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 July 3, 1999
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 41-1454591
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7400 Excelsior Blvd.
Minneapolis, Minnesota 55426-4517
(Address of principal executive
offices)
(612) 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 August 13, 1999, the number of shares outstanding of the registrant's no
par value common stock was 2,266,744 shares.
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements:
Consolidated Balance Sheets as of
July 3, 1999 and January 2, 1999
Consolidated Statements of Operations for the Three and
Six Months Ended July 3, 1999 and July 4, 1998
Consolidated Statements of Cash Flows for the
Six Months Ended July 3, 1999 and July 4, 1998
Notes to Consolidated Financial Statements
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosure about Market Risk [Not
Applicable]
PART II. OTHER INFORMATION
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 3, January 2,
1999 1999
- ---------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 206,000 $ 14,000
Accounts receivable, net of allowance of $27,000
and $18,000, respectively 1,128,000 498,000
Inventories, net of reserves of $115,000 and $40,000, respectively 1,351,000 1,979,000
Other current assets 143,000 100,000
- ---------------------------------------------------------------------------------------------------------
Total current assets $ 2,828,000 $ 2,591,000
- ---------------------------------------------------------------------------------------------------------
Property and Equipment, at cost
Land $ 2,103,000 $ 2,103,000
Buildings and improvements 3,979,000 3,957,000
Equipment 3,437,000 3,597,000
- ---------------------------------------------------------------------------------------------------------
$ 9,519,000 $ 9,657,000
Less accumulated depreciation 3,856,000 3,876,000
- ---------------------------------------------------------------------------------------------------------
Net property and equipment $ 5,663,000 $ 5,781,000
- ---------------------------------------------------------------------------------------------------------
Other Assets $ 286,000 $ 319,000
Goodwill, net of amortization of $57,000 and $38,000, respectively 133,000 152,000
- ---------------------------------------------------------------------------------------------------------
Total assets $ 8,910,000 $ 8,843,000
- ---------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Line of credit $ 1,070,000 $ 1,081,000
Current maturities of long-term obligations 77,000 79,000
Accounts payable 1,123,000 1,202,000
Accrued expenses (Note 2) 568,000 700,000
- ---------------------------------------------------------------------------------------------------------
Total current liabilities $ 2,838,000 $ 3,062,000
Long-Term Obligations, less current maturities 4,928,000 4,965,000
- ---------------------------------------------------------------------------------------------------------
Total liabilities $ 7,766,000 $ 8,027,000
- ---------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common stock, no par value; authorized 10,000,000
shares; issued and outstanding 2,267,000
and 1,237,000 shares, respectively (Note 4) $ 11,333,000 $ 10,857,000
Accumulated deficit (10,189,000) (10,041,000)
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity $ 1,144,000 $ 816,000
- ---------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 8,910,000 $ 8,843,000
=========================================================================================================
See Notes to Consolidated Financial Statements.
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
July 3, July 4, July 3, July 4,
1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------
Revenues
Retail $ 2,111,000 $ 1,956,000 $ 4,004,000 $ 3,468,000
Recycling (Note 3) 1,942,000 1,634,000 2,867,000 2,757,000
- --------------------------------------------------------------------------------------------------------------------
Total revenues $ 4,053,000 $ 3,590,000 $ 6,871,000 $ 6,225,000
Cost of Revenues 2,305,000 2,420,000 4,203,000 4,416,000
- --------------------------------------------------------------------------------------------------------------------
Gross profit $ 1,748,000 $ 1,170,000 $ 2,668,000 $ 1,809,000
Selling, General and Administrative Expenses 1,345,000 1,507,000 2,531,000 2,965,000
Loss on Impaired Assets (Note 5) -- 518,000 -- 518,000
- --------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 403,000 $ (855,000) $ 137,000 $(1,674,000)
Other Income (Expense)
Other income 44,000 42,000 109,000 269,000
Interest income -- -- -- 1,000
Interest expense (196,000) (129,000) (393,000) (230,000)
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes $ 251,000 $ (942,000) $ (147,000) $(1,634,000)
Provision for (Benefit of) Income Taxes -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 251,000 $ (942,000) $ (147,000) $(1,634,000)
====================================================================================================================
Basic and Diluted Earnings (Loss) per
Common Share $ 0.11 $ (0.79) $ (0.07) $ (1.41)
====================================================================================================================
Basic and Diluted Weighted Average Number of
Common Shares 2,267,000 1,188,000 2,018,000 1,163,000
====================================================================================================================
See Notes to Consolidated Financial Statements.
Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
July 3, July 4,
1999 1998
- ----------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net loss $ (147,000) $(1,634,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 204,000 438,000
Accretion of long-term debt discount 16,000 --
Loss on impaired assets -- 518,000
Gain on sale of equipment (52,000) (232,000)
Change in assets and liabilities:
(Increase) decrease in:
Receivables (630,000) 9,000
Inventories 628,000 (607,000)
Other current assets (43,000) (21,000)
Increase (decrease) in:
Accounts payable (79,000) 403,000
Accrued expenses (132,000) (79,000)
- ----------------------------------------------------------------------------------------------------
Net cash used in operating activities $ (235,000) $(1,205,000)
- ----------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchase of property and equipment $ (48,000) $ (273,000)
Proceeds from disposal of property and equipment 66,000 237,000
- ----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities $ 18,000 $ (36,000)
- ----------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Increase (decrease) in line of credit $ (11,000) $ 946,000
Payments on long-term obligations (56,000) (86,000)
Proceeds from sale of common stock 476,000 200,000
Proceeds from long-term debt obligations -- 250,000
- ----------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 409,000 $ 1,310,000
- ----------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents $ 192,000 $ 69,000
Cash and Cash Equivalents
Beginning 14,000 13,000
- ----------------------------------------------------------------------------------------------------
Ending $ 206,000 $ 82,000
- ----------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash payments for interest $ 279,000 $ 216,000
====================================================================================================
See Notes to Consolidated Financial Statements.
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 July 3, 1999, and the results of operations for the three-month
and six-month periods ended July 3, 1999 and July 4, 1998 and its
cash flows for the six-month periods ended July 3, 1999 and July 4,
1998. 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 financial statements and related notes in the
Company's Annual Report on Form 10-K for the year ended January 2,
1999.
2. Accrued Expenses
Accrued expenses were as follows:
July 3, January 2,
1999 1999
---------- -----------
Compensation $ 126,000 $ 139,000
Warranty 121,000 157,000
Other 321,000 404,000
---------- -----------
$ 568,000 $ 700,000
========== ===========
3. Revenue Classification
In prior reports, the Company had separately reported byproduct
revenues which now are included in recycling revenues.
4. Sale of Common Stock
In February 1999, the Company sold in a private placement 1,030,000
shares of Common Stock at a price of $0.50 per share. The Company
paid $31,500 of the proceeds and issued warrants to purchase 83,000
shares of Common Stock at $0.50 per share, subject to adjustment, to
an investment banker as a placement fee. The remaining proceeds were
used to repay certain indebtedness, to purchase inventory and for
other general corporate purposes. The warrants are valued at $27,800
using the Black-Scholes option-pricing method and are recorded in
equity.
5. Loss On Impaired Assets
During the three months ended July 4, 1998, the Company elected to
curtail its appliance shredding operation and intensify its strategic
focus on appliance retailing. As a result, the Company recorded
$518,000 as a loss on impaired assets.
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 two sources: retail appliance
sales and appliance recycling. Retail revenues are sales of
appliances, warranty and service revenue and delivery fees. Recycling
revenues are fees charged for the disposal of appliances and sales of
scrap metal and reclaimed chlorofluorocarbons (CFCs) generated from
processed appliances. In prior reports, the Company had separately
reported byproduct revenues, which now are included in recycling
revenues.
Total revenues for the three and six months ended July 3, 1999 were
$4,053,000 and $6,871,000, respectively, compared to $3,590,000 and
$6,225,000 for the same periods in the prior year.
Retail sales accounted for approximately 52% of revenues in the
second quarter of 1999. Retail revenues for the three and six months
ended July 3, 1999 increased by $155,000 or 8% and $536,000 or 15%,
respectively, from the same periods in the prior year. Second quarter
same-store retail sales increased 70% (a sales comparison of 7 stores
that were open the entire second quarters of 1999 and 1998.) The
increase in retail sales was primarily due to increased advertising
and an increase in inventory per location, partially offset by a
decrease in sales of reconditioned appliances.
