FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19621
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
MINNESOTA
(State or other jurisdiction of 41-1454591
incorporation or organization) (I.R.S. Employer
7400 Excelsior Blvd. Identification No.)
Minneapolis, Minnesota 55426-4517
(Address of principal executive
offices)
(952) 930-9000
(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
As of May 10, 2002, the number of shares outstanding of the registrant's no par
value Common Stock was 2,317,509 shares.
APPLIANCE RECYCLING CENTERS of AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION No.
----
Item 1: Financial Statements:
Consolidated Balance Sheets as of
March 30, 2002 and December 29, 2001.........................3
Consolidated Statements of Operations for the
Three Months Ended March 30, 2002 and March 31, 2001.........4
Consolidated Statements of Cash Flows for the
Three Months Ended March 30, 2002 and March 31, 2001.........5
Notes to Consolidated Financial Statements...................6
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations.................8
Item 3: Quantitative and Qualitative Disclosure about Market Risk........12
PART II. OTHER INFORMATION ...............................................13
2
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 30, December 29,
--------------------------------
2002 2001
- -------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,658,000 $ 506,000
Accounts receivable, net of allowance of $80,000
and $100,000, respectively 3,501,000 4,375,000
Inventories, net of reserves of $518,000 and $464,000, respectively 6,860,000 6,748,000
Deferred income taxes 576,000 576,000
Other current assets 176,000 174,000
- -------------------------------------------------------------------------------------------------------------
Total current assets 12,771,000 12,379,000
- -------------------------------------------------------------------------------------------------------------
Property and Equipment, at cost
Land 2,050,000 2,050,000
Buildings and improvements 3,845,000 3,779,000
Equipment 4,747,000 4,689,000
- -------------------------------------------------------------------------------------------------------------
10,642,000 10,518,000
Less accumulated depreciation 4,411,000 4,291,000
- -------------------------------------------------------------------------------------------------------------
Net property and equipment 6,231,000 6,227,000
- -------------------------------------------------------------------------------------------------------------
Other Assets 280,000 292,000
- -------------------------------------------------------------------------------------------------------------
Goodwill, net of amortization of $152,000 (Note 4) 38,000 38,000
- -------------------------------------------------------------------------------------------------------------
Total assets $ 19,320,000 $ 18,936,000
=============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit $ 4,300,000 $ 4,708,000
Current maturities of long-term obligations 972,000 401,000
Accounts payable 2,721,000 1,960,000
Accrued expenses (Note 2) 1,237,000 1,365,000
Income taxes payable 769,000 757,000
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 9,999,000 9,191,000
Long-Term Obligations, less current maturities 3,615,000 4,280,000
Deferred Income Tax Liabilities 68,000 68,000
- -------------------------------------------------------------------------------------------------------------
Total liabilities 13,682,000 13,539,000
- -------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common stock, no par value; authorized 10,000,000
shares; issued and outstanding 2,318,000 and 2,297,000
shares, respectively 11,363,000 11,360,000
Accumulated deficit (5,725,000) (5,963,000)
- -------------------------------------------------------------------------------------------------------------
Total shareholders' equity 5,638,000 5,397,000
- -------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 19,320,000 $ 18,936,000
=============================================================================================================
See Notes to Consolidated Financial Statements.
