-----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, IpKQN0FyoPqSAOWYN3Sgk4lETILXQ8pUC+3ShPbr9/m8WsvOsVHkP5QkrnOTGb+O 5upYv3MgVszrACtOTzge8g== 0000950129-97-000437.txt : 19970221 0000950129-97-000437.hdr.sgml : 19970221 ACCESSION NUMBER: 0000950129-97-000437 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970211 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KENT ELECTRONICS CORP CENTRAL INDEX KEY: 0000793024 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 741763541 STATE OF INCORPORATION: TX FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09520 FILM NUMBER: 97524958 BUSINESS ADDRESS: STREET 1: 7433 HARWIN DR CITY: HOUSTON STATE: TX ZIP: 77036-2015 BUSINESS PHONE: 7137807770 MAIL ADDRESS: STREET 1: 7433 HARWIN DRIVE CITY: HOUSTON STATE: TX ZIP: 77036-2015 10-Q 1 KENT ELECTRONICS CORP. - DATED 12/28/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 28, 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 0-14643 --------------------------------------------------------- KENT ELECTRONICS CORPORATION - -------------------------------------------------------------------------------- Exact name of registrant as specified in its charter) Texas 74-1763541 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7433 Harwin Drive, Houston, Texas 77036-2015 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 780-7770 ----------------------------- Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate 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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. At February 7, 1997, 26,272,475 shares of common stock, no par value, are issued and outstanding. 2 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 28, March 30, 1996 1996 ------------- ------------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents (including temporary investments of $40,625,000 at December 28 and $75,552,000 at March 30) ............... $ 39,417,000 $ 73,191,000 Trading securities, net ...................... 27,002,000 38,747,000 Accounts receivable, less allowance of $1,235,000 at December 28 and $999,000 at March 30 ................................ 71,526,000 52,469,000 Inventories Materials and purchased products ........... 55,413,000 44,741,000 Work in process ............................ 1,434,000 3,414,000 ------------- ------------- 56,847,000 48,155,000 Other ........................................ 4,513,000 4,297,000 ------------- ------------- Total current assets ..................... 199,305,000 216,859,000 PROPERTY AND EQUIPMENT Land ......................................... 7,439,000 7,422,000 Buildings .................................... 33,442,000 18,590,000 Furniture, fixtures and equipment ............ 59,158,000 34,444,000 Leasehold improvements ....................... 1,791,000 1,722,000 ------------- ------------- 101,830,000 62,178,000 Less accumulated depreciation and amortization (21,782,000) (17,329,000) ------------- ------------- 80,048,000 44,849,000 DEFERRED INCOME TAXES ............................. 1,189,000 1,369,000 OTHER ASSETS ...................................... 4,132,000 1,582,000 COST IN EXCESS OF NET ASSETS ACQUIRED, less accumulated amortization of $2,268,000 at December 28 and $1,994,000 at March 30 .... 16,495,000 12,802,000 ------------- ------------- $ 301,169,000 $ 277,461,000 ============= =============
The accompanying notes are an integral part of these statements. Page 2 of 13 3 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 28, March 30, 1996 1996 ------------- ------------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable .............................. $ 34,071,000 $ 30,924,000 Accrued compensation .......................... 6,281,000 9,904,000 Other accrued liabilities ..................... 6,519,000 5,177,000 Income taxes .................................. 3,743,000 5,172,000 ------------- ------------- Total current liabilities ................. 50,614,000 51,177,000 LONG-TERM DEBT ..................................... -- -- LONG-TERM LIABILITIES .............................. 1,596,000 976,000 STOCKHOLDERS' EQUITY Preferred stock, $1 par value; authorized 2,000,000 shares; none issued ............... -- -- Common stock, no par value; authorized 30,000,000 shares; 23,991,455 shares issued and 23,941,455 shares outstanding at December 28 and 23,937,176 shares issued and outstanding at March 30 ..................... 40,413,000 38,336,000 Additional paid-in capital .................... 110,569,000 110,154,000 Retained earnings ............................. 98,954,000 76,818,000 Less common stock in treasury - at cost, 50,000 shares at December 28 ...................... (977,000) -- ------------- ------------- 248,959,000 225,308,000 ------------- ------------- $ 301,169,000 $ 277,461,000 ============= =============
