-----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, N4JqlizwOXzOs2sPSpjcBpaSkif+fb9sLvBhOG/qGKTNu1YT0O5HOw5aCKOlYwsG bRigo4aylyujy/THT4/gwA== 0001021408-01-510153.txt : 20020410 0001021408-01-510153.hdr.sgml : 20020410 ACCESSION NUMBER: 0001021408-01-510153 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPTRON ELECTRONICS INC CENTRAL INDEX KEY: 0000918765 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 382081116 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23426 FILM NUMBER: 1787358 BUSINESS ADDRESS: STREET 1: 14401 MCCORMICK DR CITY: TAMPA STATE: FL ZIP: 33626 BUSINESS PHONE: 8138542351 MAIL ADDRESS: STREET 1: 14401 MCCORMICK DR CITY: TAMPA STATE: FL ZIP: 33626 10-Q 1 d10q.txt PERIOD: SEPTEMBER 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 (_) 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 - 23426 --------- REPTRON ELECTRONICS, INC. ------------------------- (Exact name of registrant as specified in its charter) Florida 38-2081116 - --------------------------- ----------------------------------- State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization 14401 McCormick Drive, Tampa, Florida 33626 - -------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (813) 854-2351 -------------- 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 ___ --- 6,397,196 shares of common stock issued and outstanding as of November 14, 2001. - --------- ----------------- REPTRON ELECTRONICS, INC. INDEX
Page PART I. FINANCIAL INFORMATION Number ------ Item 1. Financial Statements Consolidated Statements of Operations - Three months ended September 30, 2001 and September 30, 2000 and nine months ended September 30, 2001 and September 30, 2000 3 Consolidated Balance Sheets - September 30, 2001 and December 31, 2000 4 Consolidated Statement of Shareholders' Equity- Nine months ended September 30, 2001 and year ended December 31, 2000 5 Consolidated Statements of Cash Flows - Nine months ended September 30, 2001 and September 30, 2000 6 Notes to Consolidated Financial Statements - September 30, 2001 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13
PART I. FINANCIAL INFORMATION Item 1. Financial Statements REPTRON ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data)
Three months ended Nine months ended September 30, September 30, (Unaudited) (Unaudited) ----------------------- ----------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Net sales $ 84,913 $ 152,653 $ 318,470 $ 416,526 Cost of goods sold 72,875 127,613 282,541 348,104 ---------- ---------- ---------- ---------- Gross profit 12,038 25,040 35,929 68,422 Selling, general and administrative expenses 15,266 18,449 52,601 53,390 ---------- ---------- ---------- ---------- Operating earnings (loss) (3,228) 6,591 (16,672) 15,032 Interest expense, net 2,605 3,066 8,493 8,117 ---------- ---------- ---------- ---------- Earnings (loss) before income taxes (5,833) 3,525 (25,165) 6,915 Income tax provision (benefit) (2,159) 1,632 (9,369) 3,252 ---------- ---------- ---------- ---------- Net earnings (loss) $ (3,674) $ 1,893 $ (15,796) $ 3,663 ========== ========== ========== ========== Net earnings (loss) per common share - basic: $ (0.57) $ 0.30 $ (2.47) $ 0.59 ========== ========== ========== ========== Weighted average common shares outstanding - basic 6,397,196 6,282,405 6,386,871 6,229,121 ========== ========== ========== ========== Net earnings (loss) per common share - diluted: $ (0.57) $ 0.27 $ (2.47) $ 0.54 ========== ========== ========== ========== Weighted average common shares outstanding - diluted 6,397,196 6,973,455 6,386,871 6,837,620 ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements 3 REPTRON ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) ASSETS
(Unaudited) September 30, December 31, 2001 2000 ------ ------ CURRENT ASSETS Cash and cash equivalents $ 161 $ 3,049 Accounts receivable - trade, net 59,640 100,311 Inventories, net 87,788 124,695 Prepaid expenses and other assets 1,937 2,298 Deferred income tax - 62 Income tax receivable 5,600 - -------- -------- Total current assets 155,126 230,415 PROPERTY, PLANT & EQUIPMENT - AT COST, NET 29,890 33,051 EXCESS OF COST OVER NET ASSETS ACQUIRED, NET 30,423 31,473 DEFERRED INCOME TAX 3,779 - OTHER ASSETS 2,842 2,528 -------- -------- $222,060 $297,467 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $ 32,295 $ 65,199 Current portion of long-term obligations 1,634 2,476 Accrued expenses 5,970 11,941 Income taxes payable - 1,230 -------- -------- Total current liabilities 39,899 80,846 NOTE PAYABLE TO BANK 62,883 80,270 LONG-TERM OBLIGATIONS, less current portion 81,078 82,576 SHAREHOLDERS' EQUITY Preferred Stock - authorized 15,000,000 shares of $.10 par value; no shares issued - - Common Stock - authorized 50,000,000 shares of $.01 par value; issued and outstanding, 6,397,196 and 6,359,257 shares, respectively 64 64 Additional paid-in capital 23,083 22,862 Retained earnings 15,053 30,849 -------- -------- 38,200 53,775 -------- -------- $222,060 $297,467 ======== ========