3
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 30, March 31,
--------------------------------
2002 2001
- -------------------------------------------------------------------------------------------------------------
Revenues
Retail $ 7,337,000 $ 4,728,000
Recycling 4,100,000 2,866,000
Byproduct 262,000 170,000
- -------------------------------------------------------------------------------------------------------------
Total revenues 11,699,000 7,764,000
Cost of Revenues 7,725,000 4,610,000
- -------------------------------------------------------------------------------------------------------------
Gross profit 3,974,000 3,154,000
Selling, General and Administrative Expenses 3,319,000 2,390,000
- -------------------------------------------------------------------------------------------------------------
Operating income 655,000 764,000
Other Income (Expense)
Other income 7,000 21,000
Interest expense (265,000) (240,000)
- -------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 397,000 545,000
Provision for Income Taxes 159,000 229,000
- -------------------------------------------------------------------------------------------------------------
Net income $ 238,000 $ 316,000
=============================================================================================================
Basic Earnings per Common Share $ 0.10 $ 0.14
Diluted Earnings per Common Share $ 0.07 $ 0.11
=============================================================================================================
Weighted Average Number of Common Shares Outstanding:
Basic 2,311,000 2,287,000
Diluted 3,310,000 2,863,000
=============================================================================================================
See Notes to Consolidated Financial Statements.
4
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 30, March 31,
---------------------------------
2002 2001
- ---------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income $ 238,000 $ 316,000
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 133,000 101,000
Accretion of long-term debt discount 12,000 11,000
Changes in current assets and liabilities:
Receivables 874,000 (1,195,000)
Inventories (112,000) (6,000)
Other assets (2,000) (78,000)
Accounts payable 761,000 611,000
Accrued expenses (128,000) 15,000
Unrealized gain on building sale -- (18,000)
Income taxes payable 12,000 (326,000)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 1,788,000 (569,000)
- --------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of property and equipment (123,000) (349,000)
- --------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Net borrowings (payments) under line of credit (408,000) 1,188,000
Proceeds from long-term obligations -- 142,000
Payments on long-term obligations (105,000) (79,000)
- --------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (513,000) 1,251,000
- --------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 1,152,000 333,000
Cash and Cash Equivalents
Beginning 506,000 302,000
- --------------------------------------------------------------------------------------------------------
Ending $ 1,658,000 $ 635,000
=========================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 254,000 $ 230,000
Income taxes 147,000 555,000
=========================================================================================================
See Notes to Consolidated Financial Statements.
5
Appliance Recycling Centers of America, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. Financial Statements - In the opinion of management of the Company, the
accompanying unaudited consolidated financial statements contain all
adjustments (consisting of only normal, recurring accruals) necessary
to present fairly the financial position of the Company and its
subsidiaries as of March 30, 2002 and the results of operations and its
cash flows for the three-month periods ended March 30, 2002 and March
31, 2001. The results of operations for any interim period are not
necessarily indicative of the results for the year. These interim
consolidated financial statements should be read in conjunction with
the Company's annual consolidated financial statements and related
notes in the Company's Annual Report on Form 10-K for the year ended
December 29, 2001.
Certain information and footnote disclosures included in the annual
consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted.
2. Accrued Expenses
Accrued expenses were as follows:
March 30, December 29,
2002 2001
------------- ------------
Compensation $ 459,000 $ 493,000
Warranty 146,000 225,000
Other 632,000 647,000
------------- ------------
$ 1,237,000 $ 1,365,000
============= ============
3. Earnings per Share
Basic per share amounts are computed, generally, by dividing net income
or loss by the weighted-average number of common shares outstanding.
Diluted per share amounts assume the conversion, exercise, or issuance
of all potential common stock instruments unless their effect is
antidilutive, thereby reducing the loss or increasing the income per
common share.
In arriving at diluted weighted-average shares and per share amounts
for the three months ending March 30, 2002 and March 31, 2001, options
and warrants with exercise prices below average market prices for the
respective fiscal quarters in which they were dilutive were included
using the treasury stock method.
4. Accounting Standards Recently Adopted and Not Yet Adopted
Recently Adopted:
Effective December 31, 2001, the Company adopted FASB Statement No.
141, Business Combinations which eliminates the pooling method of
accounting for business combinations and Statement No. 142, Goodwill
and Other Intangible Assets which eliminates the amortization of
goodwill and other intangibles that are determined to have an
indefinite life and requires, at a minimum, annual impairment tests of
goodwill and other intangible assets that are determined to have an
indefinite life. The adoption of these new standards resulted in no
amortization of the Company's goodwill ($38,000) for the three months
ended March 30, 2002.
