-----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, DguCV/9IAD9xq/skpKWCwDsLYo8A1KEWWKjSOyhlVhKeTD0C1VIP05bNm1luliA0 hP6KWylqivuIqgBTh0tM+A== 0000950123-96-006636.txt : 19961118 0000950123-96-006636.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950123-96-006636 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96665386 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 September 30, 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 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: (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 November 7, 1996 - - 3,888,221 (Excluding 87,500 Shares of Treasury Stock). 2 FORM 10-Q Page 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS JACO ELECTRONICS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, June 30, 1996 1996 ----------- ----------- ASSETS: Current Assets: Cash $ 452,658 $ 164,161 Marketable securities 512,592 493,281 Accounts receivable - net 22,090,529 22,217,130 Inventories 30,790,480 30,089,508 Prepaid expenses and other 675,302 739,530 Deferred income taxes 751,000 708,000 ----------- ----------- Total current assets 55,272,561 54,411,610 Property, plant and equipment - net 4,264,757 4,226,617 Deferred income taxes 204,000 189,000 Excess of cost over net assets acquired 1,234,499 1,241,533 Other assets 1,593,456 1,073,969 ----------- ----------- $62,569,273 $61,142,729 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 FORM 10-Q Page 3 JACO ELECTRONICS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, June 30, 1996 1996 ------------ ----------- LIABILITIES & SHAREHOLDERS' EQUITY: Current Liabilities: Accounts payable and accrued expenses $ 16,822,058 $16,589,852 Current maturities of long term debt and capitalized lease obligations 478,927 474,082 Income taxes payable 457,075 383,970 ------------ ----------- Total current liabilities 17,758,060 17,447,904 Long term debt and capitalized lease obligations 9,638,706 8,791,270 Deferred compensation 612,500 600,000 SHAREHOLDERS' EQUITY: Preferred stock - authorized, 100,000 shares, $10 par value; none issued Common stock - authorized 10,000,000 shares, $.10 par value; issued 3,975,721 and 3,955,721 shares, respectively, and 3,888,221 and 3,955,721 outstanding, respectively 397,572 395,572 Additional paid-in capital 22,180,295 22,024,795 Unrealized gain on marketable securities 79,556 68,245 Retained earnings 12,602,584 11,814,943 Treasury stock (700,000) ------------ ----------- Total shareholders' equity 34,560,007 34,303,555 ------------ ----------- $ 62,569,273 $61,142,729 ============ ===========
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 SEPTEMBER 30, (UNAUDITED)
1996 1995 ----------- ----------- NET SALES $38,321,790 $40,083,485 ----------- ----------- COST AND EXPENSES: Cost of goods sold 30,206,288 31,542,271 ----------- ----------- Gross profit 8,115,502 8,541,214 Selling, general and administrative expenses 6,592,245 6,613,141 ----------- ----------- Operating profit 1,523,257 1,928,073 Interest expense 199,616 558,122 ----------- ----------- Earnings before income taxes 1,323,641 1,369,951 Income tax provision 536,000 562,000 ----------- ----------- NET EARNINGS $ 787,641 $ 807,951 =========== =========== Net earnings per common share $ .20 $ .32 =========== =========== Weighted average common and common equivalent shares outstanding 3,982,259 2,536,909 =========== ===========
See accompanying notes to condensed consolidated financial statements. 5 FORM 10-Q Page 5 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
Unrealized Additional Gain on Total Common Stock Paid-In Marketable Retained Treasury Shareholders' Shares Amount Capital Securities Earnings Stock Equity ------ ------- ------- ----------- -------- ----- ------- Balance at July 1, 1996 3,955,721 $395,572 $22,024,795 $68,245 $11,814,943 $34,303,555 Issuance of common stock in connection with acquisition 20,000 2,000 155,500 157,500 Unrealized gain on marketable securities 11,311 11,311 Purchase of treasury stock $(700,000) (700,000) Net earnings 787,641 787,641 --------- -------- ----------- ------- ----------- --------- ----------- Balance at September 30, 1996 3,975,721 $397,572 $22,180,295 $79,556 $12,602,584 $(700,000) $34,560,007 ========= ======== =========== ======= =========== ========= ===========
See accompanying notes to condensed consolidated financial statements 6 FORM 10-Q Page 6 JACO ELECTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
1996 1995 ------------ ------------ Cash flows from operating activities Net earnings $ 787,641 $ 807,951 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities Depreciation and amortization 207,082 174,900 Deferred compensation 12,500 12,500 Deferred income tax provision (66,000) (120,000) Amortization of goodwill 16,584 17,875 (Gain) loss on sale of equipment (11,094) 8,762 Provision for doubtful accounts 117,125 160,240 Changes in operating assets and liabilities, net of effect of acquisition Decrease (increase) in operating assets - net 630,430 (8,643,843) Increase in operating liabilities - net 30,311 3,470,650 ------------ ------------ Net cash provided by (used in) operating activities 1,724,579 (4,110,965) ------------ ------------ Cash flows from investing activities Capital