As filed with the Securities and Exchange Commission on October 24, 1997
Registration No. 333-31349
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
DDL ELECTRONICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 33-0213512
- ------------------------------ ------------------------------------
State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2151 Anchor Court
Newbury Park, California 91320
Telephone: (805) 376-9415
Telecopier: (805) 376-9015
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
---------------
Mr. Richard K. Vitelle
Chief Financial Officer
DDL Electronics, Inc.
2151 Anchor Court
Newbury Park, California 91320
Telephone: (805) 376-9415
Telecopier: (805) 376-9015
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
Copy to:
Patrick D. Daugherty, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
NationsBank Corporate Center
Charlotte, NC 28202-4000
Telephone: (704) 417-3101
Telecopier: (704) 377-4814
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following
box.[x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Title of each class Amount Proposed Proposed Amount of
of securities to be to be maximum offering maximum aggregate registration
registered registered price offering price fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding Common
Stock, $.01 par
value 2,000,000 shares(1) $1.156 per share(2) $5,456,318.84 (3) $1,653(4)
==============================================================================================================
</TABLE>
(1) Reduced from the 4,719,999 shares of Common Stock indicated
in the Registration Statement as filed on July 16, 1997.
(2) Based upon the average of the high and low prices for the
Common Stock on July 11, 1997, as reported in the consolidated
reporting system, in accordance with Rule 457(c).
(3) Assumes registration of 4,719,999 shares of Common Stock.
(4) Paid on July 16, 1997.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
SUBJECT TO COMPLETION
DATED OCTOBER 24, 1997
DDL ELECTRONICS, INC.
Common Stock
This Prospectus relates to the resale from time to time of up
to 2,000,000 shares (the "Shares") of common stock, $.01 par value
(the "Common Stock"), of DDL Electronics, Inc. (the "Company") by
certain stockholders of the Company named herein (the "Selling
Stockholders"). "See Selling Stockholders" and "Plan of
Distribution."
The Shares may be sold from time to time by the Selling
Stockholders on the New York Stock Exchange (the "NYSE") or the
Pacific Exchange (the "PE") on terms to be determined at the time
of each sale. The Selling Stockholders also may make private sales
from time to time directly or through a broker or brokers.
Alternatively, the Selling Stockholders may offer Shares from time
to time to or through underwriters, dealers or agents, who may
receive consideration in the form of discounts and commissions.
Such compensation, which may exceed ordinary brokerage
commissions, may be paid by the Selling Stockholders and/or the
purchasers of the Shares for whom such underwriters, dealers and
agents may act. See "Selling Stockholders" and "Plan of
Distribution."
The Selling Stockholders and any dealers or agents that may
participate in the distribution of the Shares may be considered
"underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any profit on the sale of
Shares offered by them and any discounts, commissions or
concessions received by any such dealers or agents may be
considered underwriting discounts and commissions under the
Securities Act.
The Company will receive no proceeds from the sale of the
Shares by the Selling Stockholders hereunder, but the Company will
pay the expenses that it incurs in connection with the
registration of the Shares with the Securities and Exchange
Commission (the "SEC"). See "Plan of Distribution" for
indemnification arrangements between the Company and the Selling
Stockholders.
The Common Stock is listed on the NYSE and on the PE under
the symbol "DDL." On October 23, 1997, the closing price per
share of the Common Stock, as reported in the consolidated
reporting system, was $0.88.
--------------------------------------------
The Shares involve a high degree of risk. See "Risk
Factors," commencing on page 3.
--------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------------------------------
The date of this Prospectus is October ___, 1997.
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement
on Form S-3 under the Securities Act with respect to the Shares
(the "Registration Statement"). This Prospectus does not contain
all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with
respect to the Company and the Shares, reference is made to the
Registration Statement, including the exhibits and schedules filed
as part thereof. Statements contained in this Prospectus as to
the contents of any contract or any other document are not
necessarily complete, and, in each such instance, reference is
hereby made to the copy of the contract or document filed as an
exhibit to the Registration Statement, each such statement being
qualified in all respects by this reference thereto.
The Company is subject to the informational and reporting
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the SEC. The
Registration Statement and exhibits and schedules thereto, as well
as such reports, proxy statements and other information, may be
inspected and copied at the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at 7 World Trade Center, Suite
1300, New York, New York 10048, at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and at 5670 Wilshire Boulevard, 11th
Floor, Los Angeles, California 90036. Copies of all or any part
of such materials may be obtained from any such office upon
payment of the fees prescribed by the SEC. The SEC also maintains
a World Wide Web site (http://www.sec.gov), which contains
reports, proxy and information statements and other information
filed electronically through the SEC's Electronic Data Gathering,
Analysis and Retrieval System (known as "EDGAR"). Such information
may also be inspected at the offices of the NYSE at 20 Broad
Street, New York, New York 10005 and at the offices of the PE at
233 South Beaudry Avenue, Los Angeles, California 90012.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents have been filed with the SEC by the
Company and are hereby incorporated by reference into this
Prospectus: (i) the Company's Annual Report on Form 10-K for its
fiscal year ended June 30, 1997 (the "Form 10-K"); (ii) the
Company's Annual Report on Form 10-K/A for its fiscal year ended
June 30, 1997, as filed with the SEC on October 24, 1997; (iii)
the Company's Current Reports on Form 8-K, dated the following
dates: September 29, 1997 and July 9, 1997; and (iv) the
description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the SEC pursuant to
Section 12 of the Exchange Act. All other documents filed
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
from the date of this Prospectus and prior to the termination of
this offering shall be deemed to be incorporated by reference
herein and shall be deemed to be a part hereof from the date of
filing thereof.
Any statement contained in a document incorporated or deemed
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document
that is also deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to
each person to whom a Prospectus is delivered, upon written or
oral request of such person, a copy of any document incorporated
herein by reference (not including exhibits to documents that have
been incorporated herein by reference unless such exhibits are
specifically incorporated by reference in the document which this
Prospectus incorporates). Requests should be directed to Mr.
Richard K. Vitelle, Chief Financial Officer, DDL Electronics,
Inc., 2151 Anchor Court, Newbury Park, California 91320, telephone
(805) 376-9415.
RISK FACTORS
Prospective investors should carefully consider the following
factors, in addition to the other information presented in this
Prospectus, before purchasing the Shares.
