Texas
|
74-2008473
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
3200
Wilcrest Drive, Suite 440, Houston, Texas
|
77042
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of Each Class
|
Name
of Each Exchange on which Registered
|
Common
Stock, par value $.01 per share
|
American
Stock Exchange
|
|
|
Page
|
PART I
|
|
|
Item 1.
|
4
|
|
Item 1A.
|
7
|
|
Item 1B.
|
9
|
|
Item 2.
|
9
|
|
Item 3.
|
9
|
|
Item 4.
|
9
|
|
PART II
|
|
|
Item 5.
|
9
|
|
Item 6.
|
12
|
|
Item 7.
|
13
|
|
Item 7A.
|
19
|
|
Item 8.
|
20
|
|
Item 9.
|
38
|
|
Item 9A.
|
38
|
|
PART III
|
|
|
Item 10.
|
38
|
|
Item 11.
|
38
|
|
Item 12.
|
38
|
|
Item 13.
|
38
|
|
Item 14.
|
38
|
|
PART IV
|
|
|
Item 15.
|
38
|
•
|
nature
of products and services
|
•
|
customer
markets served
|
•
|
methods
used to acquire and distribute products
|
•
|
economic
characteristics that influence the results of operations in different
geographical areas
|
Name
|
Age
|
Position
with the Company
|
Alex
Trevino, Jr.
|
70
|
Chairman
of the Board and President
|
Anthony
R. Maresca
|
56
|
Senior
Vice President, Treasurer and Chief Financial Officer
|
A.
Stephen Trevino
|
44
|
Senior
Vice President, Secretary and General
Counsel
|
•
|
general
economic conditions affecting general business spending,
|
•
|
consumer
spending,
|
•
|
consumer
debt levels,
|
•
|
prevailing
interest rates,
|
•
|
seasonal
nature of product sales,
|
•
|
changing
rates of new housing starts,
|
•
|
weather
conditions,
|
•
|
effects
of supplier concentration,
|
•
|
competitive
factors within the HVAC industry,
|
•
|
insurance
coverage risks,
|
•
|
viability
of the Company’s business strategy.
|
|
High
|
|
Low
|
||||
Fiscal
Year 2007
|
|||||||
1st
quarter ended 5/31/06
|
$
|
4.15
|
$
|
3.45
|
|||
2nd
quarter ended 8/31/06
|
5.93
|
3.95
|
|||||
3rd
quarter ended 11/30/06
|
6.47
|
4.80
|
|||||
4th
quarter ended 2/28/07
|
5.97
|
4.60
|
|||||
Fiscal
Year 2006:
|
|
|
|||||
1st
quarter ended 5/31/05
|
$
|
4.19
|
$
|
2.67
|
|||
2nd
quarter ended 8/31/05
|
3.19
|
2.33
|
|||||
3rd
quarter ended 11/30/05
|
2.95
|
2.22
|
|||||
4th
quarter ended 2/28/06
|
3.74
|
2.78
|
|
2/02
|
2/03
|
2/04
|
2/05
|
2/06
|
2/07
|
|||||||||||||
ACR
Group, Inc.
|
100.00
|
82.39
|
315.22
|
810.87
|
760.87
|
1002.80
|
|||||||||||||
AMEX
Composite
|
100.00
|
85.22
|
126.83
|
142.87
|
161.06
|
172.91
|
|||||||||||||
NASDAQ
Non-Financial
|
100.00
|
76.85
|
114.32
|
115.69
|
127.13
|
133.89
|
|||||||||||||
DJ
Wilshire Building Materials & Fixtures
|
100.00
|
77.68
|
131.32
|
167.56
|
198.35
|
221.31
|
|
2/02
|
2/03
|
2/04
|
2/05
|
2/06
|
2/07
|
|||||||||||||
ACR
Group, Inc.