6
Not Yet Adopted:
In September 2001, the FASB issued Statement 143, Asset Retirement
Obligations. This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The
Statement will be effective for the Company's fiscal year ending
December 2003. The Company does not believe that the adoption of this
pronouncement will have a material effect on its financial statements.
In August 2001, the FASB issued Statement 144, Accounting for
Impairment or Disposal of Long-Lived Assets. This Statement addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. The Company has not yet completed its full
assessment of the effect of this new standard on its financial
statements but believes its impact will not be significant. The
Statement will be effective for the Company's fiscal year ending
December 2002.
5. Critical Accounting Policies
As a matter of policy, the Company reviews its major assets for
impairment. The Company's major operating assets are accounts
receivable, inventories, and property and equipment. The reserve for
doubtful accounts of $80,000 should be adequate for any exposure to
loss in the Company's March 30, 2002 accounts receivable. The Company
has also established reserves for slow moving and obsolete inventories
and believes the reserve of $518,000 is adequate. The Company
depreciates its property and equipment over their estimated useful
lives and has not identified any items that are impaired as of March
30, 2002. The Company evaluated the realizability of its deferred tax
assets and tax attributes and has provided a valuation allowance
primarily for net operating loss and tax credit carryovers for which
the use is subject to limitation. The Company has significant options
and warrants outstanding and utilizes relevant market and other
valuation information relative to accounting for and reporting equity
transactions.
7
PART I: ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the Company's level
of operations and financial condition. This discussion should be read with the
consolidated financial statements appearing in Item 1.
RESULTS OF OPERATIONS
The Company generates revenues from three sources: retail, recycling
and byproduct. Retail revenues are sales of appliances, warranty and
service revenue and delivery fees. Recycling revenues are fees charged
for the disposal of appliances. Byproduct revenues are sales of scrap
metal and reclaimed chlorofluorocarbons ("CFC's") generated from
processed appliances. The Company is managed as a unit and does not
measure profit or loss separately for its three primary revenue
sources. Therefore, the Company believes that it has one operating
segment.
Total revenues for the three months ended March 30, 2002 were
$11,699,000 compared to $7,764,000 for the three months ended March 31,
2001, an increase of 51%. Retail revenues for the three months ended
March 30, 2002 were $7,337,000 compared to $4,728,000 for the three
months ended March 31, 2001, an increase of 55%. Same-store retail
sales increased 13% (a sales comparison of five stores that were open
the entire first three months of both 2002 and 2001). The increase in
retail revenues was primarily due to an increase in special buy
appliance sales as a result of operating three additional stores during
the first quarter of 2002 compared to the same period in the previous
year. Special buy appliances include manufacturer closeouts, factory
over-runs, floor samples, returned or exchanged items and scratch and
dent appliances. The Company continues to purchase appliances from
three manufacturers, Whirlpool Corporation, Maytag Corporation and
Frigidaire. There are no minimum purchase requirements with any of
these manufacturers. The Company believes purchases from these three
manufacturers will provide an adequate supply of high-quality
appliances for its retail outlets; however, there is a risk that one or
more of these sources could be lost.
Currently, the Company has ten retail locations. The Company opened a
store in March 2002 in the Columbus, Ohio market. The Company plans to
open two or three additional stores later this year in existing
markets. The Company experiences seasonal fluctuations and expects
retail sales to be higher in the second and third calendar quarters
than in the first and fourth calendar quarters, reflecting consumer
purchasing cycles.
Recycling revenues increased to $4,100,000 in the three months ended
March 30, 2002 from $2,866,000 for the same period of 2001, an increase
of 43%. The increase in recycling revenues is primarily due to an
increase in the recycling volumes principally related to the Company's
contract ("the Appliance Early Retirement and Recycling Program") with
the California Public Utilities Commission ("CPUC") offset by a
decrease in the recycling volume related to the contract with Southern
California Edison Company ("Edison"). The California regulatory
authorities have approved a statewide recycling program for 2002 that
will be administered by Edison. The Company is currently in contract
negotiations with Edison.
