-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BHMXGzdOY8hWSu5/NkCq31cPRpuPPtTP0Fn9Ya/yWe3xKr/hIXeUV9OsB3zk1K2n E6hC0+4vIhUr+niuAOp4Sw== 0000052971-97-000007.txt : 19971117 0000052971-97-000007.hdr.sgml : 19971117 ACCESSION NUMBER: 0000052971-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACO ELECTRONICS INC CENTRAL INDEX KEY: 0000052971 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111978958 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05896 FILM NUMBER: 97721027 BUSINESS ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 5162735500 MAIL ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-Q 1 QUARTERLY REPORT FORM 10-Q UNITED STATES 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 September 30, 1997 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to _________________________ Commission File Number 0-5896 JACO ELECTRONICS, INC. (Exact name of registrant as specified in its charter) NEW YORK 11-1978958 (State of other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 145 OSER AVENUE, HAUPPAUGE, NEW YORK 11788 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (516) 273-5500 Indicated 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 report), and (2) has been subject to such filing requirements for the past 90 days. YES X NO Number of Shares of Registrant's Common Stock Outstanding as of November 7, 1997 - - 3,888,221 (Excluding 87,500 Shares of Treasury Stock). FORM 10-Q September 30, 1997 Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 1997 1997 -------------- ------ ASSETS Current Assets: Cash $401,696 $463,352 Marketable securities 677,351 627,179 Accounts receivable - net 22,233,277 22,008,210 Inventories 34,357,124 33,311,201 Prepaid expenses and other 996,520 1,359,617 Prepaid income taxes 233,408 528,243 Deferred income taxes 776,000 750,000 ------- ------- Total current assets 59,675,376 59,047,802 Property, plant and equipment - net 5,027,153 5,009,045 Deferred income taxes 253,000 244,000 Excess of cost over net assets acquired 4,097,252 4,151,574 Other assets 1,516,054 1,543,257 --------- --------- $70,568,835 $69,995,678 =========== =========== See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1997 Page 3 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 1997 1997 ______________ __________ LIABILITIES & SHAREHOLDERS' EQUITY: Current Liabilities: Accounts payable and accrued expenses $17,620,132 $17,302,127 Current maturities of long term debt and capitalized lease obligations 616,447 599,239 ___________ __________ Total current liabilities 18,236,579 17,901,366 Long term debt and capitalized lease obligations 15,349,791 15,552,549 Deferred compensation 662,500 650,000 SHAREHOLDERS' EQUITY: Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized 10,000,000 shares, $.10 par value; issued 3,975,721 and 3,888,221 outstanding 397,572 397,572 Additional paid-in capital 22,180,295 22,180,295 Unrealized gain on marketable securities 150,372 120,200 Retained earnings 14,291,726 13,893,696 Treasury stock (700,000) (700,000) -------- -------- Total shareholders' equity 36,319,965 35,891,763 ---------- ---------- $70,568,835 $69,995,678 ============ ========== See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1997 Page 4 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 1997 1996 ---- ---- NET SALES $36,878,534 $38,321,790 ----------- ----------- COST AND EXPENSES: Cost of goods sold 29,061,380 30,206,288 ---------- ---------- Gross profit 7,817,154 8,115,502 Selling, general and administrative expenses 6,877,115 6,592,245 ---------- --------- Operating profit 940,039 1,523,257 Interest expense 272,009 199,616 ------- ------- Earnings before income taxes 668,030 1,323,641 Income tax provision 270,000 536,000 ------- ------- NET EARNINGS $398,030 $787,641 ======== ======== Net earnings per common share $ .10 $ .20 ============ ============ Weighted average common shares and common equivalent shares outstanding 3,943,192 3,982,259 See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30,1997 Page 5 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) Unrealized Additional Gain on Total Common Stock Paid-In Marketable Retained Treasury Shareholders' Shares Amount Capital Securities Earnings Stock Equity ______ ______ _________ ___________ _________ __________ ______________ Balance at July 1, 1997 3,975,721 $397,572 $22,180,295 $120,200 $13,893,696 $(700,000) $35,891,763 Unrealized gain on marketable securities 30,172 30,172 Net earnings 398,030 398,030 -------- ---------- ---------- ------ -------- -------- -------- Balance at September 30,1997 3,975,721 $397,572 $22,180,295 $150,372 $14,291,726 $(700,000) $36,319,965 ========= ======== ========== ======== =========== ========== ==============
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1997 Page 6
JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 1997 1996 _______ _______ Cash flows from operating activities Net earnings $ 398,030 $ 787,641 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 242,428 207,082 Deferred compensation 12,500 12,500 Deferred income tax provision (55,000) (66,000) Amortization of intangible assets 87,655 16,584 Gain on sale of equipment (11,094) Provision for doubtful accounts 89,375 117,125 Changes in operating assets and liabilities, net of effect of acquisitions: (Increase) decrease in operating assets - net (702,433) 630,430 Increase in operating liabilities - net 318,005 30,311 ------- ------- Net cash provided by operating activities 390,560 1,724,579 -------- ---------- Cash flows from investing activities Capital expenditures (260,536) (243,083) Proceeds from sale of equipment 34,000 Acquisition of operating assets - net (1,240,327) Increase in other assets (6,130) (138,953) --------- --------- Net cash used in investing activities (266,666) (1,588,363) ---------- ----------- Cash flows from financing activities Borrowings under line of credit 35,455,080 41,420,780 Payments under line of credit (35,489,278) (40,449,000) Principal payments under equipment financing and term loans (151,352) (119,499) Purchase of treasury stock (700,000) ------------ ------------ Net cash (used in) provided by financing activities (185,550) 152,281 ------------ ----------- NET (DECREASE) INCREASE IN CASH (61,656) 288,497 ------------ ------------ Cash at beginning of period 463,352 164,161 ------------ ------------ Cash at end of period $ 401,696 $ 452,658 ============ ============
See accompanying notes to condensed consolidated financial statements. FORM 10-Q September 30, 1997 Page 7 JACO ELECTRONICS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION 1) The accompanying condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring accrual adjustments, which are in the opinion of management, necessary for a fair presentation of the consolidated financial position and the results of operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation. Therefore, they should be read in conjunction with the Company's audited consolidated statements for the year ended June 30, 1997 and the notes thereto included in the Company's annual report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. 2) For interim financial reporting purposes, the Company uses the gross profit method for computing inventories, which consists of goods held for resale. 3) The Company has a $30,000,000 term loan and revolving line of credit facility with its banks, which are based principally on eligible accounts receivables and inventories as defined in the agreement. The agreement was amended to (i) extend the maturity date to September 13, 2000, (ii) change the interest rate to a rate based on the average 30 day LIBOR rate plus 3/4 % to 1 1/4% depending on the Company's performance measured by a financial ratio, effective January 1, 1998 and (iii) changed the requirements of certain financial covenants. The applicable interest rate may be adjusted quarterly and borrowings under this facility are collateralized by substantially all of the assets of the Company. 4) In April 1996, the Company announced that its Board of Directors authorized the purchase of up to 250,000 shares of its outstanding common stock under a stock repurchase program. The purchases may be made by the Company from time to time on the open market at the Company's discretion. During fiscal 1997, the Company purchased 87,500 shares of its common stock for aggregate consideration of $700,000. 5) Earnings per share has been computed based on weighted average number of shares outstanding, including approximately 55,000 and 51,000 common stock equivalents for the three months ending September 30, 1997 and 1996, respectively. In February 1997, the Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share," which is effective for financial statements for both interim and annual periods ending after December 15, 1997. Early adoption of the new standard is not permitted. The new standard eliminates primary and fully diluted earnings per share and requires presentation of basic and diluted earnings per share together with disclosure of how the per share amounts were computed. The adoption of this standard is not expected to have a material impact on the disclosure of earnings per share in the financial statements. 