-----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, LivexkoOug8gdpJ6SI0elo90L1lzfjSdM7XYH5NCNyIi8q06d+Z9VnyEKC55B0iE RmJmLDLYcybW3GnGFnxfKA== 0000950123-96-000375.txt : 19960207 0000950123-96-000375.hdr.sgml : 19960207 ACCESSION NUMBER: 0000950123-96-000375 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960206 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: 1934 Act SEC FILE NUMBER: 000-05896 FILM NUMBER: 96511807 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 JACO ELECTRONICS, INC. 1 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 December 31, 1995 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 January 26, 1996 - 3,952,722 2 FORM 10-Q Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 1995 June 30, 1995 ----------------- ------------- ASSETS: Current Assets: Cash and cash equivalents $ 368,724 $ 393,671 Accounts receivable - net 22,323,990 20,437,664 Inventories 30,103,154 26,653,881 Prepaid expenses and other 1,207,317 1,256,319 Due from officers 309,808 Deferred income taxes 653,000 571,000 ----------- ----------- Total current assets 54,656,185 49,622,343 Property, plant and equipment - net 3,997,240 4,106,221 Deferred income taxes 174,000 174,000 Excess of cost over net assets acquired 1,317,282 1,353,031 Other assets 1,062,475 1,067,643 ----------- ----------- $61,207,182 $56,323,238 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 FORM 10-Q Page 3 JACO ELECTRONICS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES & SHAREHOLDERS' EQUITY: December 31, 1995 June 30, 1995 ----------------- ------------- Current Liabilities: Accounts payable and accrued expenses $15,267,166 $17,952,385 Current maturities of long term debt and capitalized lease obligations 460,226 452,995 Income taxes payable 119,043 475,702 ----------- ----------- Total current liabilities 15,846,435 18,881,082 Long term debt and capitalized lease obligations 12,485,604 23,665,624 Deferred compensation 575,000 550,000 SHAREHOLDERS' EQUITY: Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized 10,000,000 shares, $.10 par value; issued and outstanding, 3,951,806 and 2,464,384 shares, respectively 395,181 246,438 Additional paid-in capital 22,051,940 5,013,663 Retained earnings 9,853,022 7,966,431 ----------- ----------- Total shareholders' equity 32,300,143 13,226,532 ----------- ----------- $61,207,182 $56,323,238 =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 Form 10-Q Page 4 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED DECEMBER 31, (UNAUDITED)
1995 1994 ---- ---- NET SALES $43,589,877 $33,747,154 ----------- ----------- COST AND EXPENSES: Cost of goods sold 34,768,681 26,828,111 ----------- ----------- Gross profit 8,821,196 6,919,043 Selling, general and administrative expenses 6,613,261 5,624,130 ----------- ----------- Operating profit 2,207,935 1,294,913 Interest expense 377,028 532,148 ----------- ----------- Earnings before income taxes 1,830,907 762,765 Income tax provision 751,000 315,000 ----------- ----------- NET EARNINGS $ 1,079,907 $ 447,765 =========== =========== Net earnings per common share $ .30 $ .18 =========== =========== Weighted average common and common equivalent shares outstanding 3,641,647 2,426,980 =========== ===========
See accompanying notes to condensed consolidated financial statements. 5 Form 10-Q Page 5 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE SIX MONTHS ENDED DECEMBER 31, (UNAUDITED)
1995 1994 ---- ---- NET SALES $83,673,362 $64,834,748 ----------- ----------- COST AND EXPENSES: Cost of goods sold 66,310,952 51,521,583 ----------- ----------- Gross profit 17,362,410 13,313,165 Selling, general and administrative expenses 13,226,402 11,152,525 ----------- ----------- Operating profit 4,136,008 2,160,640 Interest expense 935,150 960,381 ----------- ----------- Earnings before income taxes 3,200,858 1,200,259 Income tax provision 1,313,000 490,000 ----------- ----------- NET EARNINGS $ 1,887,858 $ 710,259 =========== =========== Net earnings per common share $ .61 $ .29 =========== =========== Weighted average common and common equivalent shares outstanding 3,089,743 2,423,387 =========== ===========
See accompanying notes to condensed consolidated financial statements. 6 FORM 10-Q Page 6 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEAR ENDED JUNE 30, 1995 THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
