-----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, NOMcMXnWQKBf0IRXY6t3WFJrBbbeNKs3gmlSbFIsXrhXg08qa3m5Tn0bbmmsb/qr EwlZYlZqAHUDlVX/ctMEVA== /in/edgar/work/0000052971-00-000029/0000052971-00-000029.txt : 20001115 0000052971-00-000029.hdr.sgml : 20001115 ACCESSION NUMBER: 0000052971-00-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACO ELECTRONICS INC CENTRAL INDEX KEY: 0000052971 STANDARD INDUSTRIAL CLASSIFICATION: [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: 767815 BUSINESS ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 BUSINESS PHONE: 6312735500 MAIL ADDRESS: STREET 1: 145 OSER AVE CITY: HAUPPAUGE STATE: NY ZIP: 11788 10-Q 1 0001.txt 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, 2000 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 or 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: (631) 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 6, 2000 - - 5,633,959 (Excluding 618,300 Shares of Treasury Stock). FORM 10-Q September 30, 2000 Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 2000 2000 -------------- ---------- ASSETS Current Assets Cash $ 985,334 $ 617,603 Marketable securities 879,026 880,954 Accounts receivable - net 52,598,027 42,179,468 Inventories 61,212,582 53,415,793 Advance to supplier 6,539,961 Prepaid expenses and other 1,289,787 887,804 Deferred income taxes 2,077,000 1,975,000 ------------ ------------ Total current assets 125,581,717 99,956,622 Property, plant and equipment - net 7,581,348 6,926,734 Excess of cost over net assets acquired - net 16,387,588 16,600,432 Other assets 2,823,250 2,845,305 ------------ ------------ $152,373,903 $126,329,093 ============ ============= See accompanying notes to condensed consolidated financial statements.
2 FORM 10-Q September 30, 2000 Page 3 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 2000 2000 -------------- --------- LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 45,415,387 $ 39,190,011 Current maturities of long term debt and capitalized lease obligations 4,479,261 807,444 Income taxes payable 2,938,392 1,575,319 ------------- ------------- Total current liabilities 52,833,040 41,572,774 Long term debt and capitalized lease obligations 51,037,360 40,940,877 Deferred income taxes 212,000 225,000 Deferred compensation 812,500 800,000 SHAREHOLDERS' EQUITY Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized 10,000,000 shares, $.10 par value; issued 6,252,259 shares and 5,633,959 shares outstanding 625,226 625,226 Additional paid-in capital - net 23,940,051 23,906,301 Retained earnings 24,954,069 20,296,761 Accumulated other comprehensive income 164,172 166,669 Treasury stock (2,204,515) (2,204,515) ------------- ------------- Total shareholders' equity 47,479,003 42,790,442 ------------- ------------- $ 152,373,903 $ 126,329,093 ============= ============= See accompanying notes to condensed consolidated financial statements.
3 FORM 10-Q September 30, 2000 Page 4 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2000 1999 ----------- ----------- NET SALES $94,158,828 $42,017,363 COST AND EXPENSES Cost of goods sold 73,541,170 34,081,758 ----------- ----------- Gross profit 20,617,658 7,935,605 Selling, general and administrative expenses 11,834,056 7,248,597 ----------- ----------- Operating profit 8,783,602 687,008 Interest expense 888,735 322,933 ----------- ----------- Earnings before income taxes 7,894,867 364,075 Income tax provision 3,237,000 150,000 ----------- ----------- NET EARNINGS $ 4,657,867 $ 214,075 =========== =========== Net earnings per common share: Basic $ 0.83 $ 0.04 =========== =========== Diluted $ 0.75 $ 0.04 =========== =========== Weighted average common shares outstanding: Basic 5,633,959 5,480,282 =========== =========== Diluted 6,234,768 5,564,175 =========== =========== See accompanying notes to condensed consolidated financial statements.