Risk that Acquisition of Jolt will not Close. On June 30,
1997, in order to raise funds necessary to repay its 10% Senior
Secured Notes in the aggregate principal amount of $5,300,000 (the
"Senior Notes"), the Company borrowed $2 million from Mr. Thomas
A. Wheeler, a private investor, under a promissory note bearing 8%
interest (the "Wheeler Note"). The Wheeler Note matures on
February 1, 1999, except as provided below, and is secured by a
pledge of all of the outstanding shares of SMTEK, Inc. ("SMTEK").
The Company agreed to give Mr. Wheeler two seats on its Board of
Directors. The seats were filled by Mr. Wheeler and Ms. Charlene
A. Gondek. The Company also agreed to acquire all of the issued
and outstanding shares of Jolt Technology, Inc. ("Jolt"), a
privately-held electronics manufacturing company owned by Mr.
Wheeler, Ms. Gondek and a third individual, for nine million
shares of Common Stock. If the Company acquires all of the issued
and outstanding shares of Jolt in exchange for registered Common
Stock by February 1, 1999, and if Mr. Wheeler is not then
prevented from transferring his portion of such Common Stock to a
charitable foundation, then the Wheeler Note (and all accrued
interest thereon) will become due on October 31, 1999 (rather than
February 1, 1999).
The Company is currently negotiating a definitive agreement
and other legal documents relating to its acquisition of Jolt.
The specific terms of such documents are subject to negotiation,
and the closing of the Jolt acquisition will be subject to many
conditions, some of which are beyond the Company's control,
including obtaining a fairness opinion and stockholder approval.
There can be no assurance that the Jolt acquisition will be
completed on the terms described herein, or at all, or that there
will be no material change in the information included and
incorporated herein with respect to the Jolt acquisition.
Furthermore, there can be no assurance, should the Jolt
acquisition be completed, that anticipated benefits of the
acquisitions will be realized. In any event, the process of
integrating the operations of Jolt into the Company's operations
may result in unforeseen operating difficulties, could absorb
significant management attention and could require the use of
financial resources otherwise available for ongoing development
and expansion of the Company's existing operations.
Significant Losses. The Company has incurred significant
losses repeatedly in recent quarters and years. The net loss was
$1,678,000 for the Company's fiscal year ended June 30, 1997
("fiscal 1997"). Operating losses totaled $1,167,000, $4,970,000,
$6,948,000 and $5,067,000 in the Company's fiscal years ended June
30, 1996, 1995, 1994 and 1993, respectively. Indeed, with the
exception of the most recent fiscal year, during which the Company
generated operating income of $118,000, the Company has incurred
operating losses for most of the last ten years. Operating losses
could continue until such time as sales increase to a level
sufficient to cover costs and operating expenses. No assurance
can be given as to whether or when such sales increases or
sustained operating profits may be achieved.
In attempting to maintain and improve operating
profitability, management is focusing on problems such as
aggressive price competition throughout the industry and the
Company's need to strengthen its sales and marketing initiatives.
All three of the Company's operating units currently have
significant underutilized manufacturing capacity which management
attributes to these problems. Although DDL has recently
implemented operational improvements that have resulted in modest
operating income, there can be no assurance that the Company will
be able to maintain or improve operating profitability. See "The
Company" herein.
Litigation Risks. On May 29, 1997, the Company signed a
letter of intent (the "Century Letter of Intent") to merge with
Century Electronics Manufacturing, Inc. ("CEMI"). Pursuant to the
Century Letter of Intent, CEMI was to provide a loan of up to $3.3
million to the Company by June 1, 1997 for retirement of the
Company's Senior Notes in the aggregate principal amount of
$5,300,000. However, such financing was not made available by
CEMI. As a result, on June 30, 1997 the Company obtained
alternate financing which enabled it to repay its Senior Notes.
On September 22, 1997, the Company filed a lawsuit against CEMI in
the Superior Court of Ventura County, California, alleging breach
of contract and fraud and seeking $5,000,000 in actual damages
plus punitive damages. CEMI has not yet answered the Company's
complaint or made an appearance in the case. On October 14, 1997,
however, CEMI filed a lawsuit of its own against the Company in
the Superior Court of Middlesex County, Massachusetts. In the
Massachusetts action, CEMI asserts that the Company failed to
provide collateral acceptable to CEMI to secure CEMI's loan and
that the Company engaged in unfair and deceptive acts which
deprived CEMI of the opportunity to merge with a publicly traded
company. CEMI's lawsuit seeks $10,000,000 plus punitive damages.
The Company believes CEMI's lawsuit is without merit and plans to
contest CEMI's claims vigorously. The Company's prosecution of
the California action and its defense of the Massachusetts action
are both subject to all of the risks, costs and uncertainties
associated with litigation, including legal fees and expenses,
disruption of executive schedules and focus, the possibility that
the Company may be called upon to satisfy a judgment and the
possibility that the Company will be unable to realize proceeds
from any judgment that it may obtain.
Limited Capital Resources; Continuing Need for Financing.
The Company's ability to maintain its current revenue base and to
fund its business operations is dependent on the availability of
adequate capital. Without sufficient capital, the Company's
growth will be limited and its operations will be adversely
affected. As a result of significant operating losses in recent
years and the Company's repayment of the Senior Notes on June 30,
1997, the Company currently has limited capital. General market
conditions and the Company's future performance, including its
ability to generate profits and positive cash flow, will also
impact the Company's resources. In addition, the Company's future
capital requirements will depend upon a number of factors, such as
competitive conditions and capital costs, that are not within the
Company's control. The Company anticipates that it may be
required to issue additional equity or debt securities and may use
other financing sources to fund growth and development. The sale
of additional equity securities would result in additional
dilution to the stockholders of the Company. The failure of the
Company to obtain additional capital when needed could have
material adverse effects on the Company's business and future
prospects. No assurance can be given that additional financing
will be available when needed on acceptable terms or at all.
Dependence on Key Personnel. The Company's success depends
to a large extent upon the efforts and abilities of key managerial
and technical personnel. Pursuant to a change in control of the
Company in May 1995, the Company's incumbent senior management was
replaced with interim senior management while the Company searched
for permanent senior management possessed of desired skills,
experience and other qualifications. The operating management of
the Company's Northern Ireland subsidiaries was not changed.
