-----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, DyYwGAYqmPRr5BYr4M9WqZq3N669A7niwoUgBQguHA7EKTFs3vXqfLxj8G6E7ML9 KsUon5AnAZF+oK2lY8FUGQ== 0000950123-96-002337.txt : 19960515 0000950123-96-002337.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950123-96-002337 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 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: 96564300 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 FORM 10-Q 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 March 31, 1996 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 May 6, 1996 - 3,995,721 - --------- 2 FORM 10-Q Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996 June 30, 1995 -------------- ------------- ASSETS: Current Assets: Cash and cash equivalents $ 432,784 $ 393,671 Accounts receivable - net 23,686,486 20,437,664 Inventories 29,107,498 26,653,881 Prepaid expenses and other 900,914 1,256,319 Due from officers 309,808 Deferred income taxes 752,000 571,000 ----------- ----------- Total current assets 54,879,682 49,622,343 Property, plant and equipment - net 4,062,100 4,106,221 Deferred income taxes 174,000 174,000 Excess of cost over net assets acquired 1,299,408 1,353,031 Other assets 1,079,658 1,067,643 ----------- ----------- $61,494,848 $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: March 31, 1996 June 30, 1995 -------------- ------------- Current Liabilities: Accounts payable and accrued expenses $15,525,504 $17,952,385 Current maturities of long term debt and capitalized lease obligations 467,159 452,995 Income taxes payable 340,588 475,702 ----------- ----------- Total current liabilities 16,333,251 18,881,082 Long term debt and capitalized lease obligations 11,187,969 23,665,624 Deferred compensation 587,500 550,000 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, 3,955,721 and 2,464,384 shares, respectively 395,572 246,438 Additional paid-in capital 22,024,795 5,013,663 Retained earnings 10,965,761 7,966,431 ----------- ----------- Total shareholders' equity 33,386,128 13,226,532 ----------- ----------- $61,494,848 $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 MARCH 31, (UNAUDITED)
1996 1995 ---- ---- NET SALES $43,176,834 $35,825,167 ----------- ----------- COST AND EXPENSES: Cost of goods sold 34,543,777 28,328,468 ----------- ----------- Gross profit 8,633,057 7,496,699 Selling, general and administrative expenses 6,523,812 6,050,211 ----------- ----------- Operating profit 2,109,245 1,446,488 Interest expense 222,505 522,204 ----------- ----------- Earnings before income taxes 1,886,740 924,284 Income tax provision 774,000 370,000 ----------- ----------- NET EARNINGS $ 1,112,740 $ 554,284 =========== =========== Net earnings per common share $ .28 $ .23 =========== =========== Weighted average common and common equivalent shares outstanding 4,025,060 2,450,019 =========== ===========
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 NINE MONTHS ENDED MARCH 31, (UNAUDITED)
1996 1995 ---- ---- NET SALES $126,850,196 $100,659,915 ------------ ------------ COST AND EXPENSES: Cost of goods sold 100,854,729 79,850,049 ------------ ------------ Gross profit 25,995,467 20,809,866 Selling, general and administrative expenses 19,750,214 17,202,738 ------------ ------------ Operating profit 6,245,253 3,607,128 Interest expense 1,157,655 1,482,584 ------------ ------------ Earnings before income taxes 5,087,598 2,124,544 Income tax provision 2,087,000 860,000 ------------ ------------ NET EARNINGS $ 3,000,598 $ 1,264,544 ============ ============ Net earnings per common share $ .88 $ .52 ============ ============ Weighted average common and common equivalent shares outstanding 3,399,293 2,432,685 ============ ============
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 NINE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
Additional Total Common Paid-In Retained Shareholders' Shares Stock Capital Earnings Equity ---------- ----------- ----------- ------------ --------------- Balance at July 1, 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 16,991,466 17,139,966 Exercise of stock options 6,415 642 19,658 20,300 Payment for fractional shares resulting from 4-for-3 split (78) ( 8) 8 (1,268) ( 1,268) Net earnings 3,000,598 3,000,598 ----------- ---------- ----------- ----------- ------------ Balance at March 31, 1996 3,955,721 $ 395,572 $22,024,795 $10,965,761 $ 33,386,128 =========== ========== =========== =========== ============
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 NINE MONTHS ENDED MARCH 31, (UNAUDITED)
1996 1995 ---- ---- Cash flows from operating activities Net earnings $ 3,000,598 $ 1,264,544 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 505,740 500,609 Deferred compensation 37,500 37,500 Deferred income tax provision (181,000) (111,000) Amortization of goodwill 53,623 60,652 Loss on sale of equipment 8,918 18,403 Provision for doubtful accounts 514,640 313,126 Changes in operating assets and liabilities, Increase in operating assets - net (5,861,674) (8,097,618) (Decrease) increase in operating liabilities - net (2,561,994) 3,508,602 ------------- ------------- Net cash used in operating activities (4,483,649) (2,505,182) ------------- ------------- Cash flows from investing activities Capital expenditures (487,575) (1,034,835) Proceeds from sales of equipment 17,037 Decrease (increase) in due from officers - net 309,808 (73,827) Increase in other assets (12,015) (46,144) ------------- ------------- Net cash used in investing activities (172,745) (1,154,806) ------------- ------------- Cash flows from financing activities Proceeds from public offering - net 17,139,966 Borrowings under line of credit 128,785,498 102,831,553 Payments under line of credit (132,901,107) (99,846,646) Principal payments under equipment financing and term loan (8,347,882) (313,177) Borrowings under term loan -- 893,046 Proceeds from exercise of stock options 20,300 108,500 Payments for fractional shares (1,268) (362) ------------- ------------- Net cash provided by financing activities 4,695,507 3,672,914 ------------- ------------- NET INCREASE IN CASH 39,113 12,926 ------------- ------------- Cash and cash equivalents at beginning of period 393,671 434,798 ------------- ------------- Cash and cash equivalents at end of period $ 432,784 $ 447,724 ============= =============