Currently, the Company has seven retail locations compared to 14
retail locations at the end of last year's second quarter. The
Company plans to close two to three of its smaller stores and
consolidate the sales into its existing stores. The Company plans to
increase sales per store and increase sales in its existing markets.
The Company does not plan to expand its retail business into new
geographic markets at this time. 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.
RESULTS OF OPERATIONS - continued
Recycling revenues for the three and six months ended July 3, 1999
increased by $308,000 or 19% and $110,000 or 4%, respectively, from
the same periods in the prior year. The increase in recycling
revenues was primarily due to an increase in refrigerator recycling
volumes related to the contract with Southern California Edison
Company ("Edison") partially offset by a decrease in the sales of
scrap metal. The decrease in the sales of scrap metal was primarily
due to a decrease in scrap metal prices. In April 1999, the Company
signed a contract with Edison to continue its refrigerator recycling
program through December 30, 1999. Unlike the previous contracts, the
contract for 1999 does not provide for a minimum number of
refrigerators to be recycled. However, the contract is expected to
generate higher recycling volumes in 1999 compared to 1998. The
timing and amount of revenues will be dependent on advertising by
Edison.
Gross profit as a percentage of total revenues for the three and six
months ended July 3, 1999 increased to 43% and 39%, respectively,
from 33% and 29%, respectively, for the three and six months ended
July 4, 1998. The increases were primarily due to improved purchase
price and mix of inventory for retail sales, higher recycling
revenues from the Edison contract without a corresponding increase in
expenses and discontinuing unprofitable programs. Gross profit as a
percentage of total revenues for future periods can be affected
favorably or unfavorably by numerous factors, including the volume of
appliances recycled from the Edison contract, the mix of retail
product sold during the period and the price and volume of byproduct
revenues. The Company believes that gross profit as a percentage of
total revenues will improve in the third quarter due to an
anticipated higher recycling revenues from the Edison contract
without a corresponding increase in expenses.
Selling, general and administrative expenses for the three and six
months ended July 3, 1999 decreased by $162,000 or 11% and $434,000
or 15%, respectively, from the same periods in 1998. Selling expenses
for the three and six months ended July 3, 1999 decreased by $48,000
or 9% and $50,000 or 5%, respectively, from the same periods in 1998.
The decrease in selling expenses was primarily due to operating fewer
retail stores during the first six months of 1999 compared to 1998
partially offset by an increase in advertising during the first six
months of 1999 compared to 1998. General and administrative expenses
for the three and six months ended July 3, 1999 decreased by $114,000
or 12% and $384,000 or 19%, respectively, from the same periods in
1998. The decrease in general and administrative expenses was
primarily due to a decrease in personnel costs as a result of an
expense reduction program implemented in the first quarter of 1999.
RESULTS OF OPERATIONS - continued
The Company took a one-time charge of $518,000 during the three
months ended July 4, 1998 related to a loss on impaired assets
associated with the Company's decision to curtail the appliance
shredding operation of its recycling business related primarily to
the Company's Minneapolis center.
Interest expense was $196,000 for the three months and $393,000 for
the six months ended July 3, 1999 compared to $129,000 and $230,000
for the same periods in 1998. The increase in interest expense was
due to a higher average borrowed amount for the three and six months
ended July 3, 1999 than in the same periods in 1998.
The Company recorded no provision for or benefit of income taxes for
the six months ended July 3, 1999 due to the uncertainty of
realization of the net operating loss carryforwards. The net
operating loss carryforwards total approximately $8,512,000 and
expire in the years 2011 through 2013. At July 3, 1999, the Company
had a valuation allowance recorded against all of its net deferred
tax assets of approximately $4,349,000, due to uncertainty of
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.
These carryforwards may be subject to certain limitations under the
provisions of the Internal Revenue Code, Section 382, which relate to
a 50 percent change in control over a three-year period. In addition,
any future changes of control may result in the expiration of a
portion of the carryforwards before they can be used and are also
dependent upon the Company attaining profitable operations in the
future.
The Company recorded net income of $251,000 or $.11 per basic and
diluted share for the three months and a net loss of $147,000 or
($.07) per basic and diluted share for the six months ended July 3,
1999 compared to net losses of $942,000 or ($.79) per basic and
diluted share and $1,634,000 or ($1.41) per basic and diluted share
in the same periods of 1998. The increase in income was primarily due
to improvement in the gross margin as a percentage of total revenues
and lower selling, general and administrative expenses offset by
higher interest expense.