Upon consummation of the acquisition of SMTEK in January
1996, the President and Chief Executive Officer of SMTEK, Mr.
Gregory L. Horton, became the President and Chief Executive
Officer of the Company and a member of the Company's Board of
Directors. Mr. Horton's experience within the industry in which
the Company operates will continue to be of considerable
importance to the Company. Pursuant to the respective employment
agreements of Messrs. Horton and Vitelle, Vice President of
Finance and Chief Financial Officer, Mr. Horton's term of
employment continues until November 1, 1999 and Mr. Vitelle's term
of employment continues until September 12, 2001, unless earlier
terminated in accordance with the terms and conditions of each
respective agreement. With respect to each such employment
agreement, either the Company or Mr. Horton or Mr. Vitelle, as the
case may be, may terminate employment with or without cause,
although certain amounts are to be paid or forfeited to the other
party in the event of a termination of employment without cause.
There can be no assurance that the Company will be able to retain
its existing personnel or attract additional skilled employees in
the future. The loss of any of the Company's key personnel or its
inability to attract and retain key employees in the future could
have a material adverse effect on the Company's operations and
business plan. The Company is the beneficiary of "key-man" life
insurance policy with respect to Mr. Horton in the amount of $1.3
million. The Company does not intend to obtain similar insurance
policies with respect to the lives of any of its other officers or
personnel.
Concentration of Revenues Among Major Customers. In fiscal
1997, one customer accounted for approximately 42% of the sales of
DDL Electronics Limited, a wholly-owned subsidiary of the Company
located in Northern Ireland ("DDL-E"). There can be no assurance
that this customer will maintain its business relationship with
DDL-E. The loss of all or a substantial portion of DDL-E's
revenues attributable to any of its major customers that could not
be offset by a new customer could have a material adverse effect
on the Company's financial condition and results of operations.
In fiscal 1997, one customer accounted for more than 47% of
SMTEK's sales. During fiscal 1997, more than 50% of SMTEK's
business was generated by customers located in California. There
can be no assurance that any of these customers will maintain
their volume of business with SMTEK. The loss of all or a
substantial portion of SMTEK's revenues attributable to any of
SMTEK's major customers, or an adverse change in economic
conditions in California, could have a material adverse effect on
the financial condition and results of operations of SMTEK and the
Company.
Historical Dependence on Government Business; Recent Shift
into Commercial Business. A substantial portion of SMTEK's
historical revenues have been derived from contracts with United
States government prime contractors, but this historical
dependency is changing. Approximately 18% and 36% of SMTEK's net
sales in fiscal 1997 and 1996, respectively, were derived from
sales to government contractors in the defense and space sectors.
Business with the United States and other governments is, in
general, subject to a variety of risks, including delays in
funding and performance of contracts; possible termination of
contracts or subcontracts for the convenience of the government;
termination or modification of contracts or subcontracts in the
event of change in the government's requirements; policies or
budgetary constraints; adjustments as a result of audits; and
increases or unexpected costs causing losses or reduced profits
under fixed-price contracts. There can be no assurance that any
or all of these risks will not come to fruition in the Company's
business.
The ongoing shift in SMTEK's revenue base from prime
government contractors to commercial original equipment
manufacturers ("OEMs") is necessitating significant adjustments in
operations, including changes in project management, materials
management and order turnaround time. At the management level,
significant shifts in internal processes, including strategic
planning, marketing and throughput planning, are also required for
a successful completion of this transition. There can be no
assurance that SMTEK will be able to adapt to any or all of these
changes.
Industry Conditions. The industries and markets in which the
Company's customers compete are characterized by rapid
technological change and product obsolescence. As a result, the
end products made by the Company's customers have relatively short
product lives. The Company's ability to compete successfully will
depend in substantial part on its ability to procure appropriate
raw materials and maintain its quality asset base, incorporate or
respond to advances in technology, manufacture and price its
products and services competitively and achieve significant market
acceptance. Unexpected delays in completing or shipping products,
or design or production problems, may arise and could adversely
affect the Company.
Competition. The markets for the Company's products and
services are highly competitive. Competition is principally based
on price, product and service quality, order turnaround time and
technical capability. The technology used by the Company in
fabricating its products and providing its services is widely
available, and the Company has a large number of domestic and
foreign competitors, many of which are larger than the Company and
possess much greater financial, marketing, personnel and other
resources. The Company also faces competition from current and
prospective customers that evaluate the Company's capabilities
against the merits of manufacturing products internally. To
remain competitive, the Company must continue to provide
technologically advanced manufacturing services, maintain quality
levels, offer flexible delivery schedules, deliver finished
products on a reliable basis and compete favorably on the basis of
price. The Company currently may be at a competitive disadvantage
as to price when compared to manufacturers with lower cost
structures, particularly manufacturers with established facilities
where labor costs are lower, and manufacturers with larger sales
volume and resultant lower unit costs.
Environmental Matters. The Company's operations involve the
use and handling of environmentally hazardous substances. It is
currently a party to certain lawsuits brought in connection with a
waste disposal site in California known as the "Stringfellow
Superfund Site." Total cleanup costs for the Stringfellow
Superfund Site have been estimated at $600 million. Under a
proposed settlement agreement with respect to one such suit, the
Company's probable liability for such cleanup costs is estimated
at $120,000 and the Company has accrued this amount as its
estimate of the liability it will ultimately bear. It is
impossible to determine the Company's ultimate liability for such
cleanup costs. Its allocated share of such cleanup costs could
have a material adverse impact on its business, financial
condition and results of operations. See "Business --
Environmental Regulation" in the Form 10-K.
In addition, the Company is currently involved in certain
remediation and investigative studies regarding soil and
groundwater contamination with respect to certain property in
California previously leased by its Anaheim printed circuit board
manufacturing facility. Initial estimates from environmental
engineering firms indicate that it could cost from $1,000,000 to
$3,000,000 to fully clean up the site and could take as long as
ten years to complete. At June 30, 1997, the Company had a
reserve of $564,000, which represents its estimated share of
future remediation costs at this site. Based on consultation with
the environmental engineering firms, management believes that the
Company has made adequate provision for the liability based on
probable loss. It is possible, however, that the future
remediation costs at this site may differ significantly from the
estimates, and may exceed the amount of the reserve. The
Company's liability for remediation in excess of its reserve could
have a material adverse impact on its business, financial
condition and results of operations. See "Business --
Environmental Regulation" in the Form 10-K.