The accompanying notes are an integral part of these statements. Page 3 of 13 4 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended ---------------------------------- ---------------------------------- December 28, December 30, December 28, December 30, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- Net sales ................................... $ 106,385,000 $ 100,059,000 $ 314,906,000 $ 267,834,000 Cost of sales ............................... 81,954,000 73,179,000 239,013,000 197,178,000 ------------- ------------- ------------- ------------- Gross profit ........................... 24,431,000 26,880,000 75,893,000 70,656,000 Selling, general and administrative expenses 14,630,000 14,473,000 43,283,000 41,407,000 ------------- ------------- ------------- ------------- Operating profit ............................ 9,801,000 12,407,000 32,610,000 29,249,000 Other income (expense) Interest expense ....................... (6,000) (5,000) (32,000) (15,000) Other - net ............................ 1,175,000 1,615,000 4,013,000 2,612,000 ------------- ------------- ------------- ------------- Earnings before income taxes ................ 10,970,000 14,017,000 36,591,000 31,846,000 Income taxes ................................ 4,335,000 5,764,000 14,455,000 12,896,000 ------------- ------------- ------------- ------------- NET EARNINGS ........................... $ 6,635,000 $ 8,253,000 $ 22,136,000 $ 18,950,000 ============= ============= ============= ============= Earnings per share .......................... $ .26 $ .33 $ .87 $ .85 ============= ============= ============= ============= Weighted average shares ..................... 25,404,300 25,098,800 25,343,000 22,225,900 ============= ============= ============= =============
The accompanying notes are an integral part of these statements. 5 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Thirty-Nine Weeks Ended ------------------------------- December 28, December 30, 1996 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings ..................................... $ 22,136,000 $ 18,950,000 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization ................ 4,833,000 3,021,000 Provision for losses on accounts receivable .. 236,000 150,000 Loss on sale of property, plant and equipment 4,000 5,000 Stock option expense ......................... 415,000 831,000 Unrealized gains on trading securities ....... (50,000) (94,000) Net sales of trading securities .............. 11,795,000 -- Change in assets and liabilities, net of effects from purchase of assets and assumption of certain liabilities of the EMC Distribution Division of Electronics Marketing Corporation Increase in accounts receivable ......... (17,119,000) (11,895,000) Increase in inventories ................. (5,718,000) (14,938,000) Increase in other ....................... (216,000) (738,000) Increase in other assets ................ (2,550,000) (631,000) Decrease in deferred income taxes ....... 180,000 75,000 Increase in accounts payable ............ 832,000 9,364,000 Increase (decrease) in accrued compensation .......................... (3,623,000) 3,152,000 Increase in other accrued liabilities ... 1,342,000 4,844,000 Increase (decrease) in income taxes ..... (1,429,000) 960,000 Increase in long-term liabilities ....... 620,000 605,000 ------------ ------------ Total adjustments ................. (10,448,000) (5,289,000) ------------ ------------ Net cash provided by operating activities ..................... $ 11,688,000 $ 13,661,000
(Continued) Page 5 of 13 6 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Thirty-Nine Weeks Ended -------------------------------- December 28, December 30, 1996 1995 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ........................ $(39,563,000) $(12,257,000) Net purchases of trading securities ......... -- (30,605,000) Purchase of assets and assumption of certain liabilities of EMC Distribution Division of Electronics Marketing Corporation ......... (7,000,000) -- Proceeds from sale of property, plant and equipment ................................. 1,000 8,000 ------------ ------------ Net cash used by investing activities ...................... (46,562,000) (42,854,000) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock .................... 440,000 85,297,000 Purchase of treasury stock .................. (977,000) -- Tax effect of common stock issued upon exercise of employee stock options ........ 1,637,000 1,137,000 ------------ ------------ Net cash provided by financing activities ...................... 1,100,000 86,434,000 ------------ ------------ NET INCREASE (DECREASE) IN CASH .................. (33,774,000) 57,241,000 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . 73,191,000 4,434,000 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD ....... $ 39,417,000 $ 61,675,000 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for Interest .................................. $ -- $ -- Income taxes .............................. $ 14,066,000 $ 10,725,000