The accompanying notes are an integral part of these financial statements 4 REPTRON ELECTRONICS, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands, except share data)
Common Stock ------------------ Additional Total Shares Par Paid-In Retained Shareholders' Outstanding Value Capital Earnings Equity ----------- ----- ---------- --------- ------------- Balance at December 31, 1999 6,167,119 $ 62 $ 21,740 $ 25,158 $ 46,960 Exercise of stock options 192,138 2 1,122 - 1,124 Net earnings - - - 5,691 5,691 --------- ---- -------- --------- -------- Balance at December 31, 2000 6,359,257 64 22,862 30,849 53,775 Exercise of stock options (Unaudited) 37,939 - 221 - 221 Net loss (Unaudited) - - - (15,796) (15,796) --------- ---- -------- --------- -------- Balance at September 30, 2001 (Unaudited) 6,397,196 $ 64 $ 23,083 $ 15,053 $ 38,200 ========= ==== ======== ========= ========
The accompanying notes are an integral part of this financial statement 5 REPTRON ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Nine months ended September 30, (Unaudited) -------------------- 2001 2000 --------- -------- Increase (decrease) in cash and cash equivalents: Cash flows from operating activities: Net earnings (loss) $(15,796) $ 3,663 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 7,774 7,873 Deferred income taxes (3,717) 230 Loss on disposal of assets - 25 Change in assets and liabilities: Accounts receivable - trade 40,671 (23,301) Inventories 36,907 (34,614) Prepaid expenses and other current assets 361 (620) Other assets (856) (449) Accounts payable - trade (32,904) 13,717 Accrued expenses (5,971) 1,038 Income taxes payable/receivable (6,830) 680 -------- -------- Net cash provided by (used in) operating activities 19,639 (31,758) -------- -------- Cash flows from investing activities: Purchases of property, plant and equipment (3,021) (6,924) -------- -------- Net cash used in investing activities (3,021) (6,924) -------- -------- Cash flows from financing activities: Proceeds from exercise of stock options 221 810 Net proceeds (payments) on note payable to bank (17,387) 38,075 Proceeds from long term obligations - 4,000 Payments on long term obligations (2,340) (2,525) -------- -------- Net cash provided by (used in) financing activities (19,506) 40,360 -------- -------- Net increase (decrease) in cash and cash equivalents (2,888) 1,678 Cash and cash equivalents at beginning of period 3,049 108 -------- -------- Cash and cash equivalents at end of period $ 161 $ 1,786 ======== ======== Supplemental cash flow information: Interest paid $ 10,100 $ 8,670 ======== ======== Income taxes paid $ 1,178 $ 2,469 ======== ========
The accompanying notes are an integral part of these financial statements 6 REPTRON ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (Unaudited) NOTE A -- BASIS OF PRESENTATION The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnote disclosure required by generally accepted accounting principles for complete financial statements. The consolidated financial statements as of September 30, 2001, and for the three and nine months ended September 30, 2001 and September 30, 2000, are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The results of operations for the three and nine months ended September 30, 2001 are not necessarily indicative of results that may be expected for the year ending December 31, 2001. The consolidated financial statements should be read in conjunction with the financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, included in the 2000 Form 10-K. NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all business combinations completed after June 30, 2001. SFAS 142 is effective for the year beginning January 1, 2002, however, certain provisions of that Statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142. In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. The provisions of the statement are effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company is evaluating the impact of the adoption of these standards and has not yet determined the effect of adoption on its financial position and results of operations. NOTE C -- INVENTORIES Inventories consist of the following (in thousands): September 30, December 31, 2001 2000 ----- ------ Electronic Component Distribution: Inventories $54,367 $ 85,943 Electronic Manufacturing Services: Work in process 8,935 13,101 Raw materials 24,486 25,651 ------- -------- $87,788 $124,695 ======= ======== 7 REPTRON ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2001 (Unaudited) NOTE D -- FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS Reptron Electronics, Inc. is a leading electronics manufacturing supply chain services company operating as a national distributor of electronic components, a contract manufacturer of electronic products and display solution provider. Our Electronic Component Distribution customers are in diverse industries including robotics, telecommunications, computers and computer peripherals, consumer electronics, healthcare, industrial controls and contract manufacturing. Our Electronic Manufacturing Services segment manufactures electronic products according to customer design, primarily for customers in the telecommunications, healthcare, industrial/instrumentation, banking and office products industries. As a display solution provider, we provide display design engineering, systems integration and turnkey manufacturing services. The following table shows net sales and gross profit by industry segments.
Three months ended Nine months ended September 30, September 30, (in thousands) (in thousands) --------------------------- ---------------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Net Sales Electronic Component Distribution $ 46,016 $ 93,071 $ 184,604 $ 248,966 Electronic Manufacturing Services 38,897 59,582 133,866 167,560 ---------- ---------- ---------- ---------- $ 84,913 $ 152,653 $ 318,470 $ 416,526 ========== ========== ========== ========== Gross Profit Electronic Component Distribution $ 8,649 $ 16,737 $ 23,849 $ 46,387 Electronic Manufacturing Services 3,389 8,303 12,080 22,035 ---------- ---------- ---------- ---------- $ 12,038 $ 25,040 $ 35,929 $ 68,422 ========== ========== ========== ==========
NOTE E - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net earnings per common share:
Three months ended Nine months ended September 30, September 30, ----------------------- ---------------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Numerator: Net earnings (loss) (in thousands) $ (3,674) $ 1,893 $ (15,796) $ 3,663 ========== ========== ========== ========== Denominator: For basic earnings per share - Weighted average shares 6,397,196 6,282,405 6,386,871 6,229,121 Effect of dilutive securities: Employee stock options - 691,050 - 608,499 ---------- ---------- ---------- ---------- For diluted earnings per share 6,397,196 6,973,455 6,386,871 6,837,620 ========== ========== ========== ========== Net earnings (loss) per common share - basic $ (0.57) $ 0.30 $ (2.47) $ 0.59 ========== ========== ========== ========== Net earnings (loss) per common share - diluted $ (0.57) $ 0.27 $ (2.47) $ 0.54 ========== ========== ========== ==========
For the three-month and nine-month periods ended September 30, 2001, all potential dilutive securitites were excluded from the weighted average shares calculation as they were anti-dilutive. NOTE F - LONG-TERM DEBT The Company's credit facility was amended as of September 27, 2001. As part of this amendment, the line of credit facility was reduced from $120 million to $90 million to better match the Company's borrowing requirements. 8 REPTRON ELECTRONICS, INC Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ---------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- This document contains certain forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions and growth in our industry and in the general economy; competitive factors; risks due to shifts in market demand; the ability of Reptron to complete and integrate acquisitions; and the risk factors listed from time to time in our reports filed with the Securities and Exchange Commission as well as assumptions regarding the foregoing. The words "believe", "estimate", "expect", "intend", "anticipate", "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Reptron undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward- looking statements. RESULTS OF OPERATIONS - --------------------- Net Sales. Third quarter net sales decreased $67.7 million, or 44.4%, from $152.7 million in the third quarter of 2000 to $84.9 million in the third quarter of 2001. Total net sales for the first three quarters of 2001 decreased $98.1 million, or 23.5% from $416.5 million in the first three quarters of 2000 to $318.5 million in the first three quarters of 2001. Electronic Component Distribution ("ECD") third quarter net sales decreased $47.1 million, or 50.6%, from $93.1 million in the third quarter of 2000 to $46.0 million in the third quarter of 2001. Management believes this decrease resulted primarily from a significant slowdown in the sales volume and price reductions of electronic components in