Dependence on Suppliers. Certain components used by the
Company are purchased from sources specified by its customers. An
interruption in delivery of these components could have material
adverse effects on the Company. See "Business -- Raw Materials
and Suppliers" in the Form 10-K. SMTEK and DDL-E have been
adversely affected throughout their history by delays in
production caused by delay in the receipt of materials, resulting
in reduced overall profitability. There can be no assurance that
the same adverse conditions will not recur.
Volatility. The public equity markets in recent years have
experienced extreme price and volume fluctuations that often have
been unrelated or disproportionate to the operating performance of
companies. These broad fluctuations may adversely affect the
market price of the Shares. In light of these market
considerations, prospective purchasers should view the Shares as
illiquid investments.
Possible Delisting of Common Stock. The Common Stock is
currently listed and traded on the PE and the NYSE. To maintain
eligibility for listing on the NYSE, the Company must satisfy
certain continued listing criteria, including minimum levels
regarding (1) number of stockholders and shareholdings (1,200
holders and average monthly trading volume less than 100,000
shares), (2) number of publicly-held shares (600,000), (3)
aggregate market value of publicly-held shares ($8,000,000) and
(4) annual net income (an average of $600,000 per year for the
past three years if net tangible assets are less than
$12,000,000). The NYSE has notified the Company that, due to the
Company's failure to satisfy the annual net income and net
tangible asset criteria, the Common Stock is subject to delisting.
The NYSE has not yet taken affirmative action to delist the
Common Stock, but it has reserved the right to take such action in
the future. Delisting of the Common Stock from the NYSE could
have material adverse effects on the price and liquidity of the
Common Stock, depending upon, among other things, the Company's
eligibility at that time to continue listing the Common Stock on
the PE or, failing that, to list the Common Stock on Nasdaq or
some other exchange. There can be no assurance that the Common
Stock could be listed on Nasdaq or any other exchange at any time.
Proprietary Rights and Patents. The Company holds no
copyrights, patents or trademarks that are material to the sale
of its products, and currently the Company does not intend to
obtain any copyrights, patents or trademarks with respect to its
intellectual property. There can be no meaningful protection from
competitors developing and marketing products and services
competitive with those of the Company. In addition, companies
that obtain patents claiming products or processes that are
necessary for or useful to the development or operation of the
Company's products and services can bring legal actions against
the Company claiming infringement. Although management is not
aware of any claim that either the Company or any of its
subsidiaries infringes any existing patent, in the event that in
the future the Company is unsuccessful against such claim it may
be required to obtain licenses to such patents or to other patents
or proprietary technology in order to develop, manufacture or
market its products and services. There can be no assurance that
the Company will be able to obtain such licenses on commercially
reasonable terms or that the patents underlying the licenses will
be valid and enforceable.
Risks Associated with International Business. Revenues from
international business could continue to represent a substantial
percentage of the Company's total revenues. Such business is
subject to various risks, including exposure to currency
fluctuations, political and economic instability, the greater
difficulty of administering business abroad and the need to comply
with a wide variety of export laws, tariff regulations and
regulatory requirements. Such risks are amplified in the case of
the Company because a large portion of its assets and operations
are located outside of the United States. See "Business" in the
Form 10-K and "The Company" herein.
No Dividends. There can be no assurance that the operations
of the Company will ever result in revenues sufficient to enable
the Company to resume paying dividends on its Common Stock, which
were suspended in 1989. For the foreseeable future, management
anticipates that any earnings generated by the Company's
operations will be used to finance the Company's business and that
cash dividends on the Common Stock will not be paid to
stockholders.
THE COMPANY
This section of the Prospectus contains certain forward-
looking statements that involve various risks and uncertainties.
Actual results may differ from the results suggested by such
forward-looking statements. Factors that might cause such
differences would include, without limitation, those discussed in
"Risk Factors."
The Company manufactures printed circuit boards ("PCBs"),
also called printed wire boards ("PWBs"), for use primarily in the
computer, communications and instrumentation industries. The
Company also is an independent provider of electronic
manufacturing services ("EMS") for electronic equipment
manufacturers. Its PCB facilities are located in Northern Ireland
and primarily serve customers in Western Europe. Its EMS
facilities are located in Northern Ireland and Southern
California. The Company's principal executive offices are located
at 2151 Anchor Court, Newbury Park, California 91320, telephone
(805) 376-9415.
All of the Company's products and services are "customized"
insofar as they are produced only after the Company has contracted
for their design and sale. The Company relies on customer
specifications in manufacturing products. Such specifications may
be developed by the customer alone or may involve some assistance
provided by the Company. Customers submit requests for quotations
on each project. The Company prepares bids based on estimates of
its costs.
European PCB Operations
The Company conducts its PCB business through a wholly-owned
subsidiary, Irlandus Circuits Limited ("Irlandus").
The PCB Industry. PCBs range from simple single- and double-
sided boards to boards with more than twenty layers. When joined
with electronic components in an assembly process, they comprise
the basic building blocks of electronic equipment. PCBs consist
of fine lines of a conductive material, such as copper, which are
bonded to a non-conductive panel, typically laminated epoxy glass.
The conductive pathways in a PCB form electrical circuits and
replace wire as a means of connecting electronic components.
On technologically advanced multilayer boards, conductive
pathways between layers are connected with traditional plated
through-holes and may incorporate surface mount technology.
"Through-holes" are holes drilled entirely through the board that
are plated with a conductive material and constitute the primary
connection between the circuitry on the different layers of the
board and the electronic components attached to the boards later.
"Surface mount" boards are boards on which electrical components
are soldered instead of being inserted into through-holes.
Although much more complex and difficult to produce, surface
mount boards can substantially reduce wasted space associated with
through-hole technology and permit greatly increased surface and
inner layer densities. Single-sided PCBs are used in electronic
games and automobile ignition systems, while multilayer PCBs find
use in more advanced applications such as computers, office
equipment, communications, instrumentation and defense systems.
The development of increasingly sophisticated electronic
equipment, which combines higher performance and reliability with
reduced size and cost, has created a demand for greater
complexity, miniaturization and density in electronic circuitry.