6) During August 1996, and January 1997, the Company purchased QPS Electronics, Inc. and Corona Electronics, Inc., respectively, both of which are electronic component distributors. Aggregate consideration paid for the acquisitions approximated $4,700,000 of which $157,500 was paid through the issuance of 20,000 shares of the Company's common stock. These acquisitions have been accounted for by the purchase method and, as such, the fair value of the assets and liabilities acquired have been recorded on the date of the respective acquisitions. The respective results of their operations are included with those of the Company from the date of acquisition. The excess of the purchase price, over the fair value of the assets acquired, approximately $3,053,000, is being amortized using the straight-line method over a period of twenty years. Pro forma historical results of operations are not presented, as such results would not be materially different from the historical results of the Company. FORM 10-Q September 30, 1997 Page 8 JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Statements in this filing, and elsewhere, which look forward in time involve risks and uncertainties which may effect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: dependence on a limited number of suppliers for products which generate a significant portion of the Company's sales, the effect upon the Company of increases in tariffs or duties, changes in trade treaties, strikes or delays in air or sea transportation and possible future United States legislation with respect to pricing and/or import quotas on products imported from foreign countries, and general economic effect upon manufacturers, end users of electronic components and electronic component distributors. GENERAL Jaco is a distributor of electronic components and provider of contract manufacturing and value-added services. Products distributed by Jaco include semiconductors, capacitors, resistors, electromechanical devices and flat panel displays (FPDs) used in the assembly and manufacturing of electronic equipment. The Company's customers are primarily small and medium sized manufacturers. The trend for these customers has been to shift certain manufacturing functions to third parties (outsourcing). The Company intends to seek to capitalize on this trend toward outsourcing by increasing sales of products enhanced by value-added services. Value-added services currently provided by Jaco consist of configuring complete computer systems to customer specifications both in tower and desktop configurations, kitting (e.g. supplying sets of specified quantities of products to a customer that are prepackaged for ease of feeding the customer's production lines), and contract manufacturing services through the Company's wholly-owned subsidiary, Nexus Custom Electronics, Inc. Form 10-Q September 30, 1997 Page 9 COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996 Net sales for the first quarter of fiscal 1998 decreased approximately 4% to $36.9 million as compared to $38.3 million for the first quarter of fiscal 1997. The Company was affected by the continued industry wide competitive pressures resulting in reduction of the unit prices of certain electronic components. The Company believes that to increase sales in future periods it needed to expand its semiconductor management group, flat panel display division and increase the field application engineer program. Gross profit margins, as a percentage of the net sales remained constant at 21.2% for the quarter ended September 30, 1997 as compared to the quarter ended September 30, 1996. The Company was able to maintain its margins despite the reductions in component pricing during the quarter. Selling, general and administrative (SG&A) expenses increased to $6.9 million for the first quarter of fiscal 1998, an increase of $.3 million, or approximately 4.3% compared to the $6.6 million for the first quarter of fiscal 1997. The increase was a result of the expanded programs previously stated and the additional costs associated with the acquisitions of Q.P.S. Electronics, Inc. and Corona Electronics, Inc. These increases were partially offset during the current quarter by reducing certain administrative costs and non-core personnel. Interest expense increased to $272,000 for the three months ended September 30, 1997 as compared to $200,000 for the three months ended September 30, 1996. The increase was primarily attributable to the increased borrowings of approximately $4.5 million attributed to the fiscal 1997 acquisitions of Q.P.S. Electronics, Inc. and Corona Electronics, Inc. (see note A-6 of the notes to condensed consolidated financial statements). Net earnings for the three months ended September 30, 1997 were $398,000, or $.10 per share as compared to $788,000, or $.20 per share for the three months ended September 30, 1996. The decrease in net earnings was attributable to the decrease in sales and the increase in SG&A expenses incurred in pursuit of the initiatives to expand the semiconductor management group, flat panel display division, field application engineer program and the acquisition of Corona Electronics, Inc. and Q.P.S. Electronics, Inc. LIQUIDITY AND CAPITAL RESOURCES The Company's agreement with its banks, as amended, provides the Company with a $30,000,000 term loan and revolving line of credit facility based principally on eligible accounts receivable and inventories