the United States. Sales of semiconductors, passive components and electromechanical components accounted for 80.1%, 8.3% and 11.6%, respectively, of third quarter 2001 ECD net sales compared to 67.0%, 24.3% and 8.7%, respectively, of third quarter 2000 ECD net sales. Sales generated from the top four ECD vendors accounted for approximately $20.8 million, or 42.7% of third quarter 2001 ECD net sales, as compared with approximately $40.0 million or 43.0% of third quarter 2000 ECD net sales. ECD net sales decreased $64.4 million, or 25.9%, from $249.0 million in the first three quarters of 2000 to $184.6 million in the first three quarters of 2001. This decrease was driven primarily by factors stated above. Sales of semiconductors, passive components and electromechanical components accounted for 80.4%, 10.0% and 9.6%, respectively, of first three quarters 2001 ECD net sales, compared to 65.9%, 25.8% and 8.3%, respectively, of first three quarters 2000 ECD net sales. Sales generated from the top four ECD vendors accounted for approximately $85.5 million, or 44.8% of first three quarters 2001 ECD net sales, as compared with approximately $103.0 million or 41.4% of first three quarters 2000 ECD net sales Electronic Manufacturing Services ("EMS") net sales decreased $20.7 million, or 34.7%, from $59.6 million in the third quarter of 2000 to $38.9 million in the third quarter of 2001. This decrease is primarily attributable to decreased demand within the semiconductor equipment and telecommunications customer base of EMS. EMS transacted business with 67 customers in the third quarter of 2001. The three largest EMS customers accounted for approximately 18.5%, 11.6% and 7.6%, respectively, of third quarter 2001 EMS net sales (8.5%, 5.3% and 3.5%, respectively, of total Company third quarter 2001 net sales) as compared to 16.5%, 10.5% and 9.7%, respectively, of third quarter 2000 EMS net sales (6.4%, 4.1% and 3.8%, respectively, of total Company third quarter 2000 net sales). 9 EMS net sales decreased $33.7 million, or 20.1%, from $167.6 million in the first three quarters of 2000 to $133.9 million in the first three quarters of 2001. This decrease was driven primarily by factors stated above. EMS transacted business with 76 customers during the first three quarters of 2001. The three largest EMS customers accounted for approximately 14.1%, 12.5%, and 6.6%, respectively, of first three quarters 2001 EMS net sales (5.3%, 2.8% and 3.7%, respectively, of total Company first three quarters 2001 net sales) as compared to 14.7%, 9.3% and 9.1%, respectively, of first three quarters 2000 EMS net sales (5.9%, 3.7% and 3.7%, respectively, of total Company first three quarters 2000 net sales). Gross Profit. Total third quarter gross profit decreased $13.0 million or 51.9%, from $25.0 million in the third quarter of 2000 to $12.0 million in the third quarter of 2001. The gross margin decreased from 16.4% in the third quarter of 2000 to 14.2% in the third quarter of 2001. Total gross profit decreased $32.5 million, or 47.5%, from $68.4 million in the first three quarters of 2000 to $35.9 million in the first three quarters of 2001. The gross margin decreased from 16.4% in the first three quarters of 2000 to 11.3% (to 15.1% excluding the $12 million non-cash inventory writedown in the second quarter of 2001) in the first three quarters of 2001. ECD third quarter gross profit decreased $8.1 million, or 48.3%, from $16.7 million in the third quarter of 2000 to $8.6 million in the third quarter of 2001. ECD gross margin increased from 18.0% in the third quarter of 2000 to 18.8% in the third quarter of 2001. This increase in gross margin is due primarily to improved purchasing and selling practices in the third quarter of 2001 as compared with the third quarter of 2000. ECD first three quarters gross margin decreased from 18.6% in the first three quarters of 2000 to 12.9% (to 18.3% excluding the $10.0 million non-cash inventory writedown charge in the second quarter of 2001) in the first three quarters of 2001. EMS gross profit decreased $4.9 million, or 59.2%, from $8.3 million in the third quarter of 2000 to $3.4 million in the third quarter of 2001 and gross margin decreased from 13.9% in the third quarter of 2000 to 8.7% in the third quarter of 2001. EMS first three quarters gross profit decreased $10.0 million, or 45.2% from $22.0 million in 2000 to $12.1 million in 2001 and its gross margin decreased from 13.2% in the first three quarters of 2000 to 9.0% (to 10.5% excluding the $2.0 million non-cash inventory writedown charge in the second quarter of 2001) in the first three quarters of 2001. The remaining decrease in gross margin is primarily attributable to under utilization of