Additional Total Common Paid-In Retained Shareholders' Shares Stock Capital Earnings Equity ------ ------ ---------- -------- ------------- Balance at June 30, 1994 1,652,309 $165,231 $ 3,810,516 $ 7,226,705 $11,202,452 Exercise of stock options 28,000 2,800 105,700 108,500 10% stock dividend 167,979 16,798 1,159,056 (1,175,854) Payment for fractional shares resulting from 10% stock dividend (362) (362) 4-for-3 stock split 616,096 61,609 (61,609) Net earnings 1,915,942 1,915,942 --------- -------- ----------- ----------- ----------- Balance at June 30, 1995 2,464,384 246,438 5,013,663 7,966,431 13,226,532 --------- -------- ----------- ----------- ----------- Issuance of common stock for cash 1,485,000 148,500 17,026,595 17,175,095 Exercise of stock options 2,500 250 11,675 11,925 Payment for fractional shares resulting from 4-for-3 split (78) (7) 7 (1,267) (1,267) Net earnings 1,887,858 1,887,858 --------- -------- ----------- ----------- ----------- Balance at December 31, 1995 3,951,806 $395,181 $22,051,940 $ 9,853,022 $32,300,143 ========= ======== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements 7 FORM 10-Q Page 7 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, (UNAUDITED)
1995 1994 ---- ---- Cash flows from operating activities Net earnings $ 1,887,858 $ 710,259 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 349,800 344,031 Deferred compensation 25,000 25,000 Deferred income tax provision (82,000) (78,000) Amortization of goodwill 35,749 40,435 Loss on sale of equipment 8,918 9,403 Provision for doubtful accounts 326,190 110,620 Changes in operating assets and liabilities, Increase in operating assets - net (5,612,787) (6,201,321) (Decrease) increase in operating liabilities - net (3,041,878) 1,864,387 ------------ ------------ Net cash used in operating activities (6,103,150) (3,175,186) ------------ ------------ Cash flows from investing activities Capital expenditures (266,774) (722,247) Proceeds from sales of equipment 17,037 Decrease (increase) in due from officers - net 309,808 (71,027) Decrease (increase) in other assets 5,168 (76,464) ------------ ------------ Net cash provided by (used in) investing activities 65,239 (869,738) ------------ ------------ Cash flows from financing activities Proceeds from public offering - net 17,175,095 Borrowings under line of credit 89,522,388 69,118,970 Payments under line of credit (92,567,064) (65,317,472) Principal payments under equipment financing and term loan (8,128,113) (219,649) Borrowings under term loan 457,523 Proceeds from exercise of stock options 11,925 Payments for fractional shares (1,267) ------------ ------------ Net cash provided by financing activities 6,012,964 4,039,372 ------------ ------------ NET DECREASE IN CASH (24,947) (5,552) ------------ ------------ Cash and cash equivalents at beginning of period 393,671 434,798 ------------ ------------ Cash and cash equivalents at end of period $ 368,724 $ 429,246 ============ ============
See accompanying notes to condensed consolidated financial statements 8 FORM 10-Q Page 8 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, 1995 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) On October 20, 1995, the Company completed a public offering of 1,600,000 shares of its common stock at $12.75 per share. The offering consisted of 1,325,000 shares offered by the Company and 275,000 shares offered by selling shareholders. On December 8, 1995, the underwriters of the public offering exercised a portion of their over-allotment option for an additional 160,000 shares at a price of $12.75 per share. The Company's net proceeds from the public offering of $17,175,095, after deducting the underwriters commission and costs of the public offering, was used to reduce its bank indebtedness. In connection with the public offering the Company also issued stock warrants, to the representative underwriters, to purchase up to 70,000 shares of common stock at an exercise price per share equal to 180% of the public offering price expiring on October 20, 1999. 3) For interim statement purposes, the Company uses the gross profit method in computing inventories which consists of goods held for resale. 4) Earnings per share has been computed based on weighted average number of shares outstanding including approximately 82,000 and 78,000 common stock equivalents for the three and six months ending December 31, 1995, respectively. The effect of common stock equivalents were antidilutive for the six months ended December 31, 1994, and approximately 3,200 common stock equivalents were included in weighted average number of shares outstanding for the three months ended December 31, 1994. 