In response to this demand, multilayer technology is advancing
rapidly on many fronts, including the widespread use of surface
mount technology. More sophisticated boards are being created by
decreasing the width of the tracks on the board and increasing the
amount of circuitry that can be placed on each layer. Fabricating
advanced multilayer PCBs requires high levels of capital
investment and complex, rapidly changing production processes.
Since the mid-1980s, the Company has increasingly focused on
the fabrication of advanced multilayer PCBs. Management believes
that the market for these boards offers the opportunity for more
attractive margins than the market for less complex single and
double-sided boards.
As the sophistication and complexity of PCBs increase, yields
typically fall. Historically, the Company relied on tactical
quality procedures, in which defects are assumed to exist and
inspectors examine products lot by lot and board by board to
identify deficiencies. This traditional approach to quality
control is not adequate, however, in an advanced multilayer PCB
fabrication environment. Irlandus is now striving to minimize the
occurrence of product defects.
Market demand for PCBs historically has been driven by end-
user product demand. Market supply has followed a classic "boom
and bust" cycle because there are few barriers to entry. High
margins triggered a flood of supply to the market in the 1980s,
which drove prices down until significant industry consolidation
occurred in the early 1990s.
Competition among PCB manufacturers is based on price,
quality, order turnaround speed and technical differentiation
within the manufacturing process. Virtually every order is bid
competitively. The profit of an individual manufacturer typically
depends on its throughput mix; premium panels generate higher
margins. Both Irlandus and DDL-E have achieved "ISO 9002"
certification, which is increasingly necessary to attract
business.
Irlandus. Irlandus is located in Craigavon, Northern
Ireland, where it produces high-quality, high-technology,
multilayer PCBs. Established in 1972 by Andrus Circuits, a German
company, it was acquired by the Company in 1984 and currently
employs approximately 160 people. Irlandus has a base of
approximately 150 active customers throughout Europe. In fiscal
1997, Irlandus' largest customer accounted for approximately 22%
of its total revenues. No other customer represented more than
10% of Irlandus' fiscal 1997 revenues. Over 80% of its sales are
made by a direct sales force; the remainder are effected by
independent sales representatives.
Since 1989 Irlandus has struggled to compete effectively in a
marketplace characterized by excess supply. In fiscal 1997, it
did achieve an operating profit, which management attributes to a
new strategic focus on the high-technology, prototype and premium
fast-service end of the multilayer PCB market. There can be no
assurance, however, that Irlandus will continue to profit from its
implementation of this strategy.
EMS Contracts
The Company conducts its EMS business in Western Europe
through DDL-E and in the United States through SMTEK.
The EMS Industry. EMS contracts are estimated to generate
more than $30 billion in revenues annually worldwide. The EMS
market has three segments: high-volume, medium-volume and low-
volume. The Company focuses on the medium-volume segment, which
accounts for approximately 20% of global demand. Manufacturers in
this segment are highly fragmented and competitive. Customer
bases tend to be highly concentrated, with two or three customers
typically accounting for most of the typical manufacturer's
revenue.
Three types of technology are employed in providing higher-
margin, higher-complexity contract manufacturing in the medium-
volume EMS market segment: surface mount technology ("SMT"), which
accounts for the majority of manufacturing; and through-hole
technology and system assembly, which together account for the
remainder. Management believes that the medium-volume EMS market
is continuing to move toward SMT as the preferred manufacturing
technique, mainly because semiconductors have continued to decline
in size, thereby lowering manufacturing tolerances.
Competition in this market segment is driven by service,
order turnaround time and quality. Margins tend to be slightly
higher here than in the high-volume segment because of greater
complexity and the generally higher price associated with
specialty products. Also, the customers in this segment tend to
be smaller firms, with less bargaining power. Such customers
include specialized equipment providers to the financial services,
computer hardware, medical services and telecommunications
industries, among others.
DDL-E. DDL-E provides turnkey EMS using both SMT and
through-hole technologies. Under the turnkey process, DDL-E
procures customer-specified components from suppliers, assembles
the components onto PCBs and performs post-assembly testing. DDL-
E provides EMS primarily for original equipment manufacturers
located in Western Europe and sells system assembly and
subassembly services to the same customer base. It does not
fabricate any of the components or PCBs used in these processes.
Instead, after acceptance of an order, it procures the necessary
components from distributors.
In the past, DDL-E has procured a portion of its PCB
requirements from its affiliate, Irlandus, at prevailing
commercial prices. Located approximately two miles from Irlandus'
facilities in Craigavon, Northern Ireland, DDL-E was founded by
the Company in 1989 to complement Irlandus' PCB business by adding
value to boards at the next level of manufacturing. DDL-E has
traditionally focused on customers who are major OEMs in global
businesses across a wide range of industries. Its customer base
is highly concentrated; in fiscal 1997, five customers accounted
for 77% of sales. All of its sales are made by its direct sales
force.
Historically, there has been a high level of interdependence
in the EMS/OEM relationship. Since contracted manufacturing may
be a substitute for all or some portion of a customer's captive
EMS capability, continuous communication between the manufacturer
and the customer is critical. To facilitate such communication,
DDL-E maintains a customer service department whose personnel work
closely with the customer throughout the assembly process.
Engineering and service personnel coordinate with the customer on
product implementation, thereby providing feedback on issues such
as ease of assembly and anticipated production lead times.
Component procurement is commenced after component specifications
are verified and approved sources are confirmed with the customer.
Concurrently, assembly routing and procurement for conformance
with workmanship standards are defined and planned.
"In-circuit" test fixturing also is designed and developed.
In-circuit tests are normally performed on all assembled circuit
boards for turnkey projects. Such tests verify that components
have been properly inserted and meet certain functional standards
and that electrical circuits are properly completed. In addition,
under protocols specified by the customer, DDL-E performs
customized functional tests designed to ensure that the board or
assembly will perform its intended function. Company personnel
monitor all stages of the assembly process in an effort to provide
flexible and rapid responses to the customer's requirements,
including changes in design, order size and delivery schedule.