The accompanying notes are an integral part of these statements. Page 6 of 13 7 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounting Policies The consolidated balance sheet as of December 28, 1996, and the related consolidated statements of earnings and cash flows for the thirteen and thirty-nine week periods ended December 28, 1996 and December 30, 1995, have been prepared by the Company without audit. In the opinion of management, the financial statements include all adjustments necessary for a fair presentation. All adjustments made were of a normal recurring nature. Interim results are not necessarily indications of results for a full year. For further financial information, refer to the audited financial statements of the Company and notes thereto for the fiscal year ended March 30, 1996, included in the Company's Form 10-K for that period. Cash and Cash Equivalents Temporary investments may be greater than the cash and cash equivalents balance because they may be offset by individual bank accounts with a book overdraft position within the same bank where multiple accounts are maintained. Sales To Major Customers For the thirteen and thirty-nine week periods ended December 28, 1996, sales to Compaq Computer Corporation represented 12.8% and 12.1% of net sales, respectively. For the thirteen and thirty-nine week periods ended December 30, 1995, sales to Compaq represented 14.8% and 13.4% of net sales, respectively. Sales to Applied Materials, Inc. represented 12.4% and 12.8% of net sales, respectively, for the thirteen and thirty-nine week periods ended December 30, 1995. Business Combinations On December 5, 1996, the Company purchased the assets and disclosed liabilities of the EMC Distribution Division of Electronics Marketing Corporation, a regional specialty electronics distributor based in Columbus, Ohio. The aggregate cash consideration for the transaction was approximately $7 million. Page 7 of 13 8 On January 17, 1997, subsequent to the close of the quarter, the Company completed the acquisitions of Futronix Corporation of Houston, Texas and Wire & Cable Specialties Corporation of Atlanta, Georgia. The aggregate consideration for the transaction was approximately $83 million, including the exchange of approximately 2.2 million shares of Kent common stock for all of the common stock equivalents of both companies, and the assumption of approximately $20 million in debt, which the Company has since retired. The Company will record certain one time charges related to the acquisition in the fourth quarter of fiscal 1997. The acquisitions will be accounted for as a pooling of interests. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales for the thirteen and thirty-nine weeks ended December 28, 1996 increased $6,326,000, or 6.3%, and $47,072,000, or 17.6%, compared to the same periods a year ago. The sales increase reflected internal growth primarily from increased demand from existing customers and an expanded customer base. As anticipated, the Company reported sequential revenue growth in the thirteen week period, primarily due to the continued market share gains in the Company's distribution operations and the contribution of new customers and expanded relationships with existing customers at the Company's contract manufacturing operations. Gross profit decreased $2,449,000, or 9.1%, for the thirteen weeks and increased $5,237,000, or 7.4%, for the thirty-nine weeks when compared to the corresponding periods a year ago. Gross profit as a percentage of sales decreased to 23.0% from 26.9% for the thirteen week period, and to 24.1% from 26.4% for the thirty-nine week period, compared to the same periods last year. The decrease in gross profit for the thirteen week period and the decrease in the gross profit percentage for the thirteen and thirty-nine week periods were the result of continued pricing pressures and the transitioning of new business services by the Company's contract manufacturing division. Page 8 of 13 9 Selling, general and administrative ("SG&A") expenses increased $157,000, or 1.1%, for the thirteen week period and $1,876,000, or 4.5%, for the thirty-nine week period, compared to the same periods in the previous year. As a percentage of sales, SG&A declined to 13.8% from 14.5% for the thirteen weeks and to 13.7% from 15.5% for the thirty-nine weeks compared to the same prior year periods. The decline of SG&A as a percentage of sales reflects the Company's continued focus on cost containment as well as specific steps to reduce SG&A expenses in light of the current difficult business environment. Other-net consists principally of interest and dividend income generated by cash, cash equivalents and trading securities. The decrease in interest and dividend income for the thirteen week period was primarily due to the decrease in cash, reflecting the Company's continued investment in property and equipment, accounts receivable and inventory. Net earnings decreased $1,618,000, or 19.6%, and increased $3,186,000, or 16.8%, for the thirteen and thirty-nine week periods, respectively, compared to the same periods a year ago. The decrease in net earnings for the quarter ended December 28, 1996 reflects the continued pressures on gross margin. Liquidity and Capital Resources Working capital at December 28, 1996 was $148,691,000, a decrease of $16,991,000, or 10.3%, from March 30, 1996. Included in the Company's working capital at December 28, 1996 are investments of $67,627,000, a decrease of $46,672,000 since March 30, 1996. The decrease reflects the Company's continued investment in property and equipment, as well as the purchase of the EMC Distribution Division of Electronics