortization 304 354
Deferred income tax expense 125 -
Other (5) -
Changes in operating assets and liabilities:
Accounts receivables (3,444) (4,690)
Inventory (2,415) (149)
Prepaid expenses and other assets (160) 267
Accounts payable 4,891 3,607
Accrued expenses and other liabilities 322 144
--------- ---------
Net cash provided (used) in operating activities 77 (71)
--------- ---------
Investing activities:
Acquisition of property and equipment (125) (271)
Proceeds from disposition of assets 5 -
--------- ---------
Net cash used in investing activities (120) (271)
--------- ---------
Financing activities:
Net borrowings on revolving credit facility 304 639
Payments on long-term debt (267) (293)
--------- ---------
Net cash provided by financing activities 37 346
--------- ---------
Net increase (decrease) in cash (6) 4
Cash at beginning of year 129 171
--------- ---------
Cash at end of period $ 123 $ 175
========= =========
Supplemental disclosure of cash flow information:
Cash paid for
Interest 360 575
Income taxes 9 -
The accompanying notes are an integral part
of these condensed financial statements.
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ACR GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 - Basis of Presentation
The accompanying unaudited condensed historical financial statements of
the Company have been prepared in accordance with accounting principles
generally accepted in the United States. Accordingly, they do not include all of
the information and footnotes required for complete financial statements, and
therefore should be reviewed in conjunction with the financial statements and
related notes thereto contained in the Company's annual report for the year
ended February 28, 2002 filed on Form 10-K with the Securities and Exchange
Commission. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Actual operating results for the three months ended May 31, 2002, are
not necessarily indicative of the results that may be expected for the fiscal
year ended February 28, 2003.
2 - Summary of Significant Accounting Policies
For a description of these policies, refer to Note 1 of the Notes to
Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended February 28, 2002 and to Item 2 below.
3 - Contingent Liabilities
The Company has an arrangement with an HVACR equipment manufacturer and
a bonded warehouse agent whereby HVACR equipment is held for sale in bonded
warehouses located at the premises of certain of the Company's operations, with
payment due only when products are sold. The supplier retains legal title and
substantial management control with respect to the consigned inventory. The
Company is responsible for damage to and loss of inventory that may occur at its
premises. The Company has the ability to return consigned inventory, at its sole
discretion, to the supplier for a specified period of time after receipt of the
inventory. Such inventory is accounted for as consigned merchandise and is not
recorded on the Company's balance sheet. As of May 31, 2002, the cost of such
inventory held in the bonded warehouses was $8,759,000.
The terms of the consignment agreement further provide that the Company
may be required to purchase inventory not sold within a specified period of
time. Historically, most consigned inventory is sold before the specified
purchase date, and the supplier has never enforced its right to demand payment,
instead permitted such inventory to remain on consignment.
4 - New Accounting Pronouncements
Effective March 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or
Disposal of Long-Lived Assets." The new standard requires one model of
accounting for long-lived assets to be disposed of, and broadens the definition
of discontinued operations to include a component of a segment. The Company does
not expect the adoption of SFAS 144 to have a significant impact on its
financial position or results of operations.
Effective March 1, 2002, the Company adopted SFAS No. 142, "Goodwill
and Other Intangible Assets," which establishes new accounting and reporting
requirements for goodwill and other intangible assets. Under SFAS No. 142, all
goodwill amortization ceased effective March 1, 2002. Goodwill amortization for
the quarter ended May 31, 2002 would have otherwise been $56,000. Material
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amounts of recorded goodwill attributable to each of our applicable subsidiaries
were tested for impairment by comparing the fair value of each subsidiary with
its carrying value. Fair value was determined using both discounted cash flows
and internal rates of return. These impairment tests are required to be
performed at adoption of SFAS No. 142 and at least annually thereafter.
Significant estimates used in the methodologies include estimates of future cash
flows and both future short-term and long-term growth rates. On an ongoing basis
(absent any impairment indicators), we expect to perform our annual impairment
tests during our fourth fiscal quarter.
