<PAGE>
<PAGE>
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 June 30, 1994
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 1-5374
WYLE LABORATORIES
(Exact name of registrant as specified in its charter)
California 95-1779998
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15370 Barranca Parkway
Irvine, California 92718
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 753-9953
(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 [ ]
At July 31, 1994 registrant had 12,258,916 shares of common stock
outstanding.
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
- - ------------------------------
Item 1. Financial Statements
WYLE LABORATORIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
-------------------- ---------------------
June 30, July 31, June 30, July 31,
1994 1993 1994 1993
--------- -------- -------- --------
Net sales $209,121 $147,649 $406,316 $285,273
--------- -------- -------- --------
Costs and expenses
Cost of sales 173,382 119,371 337,745 228,529
Selling & administrative
expenses 28,632 24,095 56,912 45,533
Interest expense (income), net 246 (2) 388 50
Miscellaneous, net (63) (226) (185) (339)
-------- -------- -------- --------
202,197 143,238 394,860 273,773
-------- -------- -------- --------
Income before income taxes
and accounting change 6,924 4,411 11,456 11,500
Income taxes 2,630 1,611 4,353 4,163
-------- -------- -------- --------
Income before accounting change 4,294 2,800 7,103 7,337
Cumulative effect of accounting
change for postretirement
benefits other than pensions - - - (3,193)
-------- -------- -------- --------
Net income $ 4,294 $ 2,800 $ 7,103 $ 4,144
======== ======== ======== ========
Income per share:
Income before accounting change $ .35 $ .23 $ .57 $ .59
======== ======== ======== ========
Cumulative effect of accounting
change for postretirement
benefits other than pensions $ - $ - $ - $ (.26)
======== ======== ======== ========
Net income $ .35 $ .23 $ .57 $ .34
======== ======== ======== ========
Average common and common
equivalent shares 12,411 12,332 12,431 12,342
======== ======== ======== ========
Dividends per share $ .07 $ .07 $ .07 $ .07
======== ======== ======== ========
See accompanying notes.
1 of 12<PAGE>
<PAGE>
WYLE LABORATORIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS 6/30/94 12/31/93
- - ------ -------- --------
Current assets
Cash and cash equivalents $ 6,132 $ 23,748
Receivables (less allowances of $4,610 at
6/30/94 and $4,183 at 12/31/93) 120,094 87,287
Inventories 120,770 105,716
Prepaid expenses 6,279 6,949
-------- --------
Total current assets 253,275 223,700
-------- --------
Property, plant and equipment 81,408 77,502
Less accumulated depreciation 49,971 46,896
-------- --------
31,437 30,606
-------- --------
Other assets 6,819 6,265
-------- --------
Total Assets $291,531 $260,571
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current liabilities
Current maturities of long-term debt $ 3,000 $ 4,120
Accounts payable 63,884 60,556
Accrued expenses 19,278 15,592
-------- --------
Total current liabilities 86,162 80,268
-------- --------
Long-term debt, less current maturities 26,001 6,000
-------- --------
Deferred income taxes and other liabilities 9,194 9,947
-------- --------
Commitments and contingencies - -
-------- --------
Shareholders' equity
Common stock 86,862 86,348
Retained earnings 83,312 78,008
-------- --------
170,174 164,356
-------- --------
Total Liabilities and Shareholders' Equity $291,531 $260,571
======== ========
See accompanying notes.