|
-17.61
|
%
|
282.59
|
%
|
157.24
|
%
|
-6.17
|
%
|
31.80
|
%
|
|||||||||
AMEX
Composite
|
-14.78
|
%
|
48.82
|
%
|
12.65
|
%
|
12.73
|
%
|
7.35
|
%
|
|||||||||
NASDAQ
Non-Financial
|
-23.15
|
%
|
48.75
|
%
|
1.20
|
%
|
9.89
|
%
|
5.31
|
%
|
|||||||||
DJ
Wilshire Building Materials & Fixtures
|
-22.32
|
%
|
69.04
|
%
|
27.60
|
%
|
18.37
|
%
|
11.58
|
%
|
Year
Ended February 28 or 29,
|
||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
Income
Statement Data:
|
||||||||||||||||
Sales
|
$
|
239,643
|
$
|
204,312
|
$
|
199,553
|
$
|
174,353
|
$
|
161,822
|
||||||
Gross
profit
|
61,036
|
48,331
|
46,645
|
38,558
|
35,673
|
|||||||||||
Operating
income
|
10,994
|
5,134
|
7,330
|
4,452
|
2,690
|
|||||||||||
Income
before income taxes
|
9,286
|
4,558
|
6,799
|
3,759
|
1,277
|
|||||||||||
Provision
for income taxes
|
(3,544
|
)
|
(1,804
|
)
|
(2,588
|
)
|
(1,364
|
)
|
(277
|
)
|
||||||
Cumulative
effect of accounting change
|
—
|
—
|
—
|
—
|
(483
|
)
|
||||||||||
Net
income
|
$
|
5,742
|
$
|
2,754
|
$
|
4,211
|
$
|
2,395
|
$
|
517
|
||||||
Earnings
(loss) per common share:
|
|
|
|
|
|
|||||||||||
Basic:
|
|
|
|
|
|
|||||||||||
Before
cumulative effect of accounting change
|
$
|
.51
|
$
|
.25
|
$
|
.39
|
$
|
.22
|
$
|
.09
|
||||||
Cumulative
effect of accounting change
|
—
|
—
|
—
|
—
|
(.04
|
)
|
||||||||||
$
|
.51
|
$
|
.25
|
$
|
.39
|
$
|
.22
|
$
|
.05
|
|||||||
Diluted:
|
||||||||||||||||
Before
cumulative effect of accounting change
|
$
|
.49
|
$
|
.24
|
$
|
.38
|
$
|
.22
|
$
|
.09
|
||||||
Cumulative
effect of accounting change
|
—
|
—
|
—
|
—
|
(.04
|
)
|
||||||||||
$
|
.49
|
$
|
.24
|
$
|
.38
|
$
|
.22
|
$
|
.05
|
|
As
of February 28 or 29,
|
|||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Working
capital
|
$
|
41,692
|
$
|
34,489
|
$
|
35,375
|
$
|
25,881
|
$
|
22,605
|
||||||
Total
assets
|
83,160
|
76,036
|
67,704
|
58,727
|
52,728
|
|||||||||||
Long-term
obligations
|
26,314
|
24,872
|
27,881
|
23,258
|
22,855
|
|||||||||||
Shareholders’
equity
|
27,286
|
21,146
|
17,704
|
13,058
|
10,663
|
Fiscal
Year Ended
|
||||||||||
February
28,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
of sales
|
74.5
|
76.3
|
76.6
|
|||||||
Gross
profit
|
25.5
|
23.7
|
23.4
|
|||||||
Selling,
general and administrative expenses
|
20.9
|
21.1
|
19.7
|
|||||||
Operating
income
|
4.6
|
2.6
|
3.7
|
|||||||
Interest
expense
|
1.0
|
0.7
|
0.5
|
|||||||
Interest
derivative loss (gain)
|
-
|
(0.1
|
)
|
0.1
|
||||||
Other
non-operating income
|
(0.3
|
)
|
(0.3
|
)
|
(0.3
|
)
|
||||
Income
before income taxes
|
3.9
|
2.3
|
3.4
|
|||||||
Income
taxes
|
1.5
|
0.9
|
1.3
|
|||||||
Net
income
|
2.4
|
% |
1.4
|
% |
2.1
|
% |
Payments
Due by Period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 Year
|
1-3
Years
|
4-5
Years
|
After
5
Years
|
|||||||||||
Revolving
credit facility
|
$
|
24,361
|
―
|
$
|
24,361
|
―
|
―
|
|||||||||
Long-term
debt
|
1,345
|
131
|
627
|
74
|
513
|
|||||||||||
Capital
lease obligations
|
572
|
160
|
303
|
109
|
―
|
|||||||||||
Operating
leases
|
30,836
|
7,806
|
12,771
|
7,060
|
3,199
|
|||||||||||
Estimated
interest payments
|
4,173
|
2,488
|
1,343
|
145
|
197
|
|||||||||||
Total
Contractual Obligations (including interest)
|
$
|
61,287
|
$
|
10,585
|
$
|
39,405
|
$
|
7,388
|
$
|
3,909
|
Expiration
Per Period
|
|||||||
Other
Commercial Commitments
|
Amounts
Committed
|
Less
Than 1 Year
|
|||||
Consigned
inventory
|
$
|
6,278
|
$
|
6,278
|
|||
Standby
letter of credit
|
926
|
926
|
|||||
Total
Other Commercial Commitments
|
$
|
7,204
|
$
|
7,204