Based on our initial impairment tests, we recognized a charge of
$483,000, net of tax, ($0.04 per share) in the first quarter of fiscal 2003 to
reduce the carrying value of goodwill of Lifetime Filter, Inc. to its implied
fair value. This impairment is a result of adopting a fair value approach, under
SFAS No. 142, to testing impairment of goodwill as compared to the previous
method utilized in which evaluations of goodwill impairment were made by the
Company using the estimated future discounted cash flows compared to the assets
carrying amount. Under SFAS No. 142, the impairment adjustment recognized at
adoption of the new rules was reflected as a cumulative effect of change in
accounting principle in our first quarter of fiscal 2003 income statement.
Impairment adjustments recognized after adoption, if any, generally are required
to be recognized as operating expenses.
The unaudited results of operations presented below for the three months
ended May 31, 2002 and adjusted results of operations for the three months
ended May 31, 2001 reflect the operations of the Company had we adopted the
non-amortization provisions of SFAS No. 142 effective March 1, 2001: (in
thousands, except per share amounts)
Three months ended
May 31,
----------------------
2002 2001
--------- ---------
Net income (loss) $ (24) $ 396
Add: Cumulative effect of change in accounting
principle, net of tax 483 -
Add: Goodwill amortization, net of tax - 37
--------- ---------
Adjusted net income $ 459 $ 433
========= =========
Basic and diluted earnings per share:
Reported net income - .04
Add: Cumulative effect of change in accounting
principle, net of tax .04 -
Add: Goodwill amortization, net of tax - -
--------- ---------
Adjusted net income $ .04 $ .04
========= =========
5 - Income Taxes
The provision for income taxes consists principally of federal
alternative minimum taxes and state income taxes. The provision for deferred
taxes consists of a reduction of current deferred benefits expected to be
realized as a result of the anticipated utilization of net operating loss
carryforwards in fiscal 2003. The reduction is based on applying an effective
tax rate of 21% to current year taxable income. The Company has net operating
loss and tax credit carryforwards which offset substantially all of its federal
taxable income.
-6-
6 - Debt
The Company has a revolving line of credit arrangement with a commercial
bank ("Bank"). The maximum amount that may be borrowed under the revolving line
of credit is $25 million, and $1 million for capital expenditures. At May 31,
2002, the Company had available credit of $1.7 and $0.4 million under the
revolving credit line and the capital expenditure term loan facility,
respectively. The agreement terminates in May 2003, but is automatically
extended for one-year periods unless either party gives notice of termination to
the other.
7 - Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share for the three months ended May 31, 2002 and 2001 (in
thousands, except share information):
Three Months Ended May 31,
----------------------------------
2002 2001
---------------- ---------------
Numerator:
Net income (loss) $ (24) $ 396
Numerator for basic and diluted
earnings per share - income
available to common stockholders $ (24) $ 396
================ ===============
Denominator:
Denominator for basic earnings per
share - weighted average shares 10,681,294 10,681,294
Effect of dilutive securities:
Employee stock options - -
Warrants - -
---------------- ---------------
Dilutive potential common shares - -
---------------- ---------------
Denominator for diluted earnings
per share - adj. weighted average
shares and assumed conversions 10,681,294 10,681,294
================ ===============
Basic earnings per share $ - $ .04
Dilutive earnings per share $ - $ .04
================ ===============
-7-
ACR GROUP, INC. AND SUBSIDIARIES
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
ACR Group, Inc. and its subsidiaries (collectively, the "Company") is an
independent distributor of heating, air conditioning and refrigeration ("HVACR")
equipment and related parts and supplies. The Company is among the ten largest
such distributors in the United States. Substantially all of the Company's sales
are to contractor dealers and institutional end-users. Generally accepted
accounting principles allow the aggregation of an enterprise's segments if they
are similar. Although the Company operates in different geographic areas, we
have reviewed the aggregation criteria and determined that the Company operates
as a single segment based on the high degree of similarity of the Company's
operations.