4 FORM 10-Q September 30, 2000 Page 5 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) Accumulated Additional other paid-in Retained comprehensive Treasury Shares Amount capital earnings income stock --------------- -------------- ---------------- ---------------- ---------------- -------------- Balance at July 1, 2000 6,252,259 $625,226 $ 24,041,301 $ 20,296,761 $ 166,669 $ (2,204,515) Net earnings 4,657,867 Unrealized loss on marketable securities - net (2,497) Comprehensive income Payment of fractional shares (559) Deferred compensation --------------- -------------- ---------------- ---------------- ---------------- -------------- Balance at September 30, 2000 6,252,259 $625,226 $ 24,041,301 $ 24,954,069 $ 164,172 $ (2,204,515) =============== ============== ================ ================ ================ ============== Total Deferred shareholders' compensation equity --------------- -------------- Balance at July 1, 2000 $ (135,000) $42,790,442 ----------- Net earnings 4,657,867 Unrealized loss on marketable securities - net (2,497) ---------- Comprehensive income 4,655,370 ---------- Payment of fractional shares (559) Deferred compensation 33,750 33,750 --------------- -------------- Balance at September 30, 2000 $ (101,250) $ 47,479,003 =============== ============== See accompanying notes to condensed consolidated financial statements.
5 FORM 10-Q September 30, 2000 Page 6 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2000 1999 ------------------ ----------------- Cash flows from operating activities Net earnings $ 4,657,867 $ 214,075 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 735,220 438,686 Deferred compensation 46,250 46,250 Deferred income tax benefit (113,600) (110,000) Provision for doubtful accounts 360,703 119,950 Changes in operating assets and liabilities, Increase in operating assets - net (25,517,995) (2,251,239) Increase in operating liabilities - net 7,588,449 1,912,628 ------------ ------------ Net cash (used in) provided by operating activities (12,243,106) 370,350 ------------ ------------ Cash flows from investing activities Capital expenditures (1,133,573) (112,242) Increase in marketable securities (1,969) (1,864) (Increase) decrease in other assets (21,362) 22,995 ------------ ------------ Net cash used in investing activities (1,156,904) (91,111) ------------ ------------ Cash flows from financing activities Borrowings under line of credit 87,922,848 12,795,589 Payments under line of credit (73,943,121) (12,860,157) Principal payments under equipment financing and term loans (211,427) (200,740) Payment of fractional shares (559) ------------ ------------ Net cash provided by (used in) financing activities 13,767,741 (265,308) ------------ ------------ NET INCREASE IN CASH 367,731 13,931 ------------ ------------ Cash at beginning of period 617,603 922,247 ------------ ------------ Cash at end of period $ 985,334 $ 936,178 ============ ============ Supplemental schedule of non-cash financing and investing activities: Equipment under capital leases $ 126,229 See accompanying notes to condensed consolidated financial statements.
6 FORM 10-Q September 30, 2000 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 financial statements for the year ended June 30, 2000 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) The Company has a $60,000,000 term loan and revolving line of credit facility with its banks, which is based principally on eligible accounts receivable and inventories as defined in the loan agreement. At September 30, 2000 the unused portion of the line was $6,177,864. The agreement was amended to (i) increase the amount available under the revolving line of credit to $60,000,000 through January 31, 2001 at which point it will revert back to $50,000,000, (ii) extend the maturity date to September 14, 2002, (iii) change the interest rate to a rate based on the average 30-day LIBOR plus 1-3/4% through the quarter ended September 30, 2000 at that point the rate converts to 30-day LIBOR plus 1% to 2-1/4% depending on the Company's performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and (iv) change 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. 3) The Board of Directors of the Company had authorized the purchase of up to 975,000 shares of its outstanding common stock under a stock repurchase program. The purchases were made by the Company from time to time on the open market. The Company had made purchases of 618,300 shares of its common stock from July 31, 1996 through September 13, 2000 for aggregate consideration of $2,204,515. On September 14, 2000, the Board of Directors passed a resolution to terminate the stock repurchase program. 4) For interim financial reporting purposes, the Company uses the gross profit method for computing inventories, which consists of goods held for resale. 