expenditures (243,083) (201,600) Proceeds from sales of equipment 34,000 4,600 Acquisition of operating assets - net (1,240,327) Decrease in due from officers - net 88,446 Increase in other assets (138,953) (101,972) ------------ ------------ Net cash used in investing activities (1,588,363) (210,526) ------------ ------------ Cash flows from financing activities Borrowings under line of credit 41,420,780 44,114,000 Payments under line of credit (40,449,000) (39,649,993) Principal payments under equipment financing and term loan (119,499) (112,139) Purchase of treasury stock (700,000) Payments of fractional shares (828) ------------ ------------ Net cash provided by financing activities 152,281 4,351,040 ------------ ------------ NET INCREASE IN CASH 288,497 29,549 ------------ ------------ Cash at beginning of period 164,161 393,671 ------------ ------------ Cash at end of period $ 452,658 $ 423,220 ============ ============
See accompanying notes to condensed consolidated financial statements 7 FORM 10-Q 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, 1996 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 certain officers and directors of the Company. 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 per share equal to that of the public offering. 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) In April 1996, the Company announced that its Board of Directors has authorized the purchase of up to 250,000 shares of its outstanding common stock 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. Through September 30, 1996, the Company purchased 87,500 shares of its common stock for aggregate consideration of $700,000. 4) For interim financial reporting 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 51,000 and 73,000 common stock equivalents for the three months ending September 30, 1996 and 1995, respectively. 6) On August 2, 1996, the Company purchased the operating assets of QPS Electronics, Inc., ("QPS") an electronic components distributor, located in Schaumburg, Illinois. The purchase price of $1,672,827 was paid by the issuance of 20,000 shares of the Company's common stock, cash of $1,240,327 and $275,000 to be paid six months from the date of acquisition, subject to certain adjustments as defined in the agreement. In addition, the Company received a three year covenant not to compete from the sellers of the assets at a cost to the Company of $400,000. A summary of the fair value of the assets acquired at the date of acquisition are as follows:
Accounts Receivable $613,587 Inventory 644,111 Covenant Not to Compete 400,000 Office Equipment and Other 15,129 ---------- $1,672,827 ==========
8 FORM 10-Q Page 8 JACO ELECTRONICS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The acquistion of the assests was accounted for as a purchase and, accordingly, the results of QPS's operations are included with those of the Company from the date of acquisition. Pro forma historical results are not presented as such results, would not be materially different from the historical results of the Company. 9 FORM 10-Q Page 9 JACO ELECTRONICS, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Statements in this filing, and elsewhere, which look forward in time involve risks and uncertainties which may effect the actual results of operations. The following important factors, among others, have affected and, in the future, could affect the Company's actual results: dependence on a limited number of suppliers for products which generate a significant portion of the Company sales, the effect upon the Company of increases in tariffs or duties, changes in trade treaties, strikes or delays in air or sea transportation and possible future United States legislation with respect to pricing and/or import quotas on products imported from foreign countries, and general economic effect upon manufacturers, end-users of electronic components and electronic component distributors. 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 contract manufacturing services through the Company's wholly-owned subsidiary, Nexus Custom Electronics, Inc. 10 FORM 10-Q Page 10 RESULTS OF OPERATIONS _____________________ The following table sets forth certain items in the Company's statement of earnings as a percentage of net sales for the periods shown;
Three months ended September 30, 1996 1995 ------ ------ Net sales 100.0% 100.0% Cost of goods sold 78.8 78.7 ------ ------ Gross profit 21.2 21.3 Selling, general and administrative expenses 17.2 16.5 ------ ------ Operating profit 4.0 4.8 terest expense .5 1.4 ------ ------ Earnings before income taxes 3.5 3.4 Income tax provision 1.4 1.4 ------ ------ NET EARNINGS 2.1 2.0 ====== ======