assets in the manufacturing process due to the significant reduction of sales orders in the first three quarters of 2001. Selling, General, and Administrative Expenses. Selling, general, and administrative expenses decreased $3.2 million, or 17.3%, from $18.4 million in the third quarter of 2000 to $15.3 million in the third quarter of 2001. The decrease in selling, general and administrative expenses is primarily attributable to cost cutting measures implemented in the second and third quarters of 2001. Selling, general and administrative Expenses in the first three quarters decreased $0.8 million or 1.5% from $53.4 million in the first three quarters of 2000 to $52.6 million in the first three quarters of 2001. Selling, general and administrative Expenses in the First three quarters as a percentage of net sales increased from 12.8% in the first three quarters of 2000 to 16.5% in the first three quarters of 2001. Interest Expense. Net interest expense decreased $0.5 million, or 15.0%, from $3.1 million in the third quarter of 2000 to $2.6 million in the third quarter of 2001. Net interest expense in the first three quarters increased $0.4 million, or 4.6%, from $8.1 million in the first three quarters of 2000 to $8.5 million in the first three quarters of 2001. This increase in net interest expense is the result of the combination of an increase in average outstanding debt of $15.9 million from $139.6 million during the first three quarters of 2000 to $155.5 million during the first three quarters of 2001, And a decrease in average interest rate charges from 7.8% during the first three quarters of 2000 to 7.3% during the first three quarters of 2001. 10 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Reptron primarily finances its operations through subordinated notes, bank credit lines, capital equipment leases, and short-term financing through supplier credit lines. Net cash provided by or used in operating activities has historically been driven by net income (loss) levels combined with fluctuations in inventory, accounts receivable and accounts payable. Operating activities for the first three quarters of 2001 provided cash of approximately $19.6 million. This increase in cash flow resulted primarily from decreases in accounts receivable of $40.7 million and inventories of $24.9 million, excluding a non-cash inventory writedown of $12.0 million in the second quarter of 2001. These items were partially offset by decreases in accounts payable of $32.9 million and accrued expenses of $6.0 million. Days sales in accounts receivable as of September 30, 2001 were approximately 64 days. Annualized inventory turns for the first three quarters of 2001 were approximately 4.1 excluding the inventory writedown in the second quarter of 2001. Capital expenditures totaled approximately $3.0 million in the first three quarters of 2001. These capital expenditures were primarily for the acquisition of manufacturing equipment. These purchases were funded by the working capital line of credit. Reptron believes that available credit facilities will be sufficient to meet capital expenditures and working capital needs of operations as they are presently conducted. The Company's credit facility was amended as of September 27, 2001. As part of this amendment, the line of credit facility was reduced from $120 million to $90 million to better match the Company's borrowing requirements. However, future cash requirements will depend on a wide range of factors, including the level of business in existing operations, expansion of facilities, and possible acquisitions. While there can be no assurance that such financing will be available in amounts and on acceptable terms, Reptron believes that such financing would likely be available on acceptable terms. NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all business combinations completed after June 30, 2001. SFAS 142 is effective for the year beginning January 1, 2002, however, certain provisions of that Statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142. In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. The porvisions of the statement are effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company is evaluating the impact of the adoption of these standards and has not yet determined the effect of adoption on its financial position and results of operations. Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- While we had no holdings of derivative financial or commodity instruments at September 30, 2001, we are exposed to financial market risks, including changes in interest rates. A majority of our borrowings bear a fixed interest rate. However, borrowings under our bank Credit Facility bears interest at a variable rate based on the prime rate or the London Interbank Offered Rate. 11 REPTRON ELECTRONICS, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a. Exhibits 10.1 Fifth Amendment To Revolving Credit And Security Agreement Dated January 8, 1999. b. Reports on Form 8-K None 12 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 14, 2001 ------------------- REPTRON ELECTRONICS, INC. ------------------------- (Registrant) By: /s/ Paul J. Plante ---------------------------------- Paul J. Plante, President and Chief Operating Officer (Principal Financial and Accounting Officer) 13 EX-10.1 3 dex101.txt FIFTH AMENDMENT Exhibit 10.1 FIFTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT This FIFTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this "Amendment") is made and entered into this 27/th/ day of September, 2001, by and among REPTRON ELECTRONICS, INC., a corporation organized under the laws of the State of Florida ("Reptron"); LAKE SUPERIOR MERGER CORPORATION, a corporation organized under the laws of the State of Florida ("Superior"); HIBBING ELECTRONICS CORPORATION, a corporation organized under the laws of the State of Minnesota ("Hibbing"); ("Reptron, Superior and Hibbing each a "Borrower" and collectively "Borrowers"); the various financial institutions listed on the signature pages hereof and their respective successors and permitted assigns which become "Lenders"; and PNC BANK, NATIONAL ASSOCIATION, a national association ("PNC"), as collateral and administrative agent for Lenders (PNC, together with its successors in such capacity, the "Agent"). Recitals: Agent, Lenders and Borrowers are parties to a certain Revolving Credit and Security Agreement dated January 8, 1999 (as amended at any time, the "Credit Agreement") pursuant to which Lenders have made certain revolving credit loans and other extensions of credit to Borrowers. The parties desire to amend the Credit Agreement as hereinafter set forth. NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Definitions. All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Credit Agreement. 2. Amendments to Credit Agreement. Subject to the satisfaction of the condition precedent set forth in Section 4 hereof, the Credit Agreement is hereby amended as follows: a. By deleting the definition of "Maximum Revolving Advance Amount" from Section 1.2 of the Credit Agreement and inserting the following in lieu thereof: "Maximum Revolving Advance Amount" shall mean $90,000,000. b. By deleting Section 3.10 in its entirety and inserting the following in lieu thereof: 3.10 Letter of Credit Fees. Borrowers shall pay (x) to Agent, for the benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by an percentage equal to the Applicable Margin for Eurodollar Rate Loans per annum, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable monthly in arrears on the first day of each month and on the last day of the Term and (y) to the Issuer, any and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the "Letter of Credit Fees"). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer's prevailing charges for that type of transaction. All Letter of Credit Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or proration upon the termination of this Agreement for any reason. c. By deleting Section 6.5 in its entirety and inserting the following in lieu thereof: 6.5 Pricing Formula Ratio. Maintain a Pricing Formula Ratio, of at least (a) 0.85 to 1 for the period of four (4) Fiscal Quarters ending September 30, 2001, and (b) 1 to 1 for each period of four (4) Fiscal Quarters ending on the last day of a Fiscal Quarter after September 30, 2001. d. By adding the following as a new Section 6.10 immediately following Section 6.9: 6.10 Undrawn Availability. Maintain Undrawn Availability at all times, including both prior to or immediately after any Advance, of at least $4,000,000. e. By deleting Exhibit E to the Loan Agreement in its entirety and inserting Exhibit E attached hereto in lieu thereof. 3. Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of such Borrower's covenants, duties, indebtedness and liabilities under the Loan Documents. 4. Conditions Precedent. The effectiveness of the amendments contained in Section 2 hereof is subject to the Borrowers having paid to Agent, for the benefit of Lenders, an amendment fee of $90,000. 5. Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that the Credit Agreement and the other Loan Documents executed by such Borrower are legal, valid and binding obligations of such Borrower that are enforceable against such Borrower in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by Borrower); the security interests and liens granted by Borrowers in favor of Agent are duly perfected, first priority security interests and liens, except as permitted under the Credit Agreement; and unpaid principal amount of Advances as of the close of business on September 26, 2001, totaled $64,173,441.15. 