5) On June 6, 2000, the Company acquired all of the issued and outstanding shares of common stock, no par value, of Interface Electronics Corp. ("Interface"), a distributor of electronic parts, components and equipment, located in Massachusetts. The purchase price was $15,400,000 payable in cash at the closing, (June 6, 2000) plus a deferred payment of up to $3,960,000, payable approximately one year from the anniversary of the closing. This payment will be made provided that certain conditions, as defined in the purchase agreement, are met. On the second anniversary of the closing date a deferred payment of up to $2,640,000 shall be paid provided that certain conditions, as defined in the purchase loan agreement, are met. When this contingency is resolved, the Company shall record the current fair value of the consideration paid as additional goodwill which will be amortized over the remaining life of the asset. 7 FORM 10-Q September 30, 2000 Page 8 The acquisition has been accounted for as a purchase and the operations of Interface have been included in the Company's Statement of Earnings since the date of acquisition, June 6, 2000. Included in other assets are the costs of the identifiable intangible assets acquired, principally an employment agreement and a franchise agreement which are being amortized on a straight-line basis over five and fifteen years, respectively. The excess of the purchase price and related expenses over the net tangible and identifiable intangible assets acquired amounted to approximately $13,048,000 and is being amortized on a straight-line basis over twenty years. Summarized below are the unaudited pro forma results of operations of the Company as if Interface has been acquired at the beginning of the fiscal periods presented: Three months ended September 30, 2000 1999 ---------- -------- Net sales $94,158,828 $50,175,194 Net earnings (loss) 4,657,867 (547,229) Net earnings (loss) per common share: Basic $0.83 $(0.10) Diluted $0.75 $(0.10) The pro forma financial information presented above for the three months ended September 30, 1999 is not necessarily indicative of either the results of operations that would have occurred had the acquisition taken place at the beginning of the periods presented or of future operating results of the combined companies. 6) On February 25, 2000, the Company purchased the operating assets of PGI, Industries, Inc., ("PGI") an exporter of electronic components, located in Ronkonkoma, New York. The purchase price was $1,200,000 paid in cash, plus a deferred payment of $100,000 payable over the next two years based on certain conditions, as defined in the purchase agreement. When this contingency is resolved, the Company shall record the current fair value of the consideration issued as additional costs of the acquired enterprise. These additional costs shall be amortized over the remaining life of the asset. The acquisition has been accounted for as a purchase and the operations of PGI have been included in the Company's Statement of Earnings since the date of acquisition, February 25, 2000. The excess of the purchase price over the fair value of the assets acquired, approximately $210,000, is being amortized on a straight-line basis over twenty years. Pro forma results of operations are not material. 7) On June 26, 2000, the Company announced a 3-for-2 stock split which was in the form of a 50% common stock dividend payable on July 24, 2000 to shareholders of record on July 10, 2000. All references to the number of weighted average common shares outstanding and earnings per share have been restated to reflect the 3-for-2 stock split. 8 FORM 10-Q September 30, 2000 Page 9 8) The number of shares used in the Company's basic and diluted earnings per share computations are as follows: Three Months Ended September 30, ------------------------------ 2000 1999 ------------ ------------ Weighted average common shares outstanding net of treasury shares, for basic earnings per share 5,633,959 5,480,282 Common stock equivalents for stock options 600,809 83,893 ------------ ------------ Weighted average common shares outstanding for diluted earnings per share 6,234,768 5,564,175 ============ ============ Excluded from the calculation of earnings per share are options and warrants to purchase 435,444 shares for the three months ended September 30, 1999, as their inclusion would have been antidilutive. 9) The Company has two reportable segments: electronics parts distribution and contract manufacturing. The Company's primary business activity is conducted with small and medium sized manufacturers, located in North America, that produce electronic equipment used in a variety of industries. Information pertaining to the Company's operations in different geographic areas for the three months ended September 30, 2000 and 1999 is not considered material to the financial statements. The Company's chief operating decision maker utilizes net sales and net earnings information in assessing performance and making overall operating decisions and resource allocations. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies included in the Company's annual report to shareholders. Information about the Company's segments is as follows: 9 FORM 10-Q September 30, 2000 Page 10 Three Months Ended, September 30, --------------------------- 2000 1999 ------ ------ (in thousands) Net sales from external customers Electronics components distribution $87,767 $39,224 Contract manufacturing 6,392 2,793 ------- ------- $94,159 $42,017 ====== ====== Intersegment net sales Electronics components distribution $ 128 $ 68 Contract manufacturing ----- ----- $ 128 $ 68 ========= ======== Operating profit Electronics components distribution $ 8,259 $ 582 Contract manufacturing 525 105 --------- --------- $ 8,784 $ 687 ========= ======= Interest expense Electronics components distribution $ 752 $ 192 Contract manufacturing 137 131 -------- -------- $ 889 $ 323 ======= ======= Income tax provision (benefit) Electronics components distribution $ 3,078 $ 161 Contract manufacturing 159 (11) ------- -------- $ 3,237 $ 150 ========= ======= Identifiable assets Electronics components distribution $ 138,719 $ 64,699 Contract manufacturing 13,655 10,224 ---------- ---------- $ 152,374 $ 74,923 ========= ======== Capital expenditures Electronics components distribution $ 333 $ 66 Contract manufacturing 801 46 ---------- --------- $ 1,134 $ 112 =========== ========= Depreciation and amortization Electronics components distribution $ 536 $ 288 Contract manufacturing 199 151 ---------- ---------- $ 735 $ 439 ========= ========= 10 FORM 10-Q September 30, 2000 Page 11 JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: 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 downturns in the electronics distribution industry which may have an adverse economic effect upon manufacturers, end-users of electronic components and electronic component distributors. GENERAL Jaco is a distributor of electronic components, provider of contract manufacturing and value-added services. Products distributed by Jaco include semiconductors, capacitors, resistors, electromechanical devices, flat panel displays and monitors, and power supplies 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 automated inventory management services, 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 through Nexus Custom Electronics, Inc., a wholly owned subsidiary of the Company. The Company is also expanding in the flat panel display value-added market which includes full system integration, kitting and the implementation of touch technologies. 11 FORM 10-Q September 30, 2000 Page 12 Results of Operations The following table sets forth certain items in the Company's statement of earnings as a percentage of net sales for the periods shown: Three Months Ended September 30, ------------------------------- 2000 1999 --------- --------- Net sales 100.0% 100.0% Cost of goods sold 78.1 81.1 --------- --------- Gross profit 21.9 18.9 Selling, general and administrative expenses 12.6 17.3 --------- --------- Operating profit 9.3 1.6 Interest expense 0.9 0.7 --------- --------- Earnings before income taxes 8.4 0.9 Income tax provision 3.5 0.4 --------- --------- NET EARNINGS 4.9% 0.5% ======== ========== COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 ("FISCAL 2001") WITH THREE MONTHS ENDED SEPTEMBER 30, 1999 ("FISCAL 2000") Our net sales for the first three months of fiscal 2001 were $94.2 million, an increase of $52.2 million, or 124.1%, as compared to $42.0 million reported for the first three months of fiscal 2000. The increase in net sales was principally the result of a continued strong demand for components throughout the electronics industry. The Company is benefiting from substantial investments made in sales personnel and infrastructure. The Company added new customers and expanded our relationships with existing customers as a result of the value-added services offered to assist customers in procurement and inventory management. Net sales includes the acquisition of Interface Electronics Corp. ("Interface"), which was completed during June 2000. Our gross profit was $20.6 million for the first three months of fiscal 2001, an increase of $12.7 million, or 159.8%, compared to $7.9 million for the first three months of fiscal 2000. Gross profit margins as a percentage of net sales were 21.9% for the quarter compared to 18.9% for the same quarter last fiscal year. The strong demand for components was primarily attributable for the increase in gross profit margin as a percentage of net sales. The higher gross profit percentage plus the strong sales growth resulted in the increase in gross profit. 12 FORM 10-Q September 30, 2000 Page 13 Our selling, general and administrative ("SG&A") expenses were $11.8 million for the first three months of fiscal 2001, an increase of $4.6 million, or 63.3%, compared to $7.2 million for the same quarter last fiscal year. As a percentage of net sales, SG&A expenses decreased to 12.6% for the first three months of fiscal 2001 compared to 17.3% for the comparable period last fiscal year. The increase in spending is primarily attributable to expenses necessary to support the growth in sales. These expenses include additional sales and marketing personnel, investments in our infrastructure, variable costs associated with our increase in sales and the additional costs associated with the acquisition of Interface. The decrease as a percentage of net sales reflects operating efficiencies realized with higher revenue levels. Our operating profit for the first three months of fiscal 2001 was $8.8 million as compared to $0.7 million for the first three months of fiscal 2000. As a percentage of net sales, operating profit increased to 9.3% for the current quarter, compared to 1.6% for the same quarter last fiscal year. Our interest expense increased to $0.9 million for the