of the Company as defined in the agreements expiring September 13, 2000. Effective June 1, 1997, borrowings under the credit facility bear interest at the average 30-day LIBOR rate plus 1%. As of January 1, 1998, interest is based on the average daily 30-day LIBOR rate plus 3/4% to 1 1/4% depending on the Company's performance measured by a financial ratio. The applicable interest rate may be adjusted quarterly. The outstanding balance on the revolving line of credit facility was $13,988,944 at September 30, 1997. Form 10-Q September 30, 1997 Page 10 The term loan, with a remaining balance of $750,000 at September 30, 1997, requires monthly principal payments of $17,857, together with interest through September 13, 1998, with a final payment of $533,600 on September 13, 1998. Borrowings under this facility are collateralized by substantially all of the assets of the Company. The agreement contains provisions for maintenance of certain financial ratios, all of which the Company is in compliance with at September 30, 1997, and prohibits the payment of cash dividends. The agreement also provides for the issuance of letters of credit by the banks on the Company's behalf. At September 30, 1997, $500,000 of such letters of credit were outstanding. For the three months ended September 30, 1997, the Company's net cash provided by operating activities was $391,000 as compared to net cash provided by operating activities of $1,725,000 for the three months ended September 30, 1996. The decrease is primarily attributable to the increase in inventory of $1,046,000 compared to a reduction in accounts receivable and inventory (net of assets acquired from business acquisitions) during the first quarter of fiscal 1997. Net cash used in investing activities decreased to $267,000 for the first quarter of fiscal 1998, as compared to $1,588,000 for the first quarter of fiscal 1997. The acquisition during fiscal 1997 required $1,240,000, which was financed substantially through additional borrowings under the Company's line of credit. The Company's cash expenditures may vary significantly from current levels, based on a number of factors, including, but not limited to, future acquisitions, if any. For the first quarter of fiscal 1998 and 1997 inventory turnover was 3.4x and 4.0x, respectively. The average of the Company's accounts receivable at September 30,1997 was 55 days, as compared to 53 days at September 30,1996. The Company did not experience any significant trade collection difficulties during the first quarter of fiscal 1998. On April 15, 1996, the Company's Board of Directors authorized the purchase of up to 250,000 shares of its common stock or approximately 6.3% of the then outstanding shares, under a stock repurchase program. During fiscal 1997, the Company repurchased 87,500 shares at an average market price of $8.00 per share. The Company believes that cash flow from operations and funds available under its credit facility will be sufficient to fund the Company's capital needs for at least the next twelve months. INFLATION Inflation has not had a significant impact on the Company's operations during the last three fiscal years. FORM 10-Q September 30, 1997 Page 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings Nothing to Report Item 2. Changes in Securities Nothing to Report Item 3. Defaults Upon Senior Securities Nothing to Report Item 4. Submission of Matters to a Vote of Security Holders Nothing to Report Item 5. Other Information Nothing to Report Item 6. Exhibits and Reports on Form 8-K a) Exhibits: 27. Financial Data Schedule 99.8.2 Amendment to Loan and Security Agreement b) Reports on Form 8-K: None S I G N A T U R E 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. JACO ELECTRONICS, INC. (Registrant) BY: /s/ Jeffrey D. Gash ________________________________________ Jeffrey D. Gash, Vice President/Finance (Principal Financial Officer) DATED: November 12, 1997 EX-99.8.2 2 AMENDMENT TO LOAN AND SECURITY AGREEMENT August 1, 1997 JACO ELECTRONICS, INC. 145 Oser Avenue Hauppauge, NY 11778 NEXUS CUSTOM ELECTRONICS, INC. Prospect Street Brandon, VT 05733 Gentlemen: Reference is made to the Second Restated and Amended Loan and Security Agreement between Jaco Electronics, Inc. and Nexus Custom Electronics, Inc., as Debtor, and our predecessor-in-interest, The Bank of New York Commercial Corporation, as Lender, and each other Lender a party thereto, dated September 13, 1995, as amended and supplemented (the "Loan Agreement"). Initially capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. It is hereby agreed that effective as of August 1, 1997, the Loan Agreement shall be amended as follows: 1. The definition of "Agent ABR Loan" set forth in Paragraph 1 is deleted in its entirety and replaced by the following definition of "Agent LIBO Rate Loan": " "Agent LIBO Rate Loan" shall have the meaning set forth in Paragraph 4( c ) of this Agreement." 