<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 MARCH 31, 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 1-5374
WYLE ELECTRONICS
- -------------------------------------------------------------------------------
(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 April 30, 1996 registrant had 12,544,969 shares of common stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
WYLE ELECTRONICS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Net sales $326,506 $250,036
-------- --------
Costs and expenses
Cost of sales 268,620 209,699
Selling and administrative expenses 37,589 29,155
Interest expense, net 1,934 294
Miscellaneous, net (101) (235)
-------- --------
308,042 238,913
-------- --------
Income before income taxes 18,464 11,123
Income taxes 7,461 4,393
-------- --------
Net income $ 11,003 $ 6,730
======== ========
Net income per share $ .86 $ .54
======== ========
Average common and common equivalent shares 12,841 12,457
======== ========
Dividends per share $ .08 $ .07
======== ========
</TABLE>
See accompanying notes.
1 of 7
<PAGE>
WYLE ELECTRONICS
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
(Unaudited)
ASSETS 3/31/96 12/31/95
- ------ ---------- ---------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 17,840 $ 15,694
Receivables (less allowances of $7,368 at
3/31/96 and $6,423 at 12/31/95) 167,676 159,829
Inventories 200,717 203,413
Prepaid expenses and deferred tax assets 6,943 7,295
-------- ---------
Total current assets 393,176 386,231
-------- ---------
Property, plant and equipment 58,227 52,837
Less accumulated depreciation 21,303 18,508
-------- ---------
36,924 34,329
-------- ---------
Goodwill, net 27,338 241
-------- ---------
Other assets and deferred tax assets 22,800 18,543
-------- ---------
Total assets $480,238 $ 439,344
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Current maturities of long-term debt $ 3,206 $ 3,000
Accounts payable 104,677 97,697
Accrued expenses 43,026 30,032
-------- ---------
Total current liabilities 150,909 130,729
-------- ---------
Long-term debt, less current maturities 94,534 87,600
-------- ---------
Other liabilities 25,830 25,345
-------- ---------
Commitments and contingencies
Shareholders' equity
Common stock 93,800 90,482
Retained earnings 115,187 105,188
Foreign currency translation adjustment (22) -
-------- ---------
208,965 195,670
-------- ---------
Total liabilities and shareholders' equity $480,238 $ 439,344
======== =========
</TABLE>
See accompanying notes.
2 of 7
<PAGE>
WYLE ELECTRONICS
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(In thousands)
Three Months
Ended March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 11,003 $ 6,730
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,384 1,071
Provision for losses on receivables 865 981
Provision for deferred income taxes (811) (1,322)
(Increase) decrease in receivables 381 (17,427)
(Increase) decrease in inventories 5,972 (3,525)
Decrease in prepaid expenses 403 1,012
Increase in accounts payable 2,522 17,697
Increase in accrued expenses 10,209 3,788
Other, net 263 49
-------- --------
Net cash provided by operating activities 33,191 9,054
-------- --------
FINANCING ACTIVITIES
Additions to long-term debt 6,218 698
Payments of long-term debt (209) -
Dividends on common stock (1,004) (863)
Exercise of stock options 33 1,955
Purchase of common stock - (848)
-------- --------
Net cash provided by financing activities 5,038 942
-------- --------
INVESTING ACTIVITIES
Cash consideration paid for acquired business,
net of $1,302 cash received (29,553) -
Additions to property, plant and equipment (3,995) (6,161)
Additions to other non-current assets and liabilities, net (2,535) (1,060)
-------- --------
Net cash (used for) investing activities (36,083) (7,221)
-------- --------
Increase in cash and cash equivalents 2,146 2,775
Cash and cash equivalents at beginning of period 15,694 9,319
-------- --------
Cash and cash equivalents at end of period $ 17,840 $ 12,094
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,978 $ 395
Income taxes 1,269 114
</TABLE>
See accompanying notes.
3 of 7
<PAGE>
WYLE ELECTRONICS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 -- Basis of Presentation
The consolidated financial statements included herein have been prepared by Wyle
Electronics ("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 year ended December 31, 1995. 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 year
ended December 31, 1995.
