-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fFXI67lKQuif/HzFcIFRGtbPwowKK0apFDdtjxLhnVrEck0OjXiiqAVV0xj6v8z5 EKlH6xEHOxa977BL3aXfIw== 0000912057-95-003769.txt : 19950516 0000912057-95-003769.hdr.sgml : 19950516 ACCESSION NUMBER: 0000912057-95-003769 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RICHEY ELECTRONICS INC CENTRAL INDEX KEY: 0000320591 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 953335821 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09788 FILM NUMBER: 95538852 BUSINESS ADDRESS: STREET 1: 7441 LINCOLN WAY STE 100 CITY: GARDEN GROVE STATE: CA ZIP: 92641 BUSINESS PHONE: 7148988288 MAIL ADDRESS: STREET 1: 7441 LINCOLN WAY CITY: GARDEN GROVE STATE: CA ZIP: 92641 FORMER COMPANY: FORMER CONFORMED NAME: BRAJDAS CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MICRO Z CORP DATE OF NAME CHANGE: 19840611 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 Commission File Number: 0-9788 RICHEY ELECTRONICS, INC. (Exact name of registrant as specified in its charter) Delaware 33-0594451 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7441 Lincoln Way, Garden Grove, California 92641 (Address of Principal Executive Office) (Zip Code) (714) 898-8288 (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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of May 11, 1995, 8,889,341 shares of the registrant's Common Stock, $0.001 par value, were issued and outstanding. RICHEY ELECTRONICS, INC. Condensed Balance Sheets (Unaudited)
March 31, December 31, 1995 1994 ---------- ------------ ASSETS CURRENT ASSETS Cash $ 9,000 $ 9,000 Trade receivables 13,258,000 11,167,000 Inventories 16,217,000 14,913,000 Deferred income taxes 1,427,000 1,427,000 Other current assets 584,000 435,000 ----------- ---------- Total current assets 31,495,000 27,951,000 ----------- ---------- LEASEHOLD IMPROVEMENTS, EQUIPMENT, 1,125,000 1,017,000 FURNITURE AND FIXTURES, net ----------- ---------- OTHER ASSETS AND INTANGIBLES Deferred income taxes 2,430,000 2,430,000 Intangibles 2,696,000 3,261,000 Deposits and other 337,000 354,000 ----------- ----------- 5,463,000 6,045,000 $38,083,000 $35,013,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of subordinated notes payable $ 0 $1,600,000 Notes payable, revolving line of credit 13,864,000 8,843,000 Accounts payable 9,734,000 10,457,000 Accrued expenses 1,426,000 1,734,000 ----------- ----------- Total current liabilities 25,024,000 22,634,000 ----------- ----------- SUBORDINATED NOTES PAYABLE 3,594,000 3,594,000 ----------- ----------- STOCKHOLDERS' EQUITY Preferred Stock, $0.001 par value, authorized 10,000 shares, issued none $ 0 $ 0 Common Stock, $0.001 par value, authorized 30,000,000 shares, issued and outstanding 5,889,000 shares 6,000 6,000 Additional paid-in-capital 5,240,000 5,240,000 Retained earnings 4,219,000 3,539,000 ----------- ----------- 9,465,000 8,785,000 ----------- ----------- Total stockholders' equity $38,083,000 $35,013,00 ----------- ----------- ----------- -----------
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 2 RICHEY ELECTRONICS, INC. Condensed Statements of Income (Unaudited)
Quarter Ended ---------------------------- March 31, April 1, 1995 1994 ---------- --------- Net sales $26,596,000 $20,247,000 Cost of goods sold 20,083,000 15,392,000 ----------- ----------- Gross profit 6,513,000 4,855,000 ----------- ----------- Operating expenses: Selling, warehouse, general and administrative 4,842,000 3,726,000 Amortization of intangibles 113,000 156,000 ----------- ----------- 4,955,000 3,882,000 ----------- ----------- Operating income 1,558,000 973,000 Interest expense 422,000 376,000 ----------- ----------- Income before income taxes 1,136,000 597,000 Federal and state income tax 456,000 242,000 ----------- ----------- Net income $ 680,000 $ 355,000 ------------ ----------- ------------ ----------- Earnings per common share $ 0.12 $ 0.06 ------------ ------------ ------------ ------------ Weighted average number of common shares outstanding 5,889,000 5,889,000 ------------ ----------- ------------ -----------
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 3 RICHEY ELECTRONICS, INC. Condensed Statement of Stockholders' Equity (Unaudited)
Common Stock ---------------------------------- Additional Preferred Shares Par Paid-In Retained Stock Outstanding Value Capital Earnings Total --------- ----------- ------ ---------- --------- ---------- Balance, December 31, 1994 _ 5,889,000 $6,000 $5,240,000 $3,539,000 $8,785,000 Net Income _ _ _ _ 680,000 680,000 ---------- ---------- ------ ---------- ---------- ---------- Balance, March 31, 1995 _ 5,889,000 $6,000 $5,240,000 $4,219,000 $9,465,000 ---------- ---------- ------ ---------- ---------- ---------- ---------- ---------- ------ ---------- ---------- ----------
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 4 RICHEY ELECTRONICS, INC. Condensed Statements of Cash Flows (Unaudited)