This report on Form 10-Q includes certain statements that may be deemed to
be "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and underlying
assumptions and other statements, which are other than statements of historical
facts. Forward-looking statements involve risks and uncertainties that could
cause actual results or outcomes to differ materially. Such risks and
uncertainties may include the availability of debt or equity capital to fund the
Company's working capital requirements, unusual weather conditions, the effects
of competitive pricing and general economic factors. Our expectations and
beliefs are expressed in good faith and we believe there is a reasonable basis
for them, but there can be no assurance that our expectations, beliefs or
projections will be achieved or accomplished. The forward-looking statements in
this document are intended to be subject to the safe harbor protection provided
under the securities laws.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 31, 2002 COMPARED TO THE
THREE MONTHS ENDED MAY 31, 2001
The Company recognized a net loss of $24,000 for the quarter ended May 31,
2002 (fiscal 2003) compared to net income of $396,000 for the quarter ended May
31, 2001 (fiscal 2002). The Company's results for the first quarter of fiscal
2003 include charges for two items - one related to the adoption of a new
accounting standard for reporting of goodwill and other intangible assets, and
another relating to a deferred income tax charge reducing the Company's deferred
tax assets - that were not present in the prior year. Excluding these charges,
net income in fiscal 2003 would have been $584,000, an increase of 48% over the
same period in fiscal 2002. The increase in such income was attributable to
lower interest costs in the current year, resulting from a decrease in the
average interest rate on the Company's borrowings from fiscal 2002.
Consolidated sales increased 8% during the quarter ended May 31, 2002
compared to the quarter ended May 31, 2001. Sales growth was strongest in Texas
and Florida, helped by unusually warm weather in late April and early May. Sales
declined slightly in California because of below normal temperatures. First
quarter sales at the Company's business unit based in Colorado declined 13% as a
slowdown in new residential construction continued to reduce demand for the
Company's products. Same-store sales in the first five months of calendar 2002
increased 10% over 2001, compared to a 6% increase
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in industry-wide product shipments during the same period based on data compiled
by a leading industry trade association.
The Company's gross margin percentage on sales was 21.5% for the quarter
ended May 31, 2002, compared to 21.7% for the quarter ended May 31, 2001. The
decline in consolidated gross margin percentage was directly attributable to the
Company's Colorado business unit, which was adversely affected by reduced demand
for the sheet metal products that it manufactures for use in new home
construction. The lower demand resulted in a lower absorption rate of fixed
manufacturing costs and, accordingly, a lower gross margin percentage. The
aggregate gross margin percentage of all of the Company's other operations
increased to 20.7% in the quarter ended May 31, 2002, compared to 20.1% in the
preceding year.
Selling, general and administrative ("SG&A") expenses increased 8% in the
quarter ended May 31, 2002 compared to the same quarter of 2001, principally
from increased payroll and insurance costs. Expressed as a percentage of sales,
SG&A expenses increased in the first quarter from 19.2% in 2001 to 19.3% in
2002.
Interest expense decreased 29% from 2001 to 2002 as a result of lower
average interest rates on the Company's variable rate debt. As a percentage of
sales, interest expense decreased from 1.60% in 2001 to 1.04% in 2002. Average
outstanding debt decreased 5% from 2001 to 2002.
The current provision for income taxes consists principally of federal
alternative minimum taxes and state income taxes. The provision for deferred
taxes consists of a reduction of current deferred benefits expected to be
realized as a result of the anticipated utilization of net operating loss
carryforward in fiscal 2003. Substantially all of the Company's net operating
loss carryforward will either expire, or is expected to be utilized, by the end
of fiscal 2004. The Company has estimated a tax rate of 21% to systematically
amortize through fiscal 2004 the deferred tax asset related to its net operating
loss carryforward. This estimated tax rate is likely to change periodically as
the Company re-evaluates its estimate of taxable income through fiscal 2004.