first three months of fiscal 2001, as compared to $0.3 million for the first three months of fiscal 2000. The increase was primarily due to the additional borrowings of approximately $15 million to acquire Interface during the fourth quarter of fiscal year ended June 30, 2000 and the additional borrowings required due to the increase in accounts receivable and inventory necessary to support the growth in sales. Our net earnings for the first three months of fiscal 2001 were $4.7 million, or $0.75 per share diluted, as compared to net earnings of $0.2 million, or $0.04 per share diluted for the first three months of fiscal 2000. Dilutive earnings per share includes the dilutive effect of outstanding stock options. The increase in net earnings was attributable to the increase in net sales, the increase in gross profit margins, and the reduction in SG&A expenses as it relates to a percentage of net sales. The Company also benefited from the acquisition of Interface as well as strong demand during the quarter for components throughout the electronics industry. LIQUIDITY AND CAPITAL RESOURCES Our agreement with our banks, as amended on September 28, 2000, expires on September 14, 2002. Our agreement provides us with a $60 million term loan and revolving line of credit facility based principally on eligible accounts receivable and inventories as defined in the agreement. On February 1, 2001, the revolving line of credit reduces to $50 million. The interest rate of the credit facility was based on the average 30-day LIBOR rate plus 1.75% through the quarter ending September 30, 2000. After September 30, 2000, the rate converts to the average 30-day LIBOR rate plus 1.0%-2.25% depending on our performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and may be adjusted quarterly. The outstanding balance on the revolving line of credit facility was $53.7 million at September 30, 2000. Borrowings under this facility are collateralized by substantially all of our assets. The agreement contains provisions for maintenance of certain financial ratios, all of which we were in compliance with at September 30, 2000, and prohibits the payment of cash dividends. For the first three months of fiscal 2001, our cash used in operating activities was approximately $12.2 million, as compared to net cash provided by operating activities of $0.4 million for the same period last fiscal year. The increase in net cash used is primarily attributable to an increase in accounts receivable, inventory and an advance to supplier. This was partially offset by an increase in accounts payable and accrued expenses and net earnings for the quarter. The increase in accounts receivable was the result of the increase in net sales during the quarter. The increase in inventory and an advance to our supplier, which amounted to approximately $15 million, was the result of a significant purchase order at the end of the quarter which is expected to result in shipments during the next two quarters. Net cash provided by financing activities was $13.8 million for the first three months of fiscal 2001 as compared to net cash used in financing activities of $0.3 million for the comparable period last fiscal year. The increase is primarily attributable to the increase in net borrowings under the line of credit of approximately $14.0 million required to fund the increase in inventory and the advance to the supplier described above. 13 FORM 10-Q September 30, 2000 Page 14 Our 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 three months of fiscal 2001 and fiscal 2000, our inventory turnover was 5.1x and 4.1x, respectively. The average days outstanding of our accounts receivable at September 30, 2000 was 46 days, as compared to 53 days at September 30, 1999. We believe that cash flow from operations and funds available under our credit facility will be sufficient to fund our 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. Quantitative and Qualitative Disclosure about Market Risk. We are exposed to interest rate changes with respect to our credit facility which bears interest at the higher of the prime rate or the federal funds rate plus 0.5%, or at our option, at a rate equal to the average 30-day LIBOR rate plus 1.0% to 2.25% depending on our performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and may be adjusted quarterly. At September 30, 2000, $53.7 million was outstanding under the credit facility. Changes in the LIBOR interest rate during the fiscal year will have a positive or negative effect on our interest expense. Each 1.0% fluctuation in the LIBOR interest rate will increase or decrease interest expense for us by approximately $0.5 million based on outstanding borrowings at September 30, 2000. The impact of interest rate fluctuations on other floating rate debt is not material. 14 FORM 10-Q September 30, 2000 Page 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings Nothing to Report Item 2. Changes in Securities and Use of Proceeds 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 27.1 Financial Data Schedule 99.8.8 Amendment to Second Restated and Amended Loan and Security Agreement dated September 28, 2000 b) Reports on Form 8-K 1) On October 20, 2000, a Current Report on Form 8-K, Amendment No. 2, was filed to include revised audited financial statements of Interface Electronics Corp. as of and for the year ended December 31, 1999, unaudited statements of Interface Electronics Corp. for the nine months ended March 31, 2000 and related proforma information. 