Quarter Ended -------------------------------- March 31, April 1, 1995 1994 --------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 680,000 $ 355,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 200,000 193,000 Deferred income taxes 456,000 242,000 Changes in operating assets and liabilities: (Increase) in trade receivables (2,091,000) (684,000) (Increase) decrease in inventories (1,304,000) 525,000 (Increase) in other assets (44,000) (115,000) (Decrease) in accounts payable and accrued expenses (1,005,000) (906,000) ----------- --------- Net cash (used in) operating activities (3,108,000) (390,000) ----------- --------- CASH FLOWS (USED IN) INVESTING ACTIVITIES Purchase of leasehold improvements and equipment (202,000) (76,000) Business acquisitions (23,000) (296,000) ----------- --------- Net cash (used in) investing activities (225,000) (372,000) CASH FLOWS FROM FINANCING ACTIVITIES Net advances on revolving line of credit 5,021,000 3,719,000 Transaction costs associated with common stock offering (88,000) _ Principal payments on subordinated debt (1,600,000) (2,957,000) ---------- --------- Net cash provided by financing activities 3,333,000 762,000 ---------- --------- Increase in cash 0 0 CASH Beginning $ 9,000 $ 7,000 ---------- --------- Ending $ 9,000 $ 7,000 ---------- --------- ---------- --------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash Payments For: Interest $ 539,000 $ 615,000 ---------- --------- ---------- --------- Income taxes $ 57,000 $ 7,000 ---------- --------- ---------- ---------
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 5 RICHEY ELECTRONICS, INC. Notes to Condensed Financial Statements (Unaudited) NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Richey Electronics, Inc. (which conducts business under the name RicheyCypress Electronics) is a multi-regional, specialty distributor of electronic components and a provider of value-added assembly services. The Company distributes connectors, switches, cable and other interconnect, electromechanical and passive components used in the assembly and manufacturing of electronic equipment. Richey Electronics also provides a wide variety of value-added assembly services. These value-added assembly services consist of (i) component assembly, which is the assembly of components to manufacturer specifications and (ii) contract assembly, which is the assembly of cable assemblies, battery packs and mechanical assemblies to customer specifications. The Company's customers are primarily small- and medium-sized original equipment manufacturers. Approximately 80% of the Company's inventory is located at its centralized distribution facility in Los Angeles, and the remaining inventory is located in regional warehouses in Boston, San Diego and San Jose. Significant accounting policies The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for the complete financial statements. In management's opinion, the accompanying financial statements reflect all material adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The results for the interim periods ended March 31, 1995 and April 1, 1994 are not necessarily indicative of the results which will be reported for the entire year. Income tax expense in these interim financial statements is recorded based upon the Company's expected annual effective income tax rate. The benefit from the previously unrecognized net operating loss carryforwards acquired in the merger of RicheyImpact Electronics, Inc. and Brajdas Corporation (the "Richey-Brajdas Merger") is used to reduce the carrying value of intangibles. Amortization expense of the reduced intangibles is adjusted prospectively on a monthly basis. For further information, refer to the audited financial statements of the Company and notes thereto for the year ended December 31, 1994, included in the Company's Annual Report on Form 10-K. 6 RICHEY ELECTRONICS, INC. Notes to Condensed Financial Statements - (Continued) (Unaudited) NOTE 2. BUSINESS COMBINATION In-Stock On April 4, 1994, the Company completed the purchase of the assets and business of the In-Stock Products Division of Anchor Group, Inc. ("In-Stock"), a Boston, Massachusetts area distributor of electronic components, for approximately $1,841,000 in cash, including acquisition costs (the "In-Stock Acquisition"). The In-Stock Acquisition was accounted for as a purchase. The fair value of assets acquired was $2,787,000 and the liabilities assumed totaled $946,000. Goodwill of $274,000 is included in other assets and is being amortized over 15 years. The results of operations of In-Stock subsequent to the date of the In-Stock Acquisition are included in the Company's financial statements. The following pro forma results of continuing operations assume the In- Stock Acquisition (which occurred on April 4, 1994) had occurred as of the beginning of 1994 after giving effect to certain adjustments, including amortization of acquired intangibles, reduction in interest expense and related tax effects.