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 $17,139,966, after deducting the underwriters commission and costs of the public offering, were 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 which expire on October 20, 1999. 3) On April 15, 1996, the Company announced that its Board of Directors has authorized the purchase of up to 250,000 shares of its outstanding common stock or approximately 6.3% of the currently outstanding shares, under a stock repurchase program. The purchases may be made by the Company from time to time in the open market at the Company's discretion. 4) For interim statement purposes, the Company uses the gross profit method in computing inventories which consists of goods held for resale. 5) Earnings per share has been computed based on weighted average number of shares outstanding including approximately 70,000 and 75,000 common stock equivalents for the three and nine months ending March 31, 1996, respectively. The effect of common stock equivalents were antidilutive and were not included in weighted average number of shares outstanding for the three and nine months ended March 31, 1995. 6) 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 4-for-3 stock split. 9 Form 10-Q Page 9 JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENT'S' 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 Nine months ended March 31, March 31, 1996 1995 1996 1995 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 80.0 79.1 79.5 79.3 ----- ----- ----- ----- Gross profit 20.0 20.9 20.5 20.7 Selling, general and administrative expenses 15.1 16.9 15.6 17.1 ----- ----- ----- ----- Operating profit 4.9 4.0 4.9 3.6 Interest expense .5 1.5 .9 1.5 ----- ----- ----- ----- Earnings before income taxes 4.4 2.5 4.0 2.1 Income tax provision 1.8 1.0 1.6 .8 ----- ----- ----- ----- NET EARNINGS 2.6% 1.5% 2.4% 1.3% ===== ===== ===== =====
10 FORM 10-Q Page 10 COMPARISON OF THREE AND NINE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995 Net sales for the third quarter of fiscal 1996 increased 21 % to $43.2 million, as compared to $35.8 million for the third quarter of fiscal 1995. The increase in sales, compared to the comparable period last year, was the result of the growth in our existing locations and demand for electronic components. Net sales for the nine months ended March 31, 1996 increased 26% to $126.9 million, compared to $100.7 million for the nine months ended March 31, 1995. Gross profit margins decreased for the three and nine months ended March 31, 1996, compared to the comparable periods last year. The decrease was primarily the result of increased availability of certain components, during the current quarter; resulting in more competitive pricing. Selling, general and administrative expenses (SG&A) were $6.5 million and $19.8 million during the three and nine months ended March 31, 1996, compared to $6.1 million and $17.2 million last year. Due to the Company's controlling of costs while sales increased, SG&A as a percentage of net sales decreased to 15.1% as compared to 16.9% for the current quarter and to 15.6% from 17.1% for the nine months ended March 31, 1996, as compared to the previous fiscal year. Interest expense decreased to $223,000 for the three months ended March 31, 1996, compared to $522,000 for the three months ended March 31, 1995. The 57% decrease was primarily the result of a reduction in borrowing 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 third quarter of fiscal 1996 increased 101% compared to the same period in fiscal 1995. Net earnings for the nine months ended March 31, 1996 were $3.0 million, an increase of 137% as compared to $1.3 million for the same period in fiscal 1995. The increase in net earnings 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, $1,500,000 (the outstanding balance of which at March 31, 1996 was approximately $1,071,000) 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 the prime rate or the federal funds rate +1/2% or, at the Company's option, LIBOR plus 2.0% for fixed periods of time. The Company must comply with various 11 FORM 10-Q Page 11 financial covenants, all of which the Company is in compliance. As of March 31, 1996, the Company had outstanding borrowings of $10.5 million, with additional borrowing capacity of $19.5 million available under the revolving line of credit. Working capital increased to $38.5 million as of March 31, 1996, as compared to $16.5 million as of March 31, 1995, an increase of $22.0 million or 133%. The increase was 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 nine months ended March 31, 1996, the Company's net cash used in operating activities increased to $4.5 million, from $2.5 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 $1.2 million principally due to the Company's net earnings. 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 $17.1 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 Nothing to Report Item 5. Other Information Stock Repurchase The Company's Board of Directors has authorized the Company to purchase up to 250,000 shares of its outstanding common stock or approximately 6.3% of the currently outstanding shares, under a stock repurchase program. Purchases may be made by the Company from time to time in the open market at the Company's discretion. Item 6. Exhibits and Reports on Form 8-K a) Exhibits: 27: Financial Data Schedule b) Reports on Form 8-K: None 13 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: May 14, 1996 14 EXHIBIT INDEX Exhibit 27 - Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JUN-30-1996 MAR-31-1996 432,784 0 24,477,855 791,399 29,107,498 54,879,682 7,074,998 3,012,898 61,494,848 16,333,251 11,775,469 0 0 395,572 32,990,556 61,494,848 126,850,196 126,850,196 100,854,729 100,854,729 19,750,214 0 1,157,655 5,087,598 2,087,000 3,000,598 0 0 0 3,000,598 0.88 0.88
-----END PRIVACY-ENHANCED MESSAGE-----