-----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, OFZIZptYQwHhHgV2EmZN5Yr3zpKZDvmJYHjg4cgqHkn5Ca5Pns7IbUG2pQnyf5ea HpCyljxO1Wi+AECVNB4Z+Q== 0000052971-02-000017.txt : 20021114 0000052971-02-000017.hdr.sgml : 20021114 20021114153648 ACCESSION NUMBER: 0000052971-02-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 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: 1934 Act SEC FILE NUMBER: 002-34664 FILM NUMBER: 02824962 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 jaco10qsept2002.txt JACO ELECTRONICS, INC. 10-Q SEPTEMBER 30, 2002 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, 2002 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 8, 2002 - - 5,791,432 (Excluding 634,300 Shares of Treasury Stock). FORM 10-Q September 30, 2002 Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 2002 2002 --------------- ----------- ASSETS Current Assets Cash $ 381,702 $ 324,447 Marketable securities 554,205 650,267 Accounts receivable - net 26,237,067 29,095,269 Inventories 42,520,334 42,611,225 Prepaid expenses and other 944,299 1,183,043 Prepaid and refundable income taxes 3,011,205 2,440,055 Deferred income taxes 2,027,000 2,017,000 --------- --------- Total current assets 75,675,812 78,321,306 Property, plant and equipment - net 6,210,953 6,708,828 Deferred income taxes 436,000 434,000 Excess of cost over net assets acquired - net 22,363,296 22,363,296 Other assets 2,710,810 2,807,451 ----------- ----------- $107,396,871 $110,634,881 ============ ============ See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30, 2002 Page 3 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, 2002 2002 --------------- ------------ LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 23,692,646 $ 25,289,554 Current maturities of long term debt and capitalized lease obligations 873,684 897,419 ------------- ------------ Total current liabilities 24,566,330 26,186,973 Long term debt and capitalized lease obligations 34,298,087 34,879,766 Deferred compensation 912,500 900,000 SHAREHOLDERS' EQUITY Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized, 20,000,000, $.10 par value; 6,425,732 shares issued and 5,807,432 shares outstanding 642,573 642,573 Additional paid-in capital 25,152,010 25,152,010 Retained earnings 24,115,418 25,102,628 Accumulated other comprehensive loss (85,532) (24,554) Treasury stock (2,204,515) (2,204,515) ---------- ----------- Total shareholders' equity 47,619,954 48,668,142 ---------- ---------- $107,396,871 $110,634,881 ============ ============ See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30, 2002 Page 4 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2002 2001 -------------- ------------- NET SALES $49,043,655 $49,430,523 COST AND EXPENSES Cost of goods sold 42,696,191 41,415,022 ---------- ---------- Gross profit 6,347,464 8,015,501 Selling, general and administrative expenses 7,465,363 9,392,345 ------------ ------------ Operating loss (1,117,899) (1,376,844) Interest expense 401,311 769,704 ------------ ------------ Loss before income taxes (1,519,210) (2,146,548) Income tax benefit (532,000) (644,000) ------------ ------------ NET LOSS $ (987,210) $(1,502,548) ============ ============ Net loss per common share: Basic $ (0.17) $ (0.26) ============ ============ Diluted $ (0.17) $ (0.26) ============ ============ Weighted average common shares outstanding: Basic 5,807,432 5,700,937 ============ ============ Diluted 5,807,432 5,700,937 ============ ============ See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30, 2002 Page 5 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED) Additional paid-in Retained Shares Amount capital earnings --------------- -------------- ---------------- ------------------- Balance at July 1, 2002 6,425,732 $ 642,573 $ 25,152,010 $ 25,102,628 Net loss (987,210) Unrealized loss on marketable securities, net of deferred taxes --------------- -------------- ---------------- ------------------- Balance at September 30, 2002 6,425,732 $ 642,573 $ 25,152,010 $ 24,115,418 =============== ============== ================ =================== Accumulated other Total comprehensive Treasury shareholders' loss stock equity -------------- ---------------- ----------------- Balance at July 1, 2002 $ (24,554) $ (2,204,515) $ 48,668,142 Net loss (987,210) Unrealized loss on marketable securities, net of deferred taxes (60,978) (60,978) -------------- ---------------- ----------------- Balance at September 30, 2002 $ (85,532) $ (2,204,515) $ 47,619,954 ============== ================ ================= See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30, 2002 Page 6 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, (UNAUDITED) 2002 2001 ------------------ ----------------- Cash flows from operating activities Net loss $ (987,210) $ (1,502,548) Adjustments to reconcile net loss to net cash provided by (used in) operating activities Depreciation and amortization 559,246 592,139 Deferred compensation 12,500 12,500 Deferred income tax expense 25,000 41,032 Provision for doubtful accounts 192,500 176,900 Changes in operating assets and liabilities, Decrease in operating assets - net 2,424,187 12,225,238 Increase (decrease) in operating liabilities - net 502,655 (7,027,767) ------------------ ----------------- Net cash provided by operating activities 2,728,878 4,517,494 ------------------ ----------------- Cash flows from investing activities Capital expenditures (27,121) (69,723) Purchase of marketable securities (1,916) (1,987) Business acquisitions - deferred payments (2,099,563) Decrease (increase) in other assets 62,391 (329,542) ------------------ ----------------- Net cash used in investing activities (2,066,209) (401,252) ------------------ ----------------- Cash flows from financing activities Borrowings under line of credit 46,162,798 44,782,170 Payments under line of credit (46,545,132) (48,241,778) Principal payments under equipment financing and term loans (223,080) (253,217) Proceeds from exercise of stock options 25,000 ------------------ ----------------- Net cash used in financing activities (605,414) (3,687,825) ------------------ ----------------- NET INCREASE IN CASH 57,255 428,417 ------------------ ----------------- Cash at beginning of period 324,447 89,523 ------------------ ----------------- Cash at end of period $ 381,702 $ 517,940 ================== ================= Supplemental schedule of non-cash financing and investing activities: Equipment acquired under capital lease obligations $ 396,685 See accompanying notes to condensed consolidated financial statements.
FORM 10-Q September 30, 2002 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, 2002 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's agreement with its banks, as amended, provides the Company with a $45,000,000 revolving line of credit facility. The credit facility is based principally on eligible accounts receivable and inventories of the company as defined in the agreement. The agreement was amended to (i) extend the maturity date to March 14, 2004, (ii) reduce the credit facility line from $70 million to $45 million, and (iii) change the requirements of certain financial covenants. The agreement also requires the Company to establish a compensating balance arrangement with its banks. The interest rate was based on the average 30-day LIBOR plus 1% to 2.25% depending on the Company's performance for the immediately preceding four fiscal quarters measured by a certain financial ratio. Effective October 1, 2002, the rate converted to the average 30-day LIBOR plus 2.25% to 2.75%. Borrowings under this facility are collateralized by substantially all of the assets of the Company. 3) For interim financial reporting purposes, the Company uses the gross profit method for computing inventories, which consists principally of goods held for resale. 4) On September 18, 2001, the Company announced that its Board of Directors authorized the repurchase of up to 250,000 shares of its outstanding common stock. Purchases may be made from time to time in market or private transactions at prevailing market prices. 5) In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146 ("SFAS No. 146"), "Accounting for Costs Associated with Exit or Disposal Activities," which addresses accounting for restructuring and similar costs. SFAS No. 146 supersedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3. SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly SFAS No. 146 may affect the timing of recognizing future restructuring costs as well as the amount recognized. SFAS no. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. Management believes that the adoption of SFAS No. 146 will not have a material impact on its results of operations or financial position. 6) 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, plus the assumption of certain liabilities and a deferred payment of $5,002,860, which has been fully satisfied as of September 30, 2002. The acquisition has been accounted for as a purchase and the operations of Interface have been included in the Company's Statement of Operations since the date of acquisition. Included in other assets are the costs of the identifiable intangible assets acquired, principally an employment agreement which is being amortized on a straight-line basis over five years, and a franchise agreement which was being amortized on a straight-line basis over fifteen years until the Company's adoption of SFAS No. 142. The excess of the purchase price and related expenses over FORM 10-Q September 30, 2002 Page 8 the net tangible and identifiable intangible assets acquired amounted to approximately $19,703,000 at September 30, 2002, and was being amortized on a straight-line basis over twenty years until the Company's adoption of SFAS No. 142. 