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
21
|
Consolidated
Balance Sheets as of February 28, 2007 and 2006
|
22
|
Consolidated
Statements of Income for the fiscal years ended February 28, 2007,
2006 and 2005
|
24
|
Consolidated
Statements of Shareholders’ Equity for the fiscal years ended
February 28, 2007, 2006 and 2005
|
25
|
Consolidated
Statements of Cash Flows for the fiscal years ended February 28,
2007, 2006 and 2005
|
26
|
Notes
to Consolidated Financial Statements
|
27
|
Schedule
of Valuation and Qualifying Accounts
|
41
|
|
February
28,
|
||||||
Current
assets:
|
2007
|
2006
|
|||||
Cash
|
$
|
1,135
|
$
|
1,275
|
|||
Accounts
receivable, net
|
23,330
|
22,380
|
|||||
Inventories,
net
|
43,516
|
38,264
|
|||||
Prepaid
expenses and other current assets
|
1,619
|
1,250
|
|||||
Deferred
income taxes
|
1,652
|
1,338
|
|||||
Total
current assets
|
71,252
|
64,507
|
|||||
Property
and equipment, net
|
5,647
|
4,844
|
|||||
Goodwill
|
5,408
|
5,408
|
|||||
Interest
derivative asset
|
―
|
298
|
|||||
Other
assets
|
853
|
979
|
|||||
|
|
||||||
Total
assets
|
$
|
83,160
|
$
|
76,036
|
February
28,
|
|||||||
2007
|
2006
|
||||||
|
|||||||
Current
liabilities:
|
|||||||
Current
maturities of long-term debt
|
$
|
131
|
$
|
128
|
|||
Current
maturities of capital lease obligations
|
160
|
145
|
|||||
Accounts
payable
|
23,106
|
25,002
|
|||||
Accrued
expenses and other current liabilities
|
5,931
|
4,597
|
|||||
Income
tax payable
|
232
|
146
|
|||||
Total
current liabilities
|
29,560
|
30,018
|
|||||
|
|||||||
Borrowings
under revolving credit agreement
|
24,361
|
22,940
|
|||||
Long-term
notes, net of current maturities
|
1,214
|
1,344
|
|||||
Long-term
capital lease obligations, net of current maturities
|
412
|
248
|
|||||
Interest
derivative liability
|
143
|
―
|
|||||
Deferred
income taxes
|
184
|
340
|
|||||
Total
long-term liabilities
|
26,314
|
24,872
|
|||||
|
|
||||||
Commitments
and contingencies (Notes 5 and 10)
|
|
||||||
Shareholders’
equity:
|
|
||||||
Preferred
stock, $.01 par, authorized 2,000,000 shares, none outstanding
|
―
|
―
|
|||||
Common
stock, $.01 par, authorized 25,000,000 shares, 12,113,078 and 12,000,294
issued and outstanding at February 28, 2007 and 2006, respectively
|
121
|
120
|
|||||
Paid-in
capital
|
43,286
|
44,413
|
|||||
Accumulated
other comprehensive loss, net of tax
|
(88
|
)
|
―
|
||||
Unearned
restricted stock compensation
|
―
|
(1,612
|
)
|
||||
Accumulated
deficit
|
(16,033
|
)
|
(21,775
|
)
|
|||
Total
shareholders’ equity
|
27,286
|
21,146
|
|||||
|
|
||||||
Total
liabilities and shareholders’ equity
|
$
|
83,160
|
$
|
76,036
|
For
the Years Ended
February
28,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Sales
|
$
|
239,643
|
$
|
204,312
|
$
|
199,553
|
||||
Cost
of sales
|
178,607
|
155,981
|
152,908
|
|||||||
Gross
profit
|
61,036
|
48,331
|
46,645
|
|||||||
Selling,
general and administrative expenses
|
50,042
|
43,197
|
39,315
|
|||||||
Operating
income
|
10,994
|
5,134
|
7,330
|
|||||||
Interest
expense
|
2,451
|
1,489
|
1,060
|
|||||||
Interest
derivative (gain) loss
|
(84
|
)
|
(247
|
)
|
50
|
|||||
Other
non-operating income
|
(659
|
)
|
(666
|
)
|
(579
|
)
|
||||
Income
before income taxes
|
9,286
|
4,558
|
6,799
|
|||||||
Provision
(benefit) for income taxes:
|
||||||||||
Current
|
3,960
|
1,577
|
2,709
|
|||||||
Deferred
|
(416
|
)
|
227
|
(121
|
)
|
|||||
Net
income
|
$
|
5,742
|
$
|
2,754
|
$
|
4,211
|
||||
Earnings
per common share:
|
||||||||||
Basic
|
$
|
.51
|
$
|
.25
|
$
|
.39
|
||||
Diluted
|
$
|
.49
|
$
|
.24
|
$
|
.38
|
No.