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 three months
ended March 31, 1996 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 first quarter of 1996
ended on March 31, 1996. Last year's first quarter ended on April 2, 1995 (the
Sunday nearest March 31, 1995). For clarity of presentation, the Company uses
calendar month-end dates for financial reporting purposes.
Note 2 -- Acquisition
On January 2, 1996, the Company purchased all the outstanding capital stock (the
"Stock") of Sylvan Ginsbury, Ltd., a New Jersey corporation, and certain
affiliated entities ("Ginsbury"), an international distributor of active,
passive and interconnect electronic products with operations in the United
States and six European countries. The assets represented by the Stock generally
include personal property, inventory, accounts receivable, intellectual
property, assigned contracts, permits and other identifiable intangible assets.
The negotiated purchase price of the Ginsbury stock was approximately $38.8
million consisting of $30.8 million in cash paid on the closing date, $3.0
million of restricted stock issued at closing and up to $5.0 million in cash for
an earnout provision, which is potentially payable based on the future financial
performance of Ginsbury over a five-year period. The acquisition was financed
mainly through borrowings under the Company's revolving credit agreement. The
transaction was accounted for using the purchase method of accounting. Goodwill
recorded as part of the acquisition is being amortized using the straight-line
method over a 40 year period.
4 of 7
<PAGE>
The results of operations of the Company for the quarter ended March 31, 1996
include the results of Ginsbury. If the acquisition of Ginsbury had taken place
at the beginning of 1995 rather than on January 2, 1996, the Company's pro forma
consolidated net sales, net income and net income per share would have been
$262,555,000, $6,861,000 and $.55, respectively, for the quarter ended March 31,
1995. Such pro forma amounts are not necessarily indicative of what the actual
consolidated results would have been for the full year of 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
Consolidated sales for the first quarter ended March 31, 1996 totaled
$326,506,000, up 31% compared to the three months ended March 31, 1995. Net
income aggregated $11,003,000 for the first quarter, an increase of 63% versus
the corresponding period last year.
On January 2, 1996, the Company purchased all the outstanding capital stock of
Sylvan Ginsbury, Ltd., a New Jersey corporation, and certain affiliated entities
("Ginsbury"), an international distributor of active, passive and interconnect
electronic products with operations in the United States and six European
countries. Accordingly, the results of operations of the Company for the quarter
ended March 31, 1996 include the results of Ginsbury.
The higher sales for the first quarter of 1996, in comparison to the prior year,
can be attributed mainly to increased shipments of semiconductor products,
particularly those offered through the Company's value-added activities such as
design of application specific integrated circuits (ASICs), and other
semiconductor design/programming services along with kitting, turnkey
manufacturing and autoreplenishment services. Sales of lower margin PC
microprocessors in the first quarter of 1996 were down from the previous year.
The Company also recorded higher shipments of computer systems products and mass
storage devices in the first three months of 1996 versus the same period in the
prior year. Sales from the new Ginsbury acquisition also contributed to the
Company's overall sales growth.
The increased net income for the first quarter of 1996, compared to the previous
year, primarily reflects the Company's higher sales. Additionally, the
Company's aggregate gross margin percentage increased in comparison to the prior
year, due in part to a change in the mix of products sold. Earnings also
benefited from lower selling and administrative expense as a percentage of
sales. Income in the first quarter of 1996 reflects a higher level of interest
expense compared to the same period last year, due to increased borrowing
requirements to finance additional working capital to support the higher sales
levels as well as the cash portion of the Ginsbury acquisition.