2. The definition of "Contract Rate" set forth in Paragraph 1 is amended to read in its entirety as follows: " "Contract Rate" means an interest rate per annum equal to (i) the applicable LIBO Rate plus one percent (1%) in the case of LIBO Rate Loans first arising, or first continued or converted thereto prior to January 1, 1998, and (ii) in the case of LIBO Rate Loans first arising, or first continued or converted thereto on or after January 1, 1998, the applicable LIBO Rate plus ( a ) one and one-quarter percent (1 1/4%) if the ratio of total Loans to net earnings before interest, taxes, depreciation, amortization, extraordinary gains and losses, and all other non-cash charges on a consolidated basis ("EBITDA") during the immediately preceding four (4) fiscal quarters is greater than 2 to 1, ( b ) one percent (1%) if the ratio of total Loans to EBITDA during the immediately preceding four (4) fiscal quarters is 1.5-2 to 1, or ( c ) three-quarters of one percent (3/4%) if the ratio of total Loans to EBITDA during the immediately preceding four (4) fiscal quarters is less than 1.5 to 1. The Contract Rate applicable to LIBO Rate Loans under clause (ii) hereof shall be adjusted quarterly." 3. The definitions of "Interest Period", "LIBO Rate (Reserve Adjusted)", "LIBOR Office" and "LIBOR Reserve Percentage" set forth in Paragraph 1 are deleted in their entirety. 4. The definition of "LIBO Rate" set forth in Paragraph 1 is amended to read in its entirety as follows: " "LIBO Rate" means the rate per annum for the one month LIBOR as published in The Wall Street Journal, averaged monthly on a calendar month basis." 5. The definition of "LIBO Rate Loan" set forth in Paragraph 1 is amended to read in its entirety as follows: " "LIBO Rate Loan" means a Loan or any portion thereof that bears interest based on the LIBO Rate." 6. The fourth through the seventh lines of the definition of "Term Loan Notes" set forth in Paragraph 1 are deleted in their entirety and replaced by the following: "restate in their entirety, upon terms and conditions therein more fully described, that certain promissory note initially issued by Debtor to the order of BNYCC dated as of March 11, 1994 in the original principal amount of $1,500,000." 7. The second full paragraph of Paragraph 2 is amended by deleting the following language: "provided that any application of the proceeds of Accounts which (i) is made prior to the occurrence of an Event of Default and (ii) is not made at the direction of Borrower, and which application results in the payment of a LIBO Rate Loan prior to the last day of an Interest Period with respect thereto shall not result in the required payment by Debtor to Lender of any penalty or premium or loss or expense pursuant to Paragraph 5(g) hereof," 8. Paragraph 4( c )( i ) is deleted in its entirety and replaced by the following: "[INTENTIONALLY OMITTED]". 9. Paragraph 4( c )( ii ) is amended to read in its entirety as follows: "( ii ) The Debtor may by telephonic notice received by an officer of the Agent, request a borrowing prior to 1:00 P.M. New York time in the form of a LIBO Rate Loan on the date on which it requests to incur such a Loan, such request to specify the amount of the Loan requested. In any such instance, the Agent may: (a) notify each of the Lenders, not later than 2:00 P.M. New York time, of the LIBO Rate Loan to be funded on such date, as well as the amount of such Lender's Pro Rata Share of the requested LIBO Rate Loan, and each such Lender shall make such amount available to the Agent on such date in same day funds, to such account of the Agent as the Agent may designate, by not later than 5:00 P.M. New York time; or (b) if the Agent shall elect to do so in its sole and absolute discretion, subject to the terms and conditions hereof and in its capacity as a Lender, make such LIBO Rate Loan available to the Debtor (each an "Agent LIBO Rate Loan") on the date so requested, by transferring same day funds to the operating account(s) of the Debtor maintained with the Agent. Each such Agent LIBO Rate Loan shall constitute a Loan hereunder and shall be subject to all of the terms and conditions applicable to other Loans, except that all payments thereon shall be payable to the Agent in its capacity as Lender, solely for its own account, until such time as each of the Lenders shall Settle with the Agent as to such Agent LIBO Rate Loan on the Settlement Date next occurring. Until such Settlement shall occur, the Agent shall correspondingly increase its Pro Rata Share of the Aggregate Maximum Loan Amount and the Pro Rata Share of each such other Lender shall be correspondingly decreased and upon such Settlement occurring, appropriate adjustments shall be made to such Pro Rata Shares in order to restore such Pro Rata Shares to their respective levels prior to the relevant Agent LIBO Rate Loan." 10. Paragraph 4( c )( v ) is deleted in its entirety and replaced by the following: "[INTENTIONALLY OMITTED]". 