8
The Appliance Early Retirement and Recycling Program is a
refrigerator/freezer/room air conditioner recycling program that
operates in San Diego and surrounding areas, a six county region in
California's Central Valley, including the cities of Fresno and
Stockton and the seven county Bay Area, including San Francisco. The
program began in June 2001 and runs through August 31, 2002. The
Company is responsible for advertising the program.
The recent energy crisis in California has not had a material adverse
effect on the Company's operations. However, there can be no assurance
that it will not have an adverse effect in the future if Edison or the
CPUC is unable to perform under the terms of its contracts with the
Company.
Byproduct revenues increased to $262,000 in the three months ended
March 30, 2002 from $170,000 in the same period of 2001. The increase
was primarily due to an increase in the volume of CFCs and scrap metal
from the California recycling operations offset by a decrease in CFC
prices.
Gross profit as a percentage of total revenues decreased to 34.0% for
the three months ended March 30, 2002 from 40.6% for the three months
ended March 31, 2001. The decrease was primarily due to higher
recycling costs related to the recycling programs offset by slightly
higher gross margin in sales of special buy appliances. Gross profit as
a percentage of total revenues for future periods can be affected
favorably or unfavorably by numerous factors, including the mix of
retail products sold, the prices at which product is purchased from the
three manufacturers, the volume of appliances recycled from the
expected Edison contract and the current CPUC contract, and the price
and volume of byproduct revenues. The Company believes that gross
profit as a percentage of total revenues for the year will approximate
the gross profit as a percentage of total revenues of the first quarter
of 2002.
Selling, general and administrative expenses for the three months ended
March 30, 2002 increased by $929,000 or 38.9% from the same period in
2001. Selling expenses for the three months ended March 30, 2002
increased by $584,000 or 45.7% from the same period in 2001. The
increase in selling expenses was primarily due to the expenses for the
opening of one store during the first quarter of 2002 and operating two
additional stores in the first quarter of 2002 compared to the same
period in the previous year. General and administrative expenses for
the three months ended March 30, 2002 increased by $345,000 or 31.1%
from the same period in 2001. The increase in general and
administrative expense was primarily due to an increase in personnel
costs related to the recycling programs and Company retail growth.
Interest expense was $265,000 for the three months ended March 30, 2002
compared to $240,000 for the same period in 2001. The increase was due
to a higher minimum interest amount in the three months ended March 30,
2002 than in the same period in 2001.
9
RESULTS OF OPERATIONS - Continued
The Company recorded a provision for income taxes of $159,000 for the
three months ended March 30, 2002 compared to $229,000 for the three
months ended March 31, 2001. This decrease was due to both lesser
pre-tax income and a lower effective tax rate for the three months
ended March 30, 2002 compared to the same period in the prior year.
The Company has net operating loss carryovers and credit carryforwards
of approximately $7 million at March 30, 2002, which may be available
to reduce taxable income and in turn income taxes payable in future
years. However, future utilization of these loss and credit
carryforwards is subject to certain significant limitations under
provisions of the Internal Revenue Code including limitations subject
to Section 382, which relate to a 50 percent change in control over a
three-year period, and are further dependent upon the Company
maintaining profitable operations. The Company believes that the
issuance of Common Stock during 1999 resulted in an "ownership change"
under Section 382. Accordingly, the Company's ability to use net
operating loss carryforwards generated prior to February 1999 may be
limited to approximately $56,000 per year or less than $1 million
through 2018.
At March 30, 2002, the Company had recorded cumulative valuation
allowances of approximately $2,998,000 against its net deferred tax
assets due to the uncertainty of their realization. The realization of
deferred tax assets is dependent upon sufficient future taxable income
during the periods when deductible temporary differences and
carryforwards are expected to become available to reduce taxable
income.
