Ace Hardware 2005 Annual Report Download - page 33

(9) Member Retailers’ Equity
The Company’s classes of stock are described below:
Number of Shares at
December 31, January 1,
2005 2005
Class A Stock, voting,
redeemable at par value
Authorized .................... 10,000 10,000
Issued and
outstanding .................. 3,226 3,323
Class B Stock, nonvoting,
redeemable at not less
than twice par value
Authorized .................... 6,500 6,500
Issued .............................. 6,499 6,499
Outstanding .................. 1,556 1,668
Treasury stock ................ 4,943 4,831
Class C Stock, nonvoting,
redeemable at not less
than par value
Authorized .................... 4,000,000 4,000,000
Issued and
outstanding .................. 3,025,389 2,914,635
Issuable as patronage
dividends ...................... 325,611 277,167
Additional Stock Subscribed:
Class A Stock .................. 911
Class B Stock .................. —)—)
Class C Stock .................. 5,280 4,410
No dividends can be declared on any shares of any class of the
Company’s stock.
Upon termination of the Company’s membership agreement with
any retail outlet, all shares of stock of the Company held by the
retailer owning or controlling such outlet must be sold back to the
Company, unless a transfer of such shares is made to another party
accepted by the Company as a member retailer with respect to the
same outlet.
A Class A share is issued to a member retailer only when the share
subscribed has been fully paid. Class B and Class C shares are
only issued when all such shares subscribed with respect to a retail
outlet have been fully paid. Additional stock subscribed in the
accompanying financial statements represents the paid portion of
stock subscribed.
All shares of stock are currently issued and repurchased at par
value, except for Class B Stock which is repurchased at twice its par
value, or $2,000 per share. Upon retirement of Class B shares held
in treasury, the excess of redemption price over par is allocated
equally between contributed capital and retained earnings.
Treasury stock transactions during 2004 and 2005 are
summarized below:
Shares Held in Treasury
Class A Class B Class C
Balance at
January 3, 2004 ...................... —)4,667 —)
Stock issued ........................ —)—)—)
Stock repurchased .............. 238 164 189,805
Stock retired ...................... (238) —)(189,805)
Balance at
January 1, 2005 ...................... —)4,831 —)
Stock issued ........................ —)—)—)
Stock repurchased .............. 242)112 162,282
Stock retired ...................... (242) —)(162,282)
Balance at
December 31, 2005 ................ —)4,943 —)
Subsequent to December 31, 2005, a member retailer completed
a transaction with a third party which resulted in the redemption
of the Company’s Class C stock in the amount of $10.1 million,
offset by outstanding promissory notes of $8.8 million due from
the retailer.
8ACE HARDWARE CORP. NEW FRONTIERS. NEW OPPORTUNITIES.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)