The materials procurement element of DDL-E's turnkey services
consists of the planning, purchasing, expediting and financing of
the components and materials required to assemble a PCB or system-
level assembly. Customers have increasingly required DDL-E and
other independent providers of EMS to purchase all or some
components directly from component manufacturers or distributors
and to finance the components and materials. In establishing a
turnkey relationship with an independent EMS provider, a customer
must incur expenses in order to qualify the EMS provider (and, in
some cases, the provider's sources of component supply), refine
product design and EMS processes and develop mutually compatible
information and reporting systems. With this relationship
established, management believes that customers experience
significant difficulty in expeditiously and effectively
reassigning a turnkey contract to a new assembler or in taking on
the project themselves.
While the interdependence between EMS providers and OEMs may
be a source of stability in DDL-E's customer base, it also is an
obstacle when DDL-E seeks to attract new customers.
SMTEK. SMTEK is an EMS provider, specializing in SMT design
and assembly of circuit boards. Its operations range from
analysis and design to complex manufacturing and test services.
Its services are marketed to the military, medical, avionics,
industrial and space industries and for high-end commercial
applications.
SMTEK's core competence includes: (i) mechanical thermal and
structural engineering analysis and design of printed circuit
boards; (ii) full procurement of all materials and components; and
(iii) full in-circuit and functional testing capabilities. Such
operations are integrated with a contract manufacturing capability
that relies in substantial part upon factory automation. SMTEK
employs approximately 155 persons and conducts its operations in a
45,000-square-foot facility located in Newbury Park, California.
SMTEK was founded in 1986 by Mr. Horton, who became the
Company's President and Chief Executive Officer when the Company
acquired SMTEK in January 1996. Over the years SMTEK has focused
on supplying circuit board assemblies to the aerospace and
avionics industry. Management believes that SMTEK's automated
production processes and design capabilities are a competitive
advantage. Such automated processes rely upon SMT, an unpatented
design and production technique believed by management to be less
expensive and more efficient than component through-hole
insertion. SMTEK competes against companies that are much larger
and better capitalized than the Company. In the past Mr. Horton
was able to increase the revenues of SMTEK by focusing on
contracts of much smaller size than those sought actively by its
principal competitors. SCI Systems is the leading firm in the EMS
industry. Management believes that the Company's largest direct
competitor is Solectron Corporation.
SMTEK's backlog at June 30, 1997 amounted to approximately
$15 million in orders to be filled within six months under
contracts with approximately 40 customers.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements
have been prepared giving effect to the acquisition of Jolt by the Company
as if the acquisition had taken place at June 30, 1997 for the pro forma
consolidated balance sheet and, in the case of the pro forma statement of
operations, as of July 1, 1996.
The acquisition will be accounted for using the purchase method. In
accordance with Accounting Principles Board Opinion No. 16, the purchase
price will be allocated to the assets and liabilities acquired at their
estimated fair values at acquisition date. Based on current information,
management does not expect the final allocation of the purchase price to be
materially different from that used in the following pro forma balance
sheet and pro forma statement of operations.
The unaudited pro forma financial information is not necessarily
indicative of the results of operations of the financial position which
would have been attained had the acquisition been consummated at either of
the foregoing assumed dates or which may be attained in the future. The pro
forma financial information should be read in conjunction with the
historical financial statements of the Company and Jolt.
<TABLE>
DDL ELECTRONICS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
(In thousands)
<CAPTION>
DDL Electronics, Inc. Jolt Technology, Inc.
------------------------------------ -----------------------------------
As reported Effect of DDL Jolt Pro forma Pro forma
at 6/27/97 transactions pro forma Balances Pre-merger pro forma acquisition total at
(Actual) on 6/30/97 at 6/30/97 at 6/30/97 transactions at 6/30/97 adjustments 6/30/97
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,718 $(3,343)(A) $ 1,375 $ 640 $ (40)(B) $ 600 $ (256)(D) $ 1,719
Accounts receivable, net 9,198 9,198 409 409 9,607
Costs and estimated earnings
in excess of billings on
uncompleted contracts, net
of progress billings 3,161 3,161 3,161
Inventories 3,211 3,211 76 76 3,287
Prepaid expenses 132 132 17 17 149
------- ------- ------- ------- ------- ------- ------- -------
Total current assets 20,420 (3,343) 17,077 1,142 (40) 1,102 (256) 17,923
Property and equipment, net 6,790 6,790 501 501 0 (E) 7,291
Goodwill 4,439 4,439 4,262 (F) 8,701
Deposits and other assets 231 231 8 8 239
------- ------- ------- ------- ------- ------- ------- -------
$31,880 $(3,343) $28,537 $ 1,651 $ (40) $ 1,611 $ 4,006 $34,154
======= ======= ======= ======= ======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit payable $ 1,378 $ 1,378 $ 1,378
Current portion of long-term
debt 4,167 $(3,300)(A) 867 867
Accounts payable 9,084 9,084 $ 12 $ 12 9,096
Notes and accrued interest
payable to Jolt stockholder 1,935 $(1,935)(C) 0 0
Other current liabilities 3,466 (43)(A) 3,423 28 28 3,451
------- ------- ------- ------- ------- ------- ------- -------
Total current liabilities 18,095 (3,343) 14,752 1,975 (1,935) 40 14,792
Long-term debt 7,820 0 (A) 7,820 8 8 7,828
------- ------- ------- ------- ------- ------- ------- -------
Stockholders' equity:
Common stock and additional
paid-in capital 6,656 6,656 $ 5,569 (G) 12,225
Retained earnings 0 0 0
Foreign currency translation
adjustment (691) (691) (691)
Net assets of acquired company (332) 1,895 1,563 (1,563)(H) 0
------- ------- ------- ------- ------- ------- ------- -------
Total stockholders'
equity (deficit) 5,965 0 5,965 (332) 1,895 1,563 4,006 11,534
------- ------- ------- ------- ------- ------- ------- -------
$31,880 $(3,343) $28,537 $ 1,651 $ (40) $ 1,611 $ 4,006 $34,154
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
DDL ELECTRONICS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(A) Represents the net effects of two transactions that occurred on June 30,
1997 (which was subsequent to the Company's fiscal year ended June 27,
1997, as the Company utilizes a 52-53 week year):
(1) Issuance of a note payable due February 1, 1999 in the principal
amount of $2,000,000, with the corresponding cash proceeds.
(2) Repayment of Senior Notes due July 1, 1997 in the aggregate
principal amount of $5,300,000 plus accrued interest of $43,000.