The Company's business is affected by the cyclical nature of the electronics
industry and the effect of general economic conditions, industry market
conditions caused by changes in the supply and demand for semiconductors and
computer products, as well as intense industry competition. There is hereby
incorporated by reference the information appearing under the caption "Risk
Factors" in Part I of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
5 of 7
<PAGE>
Financial Condition
- -------------------
Working capital as of March 31, 1996 totaled $242,267,000, down $13,235,000 from
December 31, 1995. The decline in working capital can be attributed primarily to
an increase in accounts payable and accrued expenses, offset partially by higher
receivables. The current ratio at March 31, 1996 and December 31, 1995 was 2.6
and 3.0, respectively. The ratio of long-term debt to total capital (long-term
debt plus equity) was 31% at both March 31, 1996 and December 31, 1995.
In April 1996, the Company issued $30 million of senior unsecured notes due
2001, which bear interest at 6.98%. The proceeds from the notes were used to
repay bank borrowings. Simultaneously with the issuance of the notes, the
Company amended its $140 million three-year revolving credit agreement by
reducing the committed credit line to $110 million.
Capital expenditures for the three months ended March 31, 1996 aggregated
$3,995,000, which were lower than the prior year due to costs incurred in 1995
for the construction of a new warehouse/value-added distribution center.
During the first quarter of 1996, the Company paid $30.8 million relating to the
cash portion of the purchase price for Ginsbury.
The Company's near-term cash requirements are expected to be financed through a
combination of internally generated cash flow, bank borrowings and other sources
of available capital.
PART II - OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
11. Calculation of Net Income Per Share
27. Financial Data Schedule
(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.
6 of 7
<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 ELECTRONICS
Date: May 15, 1996 By: /s/ R. VAN NESS HOLLAND, JR.
---------------------------
R. Van Ness Holland, Jr.
Executive Vice President-
Finance and Treasurer,
Chief Financial Officer
7 of 7
<PAGE>
WYLE ELECTRONICS
INDEX TO EXHIBITS FILED WITH FORM 10-Q
For the Quarter Ended March 31, 1996
<TABLE>
<CAPTION>
Exhibits
- --------
<C> <S>
11. Calculation of Net Income Per Share
27. Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 11
----------
WYLE ELECTRONICS
CALCULATION OF NET INCOME PER SHARE
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
------------------
1996 1995
--------- -------
<S> <C> <C>
Net income............................ $11,003 $ 6,730
======= =======
PRIMARY
Common and common equivalent shares
Weighted average number of common
shares outstanding................ 12,536 12,239
Stock options included under the
treasury stock method (1)......... 305 218
------- -------
12,841 12,457
======= =======
Net income per share $ .86 $ .54
======= =======
FULLY DILUTED (2)
Common and common equivalent shares
Weighted average number of common
shares outstanding................ 12,536 12,239
Stock options included under the
treasury stock method (1)......... 331 272
------- -------
12,867 12,511
======= =======
Net income per share $ .86 $ .54
======= =======
</TABLE>
(1) Under the primary computation the assumed repurchase price of option shares
is based on the average market price for the period. Under the fully diluted
computation the repurchase price is based on the higher of the average
market price or the month-end closing price, whichever provides greater
dilution.
(2) Net income per average common and common equivalent share presented on the
face of the consolidated statements of income represents primary earnings
per share. Dual presentation of primary and fully diluted earnings per
share has not been made on the consolidated statements of income because the
differences are insignificant.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 17,840
<SECURITIES> 0
<RECEIVABLES> 175,044
<ALLOWANCES> 7,368
<INVENTORY> 200,717
<CURRENT-ASSETS> 393,176
<PP&E> 58,227
<DEPRECIATION> 21,303
<TOTAL-ASSETS> 480,238
<CURRENT-LIABILITIES> 150,909
<BONDS> 94,534
0
0
<COMMON> 93,800
<OTHER-SE> 115,165
<TOTAL-LIABILITY-AND-EQUITY> 480,238
<SALES> 326,506
<TOTAL-REVENUES> 326,506
<CGS> 268,620
<TOTAL-COSTS> 268,620
<OTHER-EXPENSES> 36,623
<LOSS-PROVISION> 865
<INTEREST-EXPENSE> 1,934
<INCOME-PRETAX> 18,464
<INCOME-TAX> 7,461
<INCOME-CONTINUING> 11,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,003
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0
</TABLE>