Quarter Ended April 1, 1994 (Unaudited) ------------- Net sales $22,945,000 Net income 470,000 Net income per share .08
The pro forma financial information does not purport to be indicative of the results of operations that would have occurred had the transactions actually taken place at the beginning of the periods presented. NOTE 3. PUBLIC OFFERING (Subsequent Event) AND NET OPERATING LOSS CARRYFORWARDS Public Offering On April 27, 1995, the Company sold 3,000,000 shares of common stock through an underwritten public offering. The Company has granted to the underwriters an option to purchase an additional 165,000 shares of common stock, at $5.115 per share. This option expires on May 20, 1995. 7 RICHEY ELECTRONICS, INC. Notes to Condensed Financial Statements - (Continued) (Unaudited) Proceeds to the Company were $14.9 million, net of underwriting discounts and estimated expenses associated with the offering. The proceeds were used to repay approximately $3.6 million in senior and junior subordinated debt, and the balance was used to reduce the Company's revolving line of credit with its asset based lender by $11.3 million. The Company has, as a result of the offering, entered into negotiations with its asset based lender to revise the terms and conditions of its loan agreement. Net Operating Loss Carryforwards As of December 31, 1994, the Company had net operating loss carryforwards ("NOLs") with the following expiration dates:
Expiration Date Federal California - --------------- ------- ---------- 1997 $ - $3,599,000 1998 3,450,000 953,000 1999 2,935,000 270,000 2000 490,000 _ 2005 2,000,000 _ 2006 2,053,000 _ 2007 9,700,000 _ 2008 2,500,000 _ 2009 771,000 _ ---------- ---------- $23,899,000 $4,822,000 ---------- ---------- ---------- ----------
Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382") and the related regulations impose certain limitations on a corporation's ability to use NOLs if more than a 50% ownership change occurs. California law conforms to the provisions of Section 382. The Richey-Brajdas Merger did not result in a more than 50% ownership change. However, as a result of the offering, the Company effectuated a "change of ownership" as understood by Section 382. This "change of ownership" will restrict the Company's use of the NOLs to $2.1 million per year. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General Richey Electronics is a multi-regional, specialty distributor of electronic components and a provider of value-added assembly services. The Company distributes connectors, switches, cable and other interconnect, electromechanical and passive components used in the assembly and manufacturing of electronic equipment. Richey Electronics also provides a wide variety of value-added assembly services, which typically generate higher gross margins than traditional component distribution. These value- added assembly services consist of (i) component assembly, which is the assembly of components to manufacturer specifications and (ii) contract assembly, which is the assembly of cable assemblies, battery packs and mechanical assemblies to customer specifications. The Company's customers are primarily small- and medium-sized original equipment manufacturers. Approximately 80% of the Company's inventory is located at its centralized distribution facility in Los Angeles, and the remaining inventory is located in regional warehouses in Boston, San Diego and San Jose. Management and an investor group built the Company through a series of transactions, beginning with the acquisition of the operations of Richey/Impact Electronics Inc. in December 1990 for $5.5 million ($5.9 million, including acquisition costs), consisting of $3.7 million in cash funded by the revolving line of credit, senior preferred stock valued at $1.0 million and $800,000 ($1.2 million, including acquisition costs) in cash contributed by the investors. This was followed by the merger (the "Richey-Brajdas Merger") of RicheyImpact and Brajdas Corporation ("Brajdas") in April 1993 through the issuance of 10,900,000 shares of common stock valued at $4.1 million. The Company completed the acquisition (the "In-Stock Acquisition") of the In-Stock Division of Anchor Group, Inc. ("In-Stock") in April 1994 for $1.9 million in cash funded by the revolving line of credit. The Company has devoted significant efforts to improving the performance of those operations. The Company's financial statements exclude the financial results of In-Stock prior to the In-Stock Acquisition. According to the April 17, 1995 edition of Electronic Buyers' News, the Company ranked as the 26th largest electronics distributor in the United States in 1994. 9 Results of Operations Richey Electronics, Inc. Summary of Selected Data (Unaudited) The following table sets forth certain items in the statements of income as a percent of net sales for periods shown and additional items of a statistical nature.