2 of 12<PAGE>
<PAGE>
WYLE LABORATORIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
--------------------
June 30, July 31,
1994 1993
--------- --------
OPERATING ACTIVITIES
Net income $ 7,103 $ 4,144
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 3,284 2,815
Provision for losses on receivables 606 714
Provision for deferred income taxes (1,302) (417)
Cumulative effect of accounting change for
postretirement benefits other than pensions - 3,193
(Increase) in receivables (33,413) (3,638)
(Increase) in inventories (15,054) (2,748)
(Increase) decrease in prepaid expenses 1,074 (3,941)
Increase in accounts payable 3,328 10,169
Increase (decrease) in accrued expenses 3,413 (920)
Other, net 370 99
------- -------
Net cash provided by (used for) operating activities (30,591) 9,470
------- -------
FINANCING ACTIVITIES
Additions to long-term debt 20,001 -
Payments of long-term debt (1,120) (48)
Dividends on common stock (1,714) (1,705)
Exercise of stock options 360 553
------- -------
Net cash provided by (used for) financing activities 17,527 (1,200)
------- -------
INVESTING ACTIVITIES
Additions to property, plant and equipment (3,927) (1,795)
Additions to other non-current assets (625) (384)
------- -------
Net cash (used for) investing activities (4,552) (2,179)
------- -------
Increase (decrease) in cash and cash equivalents (17,616) 6,091
Cash and cash equivalents at beginning of period 23,748 29,467
------- -------
Cash and cash equivalents at end of period $ 6,132 $35,558
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 563 $ 614
Income taxes 4,231 5,797
See accompanying notes.
3 of 12<PAGE>
<PAGE>
WYLE LABORATORIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 -- Basis of Presentation
- - -------------------------------
The consolidated financial statements included herein have been prepared
by the company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The accompanying consolidated
financial statements have been prepared on the same basis as the
consolidated financial statements for the eleven-month fiscal period ended
December 31, 1993. These financial statements should be read in
conjunction with the financial statements and the notes thereto included
in the company's Annual Report to Shareholders for the eleven-month fiscal
period ended December 31, 1993.
Effective December 31, 1993, the company changed its year-end from January
31 to December 31. Although the periods presented are not the same, the
company believes that this difference did not materially affect the
comparability of the financial information.
The consolidated financial statements include the accounts of the company
and all of its subsidiaries after eliminating all significant intercompany
transactions and reflect all normal recurring adjustments which are, in
the opinion of management, necessary to present a fair statement of the
results for the interim periods reported. The results of operations for
the six months ended June 30, 1994 are not necessarily indicative of the
results to be expected for the full year.
The company's fiscal quarters are on a 13-week basis. The second quarter
of 1994 ended on July 3, 1994 (the Sunday nearest June 30, 1994). For
clarity of presentation, the company uses calendar month-end dates for
financial reporting purposes.
4 of 12<PAGE>
<PAGE>
Note 2 -- Change in Accounting Principle
- - ----------------------------------------
In November 1992, the Financial Accounting Standards Board (the "FASB")
issued Statement No. 112, "Employers' Accounting for Postemployment
Benefits." This statement required the company to change its method of
accounting for postemployment benefits provided to qualifying former or
inactive employees and their dependents before retirement, to accrue for
the cost of these benefits during an employee's years of service. The
adoption of FASB Statement No. 112 did not have a material effect on the
company's net income or financial position.
Note 3 -- Inventories
- - ---------------------
A detail of inventory balances at June 30, 1994 and December 31, 1993 is
presented below:
(In thousands)
Inventories: 6/30/94 12/31/93
-------- --------
Finished goods $116,488 $100,600
Work in process 2,339 3,057
Raw materials 1,943 2,059
-------- --------
Total $120,770 $105,716
======== ========
5 of 12<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Comparative Sales and Income by Major Lines of Business
- - -------------------------------------------------------
(In thousands)
Three Months Ended Six Months Ended
-------------------- -------------------
June 30, July 31, June 30, July 31,
1994 1993 1994 1993
---------- -------- --------- --------
NET SALES
- - ---------
Electronics Marketing $188,104 $125,690 $363,683 $237,706
Scientific Services & Systems 21,017 21,959 42,633 47,567
-------- -------- -------- --------
Total $209,121 $147,649 $406,316 $285,273
======== ======== ======== ========
INCOME
- - ------
Electronics Marketing $ 7,140 $ 4,736 $ 12,266 $ 11,901
Scientific Services & Systems 1,820 1,285 3,165 3,007
-------- -------- -------- --------
Operating income 8,960 6,021 15,431 14,908
General corporate expenses (1,790) (1,612) (3,587) (3,358)
Interest (expense) income, net (246) 2 (388) (50)
-------- -------- -------- --------
Income before income taxes
and accounting change $ 6,924 $ 4,411 $ 11,456 $ 11,500
======== ======== ======== ========
6 of 12<PAGE>
<PAGE>
Results of Operations
- - ---------------------
Consolidated sales for the second quarter and six months ended June 30, 1994
totaled $209,121,000 and $406,316,000, respectively. Net income was $4,294,000
for the second quarter and $7,103,000 for the year-to-date. Sales for the
second quarter and first six months both rose 42% compared to last year's
second quarter and first half ended July 31, 1993. Net income for the second
quarter grew by 53% versus the prior year, while income for the first six
months (before the effect of an accounting change) declined slightly.