The cumulative effect of accounting change reflects the result of adopting
the provisions SFAS No. 142, "Goodwill and Other Intangible Assets" as of March
1, 2002. For further explanation, see New Accounting Pronouncements, below.
LIQUIDITY AND CAPITAL RESOURCES
In the quarter ended May 31, 2002, the Company generated cash flow from
operations of $77,000, compared to using cash flow of $71,000 in operations in
the same quarter of 2001. Gross accounts receivable represented 41 days of gross
sales as of May 31, 2002 compared to 46 days at May 31, 2001, reflecting a
continuous focus on credit management and active collection efforts. The Company
has been particularly successful at reducing its days sales outstanding over the
past two quarters, but we do not anticipate that significant further reduction
is achievable without adversely impacting sales. Inventory at May 31, 2002 is
18% greater than at May 31, 2001, as stocking levels were increased to
accommodate potential additional customer orders. Since the Company's sales
activity is greatest in the second quarter ending August 31 (consistent with the
greatest use of air conditioning), we are carefully managing sales and inventory
levels to ensure that the Company does not have substantial excess inventory at
the end of the second quarter.
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The Company has credit facilities with a commercial bank ("Bank") which
include an $25 million revolving line of credit, and $1 million for capital
expenditures. Outstanding borrowings on the revolving credit line change daily
depending on cash collections and disbursements. During the quarter ended May
31, 2002, the Company did not borrow additional funds from its capital
expenditure facility. At May 31, 2002, the Company had available credit of $1.7
and $0.4 million under the revolving credit line and the capital expenditure
term loan facility, respectively. As of May 31, 2002, borrowings under both
credit facilities bear interest at either the prime rate or LIBOR plus 2.75%,
and the Company had elected the LIBOR option on substantially all outstanding
borrowings. As of May 31, 2002, the average interest rate on all borrowings was
6.53%. Management believes that availability under the revolving credit facility
will be adequate to finance the Company's working capital requirements of its
existing operations for the foreseeable future.
The Company has approximately $4.7 million in tax loss carryforwards, of
which $3.4 expires in fiscal 2003. Such operating loss carryforwards will
substantially limit the Company's federal income tax liabilities in fiscal 2003.
SEASONALITY
The Company's sales volume and, accordingly, its operating income vary
significantly during its fiscal year. The highest levels of sales occur during
the times of the year when climatic conditions require the greatest use of air
conditioning, since the Company's operations are concentrated in the warmer
sections of the United States. Accordingly, sales will be highest in the
Company's second quarter ending August 31, and will be lowest in its fourth
quarter.
INFLATION
The Company does not believe that inflation has had a material effect on
its results of operations in recent years. Generally, manufacturer price
increases attributable to inflation uniformly affect both the Company and its
competitors, and such increases are passed through to customers as an increase
in sales prices.
NEW ACCOUNTING PRONOUNCEMENTS
Effective March 1, 2002, the Company adopted Statement of Financial
Standards No. 142, (SFAS 142) "Goodwill and Other Intangible Assets," which
establishes new accounting and reporting requirements for goodwill and other
intangible assets. Under SFAS No. 142, all goodwill amortization ceased
effective March 1, 2002. Goodwill amortization for the quarter ended May 31,
2002 would have otherwise been $56,000. Material amounts of recorded goodwill
attributable to each of our reporting units were tested for impairment by
comparing the fair value of each reporting unit with its carrying value. Fair
value was determined using discounted cash flows, internal rates of return and
market multiples. These impairment tests are required to be performed at
adoption of SFAS No. 142 and at least annually thereafter. Significant estimates
used in the methodologies include estimates of future cash flows and both future
short-term and long-term growth rates. On an ongoing basis (absent any
impairment indicators), we expect to perform our annual impairment tests during
our fourth fiscal quarter.