Quarter Ended ------------------------- Mar 31, Apr 1, 1995 1994 ------ ----- Statements of Income Data: Net Sales .......................................... 100.0% 100.0% Cost of Goods Sold ................................. 75.5 76.0 ----- ----- Gross Profit ..................................... 24.5 24.0 ----- ----- Selling, warehouse, general & administrative ....... 18.2 18.4 Amortization of intangibles ........................ 0.4 0.8 ----- ----- Operating Income ................................. 5.9 4.8 Interest Expense ................................... 1.6 1.9 ----- ----- Income before income taxes ....................... 4.3 2.9 Federal and state income taxes ..................... 1.7 1.2 ----- ----- Net Income ......................................... 2.6% 1.7% ----- ----- ----- -----
Mar 31, Dec 31, Sept 30, July 1, April 1, 1995 1994 1994 1994 1994 -------- ------- -------- ------ -------- Balance Sheet Data: Total assets (000) ............................ $38,083 $35,013 $34,434 $33,090 $30,834 Working capital (000) ......................... $ 6,471 $ 5,317 $ 5,908 $ 5,235 $ 4,573 Ratio of current assets to current liabilities. 1.3 1.2 1.3 1.3 1.2 Line of credit (000) .......................... $13,864 $ 8,843 $10,714 $10,731 $10,714 Subordinated notes payable (000)............... $ 3,594 $ 5,194 $ 5,194 $ 5,194 $ 5,194 Inventory turnover ............................ 5.0 4.9 4.9 5.4 5.2 Days sales outstanding in accounts receivable . 45.4 42.3 44.0 41.5 41.2 Stockholders' equity .......................... $ 9,465 $ 8,785 $ 8,250 $ 7,779 $ 7,247 Return on stockholders' equity ................ 29.8% 24.1% 26.2% 25.7% 21.0%
Net sales for the quarter ended March 31, 1995 increased to $26,596,000 from $20,247,000 for the corresponding period of 1994, an increase of 31%. Net sales of electronic components increased to $19,193,000 in the first quarter of 1995 from $16,388,000 in the first quarter of 1994, an increase of 17%. Net sales of value-added assembly services increased to $7,403,000 for the quarter ended March 31, 1995 from $3,859,000 for the corresponding first quarter of 1994, an increase of 92%. Management estimates that approximately one-third of the increase in value-added assembly service revenues is due to the In-Stock Acquisition, with the balance due to internal growth. The 10 overall increase in net sales for the first quarter of 1995 was attributable primarily to a strengthening of the distribution marketplace in the past several months as well as the addition of the sales of In-Stock. See Note 2 of Notes to Condensed Financial Statements. The Company has fully integrated the operations of In-Stock with its existing operations and has not maintained separate sales records since the In-Stock acquisition; however, the Company estimates, based solely upon In-Stock's historical sales rates, that at least 13% of the increase in net sales is attributable to the In-Stock Acquisition. The Company believes that order backlog (confirmed orders from customers for shipment within the next 12 months) generally averages two to three months' sales in the electronics distribution industry. Order backlog at March 31, 1995 was $25,750,000, up 59% from $16,175,000 at April 1, 1994. Gross profit as a percentage of net sales increased by 0.5% to 24.5% for the quarter ended March 31, 1995 from 24.0% for the comparable period in 1994. Management attributes the improvement in gross margins to its emphasis on value-added services, which usually obtain higher gross margins, and its institution of what it believes to be more stringent gross margin audits and disciplines. Management's emphasis on value-added services has increased value-added sales from 19% of total sales in the first quarter of 1994 to 28% of total sales in the first quarter of 1995 and has caused the improved gross profit margins reflected in the first quarter of 1995. Operating expenses for the quarter ended March 31, 1995 increased to $4,955,000 from $3,882,000 for the corresponding period in 1994, an increase of 28%, but, as a percentage of net sales, decreased 0.6% for the quarter ended March 31, 1995 from the corresponding period in 1994. The Company's operations have benefitted from