of
Shares
Outstanding
|
Par
Value
|
Paid-in
Capital
|
Unearned
Restricted
Stock
Compensation
|
Accumulated
Other Comprehensive Income (loss)
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance,
February 29, 2004
|
10,681,294
|
$
|
107
|
$
|
41,691
|
$
|
—
|
$
|
—
|
$
|
(28,740
|
)
|
$
|
13,058
|
||||||||
Issuances
of shares of restricted common stock
|
1,084,000
|
11
|
2,261
|
(2,272
|
)
|
—
|
—
|
—
|
||||||||||||||
Stock
issuances from exercise of stock options
|
39,000
|
—
|
46
|
—
|
—
|
—
|
46
|
|||||||||||||||
Amortization
of unearned restricted stock compensation
|
—
|
—
|
—
|
389
|
—
|
—
|
389
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
4,211
|
4,211
|
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||||
Balance,
February 28, 2005
|
11,804,294
|
118
|
43,998
|
(1,883
|
)
|
—
|
(24,529
|
)
|
17,704
|
|||||||||||||
Issuances
of shares of restricted common stock
|
50,000
|
1
|
136
|
(137
|
)
|
—
|
—
|
—
|
||||||||||||||
Stock
issuances from exercise of stock options
|
146,000
|
1
|
171
|
—
|
—
|
—
|
172
|
|||||||||||||||
Amortization
of unearned restricted stock compensation
|
—
|
—
|
—
|
408
|
—
|
—
|
408
|
|||||||||||||||
Tax
benefit from restricted stock compensation
|
—
|
—
|
108
|
—
|
—
|
—
|
108
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
2,754
|
2,754
|
|||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||
Balance,
February 28, 2006
|
12,000,294
|
120
|
44,413
|
(1,612
|
)
|
—
|
(21,775
|
)
|
21,146
|
|||||||||||||
Effect
of adoption of SFAS 123(R)
|
—
|
—
|
(1,612
|
)
|
1,612
|
—
|
—
|
—
|
||||||||||||||
Issuances
(net) of shares of restricted common stock
|
89,284
|
1
|
(165
|
)
|
—
|
—
|
—
|
(164
|
)
|
|||||||||||||
Stock
issuances from exercise of stock options
|
23,500
|
—
|
35
|
—
|
—
|
—
|
35
|
|||||||||||||||
Restricted
stock compensation
|
—
|
—
|
512
|
—
|
—
|
—
|
512
|
|||||||||||||||
Tax
benefit from restricted stock compensation
|
—
|
—
|
103
|
—
|
—
|
—
|
103
|
|||||||||||||||
Comprehensive
Income:
|
||||||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
5,742
|
5,742
|
|||||||||||||||
Other
comprehensive loss, change in fair market value of interest derivative,
net of tax
|
—
|
—
|
—
|
—
|
(88
|
)
|
—
|
(88
|
)
|
|||||||||||||
Comprehensive
Income:
|
5,654
|
|||||||||||||||||||||
Balance,
February 28, 2007
|
12,113,078
|
$
|
121
|
$
|
43,286
|
$
|
—
|
$
|
(88
|
)
|
$
|
(16,033
|
)
|
$
|
27,286
|
|
2007
|
|
2006
|
|
2005
|
|||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
5,742
|
$
|
2,754
|
$
|
4,211
|
||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||||
Depreciation
and amortization
|
1,008
|
889
|
914
|
|||||||
Provision
for doubtful accounts
|
799
|
735
|
557
|
|||||||
Loss
(gain) on sale of assets
|
(28
|
)
|
(19
|
)
|
30
|
|||||
Market
value of interest derivative
|
(84
|
)
|
(247
|
)
|
50
|
|||||
Deferred
income taxes
|
(416
|
)
|
227
|
(121
|
)
|
|||||
Amortization
of unearned restricted stock compensation
|
512
|
408
|
389
|
|||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
|
|
|
|||||||
Accounts
receivable
|
(1,748
|
)
|
(2,196
|
)
|
(3,205
|
)
|
||||
Inventories
|
(5,252
|
)
|
(5,341
|
)
|
(4,740
|
)
|
||||
Prepaid