LIQUIDITY AND CAPITAL RESOURCES
At July 3, 1999, the Company had a working capital deficit of $10,000
compared to a working capital deficit of $471,000 at January 2, 1999.
Cash and cash equivalents increased to $206,000 at July 3, 1999 from
$14,000 at January 2, 1999. Net cash used in operating activities was
$235,000 for the six months ended July 3, 1999 compared to $1,205,000
in the same period of 1998. The decrease in cash used in operating
activities was primarily due to a decrease in the net loss for the
period (net of noncash loss on impaired assets) plus an increase in
accounts receivable and partially offset by an increase in accounts
payable and a decrease in inventories.
The Company's capital expenditures for the six months ended July 3,
1999 and July 4, 1998 were approximately $48,000 and $273,000,
respectively. The 1999 capital expenditures were related to building
improvements and the purchase of computer equipment. The 1998 capital
expenditures were primarily related to building improvements.
The Company has a $2.0 million line of credit with a lender. The
interest rate as of July 3, 1999 was 13%. The amount of borrowings
available under the line of credit is based on a formula using
receivables and inventories. The line of credit has been renewed
through August 30, 2000 on the same terms as the loan currently in
place. The line of credit 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, is guaranteed by the President of the Company, and requires
minimum monthly interest payments of $5,625 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 also requires that the Company meet certain
financial covenants, provides payment penalties for noncompliance,
limits the amount of other debt the Company can incur, limits the
amount of spending on fixed assets and limits payments of dividends.
At July 3, 1999, the Company was in compliance with such covenants
and had unused borrowing capacity of $300,000.
In April 1999, the Company signed a contract with Edison to continue
its refrigerator recycling program through December 30, 1999. Unlike
the previous contracts, the contract for 1999 does not provide for a
minimum number of refrigerators to be recycled. However, the contract
is expected to generate higher recycling volumes in 1999 compared to
1998. The timing and amount of revenues will be dependent on
advertising by Edison.
LIQUIDITY AND CAPITAL RESOURCES - continued
The Company believes, based on the anticipated revenues from the
Edison contract, the anticipated sales per retail store and its
anticipated increased in gross profit, that its cash balance,
anticipated funds generated from operations and its current line of
credit will be sufficient to finance its operations and capital
expenditures through December 1999. The Company's total capital
requirements will depend upon, among other things as discussed below,
the recycling volumes generated from the Edison program in 1999 and
the number and size of retail stores operating during the fiscal
year. Currently, the Company has three centers and seven stores in
operation. If revenues are lower than anticipated or expenses are
higher than anticipated or the line of credit cannot be maintained,
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 lender.
YEAR 2000
Based on its assessment of the Year 2000 issue, the Company
determined that it will be required to modify or replace significant
portions of its software so that its computer systems will properly
utilize dates beyond December 31, 1999. The Company believes that
with the planned modifications to existing software and conversions
to new software, the Year 2000 issue will not have a material adverse
impact on the Company's operations. However, if such modifications
and conversions are not made, or are not completed in a timely
manner, the Year 2000 issue could have a material impact on the
operations of the Company. The Company has determined it has no
exposure to contingencies related to the Year 2000 issue for products
it has sold.
The Company will utilize both internal and external resources to
replace and test the software for Year 2000 modifications. The
Company plans to complete its Year 2000 project no later than
November 15, 1999. The costs of the project are expected to be funded
through operating cash flows. A portion of the costs will be used to
purchase new software, which will be capitalized. The remaining
portion of the costs will be expensed as incurred over the course of
the project. The overall cost of the project is expected to be
approximately $260,000. To date, the Company has incurred and
expensed approximately $102,000 related to the assessment of, and
preliminary efforts in connection with, its Year 2000 project and
development of a remediation plan. The Company's cost and estimates
to complete the Year 2000 project include the cost of modifications
to existing software, the acquisition of new software and the
estimated costs and time associated with assessing the impact on the
Company of third parties' Year 2000 issue. All such estimates are
based on presently available information.
YEAR 2000 - continued
The Company has initiated communications with all of its significant
suppliers and large customers to determine the extent to which the
Company is vulnerable to those third parties' failure to remediate
their own Year 2000 issue. However, there can be no guarantee that
the systems of other companies on which the Company's systems rely
will be timely converted, or that a failure to convert by another
company, or a conversion that is incompatible with the Company's
systems, would not have material adverse effect on the Company.