economies of scale that have increased operating leverage (reduced operating expenses as a percentage of net sales). Operating income increased 60.1% from $973,000 during the first quarter of 1994 to $1,558,000 during the first quarter of 1995. Interest expense for the first quarter of 1995 was $422,000 as compared with $376,000 for the first quarter of 1994. The increase in interest expense for the first quarter of 1995 was primarily due to the effects of the purchase of In-Stock in April 1994. In addition, the interest rate on the Company's revolving line of credit has increased as a result of increases in bank prime lending rates over those which prevailed in the first quarter of 1994. Federal and state income tax expense increased to $456,000 (40% effective rate) for the quarter ended March 31, 1995 from $242,000 (40% effective rate) for the corresponding period of 1994. This increase was proportional to the increase in pre-tax earnings for the quarter. See Note 3 of Notes to Condensed Financial Statements for further discussion of income tax matters. Liquidity And Capital Resources The Company currently maintains, with its asset based lender, a revolving line of credit of up to $15,000,000 based upon eligible accounts receivable and inventory, with an interest rate of 1.5% over prime. The revolving line of credit restricts payment of cash dividends on the Company's common stock, without prior approval of the lender. As of March 31, 1995, the Company had outstanding borrowings thereunder of $13,864,000 with an additional 11 borrowing capacity of $1,136,000. On April 28, 1995, as a result of the successful sale of 3,000,000 shares of the Company's common stock on April 27, 1995, the Company paid down all of its senior and junior subordinated notes completely and approximately $11,300,000 of the outstanding balance under its revolving line of credit. The Company believes that its line of credit will be adequate to meet its anticipated funding commitments for the remainder of 1995. The Company is currently in negotiations with its asset based lender to increase the size and modify the terms of its revolving line of credit. Working capital increased to $6,471,000 on March 31, 1995 from $5,317,000 on December 31, 1994, an increase of $1,154,000. During the first quarter of 1995, the Company generated $1,671,000 of earnings before interest, income taxes, depreciation and amortization ("EBITDA") as compared to EBITDA of $1,129,000 for the first quarter of 1994. Overall, the Company experienced a net use of funds of $3,108,000 from operating activities in the first quarter of 1995, consisting primarily of $2,091,000 in increased accounts receivable, $1,304,000 in increased inventory and a $1,005,000 decrease in accounts payable and accrued expenses. Including $225,000 of net cash used in investing activities, primarily for capital expenditures, the net use of funds of $3,333,000 was financed by borrowing against the Company's revolving line of credit. In March 1995, the Company borrowed an additional $1,600,000 under its revolving line of credit to pay down the current portion of its senior subordinated debt. For the quarter ended March 31, 1995, inventory turnover increased to 5.0x compared to 4.9x for the quarter ended December 31, 1994, primarily as a result of the increase in value-added service sales which historically have a higher inventory turnover. Days sales outstanding increased by three days to 45 days at March 31, 1995 from 42 days as of December 31, 1994. Accounts receivables increased from $11,167,000 at December 31, 1994 to $13,258,000 at March 31, 1995. This increase relates primarily to a 10.5% increase in overall sales during the first quarter of 1995 as compared to the fourth quarter of 1994, and an increase of 18.5% in value-added assembly services over the same period. The Company does not anticipate that the adoption of any of the recently issued FASB statements will have a material impact on the Company's financial statements. 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits required by Item 601 of Regulation S-K.
Number Exhibit Page ------ ------- ---- 10.1 Agreement To Terminate Stockholders' Agreement (b) Reports on Form 8-K. None.