7) Total comprehensive loss and its components for the three months ended September 30, 2002 and 2001 are as follows: Three Months Ended September 30, -------------------------------- 2002 2001 -------------- ------------- Net loss $ (987,210) $ (1,502,548) Unrealized loss on marketable securities (97,978) (109,033) Deferred tax benefit 37,000 39,032 -------------- ------------- Comprehensive loss $ (1,048,188) $ (1,572,549) ============== ============= Accumulated other comprehensive income is comprised of unrealized gains and losses on marketable securities, net of the related tax effect. 8) The weighted average common shares outstanding net of treasury shares, used in the Company's basic and diluted earnings per share computations were 5,807,432 and 5,700,937 for the three months ended September 30, 2002 and 2001, respectively. Excluded from the calculation of earnings per share are options to purchase 844,548 and 948,920 shares of the Company's common stock for the three months ended September 30, 2002 and 2001, respectively, as their inclusion would have been antidilutive. Common stock equivalents for stock options are calculated using the treasury stock method. 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 size 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, 2002 and 2001 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: FORM 10-Q September 30, 2002 Page 9 Three Months Ended September 30, ------------- 2002 2001 --------- ------- (in thousands) Net sales from external customers Electronics components distribution $46,086 $42,438 Contract manufacturing 2,958 6,993 ------- ------- $49,044 $49,431 ====== ====== Intersegment net sales Electronics components distribution $ 40 $ 114 Contract manufacturing _____ _____ $ 40 $ 114 ======== ========= Operating (loss) profit Electronics components distribution $ (819) $ (1,574) Contract manufacturing (299) 197 --------- ------- $ (1,118) $ (1,377) ======= ======= Interest expense Electronics components distribution $ 288 $ 604 Contract manufacturing 113 166 -------- -------- $ 401 $ 770 ====== ======= (Loss) earnings before income taxes Electronics components distribution $ (1,107) $ (2,178) Contract manufacturing (412) 31 ----------- -------- $ (1,519) $ (2,147) =========== =========== Identifiable assets Electronics components distribution $ 94,884 $107,552 Contract manufacturing 12,513 16,884 -------- -------- $107,397 $124,436 ======= ======= Capital expenditures Electronics components distribution $ 27 $ 70 Contract manufacturing _____ _____ $ 27 $ 70 ====== ====== Depreciation and amortization Electronics components distribution $ 353 $ 369 Contract manufacturing 206 223 -------- -------- $ 559 $ 592 ======= ======= FORM 10-Q September 30, 2002 Page 10 Item 2. 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: Except for the historical information, this filing includes forward-looking statements that involve risks and uncertainties, including, but not limited to, general industry and economic conditions, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results, delays in development of highly-complex products, the ability of the Company to continue to expand its operations, the level of costs incurred in connection with the Company's expansion efforts and the financial strength of the Company's customers and suppliers and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. The forward-looking statements in this filing involve risks and uncertainties which could cause actual results, performance or trends, including margins, SG&A expenses as a percentage of revenues and earnings per diluted share, to differ materially from those expressed in the forward-looking statements. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. Actual results may differ materially from such information set forth herein. 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. FORM 10-Q September 30, 2002 Page 11 Results of Operations The following table sets forth certain items in the Company's statements of operations as a percentage of net sales for the periods shown: Three Months Ended September 30, ---------------------------------- 2002 2001 --------------- --------------- Net sales 100.0% 100.0% Cost of goods sold 87.1 83.8 --------------- --------------- Gross profit 12.9 16.2 Selling, general and administrative expenses 15.2 19.0 --------------- --------------- Operating loss (2.3) (2.8) Interest expense 0.8 1.5 --------------- --------------- Loss before income taxes (3.1) (4.3) Income tax benefit (1.1) (1.3) --------------- --------------- NET LOSS (2.0)% (3.0)% ==== ==== COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001 - ------------------------------------------------------------------------------- Net sales for the three months ended September 30, 2002 were $49.0 million, a decrease of 0.8%, as compared from $49.4 million for the three months ended September 30, 2001.The electronics industry continues to be impacted by weak demand for components throughout most sectors. Additionally, there has been downward pressure on unit pricing at the time of procurement. We anticipate pricing will stabilize when demand picks up. For the current quarter, flat panel display (FPD) sales represented approximately 10% of our distribution sales. Passive components represented approximately 34% of our distribution sales and active components, including FPD, represented approximately 66% of our distribution sales. Gross profit was $6.3 million, or 12.9% for the three months ended September 30, 2002, as compared to $8.0 million, or 16.2% for the three months ended September 30, 2001. The margin decrease is a result of a higher percentage of sales of active components, which historically sell for lower margins and the continued pressure on pricing due to weak demand for components. We do not anticipate gross profit margins to materially improve for the foreseeable future. Selling, general and administrative ("SG&A") expenses were $7.5 million for the three months ended September 30, 2002, a decrease of $1.9 million, or 20.8%, as compared to $9.4 million for the three months ended September 30, 2001. The decrease is the result of reduced staffing levels, elimination of discretionary costs, and variable costs such as commissions paid to sales personnel. Commissions are paid as a percentage of either net sales or gross profit. Management is continuing to review SG&A expenses and will continue to reduce costs that are deemed discretionary. FORM 10-Q September 30, 2002 Page 12 Interest expense decreased 48% to $0.4 million for the three months ended September 30, 2002, as compared to $0.8 million for the comparable period last year. Bank borrowings declined approximately $19 million compared to last year and interest rates declined slightly. Management does not expect any material increase in borrowings at the current level of net sales. Net loss for the three months ended September 30, 2002 was $1.0 million, or $0.17 per diluted share as compared to $1.5 million, or $0.26 per diluted share for the three months ended September 30, 2001. The net loss was primarily attributable to the decrease in gross profit margin. As a result of reducing SG&A and interest expenses, the net loss for the current quarter was reduced by 34% compared to the comparable quarter during the last fiscal year. LIQUIDITY AND CAPITAL RESOURCES Our agreement with our banks, as amended, expires on March 14, 2004. The agreement provides us with a $45 million revolving line of credit facility based principally on eligible accounts receivable and inventories as defined in the agreement. The agreement also requires the Company to establish a compensating balance arrangement with its banks. The interest rate of the credit facility was based on the average 30-day LIBOR rate plus 1% to 2.25% depending on our performance for the immediately preceding four fiscal quarters measured by a certain financial ratio. Effective October 1, 2002, the rate converted to the average 30-day LIBOR plus 2.25% to 2.75%. The outstanding balance on the revolving line of credit facility was $33.4 million at September 30, 2002. 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, 2002, and prohibits the payment of cash dividends. For the three months ended September 30, 2002, our cash provided by operating activities was approximately $2.7 million, as compared to $4.5 million for the same period last fiscal year. The decrease in net cash provided is primarily attributable to a smaller decrease in accounts receivable and inventory for the three months ended September 30, 2002, as compared to the same period last fiscal year. This was partially offset by an increase in accounts payable and accrued expenses for the three months ended September 30, 2002, as compared to a decrease in accounts payable and accrued expenses for the three months ended September 30, 2001. The decrease in accounts receivable and inventory was the result of the decrease in net sales for the three months ended September 30, 2002, as compared to the same period last year. Net cash used in investing activities increased to $2.1 million for the three months ended September 30, 2002, as compared to $0.4 million for the three months ended September 30, 2001. The increase is primarily attributable to deferred payments related to the acquisition of Interface Electronics Corp. of $2.1 million for the three months ended September 30, 2002. Net cash used in financing activities was $0.6 million for the three months ended September 30, 2002 as compared to $3.7 million for the comparable period last fiscal year. The decrease in net cash used is primarily attributable to the