EX-99.2 4 y89606a1exv99w2.txt PRO FORMA FINANCIAL INFO Exhibit 99.2 JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. INTRODUCTION (UNAUDITED) The unaudited pro forma condensed consolidated financial statements have been prepared to illustrate the effect of the Asset Purchase Agreement dated as of May 19, 2003, as amended by the First Amendment to the Asset Purchase Agreement dated as of June 2, 2003 by and between the Company and Reptron. The unaudited pro forma condensed consolidated balance sheet at March 31, 2003 is based on the historical consolidated balance sheet of Jaco Electronics, Inc. ("Jaco") as of March 31, 2003 and the historical balance sheet of the distribution division of Reptron Electronics, Inc. ("Reptron") as of March 31, 2003 and assumes that the asset purchase agreement occurred on March 31, 2003. The purchase price consisted of a cash payment of approximately $5.6 million at closing (subject to post closing adjustments), plus the assumption of certain liabilities of reptron. To finance the transaction, the company used its existing credit facility. The unaudited pro forma condensed consolidated statements of operations for the nine months ended March 31, 2003 and the year ended June 30, 2002 are based on the historical consolidated statements of operations of Jaco Electronics, Inc. and the historical statements of operations of the distribution division of Reptron Electronics, Inc. for the nine months ended March 31, 2003 and the twelve months ended June 30, 2002 and combines their results as if the acquisition had occurred on July 1, 2002 and July 1, 2001, respectively. The pro forma adjustments are based on preliminary assumptions of the allocation of the purchase price and are subject to revision upon final settlement of all purchase price adjustments and the completion of evaluations made on the fair value of the assets acquired and liabilities assumed. As a result, the final allocation of the fair value of assets and liabilities assumed in connection with the acquisition may differ from that presented herein. The pro forma adjustments do not include any potential benefits that might result from the elimination of duplicate costs. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the actual results that would have been reported if the acquisition occurred on the dates indicated nor do they purport to be indicative of the results which may be obtained in the future. In the opinion of management all adjustments necessary to present fairly such pro forma condensed consolidated financial statements have been made. The pro forma condensed consolidated financial statements should be read in conjunction with Jaco Electronics, Inc.'s Form 10-K for the fiscal year ended June 30, 2002. JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 2003 (IN THOUSANDS) (UNAUDITED)
Historical Pro Forma -------------------- ----------------------------- Jaco Reptron Adjustments Consolidated --------- ------- ------------- ------------ ASSETS Current Assets Cash $ 64 $ 64 Restricted Cash 800 800 Marketable securities 574 574 Accounts receivable - net 27,751 $11,303 $(11,303) (A) 27,751 Inventories 35,739 12,333 (2,500) (A) 40,239 (5,333) (B) Prepaid expenses and other 1,062 244 (244) (A) 1,062 Prepaid and refundable income taxes 1,107 1,107 Deferred income taxes 2,078 2,078 --------- ------- --------- -------- Total current assets 69,175 23,880 (19,380) 73,675 Property, plant and equipment - net 5,405 600 (B) 6,005 Deferred income taxes 436 2,179 (2,179) (A) 436 Excess of cost over net assets acquired - net 22,363 2,836 (B) 25,199 Other assets 2,671 49 (49) (A) 4,271 1,600 (B) --------- ------- --------- -------- Total assets $ 100,050 $26,108 $(16,572) $109,586 ========= ======= ========= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payables $ 25,572 $6,644 $ (3,222) (A) $28,994 Accrued expenses 2,230 1,373 (1,186) (A) 2,767 350 (B) Current maturities of long-term debt and capitalized lease obligations 721 721 Accrued restructuring costs 566 (566) (A) - --------- ------- --------- -------- Total current liabilities 28,523 8,583 (4,624) 32,482 Long-term debt and capitalized lease obligations 23,872 5,577 (C) 29,449 Deferred compensation 938 938 SHAREHOLDERS' EQUITY Common stock 643 643 Additional paid-in capital 25,152 25,152 Retained earnings 23,315 17,525 (11,301) (A) 23,315 (647) (B) (5,577) (C) Accumulated other comprehensive loss (78) (78) Treasury stock (2,315) (2,315) --------- ------- --------- -------- Total shareholders' equity 46,717 17,525 (17,525) 46,717 --------- ------- --------- -------- Total liabilities and shareholders' equity $ 100,050 $26,108 $(16,572) $109,586 ========= ======= ========= ========