expenses and other assets
|
(220
|
)
|
(882
|
)
|
509
|
|||||
Accounts
payable
|
(1,896
|
)
|
6,728
|
(1,002
|
)
|
|||||
Accrued
expenses and other liabilities
|
1,258
|
574
|
874
|
|||||||
Tax
benefit from restricted stock compensation
|
—
|
108
|
—
|
|||||||
Net
cash (used in) provided by operating activities
|
(325
|
)
|
3,738
|
(1,534
|
)
|
|||||
Cash
flows from investing activities:
|
|
|
|
|||||||
Purchase
of property and equipment
|
(1,452
|
)
|
(1,180
|
)
|
(817
|
)
|
||||
Business
acquisition, net of cash acquired
|
—
|
(148
|
)
|
―
|
||||||
Proceeds
from disposition of assets
|
11
|
59
|
236
|
|||||||
Receipts
(payments) on derivative instrument
|
382
|
(120
|
)
|
(445
|
)
|
|||||
Net
cash used in investing activities
|
(1,059
|
)
|
(1,389
|
)
|
(1,026
|
)
|
||||
Cash
flows from financing activities:
|
|
|
||||||||
Net
borrowings (payments) on revolving credit facility
|
1,420
|
(3,060
|
)
|
4,914
|
||||||
Proceeds
from long-term debt
|
―
|
―
|
875
|
|||||||
Payments
on long-term debt
|
(316
|
)
|
(321
|
)
|
(1,192
|
)
|
||||
Proceeds
from exercise of stock options
|
35
|
172
|
46
|
|||||||
Tax
benefit from restricted stock compensation
|
103
|
—
|
—
|
|||||||
Net
cash provided by (used in) financing activities
|
1,242
|
(3,209
|
)
|
4,643
|
||||||
Net
(decrease) increase in cash
|
(140
|
)
|
(860
|
)
|
2,083
|
|||||
Cash
at beginning of year
|
1,275
|
2,135
|
52
|
|||||||
Cash
at end of year
|
$
|
1,135
|
$
|
1,275
|
$
|
2,135
|
||||
Schedule
of non-cash investing and financing activities:
|
||||||||||
Purchases
of property and equipment
|
|
|
||||||||
For
notes payable
|
$
|
—
|
$
|
—
|
$
|
32
|
||||
Under
capital leases
|
367
|
277
|
87
|
|||||||
Supplemental
cash flow information:
|
|
|
||||||||
Interest
paid
|
2,451
|
1,489
|
1,060
|
|||||||
Interest
derivative payments (receipts)
|
(571
|
)
|
(120
|
)
|
445
|
|||||
Income
taxes paid
|
3,710
|
1,951
|
2,225
|
nature
of products and services
|
|
customer
markets served
|
|
methods
used to acquire and distribute products
|
|
economic
characteristics that influence the results of operations in different
geographical areas
|
Buildings
|
20-40
years
|
Leasehold
improvements
|
Lesser
of useful life or lease term
|
Furniture
and fixtures
|
5-7
years
|
Vehicles
|
3-6
years
|
Warehouse
and office equipment
|
3-10
years
|
Year
Ended February 28,
|
|
||||||
|
|
2006
|
|
2005
|
|||
Net
income applicable to common shareholders as reported
|
$
|
2,754
|
$
|
4,211
|
|||
Total
stock-based employee compensation gain (expense) under fair value
method
for all awards, net of tax
|
19
|
(58
|
)
|
||||
Pro
forma income applicable to common shareholders
|
$
|
2,773
|
$
|
4,153
|
|||
Earnings
per share:
|
|
|
|||||
Basic:
|
|
|
|||||
As
reported
|
$
|
.25
|
$
|
.39
|
|||
Pro
forma
|
.25
|
.39
|
|||||
Diluted:
|
|
|
|||||
As
reported
|
$
|
.24
|
$
|
.38
|
|||
Pro
forma
|
.24
|
.38
|
2007
|
|
2006
|
|||||
Land
|
$
|
311
|
$
|
311
|
|||
Building
and leasehold improvements
|
5,071
|
4,519
|
|||||
Furniture
and fixtures
|
432
|
356
|
|||||
Vehicles
|
922
|
926
|
|||||
Warehouse
and office equipment
|
6,450
|
5,575
|
|||||
13,186
|
11,687
|
||||||
Less:
accumulated depreciation and amortization