increase in net borrowings under the line of credit of approximately $3.1 million. For the three months ended September 30, 2002 and September 30, 2001, our inventory turnover was 4.0x and 2.8x, respectively. The average days outstanding of our accounts receivable at September 30, 2002 were 51 days, as compared to 63 days at September 30, 2001. We believe that cash flow from operations and funds available under our credit facility will be sufficient to fund our capital needs for the foreseeable future. However, our cash expenditures may vary significantly from current levels, based on a number of factors, including, but not limited to future acquisitions, if any. Historically, we have been able to obtain amendments to our existing credit facility to satisfy financial covenants. While there can be no assurances that such financing or future amendment if needed, will be available, management believes we will be able to continue to obtain financing on acceptable terms. Inflation Inflation has not had a significant impact on the Company's operations during the last three fiscal years. FORM 10-Q September 30, 2002 Page 13 Item 3. 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 2.25% to 2.75% depending on our performance for the immediately preceding four fiscal quarters measured by a certain financial ratio, and may be adjusted quarterly. At October 31, 2002, $30.1 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 $0.3 million based on outstanding borrowings at October 31, 2002. The impact of interest rate fluctuations on other floating rate debt is not material. Item 4. Procedures and Controls Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures are effective. There have been no significant changes in the Company's internal controls or other factors that could significantly affect those controls since the date of the Company's last evaluation of its internal controls, and there have been no corrective actions with regard to significant deficiencies and material weaknesses in such controls. FORM 10-Q September 30, 2002 Page 14 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) Exhibit 99.9 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 99.10 - Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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, Executive Vice President, Finance and Secretary (Principal Financial Officer) DATED: November 14, 2002 CERTIFICATION BY JOEL H. GIRSKY PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14 I, Joel H. Girsky, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jaco Electronics, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Joel H. Girsky ------------------ Joel H. Girsky Chairman, President and Treasurer (Principal Executive Officer) DATED: November 14, 2002 CERTIFICATION BY JEFFREY D. GASH PURSUANT TO SECURITIES EXCHANGE ACT RULE 13A-14 I, Jeffrey D. Gash, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Jaco Electronics, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Jeffrey D. Gash -------------------------------------------- Jeffrey D. Gash Executive Vice President, Finance and Secretary (Principal Financial Officer) DATED: November 14, 2002 EX-99.9 3 exhibit999girsky.txt SECTION 906 CERTIFICATION - J. GIRSKY Exhibit 99.9 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Chairman, President and Treasurer, of Jaco Electronics, Inc. (the "Company"), hereby certifies, to the best of my knowledge, that the Form 10-Q of the Company for the quarter ended September 30, 2002 (the "Periodic Report") accompanying this certification fully complies with the requirements of the Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. The foregoing certification is incorporated solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act and is not intended to be used for any other purpose. /s/ Joel H. Girsky ------------------ Joel H. Girsky Chairman, President and Treasurer (Principal Executive Officer) DATED: November 14, 2002 EX-99.10 4 exhibit991.txt SECTION 906 CERTIFICATION - J. GASH Exhibit 99.10 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Executive Vice President, Finance and Secretary of Jaco Electronics, Inc.(the "Company"), hereby certifies, to the best of my knowledge, that the Form 10-Q of the Company for the quarter ended September 30, 2002 (the "Periodic Report") accompanying this certification fully complies with the requirements of the Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. The foregoing certification is incorporated solely for purposes of complying with the provisions of Section 906 of the Sarbanes-Oxley Act and is not intended to be used for any other purpose. /s/ Jeffrey D. Gash ------------------------------------------- Jeffrey D. Gash Executive Vice President, Finance and Secretary (Principal Financial Officer) DATED: November 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----