Of the aggregate principal amount on these notes, $3,300,000 was
classified as a current liability at June 27, 1997, and the
remaining $2,000,000 was included in long-term debt at that date
because this portion was essentially refinanced on a long-term
basis as a result of the $2,000,000 note referred to in
(A)(1) above.
(B) The acquisition agreement provides that Jolt will have not less than
$600,000 of cash at the time of acquisition closing. It is assumed
that cash in excess of $600,000 will be distributed to Jolt's
stockholders in a pre-acquisition distribution.
(C) To convert notes payable to a Jolt stockholder and accrued interest
thereon to equity in a pre-merger transaction, in accordance with the
terms of the acquisition agreement.
(D) Cash paid for direct costs of acquisition and debt issuance costs, as
follows:
Cash paid for fairness opinion fee $ 105,000
Cash paid for other direct costs of Jolt acquisition 151,000
---------
$ 256,000
=========
(E) The fair market value of Jolt's property and equipment is considered to
approximate its net book value in Jolt's historical financial statements,
hence no adjustment in basis of property and equipment is shown.
(F) To record excess of cost over value assigned to net assets
acquired as goodwill.
(G) To record issuance of Common Stock as purchase consideration for Jolt.
(H) To eliminate pre-acquisition equity of Jolt.
(I) The purchase price of Jolt is computed as follows:
Issuance of 9 million shares of DDL common stock,
valued at $1.125 per share, less discount of 45%
for blockage and lock-up trading restrictions $5,569,000
Direct costs of acquisition including fairness
opinion, legal and accounting 256,000
----------
$5,825,000
==========
The purchase price is allocated as follows:
Book value of net assets acquired $1,563,000
Excess of cost over value assigned (goodwill) 4,262,000
----------
$5,825,000
==========
<PAGE>
DDL ELECTRONICS, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
(Unaudited)
(In thousands except per share amounts)
DDL
Electronics, Jolt Pro forma
Inc. Technology, acquisition Pro forma
(Actual) Inc. adjustments total
-------- -------- -------- --------
(A)
Sales $48,919 $ 2,170 $51,089
------- ------- -------
Costs and expenses:
Cost of goods sold 42,475 1,329 43,804
Administrative and selling 5,058 346 5,404
Goodwill amortization 1,268 $ 213 (B) 1,481
------- ------- ------- -------
48,801 1,675 213 50,689
------- ------- ------- -------
Operating income 118 495 (213) 400
------- ------- ------- -------
Non-operating income (expense):
Interest expense on
stockholder notes (107) 107 (C) 0
Interest expense - other (1,105) (10) (1,115)
Debt issue cost
amortization (937) (937)
Other income 246 8 254
------- ------- ------- -------
(1,796) (109) 107 (1,798)
------- ------- ------- -------
Income (loss) before income
taxes (1,678) 386 (106) (1,398)
Provision for income taxes 0 0 28 (D) 28
------- ------- ------- -------
Net income (loss) $(1,678) $ 386 $ (134) $(1,426)
======= ======= ======= =======
Per share information:
Loss per share $ (0.07) $ (0.04)
======= =======
Shares used in computing
loss per share 23,398 9,000 32,398
======= ======= =======
<PAGE>
DDL ELECTRONICS, INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1997
(In thousands)
(A) The revenues and expenses shown for Jolt are the historical
amounts for Jolt's fiscal year ended December 31, 1996, adjusted to
add revenues and expenses for the six months ended June 30,
1997 and to deduct revenues and expenses for the six months
ended June 30, 1996.
(B) To amortize goodwill arising from the Jolt acquisition on a
straight-line basis over 20 years.
(C) To eliminate interest expense on notes payable to a Jolt stockholder.
These notes will be converted to equity prior to the acquisition.
(D) Amount represents a Florida state income tax provision on Jolt's
pretax income, after giving effect to the elimination of interest
expense on notes payable to stockholder. Jolt is an "S" corporation
for income tax purposes and hence does not pay income taxes at the
corporate level. Upon consummation of the merger, Jolt will be
converted to a "C" corporation and will be subject to Florida
corporate income taxes at the rate 5.5% of taxable income. For
federal income tax purposes, it is assumed that Jolt's taxable income
will be sheltered by the Company's net operating loss carryforwards.
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares.
DETERMINATION OF OFFERING PRICE
This Prospectus may be used from time to time by the Selling
Stockholders who offer the Shares for sale. The offering price of the
Shares will be determined by the Selling Stockholders and may be based
on market prices prevailing at the time of sale, at prices relating to
such prevailing market prices or at negotiated prices.
SELLING STOCKHOLDERS
The following table provides certain information with respect to
Common Stock beneficially owned by each Selling Stockholder as of the
dates indicated. Except as set forth in the footnotes to the table and
elsewhere in this Prospectus, within the past three years none of the
Selling Stockholders has had a material relationship with the Company or
with any of the Company's predecessors or affiliates other than as a
result of ownership of the securities of the Company. The Shares may be
offered from time to time by the Selling Stockholders named below or
their nominees, and this Prospectus may be required to be delivered by
persons who may be deemed to be underwriters in connection with the
offer or sale of Shares.
<TABLE>
<CAPTION>
Number of shares Percentage of
of Common Stock Number of shares shares of Common
Beneficially Number of of Common Stock Stock Beneficially
Owned Prior to Shares Beneficially Owned Owned After
Name the Offering Offered After the Offering the Offering
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Par Investment
Partners, L.P. 1,000,000 1,000,000 0 0.0%
A.I.M. Overseas Ltd. 1,670,000 250,000 1,420,000 5.6%
Richard Fechtor 578,550 150,000 428,550 1.7%
Peter D. Fenton 125,000 125,000 0 0.0%
Robert Detwiler 125,000 125,000 0 0.0%
Jeffrey R. Power 135,000 125,000 10,000 (1)
Sheldon M. Fechtor 100,000 100,000 0 0.0%
John Pemble 75,700 75,000 700 (1)
Maurice B. Buchsbaum 25,000 25,000 0 0.0%
Andrew Detwiler 25,000 25,000 0 0.0%
</TABLE>
(1) Less than one percent.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling
Stockholders through the facilities of the NYSE or the PE on terms to be
determined at the time of each sale. Alternatively, the Selling
Stockholders may offer Shares from time to time to or through
underwriters, dealers or agents, who may receive compensation in the
form of discounts and commissions. Such compensation, which may exceed
ordinary brokerage commissions, may be paid by the Selling Stockholders
and/or the purchasers of the Shares for whom such underwriters, dealers
and agents may act.