|
(7,539
|
)
|
(6,843
|
)
|
|||
Net
property and equipment
|
$
|
5,647
|
$
|
4,844
|
2007
|
|
2006
|
|||||
Bonuses
and commissions
|
$
|
2,321
|
$
|
1,433
|
|||
Vacation
|
558
|
499
|
|||||
Taxes,
other than income taxes
|
966
|
893
|
|||||
Self-insurance
reserves
|
1,163
|
702
|
|||||
Professional
fees
|
101
|
97
|
|||||
Customer
deposit
|
101
|
488
|
|||||
Deferred
rent
|
234
|
171
|
|||||
Other
|
487
|
314
|
|||||
$
|
5,931
|
$
|
4,597
|
|
|
2007
|
|
2006
|
|||
Borrowings
under revolving credit agreement
|
$
|
24,361
|
$
|
22,940
|
|||
Other
long-term debt:
|
|||||||
Capital
expenditure facility
|
624
|
704
|
|||||
Note
payable to sellers of real property
|
683
|
710
|
|||||
Other
|
38
|
58
|
|||||
Total
other long-term debt
|
1,345
|
1,472
|
|||||
25,706
|
24,412
|
||||||
Less
current maturities
|
(131
|
)
|
(128
|
)
|
|||
Long-term
debt, less current maturities
|
$
|
25,575
|
$
|
24,284
|
Year:
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
$131
|
$24,952
|
$36
|
$37
|
$37
|
$513
|
Year
ended February 28,
|
|
Capital lease
payments
|
||
2008
|
$
|
190
|
||
2009
|
180
|
|||
2010
|
164
|
|||
2011
|
125
|
|||
2012
|
34
|
|||
|
|
|||
Total
minimum lease payments
|
693
|
|||
Less
amounts representing interest
|
(121
|
)
|
||
|
|
|||
Present
value of future minimum lease payments
|
572
|
|||
Less
current maturities of capital lease obligations
|
(160
|
)
|
||
|
|
|||
Long-term
obligations under capital leases
|
$
|
412
|
Year:
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
Lease Payments
|
$6,729
|
$5,819
|
$5,228
|
$3,905
|
$2,445
|
$3,106
|
Year
Ended February 28,
|
|
|||||||||
|
|
2007
|
|
2006
|
|
2005
|
||||
Federal
|
||||||||||
Current
|
$
|
3,440
|
$
|
1,285
|
$
|
2,476
|
||||
Deferred
|
(418
|
)
|
198
|
(104
|
)
|
|||||
State
|
||||||||||
Current
|
520
|
292
|
233
|
|||||||
Deferred
|
2
|
29
|
(17
|
)
|
||||||
$
|
3,544
|
$
|
1,804
|
$
|
2,588
|
Year
Ended February 28,
|
|
|||||||||
|
|
2007
|
|
2006
|
|
2005
|
||||
U.S.
tax at statutory rate
|
$
|
3,157
|
$
|
1,550
|
$
|
2,312
|
||||
State
income tax, net of federal benefit
|
309
|
212
|
258
|
|||||||
Increase
(reduction) in tax expense
|
||||||||||
resulting
from:
|
||||||||||
Change
in valuation allowance
|
—
|
—
|
(115
|
)
|
||||||
Nondeductible
expenses
|
82
|
92
|
78
|
|||||||
Other
provision adjustments
|
(4
|
)
|
(50
|
)
|
55
|
|||||
Income
tax provision
|
$
|
3,544
|
$
|
1,804
|
$
|
2,588
|
2007
|
|
2006
|
|||||
Current
deferred tax assets:
|
|||||||
Section 263A
capitalization
|
$
|
802
|
$
|
701
|
|||
Allowance
for doubtful accounts
|
467
|
226
|
|||||
Accrued
vacation
|
218
|
196
|
|||||
Inventory
reserves
|
165
|
215
|
|||||
Total
current deferred tax assets
|
$
|
1,652
|
$
|
1,338
|
|||
Long-term
deferred tax assets (liabilities):
|
|
||||||
Fixed
asset depreciation
|
$
|
289
|
$
|
219
|
|||
Interest
rate derivative
|
55
|
(101
|
)
|
||||
Restricted
stock expense
|
175
|
139
|
|||||
State
NOL carryforwards
|
77
|
79
|
|||||
Goodwill
and other amortization
|
(780
|
)
|
(676
|
)
|
|||
Total
net long-term deferred tax liabilities
|
(184
|
)
|
(340
|
)
|
|||
Net
deferred tax assets
|
$
|
1,468
|
$
|
998
|
Year
Ended February 28,