2) On November 13, 2000, a Current Report on Form 8-K was filed to include under Item 5 the declaration of a three-for-two stock split in the form of a 50% stock dividend with respect to the common stock of the Comapny. 15 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 14, 2000 EX-27.1 2 0002.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the unaudited condensed consolidated balance sheet as of September 30, 2000 and the unaudited condensed consolidated statement of earnings for the three months ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 3-MOS JUN-30-2001 JUL-01-2000 SEP-30-2000 985,334 879,026 53,973,002 1,374,975 61,212,582 125,581,717 14,065,418 6,484,070 152,373,903 52,833,040 52,061,860 0 0 625,226 46,853,777 152,373,903 94,158,828 94,158,828 73,541,170 73,541,170 11,834,056 0 888,735 7,894,867 3,237,000 4,657,867 0 0 0 4,657,867 0.83 0.75
EX-99.8.8 3 0003.txt AMENDMENT TO LOAN AGREEMENT September 28, 2000 JACO ELECTRONICS, INC. ("Jaco") 145 Oser Avenue Hauppauge, NY 11788 NEXUS CUSTOM ELECTRONICS, INC. ("Nexus") Prospect Street Brandon, VT 05733 INTERFACE ELECTRONICS, INC. ("Interface") 124 Grove Street Franklin, MA 02028 Gentlemen: Reference is made to the Second Restated and Amended Loan and Security Agreement in effect between us as successor by merger to BNY Financial Corporation which was merged into GMAC Commercial Credit LLC ("GMAC"), as Agent and Lender, and Fleet Bank, N.A., f/k/a Natwest Bank, N.A ("Fleet") as Lender, dated September 13, 1995, as supplemented and amended from time to time, (the "Agreement"). Both GMAC and Fleet may hereinafter be referred to jointly as the "Lenders", and individually, as a "Lender". Initially capitalized terms not defined herein shall have the meanings ascribed to such terms in the Agreement. WHEREAS, you have requested that we amend the Agreement so as to increase the Maximum Loan Amount for each Lender from $25,000,000 to $30,000,000, for a total amount of $60,000,000 for the period commencing with the date of this letter and terminating on January 31, 2001 (the "Temporary Increase Period"); and. WHEREAS, the Lenders are willing to agree to such an increase in the Maximum Loan Amount for each Lender, subject to the terms and conditions hereof, and NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS: 1. Effective as of the date hereof, and only for the Temporary Increase Period, the Agreement shall be amended by replacing the phrase "$25,000,000" appearing next to the phrase "Maximum Loan Amount" underneath the signature of each Lender, with the phrase "$30,000,000". At the end of the Temporary Increase Period, the Debtor shall repay all excess amounts outstanding so that the amended figures described above revert to the original amounts as in effect before the commencement of the Temporary Increase Period. 2. It is hereby agreed by and between us that as of the date hereof the first sentence of paragraph 21 of the Agreement, as amended, is hereby 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 seventh anniversary of the Closing Date." 3. By their signatures below, Jaco, Nexus and Interface hereby ratify the Agreement and agree to be jointly and severally liable for all Obligations under the Agreement and agree that all of the outstanding amounts of the Loans under the Agreement, as of the date hereof, shall be valid and binding Obligations of each of them, and shall be deemed Obligations outstanding under the Agreement, and hereby agree and promise to repay to the Agent, for the benefit of the Lenders, such Obligations (including but not limited to all applicable interest) in accordance with the terms of the Agreement, but in no event, later than the Termination Date (for purposes hereof, "Termination Date" shall mean September 14, 2002, or any extended termination date, or any earlier termination date, whether by acceleration or otherwise). 4. By their signatures below, Jaco, Nexus and Interface hereby ratify and affirm to the Agent that as of the date hereof, they are in full compliance with all covenants under the Agreement and certify that all representations and warranties of the Agreement are true and accurate as of the date hereof, with the same effect as if they had been made as of the date hereof. Except as herein specifically amended, the Agreement shall remain in full force and effect in accordance with its original terms, except as previously amended. If the foregoing accurately reflects our understanding, kindly sign the enclosed copy of this letter and return it to our office as soon as practicable. Very truly yours, GMAC COMMERCIAL CREDIT LLC By:/s/ Frank Imperato Title: Senior Vice President AGREED AND ACCEPTED: JACO ELECTRONICS, INC. FLEET BANK, N.A. By:/s/ Jeffrey D. Gash By: /s/ Alice Adleberg Title: Vice President Title: Vice President NEXUS CUSTOM ELECTRONICS, INC. INTERFACE ELECTRONICS CORP. By: /s/ Jeffrey D. Gash By: /s/ Jeffrey D. Gash Title: Vice President Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----