5) On February 3, 1995, the Company declared a 10% stock dividend which was paid on March 10, 1995. Further, on August 30, 1995, the Company declared a 4-for-3 stock split which was paid on October 3, 1995. All references to the number of common shares and earnings per common share have been restated to reflect the 10% stock dividend and the 4-for-3 stock split. 9 Form 10-Q Page 9 JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 and electromechanical devices and motors 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), assembling fractional-horsepower electric motors and turnkey contract manufacturing through the Company's wholly owned subsidiary, Nexus Custom Electronics, Inc. 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 Six months ended December 31, December 31, 1995 1994 1995 1994 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 79.8 79.5 79.3 79.5 ----- ----- ----- ----- Gross profit 20.2 20.5 20.7 20.5 Selling, general and administrative expenses 15.2 16.7 15.8 17.2 ----- ----- ----- ----- Operating profit 5.0 3.8 4.9 3.3 Interest expense .8 1.6 1.1 1.4 ----- ----- ----- ----- Earnings before income taxes 4.2 2.2 3.8 1.9 Income tax provision 1.7 .9 1.5 .8 ----- ----- ----- ----- NET EARNINGS 2.5% 1.3% 2.3% 1.1% ===== ===== ===== =====
10 FORM 10-Q Page 10 COMPARISON OF THREE AND SIX MONTHS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994 Net sales for the second quarter of fiscal 1996 increased 29% to $43.6 million, as compared to $33.8 million for the second quarter of fiscal 1995. The increase in sales is the result of the Company's continued focus on internal expansion at existing locations and growth in recently established sales offices. Net sales for the six months ended December 31, 1995 increased 29% to $83.7 million, compared to $64.8 million for the six months ended December 31, 1994. Gross profit margins decreased for the three months ended December 31, 1995. The decrease during the current quarter was primarily attributable to current market conditions. Selling, general and administrative (SG&A) expenses were $6.6 million and $13.2 million during the second quarter and first six months of fiscal 1996. As a result of the increase in sales and the Company's attention to cost containment, SG&A as a percentage of net sales decreased to 15.2% as compared to 16.7% for the current quarter and to 15.8% from 17.2% for the six months ended December 31, 1995 as compared to the previous fiscal year. Interest expense decreased to $377,000 or 29% for the three months ended December 31, 1995. The decrease was the result of a reduction in borrowings under the Company's credit facility by application of the net proceeds from a stock offering completed during the second quarter (see Note A-2). Net earnings for the second quarter of fiscal 1996 increased 141% compared to the same period in fiscal 1995. Net earnings for the six months ended December 31, 1995 were $1.9 million, an increase of 166% as compared to $ .7 million for the same period in fiscal 1995. The increase in net earnings for the current quarter is principally the result of the increase in sales, control of SG&A and reduction in interest expense. LIQUIDITY AND CAPITAL RESOURCES The Company maintains a total Credit Facility of $30,000,000, $8,000,000 of which is structured as a term loan, $1,500,000 (the outstanding balance of which at December 31, 1995 was approximately $1,125,000) of which is structured as a term loan, payable in equal monthly installments of $17,857 and the balance of which is structured as a revolving line of credit. During fiscal 1995, the borrowing rate was reduced from prime +1% to a rate equal to the higher of prime rate or the federal funds rate +1/2% or, at the Company's option, LIBOR plus 2.5% for fixed periods of time. The Company must comply with various financial covenants, all of which 11 FORM 10-Q Page 11 the Company is in compliance. As of December 31, 1995, the Company had outstanding borrowings of $11.7 million, with additional borrowing capacity of $18.3 million available under the revolving line of credit. Working capital increased to $38.8 million as of December 31, 1995, as compared to $15.7 million as of December 31, 1994, an increase of $23.1 million or 147%. The increase was primarily attributable to the Company's