Comparison of the three months ended September 30, 1996 and September 30, 1995 ______________________________________________________________________________ Net sales for the first quarter of fiscal 1997 decreased 4% to $38.3 million as compared to $40.1 million for the first quarter of fiscal 1996. Net sales during the quarter decreased as the electronic components market continues to be affected by customers reducing excess inventory and the reduction in pricing of certain components such as dynamic rams (DRAMS) and static rams (SRAMS). The Company anticipates that sales from contract manufacturing should have a positive impact on sales in future periods. With the acquisition of the operating assets of QPS Electronics, Inc. and the opening of a new sales office in Phoenix, Arizona, the Company now services approximately 95% of the United States market . 11 FORM 10-Q Page 11 Gross profit margins, as a percentage of net sales, were 21.2% for the quarter ended September 30, 1996 as compared to 21.3% for the quarter ended September 30, 1995. The Company was able to maintain its margins despite the weak demand for electronic components during the current quarter, and does not anticipate any material change in margins based on its current product offerings. Selling, general and administrative expenses decreased to $6,592,000 for the first quarter of fiscal 1997 as compared to $6,613,000 for the first quarter of fiscal 1996. This decrease was achieved even though the Company opened new sales facilities in Colorado and Arizona, completed the acquisition of the assets of QPS and added a marketing group for flat panel displays. Interest expense decreased to $200,000 for the three months ended September 30, 1996 as compared to $558,000 for the three months ended September 30, 1995 or 64%. The decrease is primarily attributable to the reduction of indebtedness under the Company's credit facility by application of the net proceeds of $17,140,000, from the Company's public offering which was completed in October 1995. Net earnings for the three months ended September 30, 1996 was $788,000, (with earnings per share of $.20 on weighted average shares outstanding of 3,982,259) a decrease of $20,000 as compared to $808,000, (with earnings per share of $.32 on weighted average shares outstanding of 2,536,909), for the three months ended September 30, 1995. The decline in net sales was primarily offset by the interest expense reduction during the quarter. LIQUIDITY AND CAPITAL RESOURCES _______________________________ The Company maintains a total credit facility of $30,000,000, $1,500,000 (the outstanding balance as of September 30, 1996 was approximately $964,000) 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. The credit facility carries a borrowing rate equal to the higher of 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 financial covenants, all of which the Company believes itself to be in compliance. As of September 30, 1996, the Company had outstanding borrowings of $9.1 million, with additional borrowing capacity of $20.9 million available under the revolving line of credit. Working capital was $37.5 million as of September 30, 1996, as compared to $37.0 million as of June 30, 1996 an increase of $.5 million or approximately 1%. The increase was primarily attributable to a net increase in current assets. For the first quarter of fiscal 1997, the Company's net cash provided by operating activities was approximately $1,725,000 as compared to net cash used in operating activities of approximately $4,111,000 for the first quarter of fiscal 1996 an increase of $5,386,000 or 142%. The increase is primarily attributable to the reduction of accounts receivable in the first quarter of fiscal 1997 as compared to increases in accounts receivable and inventory levels in the first quarter of fiscal 1996. Net cash used in investing activities increased to $1,588,000 for the first quarter of fiscal 12 FORM 10-Q Page 12 1997 as compared to $211,000 for the first quarter of fiscal 1996, an increase of $1,377,000. The acquisition of the assets of QPS accounted for approximately $1,240,000 of the increase. Net cash provided by financing activities decreased $4,199,000 or 97% to $152,000 for the three months ended September 30, 1996 when compared to $4,351,000 for the three months ended September 30, 1995. The decrease is attributable to a net reduction in borrowings under the Company's line of credit of $3,492,000 and the purchase of treasury stock at a cost of $700,000. The Company's cash expenditures may vary significantly from current levels, based on a number of factors, including but not limited to, future acquisitions, if any. In April 1996, the Company's Board of Directors authorized the purchase of up to 250,000 shares of its common stock under a stock repurchase program. As of November 7, 1996, the Company has repurchased 87,500 shares at an average market price of $8.00 per share. INFLATION _________ Inflation has not had a significant impact on the Company's operations during the last three fiscal years. 13 FORM 10-Q Page 13 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 Nothing to Report Item 6. Exhibits and Reports on Form 8-K a) Exhibits: 27: Financial Data Schedule b) Reports on Form 8-K: None 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) DATED: November 14, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30,1996 AND THE UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS JUN-30-1997 SEP-30-1996 452,658 512,592 22,965,508 874,979 30,790,480 55,272,561 7,591,672 3,326,915 62,569,273 17,758,060 10,251,206 0 0 397,572 34,162,435 62,569,273 38,321,790 38,321,790 30,206,288 30,206,288 6,592,245 0 199,616 1,323,641 536,000 787,641 0 0 0 787,641 0.20 0.20
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