11. Paragraph 5(a)(i) is amended by deleting the words "except that interest with respect to LIBO Rate Loans shall be payable on the last day of the Interest Period with respect thereto" and inserting at the end of said paragraph the following sentence: "Whenever the LIBO Rate is increased or decreased, the applicable Contract Rate shall be similarly changed without notice or demand by an amount equal to the amount of such change in the LIBO Rate." 12. Paragraph 4(e)is amended by deleting the following language: "(except as set forth in subsection (b) of the definition of "Interest Period" appearing herein)". 13. Paragraph 5(a) is amended by deleting the following language: "except that interest with respect to LIBO Rate Loans shall be payable on the last day of the Interest Period with respect thereto". 14. Paragraph 5(e) is amended by deleting the following language: "at the end of the then current Interest Periods with respect thereto or sooner". 15. Paragraph 5(g) is deleted in its entirety and replaced by the following: "[INTENTIONALLY OMITTED]". 16. The first sentence of Paragraph 17(d) is amended to read in its entirety as follows: "Maintain at all times a ratio of consolidated current assets of Debtor and its Subsidiaries to consolidated current liabilities of Debtor and its Subsidiaries of not less than 1.6 to 1.0." 17. Paragraphs 17(e), (f) and (g) are amended to read in their entirety as follows: "(e) Maintain at all times consolidated net worth (all amounts which would be included under shareholders' equity on a consolidated balance sheet of the Debtor determined in accordance with generally accepted accounting principles) in an amount not less than $34,000,000, which amount shall be increased at the end of each quarter on a cumulative basis by an amount equal to fifty percent (50%) of the consolidated net profit after taxes, if any, for such quarter." "(f) Maintain at all times a ratio of the sum of (1) cash and cash equivalents plus (2) accounts receivable to current liabilities (as defined in Paragraph 17(d)) of not less than 0.65 to 1.0 on a consolidated basis." "(g) Maintain at all times an excess of current assets over current liabilities (both as defined in Paragraph 17(d) and each on a consolidated basis) of not less than $23,000,000." 18. The first sentence of Paragraph 18(e) is amended to read in its entirety as follows: "Permit at any time the ratio of Indebtedness to Tangible Net Worth to be greater than 1.30 to 1.0; "Indebtedness" shall mean consolidated total liabilities of Debtor and its Subsidiaries determined in accordance with generally accepted accounting principles consistently applied." 19. The first sentence of Paragraph 21 is amended to read in its entirety as follows: "This (Second Restated and Amended Loan and Security) Agreement shall (subject to compliance with the Conditions Precedent) become effective on the Closing Date hereof, without any interruption or break in continuity (as more fully described in the second paragraph hereof) and shall continue until the fifth anniversary of the Closing Date." 20. The fifth sentence of Paragraph 21 is amended by deleting the following language: "provided that any such payment which results in a payment of a LIBO Rate Loan before the last date of the Interest Period with respect thereto shall be subject to the provisions of Paragraph 5(g) hereof". Except as hereinabove specifically set forth, the Loan Agreement shall remain unmodified and in full force and effect in accordance with its terms. If you are in agreement with the foregoing, please so indicate by signing and returning to us the enclosed copy of this letter. Very truly yours, BNY FINANCIAL CORPORATION f/k/a THE BANK OF NEW YORK COMMERCIAL CORPORATION, as Agent and Lender By:/s/ Frank Imperato _______________________ Title: Vice President FLEET BANK, N.A. f/k/a/ NATWEST BANK N.A., as Lender By:/s/ Alice Adelberg _______________________ Title: Vice President AGREED: JACO ELECTRONICS, INC. By: /s/ Jeffrey D. Gash _______________________ Title: Vice President NEXUS CUSTOM ELECTRONICS, INC. By: /s/ Jeffrey D. Gash _______________________ Title: Vice President DATED: November 12, 1997 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted form the unaudited condensed consolidated balance sheet as of September 30, 1997 and the unaudited condensed consolidated statement of earnings fo the three months ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 3-MOS JUN-30-1998 JUL-01-1997 SEP-30-1997 401,696 677,351 23,164,672 931,395 34,357,124 59,675,376 7,596,980 2,569,827 70,568,835 18,236,579 16,012,291 0 0 397,572 35,922,393 70,568,835 36,878,534 36,878,534 29,061,380 29,061,380 6,877,115 0 272,009 668,030 270,000 398,030 0 0 0 398,030 0.10 0.10
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