EX-99.1 2 a5080798ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Jaco Electronics Reports Fiscal 2006 Second Quarter Results; Company Reports Significant Financial Improvement in Operations HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Feb. 14, 2006--Jaco Electronics, Inc. (Nasdaq: JACO): Conference Call: Tomorrow, February 15, at 4:30 p.m. EST Dial-in numbers: 888/343-7167 Webcast/Replay URL: http://www.vcall.com/IC/CEPage.asp?ID=101433 Jaco Electronics, Inc. (Nasdaq: JACO), a distributor of electronic components to original equipment manufacturers, today reported results for its fiscal 2006 second quarter ended December 31, 2005. Summary of Fiscal 2006 Second Quarter Results ($ in thousands, except per-share data) ---------------------------------------------------------------------- Three Months Ended Dec. 31, ---------------------------------------------------------------------- 2005 2004 ---------------------------------------------------------------------- Net sales $48,108 $51,967 ---------------------------------------------------------------------- Gross profit 6,665 6,581 ---------------------------------------------------------------------- Selling, general and administrative expenses 6,845 8,298 ---------------------------------------------------------------------- Operating loss (180) (1,717) ---------------------------------------------------------------------- Interest expense 553 476 ---------------------------------------------------------------------- Loss from continuing operations before income taxes (733) (2,193) ---------------------------------------------------------------------- Income tax provision (benefit)* 6,629 (658) ---------------------------------------------------------------------- Net loss (7,362) (1,535) ---------------------------------------------------------------------- Diluted net loss per share (1.17) (0.25) ---------------------------------------------------------------------- * During the three months ended December 31, 2005, $6,610,500 was added to Jaco's income tax provision to reduce the carrying value of the Company's deferred tax asset to zero. Jaco's Chairman and Chief Executive Officer Joel Girsky, commented, "During the 2006 fiscal second quarter, we continued positive recent trends in gross profit margin gains and SG&A reductions, leading to a significant decline in our operating loss to $0.2 million, compared to a $1.7 million loss in the fiscal 2005 period. Gross profit margin improved both sequentially and year-over-year, to 13.9 percent for the quarter. SG&A expenses as a percentage of net sales declined to 14.3 percent in fiscal Q2, versus 16.0 percent in the prior year period. Gross profit margins and SG&A expenses remain key factors in future operating results. "We have invested in areas we believe will provide the best prospects for long-term growth and continue to execute our focused business model that we believe can provide sustainable improvements in our operating results. Jaco's main areas of focus include our full-service FPD group, which expanded to over 29 percent of revenue this quarter, value-added inventory programs and support for off-shore global contract manufacturers, primarily in the Far East, and the Company's emphasis on working with core vendors in semiconductors, power supplies and other lines, that are successfully competing in the North American market. "Early in fiscal Q3, we announced another multi-million dollar electronic voting machine manufacturing order. The new contract was for 5,000 flat panel touch screen machines. We continue to realize the benefits from the opening of the in-house FPD integration center at our Hauppauge, NY headquarters. In addition to the voting machines order, we have also secured recent orders for gaming machines, as well as military and medical applications." About Jaco Electronics Jaco is a leading distributor of electronic components to industrial OEMs and contract manufacturers. Jaco distributes products such as semiconductors, capacitors, resistors, electromechanical devices, flat panel displays (FPD) and power supplies, which are used in the manufacture and assembly of electronic products, including: telecommunications equipment, computers and office equipment, medical devices and instrumentation, industrial equipment and controls, military/aerospace systems and automotive and consumer electronics. Jaco has two distribution centers and 16 strategically located sales offices throughout the United States, and one in Beijing, China. The Company operates an in-house FPD integration center housing its engineering and manufacturing staff and operations. The integration center enhances Jaco's ability to provide customers with unique value-added display solutions and a "one-stop" source for their FPD supply and integration requirements. In addition to customized FPD solutions, Jaco provides a variety of value-added services including automated inventory management services and assembling stock items for customers into pre-packaged kits. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release provides historical information and includes forward-looking statements that are subject to numerous assumptions, risks and uncertainties, including, but not limited to, our dependence on a limited number of distributors for our products, that most of our distributor agreements are cancelable upon short notice, the impact of downturns in our industry and the general economy, the market for our products is very competitive, the impact of disruptions in air or sea transportation and possible future legislative or regulatory changes on our business, volatility in electronic components' pricing may reduce our profit margins, the level of costs or difficulties incurred in connection with integrating the operations of businesses we acquire, the financial strength of our customers and suppliers, and other risks disclosed from time to time in our Securities and Exchange Commission filings. The forward-looking statements in this press release involve assumptions, risks and uncertainties that could cause our actual results or performance, 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. We believe that all forward-looking statements made by us have a reasonable basis, but we cannot assure you that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. As a result, our actual results may differ materially from the information set forth herein. JACO ELECTRONICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) ($ in thousands, except per share amounts) Three months ended Six months ended December 31, December 31, --------------------- ---------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Net sales $ 48,108 $ 51,967 $ 100,569 $ 112,204 ---------- ---------- ---------- ---------- Gross profit 6,665 6,581 13,782 14,182 Selling, general & administrative expenses 6,845 8,298 13,688 16,987 ---------- ---------- ---------- ---------- Operating loss (profit) (180) (1,717) 94 (2,805) ---------- ---------- ---------- ---------- Interest expense 553 476 1,118 838 Loss from continuing operations before income taxes (733) (2,193) (1,024) (3,643) Income tax provision (benefit)* 6,629 (658) 6,438 (1,093) ---------- ---------- ---------- ---------- Loss from continuing operations $ (7,362)$ (1,535) $ (7,462) $ (2,550) Discontinued operations: Loss from discontinued operations, net of income tax benefit of $39,800 - - - (64) Gain on sale of net assets of subsidiary, net of income tax provision of $518,500 - - - 831 ---------------------- ----------- ---------- Earnings from discontinued operations - - - 767 Net loss $ (7,362)$ (1,535) $ (7,462) $ (1,783) ========== ========== ========== ========== Per share information: Basic and diluted (loss) earnings per common share: Loss from continuing operations - - (1.19) (0.41) Earnings from discontinued operations - - - 0.12 Net loss $ (1.17)$ (0.25) $ (1.19) $ (0.29) ========== ========== ========== ========== Weighted average shares: Basic 6,275,480 6,262,832 6,271,656 6,233,117 ========== ========== ========== ========== Diluted 6,275,480 6,262,832 6,271,656 6,233,117 ========== ========== ========== ========== * During the three months ended December 31, 2005, $6,610,500 was added to Jaco's income tax provision to reduce the carrying value of the Company's deferred tax asset to zero. Summary Balance Sheet As of December 31, 2005 Accounts Receivable (net) $26,553,000 Inventories (net) 31,132,000 Revolving Credit Facility $28,114,000 Accounts Payable and Accrued Expenses 25,124,000 Shareholder's Equity $34,668,000 Supplemental Financial Statistics Per Share Price (2/13/06) $3.95 Book Value Per Share $5.51 Tangible Book Value Per Share $1.27 CONTACT: Jaco Electronics, Inc. Jeffrey D. Gash Chief Financial Officer 631-273-5500 jgash@jacoelect.com or Jaffoni & Collins Incorporated Joseph N. Jaffoni, Robert L. Rinderman 212-835-8500 jaco@jcir.com