Effective December 31, 1993, the company changed its year-end from January 31
to December 31. Although the periods presented are not the same, the company
believes this difference did not materially affect the comparability of the
financial information.
In May 1993, the Electronics Marketing Group began a major geographic
expansion program to open ten new facilities in key eastern and midwestern
markets within the United States. The company's earnings for the prior year's
second quarter ended July 31, 1993 were negatively impacted by initial start-
up expenses of approximately $3 million related to the expansion program, and
as anticipated, the expansion operations have continued to incur quarterly
operating losses to date during this initial investment period. Sales for the
new expansion divisions have increased steadily since inception, and as a
result, the expansion divisions' aggregate operating loss in this year's
second quarter declined substantially from levels in previous quarters. The
company believes that as sales for the new locations continue to increase, the
expansion operations should begin to generate profits during the second half
of calendar 1994.
During last year's first quarter ended April 30, 1993, the company recorded a
one-time, non-cash charge of $3,193,000, after tax, for the cumulative effect
of an accounting change to adopt FASB Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
The Electronics Marketing Group reported sales for the second quarter of
$188,104,000 and for the first half of $363,683,000. In comparison to the
prior year, revenues increased 50% in the second quarter and grew 53% for the
year-to-date. The gain in sales resulted mainly from increased demand for
semiconductor products, particularly those offered through the group's
value-added activities such as kitting, turnkey manufacturing,
autoreplenishment, design of application specific integrated circuits (ASICs)
and other design/programming services. The group also registered higher
shipments of lower margin commodity products, primarily microprocessors, and
increased computer product revenues. The continued ramp-up in shipments from
the group's new expansion divisions also contributed to the current year's
sales growth.
7 of 12<PAGE>
<PAGE>
The Electronics Marketing Group generated operating income of $7,140,000 in
the second quarter and $12,266,000 for the year-to-date. Compared to the
previous year, earnings for the second quarter increased by 51% and for the
first six months grew by 3%. The growth in second quarter earnings can be
attributed partly to the reduction in operating losses associated with the
group's major expansion program. The group's earnings for the second quarter
and first half benefited from the increase in sales, offset in part by a
decline in its aggregate gross margin percentage due primarily to a change in
product mix, as a higher percentage of revenues was generated from lower
margin commodity products and high-volume customer engagements.
The electronics distribution industry is highly sensitive to fluctuating
market conditions primarily caused by changes in the supply and demand for
semiconductors and computer products. The group's financial results have in
the past reflected variations from period-to-period due to these factors.
The Scientific Services & Systems Group recorded sales for the second quarter
of $21,017,000 and for the first half of $42,633,000. Revenues for the quarter
and first half declined in comparison to the previous year due mainly to a
reduction in billings to the aerospace and defense industry and the nuclear
power industry, offset partially by increased manufacturing revenues. The
group's year-to-date sales also declined from last year due to completion of
certain contracts with international customers.
The Scientific Services & Systems Group generated operating income of
$1,820,000 for the second quarter and $3,165,000 for the first six months.
Earnings for both the quarter and year-to-date increased versus the prior
year, which can be attributed mainly to the resolution of certain issues
during the current year's second quarter that allowed for the reversal of
related reserves. The group's operating results continue to be adversely
impacted by competitive conditions in its major markets.
A significant portion of the Scientific Services & Systems Group's business is
generated directly or indirectly from competitively bid government contracts.
The group's financial results have in the past and may in the future be
affected by government budget cutbacks and funding delays in programs to which
these contracts relate.