The Company recorded net income of $238,000 or $.07 per diluted share
for the three months ended March 30, 2002 compared to $316,000 or $.11
per diluted share for the same period of 2001. The decrease in the net
income was due to a decrease in the gross profit percentage offset by a
decrease in selling, general and administrative expenses as a
percentage of total revenues.
LIQUIDITY AND CAPITAL RESOURCES
At March 30, 2002, the Company had working capital of $2,772,000
compared to $3,188,000 at December 29, 2001. Cash and cash equivalents
increased to $1,658,000 at March 30, 2002 from $506,000 at December 29,
2001. Net cash provided by operating activities was $1,788,000 for the
three months ended March 30, 2002 compared to net cash used in
operating activities of $569,000 in the same period of 2001. The cash
provided by operating activities for the quarter was primarily due to a
decrease in accounts receivable and an increase in accounts payable.
The Company's capital expenditures for the three months ended March 30,
2002 and March 31, 2001 were approximately $123,000 and $349,000,
respectively. The 2002 capital expenditures were primarily related to
leasehold improvements for the retail store opened in March 2002. The
2001 capital expenditures were primarily related to the continued
upgrade of computer systems and the purchase of equipment related to
the refrigerator recycling operation.
10
As of March 30, 2002, the Company had a $10.0 million line of credit
with a lender. The interest rate on the line as of March 30, 2002 was
5.75%. The amount of borrowings available under the line of credit is
based on a formula using receivables and inventories. The line of
credit has a stated maturity date of August 30, 2004 and provides that
the lender may demand payment in full of the entire outstanding balance
of the loan at any time. The line of credit is secured by substantially
all the Company's assets and requires minimum monthly interest payments
of $37,500 regardless of the outstanding principal balance. The lender
also has an inventory repurchase agreement with Whirlpool Corporation
that secures the line of credit. The line requires that the Company
meet certain financial covenants, provides payment penalties for
noncompliance and prepayment, limits the amount of other debt the
Company can incur, limits the amount of spending on fixed assets and
limits payments of dividends. At March 30, 2002, the Company had unused
borrowing capacity of $526,000.
A summary of our contractual cash obligations at March 30, 2002 is as
follows:
----------------------------------------------------------------------------------
(in thousands) PAYMENTS DUE BY PERIOD
---------------------------------------------------------------------------------------------------------
CONTRACTUAL TOTAL 2002 2003 2004 2005 2006 2007
OBLIGATIONS 2, 3, 4 QTR
---------------------------------------------------------------------------------------------------------
Long-term debt,
including interest $ 6,300 $ 803 $1,460 $1,250 $2,784 $ 3 $ --
---------------------------------------------------------------------------------------------------------
Operating leases $ 6,427 $1,528 $1,510 $1,309 $1,317 $585 $178
---------------------------------------------------------------------------------------------------------
Total contractual
Cash obligations $12,727 $2,331 $2,970 $2,559 $4,101 $588 $178
---------------------------------------------------------------------------------------------------------
We also have a commercial commitment as described below:
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OTHER COMMERCIAL TOTAL AMOUNT OUTSTANDING AT DATE OF EXPIRATION
COMMITMENT COMMITTED 3/30/02
---------------------------------------------------------------------------------------------------------
Line of credit $10,000,000 $4,300,000 August 30, 2004
---------------------------------------------------------------------------------------------------------
We believe that our cash balance, availability under our line of
credit, if needed, and anticipated cash flows from operations will be
adequate to fund our cash requirements for fiscal 2002.
The recent energy crisis in California has not had a material adverse
effect on the Company's operations. However, there can be no assurance
that it will not have an adverse effect in the future if Edison or the
CPUC is unable to perform under the terms of its contracts with the
Company.