At this time, the Company believes that its most likely worst case
scenario is that the Company could experience delays in receipt of
inventory and/or could experience a delay in payments on accounts
receivable from key customers. In the event that either of these
scenarios occur, management believes that it would not have a
long-term material adverse effect on the Company's financial
condition and results of operations.
The Company does intend to prepare contingency plans so that the
Company's critical business processes can be expected to continue to
function on January 1, 2000 and beyond. These plans are intended to
mitigate both internal risks as well as potential risks in the supply
chain of the Company's suppliers and customers, and will likely
include identifying and securing alternative supplies of inventory
and sources of financing. The Company began working on a contingency
plan in the second quarter of 1999 and expects to have it
substantially finalized in November 1999.
The costs of the project and the date by which the Company plans to
complete the Year 2000 modifications and contingency plans are based
on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors.
However, there can be no assurances that these estimates will be
achieved and actual results could differ materially from those plans.
Specific factors that might cause such material differences include,
but are not limited to, the availability and cost of personnel
trained in this area, the ability to locate and correct all relevant
computer codes, and similar uncertainties.
FORWARD-LOOKING STATEMENTS
Statements regarding the Company's future operations, performance and
results, and anticipated liquidity discussed herein are
forward-looking and therefore are subject to certain risks and
uncertainties, including those discussed herein. In addition, any
forward-looking information regarding the operations of the Company
will be affected by the ability of Edison to deliver units under its
contract with the Company, the timing of such delivery and the timing
of advertising by Edison for the program. Additionally,
forward-looking information will also be affected by the ability of
individual stores to meet planned revenue levels, the speed at which
individual retail stores reach profitability, the Company being able
to contain overhead expenses or whether costs and expenses are
realized at higher than expected levels, the continued ability to
purchase product from Whirlpool at acceptable prices, the Company's
ability to secure an adequate supply of used appliances for resale
and the continued availability of the Company's current line of
credit.
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
In June 1999, the Company registered on Form S-2 for resale by the
holders 1,130,000 shares of Common Stock (approximately 50% of the
shares outstanding) which had been previously sold by the Company in
private placements. All such shares may now be sold by the holders.
The Company will receive no proceeds from such sales. Sales by the
holders under this registration could materially affect the market
price for the Common Stock.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 29, 1999 the Annual Meeting of Shareholders of Appliance
Recycling Centers of America, Inc. was held to obtain the approval of
shareholders of record as of March 19, 1999 in connection with the
three matters indicated below. Proxies were mailed to the holders of
2,266,744 shares. Following is a brief description of each matter
voted on at the meeting and the number of votes cast for, against or
withheld, as well as the number of abstentions and broker nonvotes,
as to each matter:
Vote
---------------------------------
Matter For Withhold Authority
------ --- ------------------
1. Election of Directors:
Edward R. Cameron 1,858,199 20,534
George B. Bonniwell 1,858,279 20,454
Duane S. Carlson 1,858,299 20,434
Harry W. Spell 1,858,274 20,459
Marvin Goldstein 1,864,967 13,766
OTHER INFORMATION - continued
2. Approval of Amendments to the Restated 1997 Stock Option
Plan of the Company to authorize an additional 100,000
shares of Common Stock and revise automatic
nondiscretionary grants to nonemployee directors.
Vote
--------------------------------------------
For Against Abstain Not Voted
--- ------- ------- ---------
1,835,593 31,099 2,685 9,356
3. Ratification of McGladrey & Pullen, LLP as independent
public accountants for fiscal year 1999.
Vote
--------------------------------------------
For Against Abstain Not Voted
--- ------- ------- ---------
1,872,593 2,857 3,283 0
ITEM 5 - OTHER INFORMATION - None
OTHER INFORMATION - continued
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) (i) Exhibit 10 - Amendments to the Restated 1997 Stock Option
Plan of the Company approved by shareholders April 29, 1999.
(ii) Exhibit No. 27 - Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the three
months ended July 3, 1999.
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: August 13, 1999 /s/ Edward R. Cameron
------------------------------------------
Edward R. Cameron
President
Date: August 13, 1999 /s/ Kent S. McCoy
------------------------------------------
Kent S. McCoy
Chief Financial Officer