See accompanying notes to pro forma condensed financial statements. JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET MARCH 31, 2003 (UNAUDITED) (A) To reflect the elimination of the value of assets and liabilities not acquired in connection with the acquisition of the Distribution Division of Reptron Electronics, Inc. (B) The preliminary purchase price, exclusive of related fees and expenses, of $9.2 million is based on the terms and conditions of the Asset Purchase Agreement. The Company utilized its existing credit facility to finance the consideration for the Transaction. The purchase price has initially been allocated as follows: Purchase price paid in cash $ 5,577,000 Less: Operating assets acquired Inventories (4,500,000) Fixed assets (600,000) Identifiable intangibles Franchise agreements (1,600,000) Plus: Liabilities assumed 3,609,000 Estimated transaction costs 350,000 ------------- Goodwill $ 2,836,000 =============
(C) To record the cash purchase price which was financed by additional borrowings under the Company's existing credit facility. JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Historic Pro Forma --------------------------- -------------------------- Jaco Reptron Adjustments Consolidated ---------- ------------- ------------ ---------- Net sales $ 162,630 $ 71,657 $ 234,287 Cost of goods sold 142,213 72,850 (1) 215,063 ---------- --------- ------- ---------- Gross profit (loss) 20,417 (1,193) 19,224 Selling, general and administrative expenses 22,044 21,945 $ (581) (B) 43,498 90 (C) Impairment 5,067 (1) 5,067 ---------- --------- ------- ---------- Operating loss (1,627) (28,205) 491 (29,341) Interest expense 1,123 1,942 167 (D) 3,232 ---------- --------- ------- ---------- Loss before income taxes (2,750) (30,147) 324 (32,573) Income tax benefit (962) (90) (E) (1,052) ---------- --------- ------- ---------- Net loss $ (1,788) $ (30,147) $ 414 $ (31,521) ========== ========= ======= ========== Net loss per common share: Basic and diluted $ (0.31) $ (5.44) ========== ========== Weighted average common shares outstanding: Basic and diluted 5,789,068 5,789,068 ========== ==========
(1) During the nine months ended March 31, 2003, Reptron Electronics, Inc. made the determination to dispose of the Distribution Division. Upon this determination and based on the expected sales proceeds, Reptron recorded impairments of $3.3 million related to goodwill and $1.8 million related to property, plant and equipment. In addition, Reptron recognized in cost of goods sold a charge of $10.4 million related to inventory reserves, which was based on the anticipated sales proceeds. See accompanying notes to pro forma condensed financial statements. JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2002 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Historic Pro Forma --------------------------- -------------------------- Jaco Reptron Adjustments Consolidated ---------- ------------- ------------ ---------- Net sales $ 194,106 $ 140,177 $ 334,283 Cost of goods sold 166,133 115,927 282,060 ---------- --------- ------- ---------- Gross profit 27,973 24,250 -- 52,223 Selling, general and administrative expenses 33,562 35,004 $ (122) (A) 67,401 (1,163) (B) 120 (C) ---------- --------- ------- ---------- Operating loss (5,589) (10,754) 1,165 (15,178) Interest expense 2,223 2,825 223 (D) 5,271 ---------- --------- ------- ---------- Loss before income taxes (7,812) (13,579) 942 (20,449) Income tax benefit (2,768) (1,622) 34 (E) (4,356) ---------- --------- ------- ---------- Net loss $ (5,044) $ (11,957) $ 908 $ (16,093) ========== ========= ======= ========== Net loss per common share: Basic and diluted $ (0.88) $ (2.82) ========== ========== Weighted average common shares outstanding: Basic and diluted 5,713,365 5,713,365 ========== ==========
See accompanying notes to pro forma condensed financial statements. JACO ELECTRONICS, INC. AND SUBSIDIARIES AND THE DISTRIBUTION DIVISION OF REPTRON ELECTRONICS, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2003 AND THE YEAR ENDED JUNE 30, 2002 (UNAUDITED) Jaco does expect to achieve operating efficiencies from the acquisition. It is anticipated that cost savings will result principally from such areas as warehousing, administration and operations. Such anticipated cost savings have not been reflected in the accompanying unaudited pro forma condensed consolidated statements of operations. (A) To reflect the elimination of the amortization of goodwill by Reptron for the year ended June 30, 2002. (B) To reflect the elimination of depreciation and amortization of property, plant and equipment recognized by Reptron for the nine months ended March 31, 2003 and for the year ended June 30, 2002. (C) To reflect the projected depreciation and amortization of property, plant and equipment acquired in connection with the transaction. Upon consummation of the Transaction by the company, the fair value of the fixed assets acquired was $600,000 with annual depreciation projected to be $120,000. (D) To reflect the net increase in interest expense resulting from the additional borrowings under the Company's existing credit facility.
Nine months ended Year ended March 31, 2003 June 30, 2002 -------------- ------------- Interest on additional borrowings of $5,577,000 assuming an interest rate of 4.0% $ 167,000 $ 223,000 ========== =========
An 1/8% variance in interest rates will impact pre-tax earnings by approximately $7,000. (E) To reflect the estimated income tax (benefit) provision on the deductable pro forma adjustments.