Marketing Corporation. The Company's investment strategy is low-risk and short-term, keeping the funds readily available to meet capital requirements as they arise in the normal course of business. At December 28, 1996, funds were invested primarily in a reverse repurchase agreement and a managed fund consisting primarily of taxable, high quality corporate debt instruments. Both are compatible with the Company's stated investment strategy. Subsequent to the close of the quarter, the Company retired approximately $20 million of debt associated with the acquisitions of Futronix Corporation and Wire & Cable Specialties Corporation. Page 9 of 13 10 The Company intends to apply its capital resources to expand its business by establishing or acquiring similar distribution and manufacturing operations in geographic areas that are attractive to the Company, by acquiring new facilities and by enlarging or improving existing facilities. In addition to the capital required to purchase existing businesses or to fund start-up operations, the expansion of the Company's operations at both new and existing locations will require greater levels of capital to finance the purchase of additional equipment, increased levels of inventory and greater accounts receivable. The Company is currently constructing the second phase of the K*TEC manufacturing facility and a new distribution facility at its Sugar Land, Texas campus which will require aggregate capital expenditures of approximately $22 million through early fiscal 1998. For the thirty-nine week period ended December 28, 1996, approximately $13 million was spent on these projects. Management believes that current resources, along with funds generated from operations, should be sufficient to meet its current capital requirements. PART II - OTHER INFORMATION Items 1 through 5 are not applicable and have been omitted. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 11 Statement re computation of per share earnings. 27 Financial Data Schedule (filed only in electronic format). (b) Reports on Form 8-K: Not applicable. Page 10 of 13 11 SIGNATURES 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. KENT ELECTRONICS CORPORATION ---------------------------- (Registrant) Date: February 11, 1997 By: /s/ Morrie K. Abramson ---------------------------- ----------------------- Morrie K. Abramson Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) Date: February 11, 1997 By: /s/ Stephen J. Chapko ---------------------------- ---------------------- Stephen J. Chapko Executive Vice President, Treasurer, Chief Financial Officer and Secretary (Principal Financial Officer) Date: February 11, 1997 By: /s/ David D. Johnson ---------------------------- --------------------- David D. Johnson Vice President, Corporate Controller (Principal Accounting Officer)
11 of 13 EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 KENT ELECTRONICS CORPORATION AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Unaudited)
Thirteen Weeks Ended ----------------------------------------------------- December 28, 1996 December 30, 1995 ------------------------- ------------------------- Fully Fully Primary Diluted Primary Diluted ----------- ----------- ----------- ----------- Net earnings ............... $ 6,635,000 $ 6,635,000 $ 8,253,000 $ 8,253,000 =========== =========== =========== =========== Weighted average number of common shares outstanding 23,929,300 23,929,300 23,778,000 23,778,000 Excess of shares issuable upon exercise of stock options over shares deemed retired utilizing the treasury stock method 1,475,000 1,548,400 1,320,800 1,529,400 ----------- ----------- ----------- ----------- 25,404,300 25,477,700 25,098,800 25,307,400 =========== =========== =========== =========== Earnings per share ......... $ .26 $ .26 $ .33 $ .33 =========== =========== =========== =========== Thirty-Nine Weeks Ended ----------------------------------------------------- December 28, 1996 December 30, 1995 ------------------------- ------------------------- Fully Fully Primary Diluted Primary Diluted ----------- ----------- ----------- ----------- Net earnings ............... $22,136,000 $22,136,000 $18,950,000 $18,950,000 =========== =========== =========== =========== Weighted average number of common shares outstanding 23,930,100 23,930,100 21,052,800 21,052,800 Excess of shares issuable upon exercise of stock options over shares deemed retired utilizing the treasury stock method 1,412,900 1,456,300 1,173,100 1,349,400 ----------- ----------- ----------- ----------- 25,343,000 25,386,400 22,225,900 22,402,200 =========== =========== =========== =========== Earnings per share ......... $ .87 $ .87 $ .85 $ .85 =========== =========== =========== ===========
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000793024 Kent Electronics Corporation 9-MOS MAR-29-1997 DEC-28-1996 39,417,000 27,002,000 72,761,000 1,235,000 56,847,000 199,305,000 101,830,000 21,782,000 301,169,000 50,614,000 0 0 0 40,413,000 208,546,000 301,169,000 314,906,000 314,906,000 239,013,000 239,013,000 0 236,000 32,000 36,591,000 14,455,000 22,136,000 0 0 0 22,136,000 .87 .87
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