The Company believes, based on the anticipated revenues from the
expected Edison contract and the current CPUC contract, anticipated
sales per retail store and anticipated gross profit, that its cash
balance, anticipated funds generated from operations and its current
11
line of credit, will be sufficient to finance its operations and
capital expenditures through December 2002. The Company's total capital
requirements for 2002 will depend on, among other things as discussed
below, the recycling volumes generated from the expected Edison program
and the current CPUC program in 2002 and the number and size of retail
stores operating during the fiscal year. Currently, the Company has
three recycling centers and ten retail stores in operation. If revenues
are lower than anticipated or expenses are higher than anticipated, the
Company may require additional capital to finance operations. Sources
of additional financing, if needed in the future, may include further
debt financing or the sale of equity (common or preferred stock) or
other securities. There can be no assurance that such additional
sources of financing will be available or available on terms
satisfactory to the Company or permitted by the Company's current
lenders.
FORWARD-LOOKING STATEMENTS
Statements contained in this quarterly report regarding the Company's
future operations, performance and results, and anticipated liquidity
are forward-looking and therefore are subject to certain risks and
uncertainties, including, but not limited to, those discussed herein.
Any forward-looking information regarding the operations of the Company
will be affected primarily by the Company's continued ability to
purchase product from Whirlpool, Maytag and Frigidaire at acceptable
prices and the ability and timing of Edison to deliver units under its
expected contract with the Company and the ability and timing of the
CPUC to deliver units under its contract with the Company. In addition,
any forward-looking information will also be affected by the ability of
individual retail stores to meet planned revenue levels, the rate of
sustainable growth in the number of retail stores, the speed at which
individual retail stores reach profitability, costs and expenses being
realized at higher than expected levels, the Company's ability to
secure an adequate supply of special buy and used appliances for resale
and the continued availability of the Company's current line of credit.
PART I: ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- --------------------------------------------------------------------------------
MARKET RISK AND IMPACT OF INFLATION
The Company does not believe there is any significant risk related to
interest rate fluctuations on its long-term debt since it has fixed
rates. However, there is interest rate risk on the line of credit since
its interest is based on the prime rate. Also, the Company believes
that inflation has not had a material impact on the results of
operations for the three-month period ended March 30, 2002. However,
there can be no assurance that future inflation will not have an
adverse impact on the Company's operating results and financial
conditions.
12
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1 - LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various legal
proceedings arising in the normal course of business, none of which
is expected to result in any material loss to the Company or any of
its subsidiaries.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS - None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 25, 2002, the Company held its Annual Meeting of
Shareholders. At the meeting, Edward R. Cameron, Duane S. Carlson,
Harry W. Spell, Marvin Goldstein and George B. Bonniwell were elected
as directors for 2002. The shareholders also approved an amendment to
the Company's Restated 1997 Stock Option Plan and ratified the
appointment of McGladrey & Pullen, LLP as independent auditors for
the fiscal year ending December 28, 2002.
ITEM 5 - OTHER INFORMATION - None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 - Amendment to the line of credit dated April 11, 2002
between Appliance Recycling Centers of America, Inc. and Spectrum
Commercial Services, Amendment to General Credit and Security
Agreement and Amended Guarantor Acknowledgement.
(b) Exhibit 10.2 - Amendment effective April 25, 2002 to 1997 Stock
Option Plan.
(c) The Company filed Form 8-K on February 22, 2002 announcing that it
will open a 30,000 square foot ApplianceSmart outlet on March 15,
2002 in a retail complex in southeastern Columbus, Ohio.
The Company filed Form 8-K on March 7, 2002 announcing its 2001
operating results.
13
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.
Appliance Recycling Centers of America, Inc.
--------------------------------------------
Registrant
Date: May 10, 2002 /s/Edward R. Cameron
--------------------------------------------
Edward R. Cameron
President
Date: May 10, 2002 /s/Linda Koenig
--------------------------------------------
Linda Koenig
Controller
14