-10-
Utilizing the new criteria, the Company determined that it was appropriate
to write off the entire unamortized amount of goodwill associated with its
filter manufacturing operation that was acquired in 1997. We reached that
conclusion upon consideration of the reporting unit's unprofitability for the
last two fiscal years and a substantial shift in both its product sales mix and
its customer base since the date of acquisition. Net of taxes, the writeoff
amounted to $483,000, or $0.04 per share, and in accordance with the new
standard, is reported in the income statement for the quarter ended May 31, 2002
as a cumulative effect of a change in accounting principle.
Effective March 1, 2002, the Company adopted SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets." The new standard requires one
model of accounting for long-lived assets to be disposed of, and broadens the
definition of discontinued operations to include a component of a segment. The
Company does not expect the adoption of SFAS 144 to have a significant impact on
its financial position or results of operations.
CRITICAL ACCOUNTING POLICIES
The accounting policies discussed below are critical to the Company's business
operations and an understanding of the Company's financial statements. The
financial statements are prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires management to make assumptions and estimates that affect the
reported amounts of assets, liabilities, revenues and expenses in each reporting
period. Management bases its estimates on historical experience and other
factors that are believed to be reasonable under the circumstances. Actual
results, once known, may vary from management's estimates.
Revenue Recognition
The Company recognizes revenue in accordance with SEC Statement of Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements". Substantially
all of the Company's revenues consist of sales of HVACR products that are
purchased by the Company from suppliers; less than 5% of the Company's sales are
of products that it manufactures. SAB 101 requires that four basic criteria must
be met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists, (2) delivery has occurred or services have been rendered,
(3) the amounts recognized are fixed and determinable, and (4) collectibility is
reasonably assured. The Company records revenue after it receives an order from
a customer with a fixed determinable price and the order is either shipped or
delivered to the customer.
Allowance for Doubtful Accounts
The Company records an allowance for doubtful accounts for estimated losses
resulting from the inability to collect accounts receivable from customers. The
Company establishes the allowance based on historical experience, credit risk of
specific customers and transactions, and other factors. Management believes that
the lack of customer concentration is a significant factor that mitigates the
Company's accounts receivable credit risk. One customer represents approximately
2% of consolidated sales, and no other customer comprises as much as 1% of
sales. The number of customers and their distribution across the geographic
areas served by the Company help to reduce the Company's credit exposure to a
single customer or to economic events that affect a particular geographic
region. Although the Company believes that its allowance for doubtful accounts
is adequate, any future condition that would impair the ability of a broad
section of the Company's customer base to make payments on a timely basis may
require the Company to record additional
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allowances.
Inventory
Inventories consist of HVACR equipment, parts and supplies and are valued at the
lower of cost or market value using the average cost method. Substantially all
inventories represent finished goods held for sale; raw materials represent less
than 2% of inventories. When necessary, the carrying value of obsolete or excess
inventory is reduced to estimated net realizable value. The process for
evaluating the value of obsolete or excess inventory requires estimates by
management concerning future sales levels and the quantities and prices at which
such inventory can be sold in the ordinary course of business.
Item 3. - Quantitative and Qualitative Disclosures About Market Risk
The Company is subject to market risk exposure related to changes in
interest rates on its senior credit facility, which includes revolving credit
and term notes. These instruments carry interest at a pre-agreed upon percentage
point spread from either the prime interest rate or LIBOR. Under its senior
credit facility the Company may, as its option, fix the interest rate for
certain borrowings based on a spread over LIBOR for 30 days to 6 months. At May
31, 2002 the Company had $23.2 million outstanding under its credit facilities
with the bank, of which $13.2 million is subject to variable interest rates.
Based on this balance, an immediate change of one percent in the interest rate
would cause a change in interest expense of approximately $132,000, or $.01 per
basic share, on an annual basis.
-12-
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K. None
SIGNATURES
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.
ACR GROUP, INC.
July 15, 2002 /s/ Anthony R. Maresca
----------------------- ---------------------------------------
Date Anthony R. Maresca
Senior Vice-President and
Chief Financial Officer
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