Financial Condition
- - -------------------
Working capital as of June 30, 1994 totaled $167,113,000, up $23,681,000 from
December 31, 1993. The growth in working capital can be attributed primarily
to higher trade receivables and inventories at the Electronics Marketing Group
due to higher sales levels, offset partially by lower cash and cash
equivalents and increases in accounts payable and accrued expenses. The
current ratio at June 30, 1994 and December 31, 1993 was 2.9 and 2.8,
respectively. The ratio of long-term debt to total capital (long-term debt
plus equity) was 13% at June 30, 1994 and 4% at December 31, 1993. The higher
ratio primarily reflects an increase in long-term credit line borrowings.
8 of 12<PAGE>
<PAGE>
The company's cash requirements in 1994 are expected to be higher than normal
due to funds required to finance start-up costs and working capital associated
with the Electronics Marketing Group's expansion program. In addition,
significant capital outlays are expected to be made during 1994 and 1995 for
construction of a new warehouse/value-added distribution center for the
Electronics Marketing Group. The company's near-term cash requirements are
expected to be financed through a combination of internally generated cash
flow and bank borrowings.
9 of 12<PAGE>
<PAGE>
PART II - OTHER INFORMATION
- - ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The company's Annual Meeting of Shareholders was held on May
10, 1994.
(b) Not applicable.
(c) At the company's 1994 Annual Meeting of Shareholders,
shareholders elected the company's board of directors with
voting results for each director as follows:
Shares Voted
-------------------------
Director For Against
-------- ---------- ----------
Charles M. Clough 10,135,134 386,199
John B. Farrell 10,134,721 386,612
Theodore M. Freedman 10,134,636 386,697
John R. Herring 10,134,634 386,699
Jack S. Kilby 10,134,846 386,487
James J. McMorrow 10,134,846 386,487
Ralph L. Ozorkiewicz 10,134,634 386,699
Edward Sanders 10,135,009 386,324
Stanley A. Wainer 10,134,634 386,699
Frank S. Wyle 10,135,134 386,199
F. Stephen Wyle 10,135,134 386,199
The shareholders approved the company's 1993 Eligible
Directors' Stock Option Plan with 9,370,764 shares voting for
the plan, 752,824 shares voting against the plan, 397,747
shares abstaining and 1,192,330 shares were withheld.
On March 15, 1994, the record date for the determination of
shareholders entitled to notice of and to vote at the 1994
Annual Meeting of Shareholders, 12,249,166 shares of the
company's Common Stock were outstanding and entitled to vote.
10 of 12<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
11. Calculation of Income Per Share
(b) Reports on Form 8-K:
None.
No responses are given to any other items of Part II because the answers are
either negative or not applicable.
11 of 12<PAGE>
<PAGE>
SIGNATURE
---------
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.
WYLE LABORATORIES
Date: August 16, 1994 By: R. VAN NESS HOLLAND, JR.
-------------------------
R. Van Ness Holland, Jr.
Executive Vice President-
Finance and Treasurer,
Chief Financial Officer
12 of 12<PAGE>
<PAGE>
WYLE LABORATORIES
INDEX TO EXHIBITS FILED WITH FORM 10-Q
For the Quarter Ended June 30, 1994
Exhibits:
- - --------
11. Calculation of Income Per Share
<PAGE>
EXHIBIT 11
----------
WYLE LABORATORIES
CALCULATION OF INCOME PER SHARE
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------- ------------------
June 30, July 31, June 30, July 31,
1994 1993 1994 1993
-------- -------- -------- --------
Net income applicable to
common shares . . . . . . . . $4,294 $2,800 $7,103 $4,144
======= ======= ======= =======
Common and common equivalent shares -
Weighted average number of
common shares outstanding . . 12,250 12,182 12,217 12,172
Stock options included under
the treasury stock method (1) 161 150 214 170
------- ------- ------- -------
12,411 12,332 12,431 12,342
======= ======= ======= =======
Income per share -
Income before accounting change $.35 $.23 $.57 $ .59
Cumulative effect of accounting ======= ======= ======= =======
change for postretirement
benefits other than pensions $ - $ - $ - $(.26)
======= ======= ======= =======
Net income per common share. . $.35 $.23 $.57 $ .34
======= ======= ======= =======
(1) The assumed repurchase price of option shares is based on the average
market price for the period.