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. RICHEY ELECTRONICS, INC. (Registrant) By /s/ Richard N. Berger ------------------------------------ Richard N. Berger Vice President, Chief Financial Officer and Secretary May 11, 1995 14 RICHEY ELECTRONICS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1995 EXHIBIT INDEX
Begin on Exhibit sequential Number page number - ------ ----------- 10.1 Agreement To Terminate Stockholders' Agreement
15 EX-10.1 2 EXHIBIT 10.1 AGREEMENT TO TERMINATE STOCKHOLDERS AGREEMENT THIS AGREEMENT TO TERMINATE STOCKHOLDERS AGREEMENT (this "Agreement") dated as of March __, 1995 is by and among Richey Electronics, Inc., a Delaware corporation (the "Company"), and the undersigned (collectively, the "Stockholders"), with reference to the following facts: A. The Company is the successor to Richey Electronics, Inc., a California corporation formerly known as Brajdas Corporation ("Brajdas"). RicheyImpact Electronics, Inc., a Delaware corporation, was merged into Brajdas on April 6, 1993, and BRJS Investment Holding Corp., a California corporation, was merged into Brajdas on November 18, 1993. B. The Company and the Stockholders are parties to that certain Stockholders Agreement dated as of March __, 1993, as amended by that certain First Amendment to Stockholders Agreement dated as of December 14, 1994 (as so amended, the "Stockholders Agreement"). C. On January 7, 1994, the Company filed with the Securities and Exchange Commission (the "SEC") a Form S-1 Registration Statement (the "Shelf Registration Statement") with respect to the public offering by the Stockholders of their shares of common stock of the Company. The Shelf Registration Statement was declared effective by the SEC on April 19, 1994. D. On February 23, 1995, the Company filed with the SEC a Form S-2 Registration Statement (the "Registration Statement") with respect to the public offering by the Company of 3 million shares of its common stock (the "Offering"). In connection with such offering, the underwriters require that the Company terminate the Shelf Registration by removing from registration thereunder the common stock being offered by the Stockholders. In addition, the underwriters require that the Stockholders agree not to sell any of their shares of common stock of the Company for a period of 180 days after the date on which the Registration Statement becomes effective without the prior consent of the underwriters (the "Lock-up"). E. The Stockholders are willing to consent to the termination of the Shelf Registration and to agree to the Lock-up provided that the Stockholders Agreement is terminated in its entirety. NOW, THEREFORE, for good and valuable consideration, it is agreed as follows: -1- 1. The Stockholders Agreement and each and all of the provisions thereof, including without limitation the indemnification provisions contained in Article 4 thereof, shall be terminated and shall be of no further force or effect, effective as of the Effective Date (as hereinafter defined). 2. The Stockholders hereby consent to the termination of the Shelf Registration Statement, effective as of the Effective Date. 3. Each Stockholder hereby agrees to execute a lock-up agreement with the underwriters, agreeing to the Lock-up. 4. This Agreement and the agreements and consents contained herein shall become effective if and only if the Registration Statement becomes effective in accordance with the Securities Act of 1933 (the "Act") and the Offering commences. As used herein, the term "Effective Date" shall mean the date on which the Registration Statement becomes effective in accordance with the Act. 5. COUNTERPARTS. This Agreement may be executed by the parties hereto in counterparts, each of which when so executed and delivered shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Signatures may be exchanged by telecopy and each party agrees to be bound by its own telecopied signature and to accept the telecopied signatures of the other parties. [Signature Pages Follow] -2- Signature Page to Agreement to Terminate Stockholders Agreement Richey Electronics, Inc. Barclay and Company, Inc. By_________________________ By_______________________ William C. Cacciatore Donald I. Zimmerman President President ___________________________ Palisades Associates C. Don Alverson By_______________________ ___________________________ Greg A. Rosenbaum Thomas W. Blumenthal President ___________________________ William C. Cacciatore ___________________________ Edward L. Gelbach ___________________________ Greg A. Rosenbaum ___________________________ Greg A. Rosenbaum, as Custodian for Eli, Elliott and Eve Rosenbaum ___________________________ Norbert W. St. John ___________________________ Donald I. Zimmerman -3- Signature Page to Agreement to Terminate Stockholders Agreement ____________________________ First Investment Group Otto Bochow By____________________ ____________________________ Its___________________ Frank Buzyn ____________________________ Estate of David Davenport ____________________________ Benjamin Fishoff ____________________________ Deborah A. Levy ____________________________ Saul Levy _____________________________ David Zimmerman _____________________________ Michael A. Zimmerman _____________________________ Steven A. Zimmerman -4- Signature Page to Agreement to Terminate Stockholders Agreement ______________________________ Piers Lingle _______________________________ Stefanie Lingle ______________________________ Barry and Barbara Rosenbaum, as joint tenants _______________________________ Martha R. Rosenbaum _______________________________ Heidi R. Saunders _______________________________ Robert S. Saunders _______________________________ Richard L. Wellek Saunders Capital Group, Inc. By____________________________ Robert S. Saunders President -5- EX-27 3 EXHIBIT 27
5 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 9,000 0 13,258,000 241,000 16,217,000 31,495,000 1,125,000 801,000 38,083,000 25,024,000 0 6,000 0 0 0 38,083,000 26,596,000 26,596,000 20,083,000 0 4,955,000 67,000 422,000 1,136,000 456,000 680,000 0 0 0 680,000 0.12 0.12
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