|
|||||||||||||||||||
2007
|
|
2006
|
|
2005
|
|
||||||||||||||
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding—
|
|||||||||||||||||||
Beginning
of year
|
52,000
|
$
|
1.50
|
225,500
|
$
|
1.26
|
272,500
|
$
|
1.25
|
||||||||||
Granted
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||
Exercised
|
(23,500
|
)
|
1.50
|
(146,000
|
)
|
1.18
|
(39,000
|
)
|
1.18
|
||||||||||
Forfeited
|
(28,500
|
)
|
1.25
|
(27,500
|
)
|
1.25
|
(8,000
|
)
|
1.26
|
||||||||||
|
|
|
|
|
|
|
|||||||||||||
Outstanding—
|
|
|
|
|
|
|
|||||||||||||
End
of year
|
—
|
—
|
52,000
|
1.50
|
225,500
|
1.26
|
|||||||||||||
Exercisable—
|
|
|
|
|
|
|
|||||||||||||
End
of year
|
—
|
—
|
52,000
|
1.50
|
225,500
|
1.26
|
|
Year
ended February 28,
|
|||||||||
|
2007
|
2006
|
2005
|
|||||||
Denominator
for basic earnings per share-weighted average shares
|
11,225,526
|
11,006,175
|
10,696,398
|
|||||||
Effect
of dilutive securities:
|
|
|
|
|||||||
Employee
stock options
|
—
|
26,920
|
101,190
|
|||||||
Restricted
stock grants
|
399,542
|
327,188
|
230,460
|
|||||||
|
|
|
|
|||||||
Denominator
for diluted earnings per share—adjusted weighted average shares and
assumed conversions
|
11,625,068
|
11,360,283
|
11,028,048
|
|
Quarter
|
||||||||||||
|
First
|
Second
|
Third
|
Fourth
|
|||||||||
Fiscal
year ended February 28, 2007
|
|
|
|
|
|||||||||
Sales
|
$
|
61,924
|
$
|
76,143
|
$
|
56,014
|
$
|
45,562
|
|||||
Gross
profit
|
15,255
|
19,915
|
14,229
|
11,637
|
|||||||||
Net
income (loss)
|
1,684
|
3,365
|
919
|
(226
|
)
|
||||||||
|
|
|
|
|
|||||||||
Basic
|
$
|
.15
|
$
|
.30
|
$
|
.08
|
$
|
(.02
|
)
|
||||
|
|
|
|
|
|||||||||
Diluted
|
$
|
.15
|
$
|
.29
|
$
|
.08
|
$
|
(.02
|
)
|
||||
Fiscal
year ended February 28, 2006
|
|
|
|
|
|||||||||
Sales
|
$
|
47,538
|
$
|
61,140
|
$
|
50,013
|
$
|
45,621
|
|||||
Gross
profit
|
11,115
|
14,351
|
11,805
|
11,060
|
|||||||||
Net
income
|
160
|
1,856
|
654
|
84
|
|||||||||
|
|
|
|
|
|||||||||
Basic
|
$
|
.01
|
$
|
.17
|
$
|
.06
|
$
|
.01
|
|||||
|
|
|
|
|
|||||||||
Diluted
|
$
|
.01
|
$
|
.17
|
$
|
.06
|
$
|
.01
|
Exhibit
Number
|
Description
|
|
*3.1
|
Restated
Articles of Incorporation (Exhibit 3.1 to 1991 10-K)
|
|
*3.2
|
Articles
of Amendment to Articles of Incorporation (Exhibit 3.2 to 1993
10-K)
|
|
|
|
|
*3.3
|
Amended
and Restated Bylaws (Exhibit 3.2 to 1991 10-K)
|
|
*3.4
|
Amendment
to Bylaws dated December 8, 1992 (Exhibit 3.4 to 1993
10-K)
|
|
*4.1
|
Specimen
of Common Stock Certificate of ACR Group, Inc. (Exhibit 4.1 to 1993
10-K)
|
|
*10.1
|
Employment
Agreement between the Company and Alex Trevino, Jr. dated as of March
1,
1998 (Exhibit 10.1 to 1998 10-K)
|
|
*10.2
|
Employment
Agreement between the Company and Anthony R. Maresca dated as of
March 1,
2004 (Exhibit 10.3A to 2004 10-K)
|
|
*10.2A
|
Amendment
to Exhibit “A” of the Employment Agreement between the Company and Anthony
R. Maresca effective as of March 1, 2004. (Exhibit 10.3B to August
31,
2004 10-Q)
|
|
*10.3
|
Employment
Agreement between the Company and A. Stephen Trevino dated as of
March 1,
2004. (Exhibit 10.19 to 2004 10-K)
|
|
*10.3A
|
Amendment
to Exhibit “A” of the Employment Agreement between the Company and A.