restructuring of its Credit Facility which, among other things, extended its maturity date to September 1998; the Company's profitable results; and higher inventory necessary to support the Company's increased level of sales and resulting increased accounts receivable. During the six months ended December 31, 1995, the Company's net cash used in operating activities increased to $6.1 million, from $3.2 million in fiscal 1995 primarily as a result of increases in inventory, accounts receivables and decreases in accounts payable. During the quarter, the Company decreased its borrowings under its Credit Facility by $15.5 million principally due to the completed stock offering. The Company's cash expenditures may vary significantly from its current expectation, based on a number of factors, including but not limited to, future acquisitions, if any. During October 1995, the Company completed a public offering of 1,600,000 shares of its common stock. The offering consisted of 1,325,000 shares offered by the Company and 275,000 shares offered by selling shareholders. On December 8, 1995 the underwriters partially exercised their over allotment option for an additional 160,000 shares. The net proceeds to the Company from this offering, after deducting all costs, was approximately $17.2 million. The net proceeds initially have been used to reduce the outstanding balance of the bank indebtedness under its credit facility. As a result of this reduction, the amount available under the Credit Facility has increased and is available in the future for working capital or potential acquisitions. INFLATION Inflation has not had a significant impact on the Company's operations during the last three fiscal years. 12 FORM 10-Q Page 12 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 Jaco's Annual Meeting of Shareholders was held on December 11, 1995. The Shareholders approved the following: (i) The election of each of the following nominees to the Board of Directors: Stephen A. Cohen For: 3,278,250 Withheld: 19,453 Edward M. Frankel For: 3,278,250 Withheld: 19,453 Charles B. Girsky For: 3,278,250 Withheld: 19,453 Joel H. Girsky For: 3,278,250 Withheld: 19,453 (ii) An amendment to the Company's Certificate of Incorporation to increase the aggregate number of shares of common stock, $0.10 par value per share, which the Company shall have the authority to issue from 5,000,000 shares to 10,000,000 shares. For: 3,165,566 Against: 117,459 Abstention: 14,678 Item 5. Other Information Properties Jaco leases from Bemar Realty Company, a partnership consisting of Messrs. Joel H. Girsky, President and Chairman of the Board, and Charles B. Girsky, Executive Vice President, approximately 72,000 square feet of office and warehouse space at 145 Oser Avenue, Hauppauge, New York. During January 1996, the Company entered into a new lease agreement effective as of January 1, 1996 and ending December 31, 2004. The initial base rent is five hundred four thousand dollars ($504,000) per annum and the lease provides for increases on an 13 FORM 10-Q Page 13 annual basis, net of all expenses, including taxes, utilities, insurance and maintenance and repairs. Approximately 26,000 square feet of space is sublet by Jaco to an unafilliated third party. In addition to its headquarters, Jaco maintains purchasing /sales offices and warehouse facilities at its Hauppauge location. Item 6. Exhibits and Reports on Form 8-K a) Exhibits: None b) Reports on Form 8-K: The Company filed a Report on Form 8-K, dated October 3, 1995, to report the Board of Directors declarations of a 4-for-3 stock split, which was paid on October 3, 1995 to shareholders of record at the close of business on September 22, 1995, and to report the Company's obligation to issue additional shares of Common Stock as a result of (i) previously exercised options and (ii) the antidilutiion provisions contained in the Company's option plans. 14 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) 15 EXHIBIT INDEX ------------- Exhibit No. Description Page No. - ---------- -------------- ------- EX-27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS JUN-30-1995 JUN-01-1995 DEC-31-1995 368,724 0 23,109,071 785,081 30,103,154 54,656,185 7,123,668 3,126,428 61,207,182 15,846,435 0 0 0 395,181 31,904,962 61,207,182 83,673,362 83,673,362 66,310,952 79,537,354 0 326,190 935,150 3,200,858 1,313,000 0 0 0 0 1,887,858 0.61 0.61
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