6. Revolving Credit Notes. In connection with the reduction of the Maximum Revolving Advance Amount under the Credit Agreement from $120,000,000 to $90,000,000 pursuant to this Amendment, the Borrowers are not being required to execute and deliver new Revolving Credit Notes to each the Lenders as a matter of convenience to the Borrowers. Notwithstanding that the aggregate amount of the existing Revolving Credit Notes exceeds $90,000,000, Borrowers acknowledge and agree that they shall not be entitled to obtain any Advances in excess of $90,000,0000 under the Credit Agreement. 7. Representations and Warranties. Borrowers represent and warrant to Agent and Lenders, to induce Agent and Lenders to enter into this Amendment, that no Default or Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all requisite corporate action on the part of Borrowers and this Amendment has been duly executed and delivered by Borrowers; and all of the representations and warranties made by Borrowers in the Credit Agreement are true and correct on and as of the date hereof. 8. Breach of Amendment. This Amendment shall be part of the Credit Agreement and a breach of any of any representation, warranty or covenant herein shall constitute an Event of Default. 9. Expenses of Agent and Lenders. Each Borrower agrees to pay, on demand, all costs and expenses incurred by Agent and Lenders in connection with the preparation, negotiation and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the costs and fees of Agent's and Lenders' legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement referred to herein or contemplated hereby. 10. Effectiveness; Governing Law. This Amendment shall be effective upon acceptance by Agent and Lenders (notice of which acceptance is hereby waived), whereupon the same shall be governed by and construed in accordance with the internal laws of the State of Georgia. 11. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 12. No Novation, etc. Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of the other Loan Documents, each of which shall remain in full force and effect. This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect. 13. Counterparts; Telecopied Signatures. This Amendment may be executed in any number of counterparts and by different parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. 14. Further Assurances. Each Borrower agrees to take such further actions as Lender shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby. 15. Section Titles. Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto. 16. Release of Claims. To induce Agent and Lenders to enter into this Amendment, each Borrower hereby releases, acquits and forever discharges Agent, Lenders, and all officers, directors, agents, employees, successors and assigns of Agent and Lenders, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that such Borrower now has or ever had against Agent or any Lender arising under or in connection with any of the Loan Documents or otherwise. Each Borrower represents and warrants to Agent and Lenders that such Borrower has not transferred or assigned to any Person any claim that such Borrower ever had or claimed to have against Agent or any Lender. 17. Waiver of Jury Trial. To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal in, and delivered by their respective duly authorized officers on the date first written above. REPTRON ELECTRONICS, INC. By: Name: Title: [CORPORATE SEAL ] HIBBING ELECTRONICS CORPORATION By: Name: Title: [CORPORATE SEAL ] LAKE SUPERIOR MERGER CORPORATION By: Name: Title: Accepted and agreed to: PNC BANK, NATIONAL ASSOCIATION, as a Lender and as Agent By: Name: Title: BANK OF AMERICA, N.A. f/k/a NationsBank, N.A. , as a Lender By: Name: Title: FIRSTAR BANK, N.A., as a Lender By: Name: Title: IBM CREDIT CORPORATION, as a Lender By: Name: Title: COMERICA BANK, as a Lender By: Name: Title: Exhibit E Pricing Formula Ratio Pricing Formula Ratio --------------------- Applicable Margin for Eurodollar Rate Loans Applicable Margin for Domestic Rate Loans Applicable Facility Fee Percentage Less than 1.00:1.00 2.75% 0.00% 0.35% Greater than or equal to 1.00:1.00 and less than 1.10:1.00 2.50% 0.00% 0.35% Greater than or equal to 1.10:1.00 and less than 1.25:1.00 2.25% 0.00% 0.30% Greater than or equal to 1.25:1.00 and less than 1.50:1.00 2.00% 0.00% 0.25% Greater than or equal to 1.50:1.00 and less than 1.75:1.00 1.75% 0.00% 0.25% Greater than or equal to 1.75:1.00 1.50% 0.00% 0.25% -----END PRIVACY-ENHANCED MESSAGE-----