Stephen Trevino effective as of March 1, 2004. (Exhibit 10.18A to
August
31, 2004 10-Q)
|
|
*10.4
|
Credit
Agreement between the Company and Wells Fargo Bank, N.A. dated
September 7, 2004. (Exhibit 10.20 to August 31, 2004
10-Q)
|
|
|
||
*10.5
|
|
Amendment
to Credit Agreement dated as of August 31, 2005 between the Company
and
Wells Fargo Bank, N.A. (Exhibit 10.1 to September 22, 2005
8-K)
|
*10.6
|
Second
Amendment to Credit Agreement dated June 14, 2006, by and among ACR
Group,
Inc. and Wells Fargo Bank, N.A. (Exhibit 10.1 to June 20, 2006
8-K)
|
|
*10.6A
|
Third
Amendment to Credit Agreement by and among ACR Group, Inc. and Wells
Fargo
Bank N.A. effective as of September 13, 2006. (Exhibit 10.1 to September
18, 2006 8-K)
|
|
*10.7
|
1996
Stock Option Plan of ACR Group, Inc. (Exhibit 4 to RS
333-16325)
|
|
*10.8
|
Director
Restricted Stock Agreement between the Company and Roland H. St.
Cyr dated
as of March 1, 2004. (Exhibit 10.17 to 2004 10-K)
|
|
*10.9
|
Director
Restricted Stock Agreement between the Company and Alan D. Feinsilver
dated as of March 1, 2004. (Exhibit 10.18 to 2004 10-K)
|
|
*10.10
|
Director
Restricted Stock Agreement between the Company and Thomas J. Reno
dated as
of October 26, 2005 (Exhibit 10.10 to 2006 10-K)
|
|
21.1
|
Subsidiaries
of the Company
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm
|
|
31.1
|
Certificate
of the Chief Executive Officer pursuant to Securities Exchange Act
Rules
13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certificate
of the Chief Financial Officer pursuant to Securities Exchange Act
Rules
13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1
|
Certification
from the Chief Executive Officer of ACR Group, Inc. pursuant to 18
U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002.
|
|
32.2
|
Certification
from the Chief Financial Officer of ACR Group, Inc. pursuant to 18
U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act
of 2002.
|
Description
|
Balance
at beginning of period
|
Charged
to costs and expenses
|
Write-offs
|
Balance
at end of period
|
|||||||||
Year
ended February 28, 2007:
|
|||||||||||||
Allowance
for doubtful accounts
|
$
|
906
|
$
|
799
|
$
|
615
|
$
|
1,090
|
|||||
Inventory
reserves
|
548
|
506
|
634
|
420
|
|||||||||
Year
ended February 28, 2006:
|
|||||||||||||
Allowance
for doubtful accounts
|
918
|
735
|
747
|
906
|
|||||||||
Inventory
reserves
|
370
|
596
|
418
|
548
|
|||||||||
Year
ended February 28, 2005:
|
|||||||||||||
Allowance
for doubtful accounts
|
793
|
557
|
432
|
918
|
|||||||||
Inventory
reserves
|
164
|
351
|
145
|
370
|
|
ACR
GROUP, INC.
|
|
|
|
|
Date:
May 30, 2007
|
By:
|
/S/ ANTHONY
R. MARESCA
|
|
|
Anthony
R. Maresca
Senior
Vice President and
Chief
Financial
Officer
|
Signature
|
|
|
/S/ ALEX
TREVINO,
JR.
Alex
Trevino, Jr.
|
Chairman
of the Board, President and Chief Executive Officer
(Principal
executive officer)
|
May
30, 2007
|
/S/ ANTHONY
R.
MARESCA
Anthony
R. Maresca
|
Senior
Vice President, Chief Financial Officer and Director
(Principal
financial and accounting officer)
|
May
30, 2007
|
/S/ A.
STEPHEN
TREVINO
A.
Stephen Trevino
|
Senior
Vice President, General Counsel and Director
|
May
30, 2007
|
/S/ ALAN
D.
FEINSILVER
Alan
D. Feinsilver
|
Director
|
May
30, 2007
|
/S/ ROLAND
H.
ST.
CYR
Roland
H. St. Cyr
|
Director
|
May
30, 2007
|
/S/ THOMAS
J.
RENO
Thomas
J. Reno
|
Director
|
May
30, 2007
|
/S/ MARSHALL
G.
WEBB
Marshall
G. Webb
|
Director
|
May
30, 2007
|
/S/ JO
E.
SHAW,
JR.
Jo
E. Shaw, Jr.
|
Director
|
May
30, 2007
|