The Selling Stockholders and any dealers or agents that participate
in the distribution of the Shares may be considered "underwriters"
within the meaning of the Securities Act, and any profit on the sale of
such Shares offered by them and any discounts, commissions or
concessions received by any such dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act. The
aggregate proceeds to the Selling Stockholders from sales of the Shares
will be the purchase price of such Shares less any brokers' commission
required to be paid by the Selling Stockholders.
To the extent required, the specific Shares to be sold, the names
of the Selling Stockholders, the respective purchase prices and public
offering prices, the names of any such agents, dealers and underwriters
and any applicable commissions or discounts with respect to a particular
offer will be set forth in a supplement to this Prospectus.
The Shares may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, at varying
prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold by Selling Stockholders in such
jurisdictions only through registered or licensed brokers or dealers.
In addition, in certain states Shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirements is
available and is satisfied.
The Company will pay the expenses that it incurs in connection with
the registration of the Shares with the SEC.
The Company and each Selling Stockholder have agreed to indemnify
each other against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by
Nelson Mullins Riley & Scarborough, L.L.P., Charlotte, North Carolina.
EXPERTS
The consolidated financial statements of DDL Electronics, Inc. as
of June 30, 1997 and 1996 and for each of the years in the three-year
period ended June 30, 1997, have been incorporated by reference herein
and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The financial statements of Jolt Technology, Inc. as of December
31, 1996 and for the year then ended, included in this Prospectus, have
been audited by Brunt & Company, P.A., to the extent and for the period
indicated in their report, and such financial statements have been
included herein and therein upon the authority of such firm as experts
in accounting and auditing.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Jolt Technology, Inc.
Hollywood, Florida
We have audited the accompanying balance sheet of Jolt Technology, Inc.
(a Florida corporation) as of December 31, 1996 and the related
statement of income, changes in stockholders' equity (deficit) and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first
paragraph present fairly, in all material respects, the financial
position of Jolt Technology, Inc. as of December 31, 1996 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ Brunt & Company, P.A.
BRUNT & COMPANY, P.A.
Certified Public Accountants
August 7, 1997
F-1
<PAGE>
JOLT TECHNOLOGY, INC.
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 613,618
Accounts receivable, net of allowance
for doubtful accounts of $5,000 269,181
Other receivables 11,787
Inventories 55,249
---------------
TOTAL CURRENT ASSETS 949,835
PROPERTY AND EQUIPMENT, net 454,540
OTHER ASSETS 6,573
---------------
$ 1,410,948
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 279,179
Shareholder note payable 100,000
Lease obligation payable 31,992
Accounts payable 10,853
---------------
TOTAL CURRENT LIABILITIES 422,024
SHAREHOLDER LOAN PAYABLE 1,525,148
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $1.00 par value, 10,000
shares authorized, issued and outstanding 10,000
Additional Paid-in-Capital 24,000
Accumulated Deficit (570,224)
---------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (536,224)
---------------
$ 1,410,948
===============
Read accompanying notes and auditors' report.
F-2
<PAGE>
JOLT TECHNOLOGY, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
NET SALES $ 2,354,386
COST OF GOODS SOLD 1,412,482
-------------
GROSS PROFIT 941,904
-------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 326,815
-------------
INCOME FROM OPERATIONS 615,089
INTEREST EXPENSE - SHAREHOLDER LOANS (114,900)
OTHER INCOME (EXPENSES) (9,032)
-------------
TOTAL NON-OPERATING EXPENSES (123,932)
-------------
NET INCOME $ 491,157
=============
Read accompanying notes and auditors' report.
F-3
<PAGE>
<TABLE>
JOLT TECHNOLOGY, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
DECEMBER 31, 1996
<CAPTION>
Additional
Common Treasury Paid-in Accumulated
Total Stock Stock Capital Deficit
---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 $(704,381) $ 10,000 $ (2,000) $ 24,000 $ (736,381)
Sale of Treasury Stock 2,000 2,000 -
Net income 491,157 491,157
Dividends paid (325,000) (325,000)
---------- ---------- ----------- ---------- -----------
BALANCE, December 31, 1996 $(536,224) $ 10,000 - $ 24,000 $ (570,224)
========== ========== =========== ========== ===========
Read accompanying notes and auditors' report.
F-4
</TABLE>
<PAGE>
JOLT TECHNOLOGY, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 491,157
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 232,435
Allowance for bad debts 5,000
Changes in assets and liabilities:
Accounts receivable 119,792
Inventories 2,286
Other receivables 7,647
Net deposits 1,185
Customer deposits (44,600)
Accounts payable (18,996)
Accrued expenses 106,224
-----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 902,130
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (225,942)
-----------------
NET CASH USED BY INVESTING ACTIVITIES (225,942)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Reduction in Capitalized Lease Obligations (171,467)
Sale of Treasury Stock 2,000
Shareholder dividends (325,000)
-----------------
NET CASH USED IN FINANCING ACTIVITIES (494,467)
-----------------
NET INCREASE IN CASH 181,721
CASH AT BEGINNING OF YEAR 431,897
-----------------
CASH AT END OF YEAR $ 613,618
=================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 57,227
=================
Read accompanying notes and auditors' report.
F-5
<PAGE>
JOLT TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 1 - BUSINESS ACTIVITY
The Company was incorporated in the State of Florida on June 21, 1989.
It is engaged in the manufacture and sale of custom made printed circuit
boards for use primarily in the computer, communications and
instrumentation industries. The Company is located in Florida with
customers throughout the United States but primarily in the South
Florida region.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents: Cash equivalents include short-term, highly-
liquid debt instruments purchased with original maturities of three
months or less.
Revenue Recognition: Revenue is recognized when products are shipped
and title has passed to the customer.
Inventories: Inventories are stated at the lower of cost (determined on
the first-in, first-out basis) or market. Labor and overhead costs are
capitalized at the time of production.
Property and Equipment: Property and equipment are stated at cost.
Depreciation is provided using straight-line methods at rates based on
the following estimated useful lives:
Years
------
Machinery and equipment 5 - 10
Furniture and fixtures 5 - 10
Vehicles 5
Expenditures for major renewals and betterments that extend the useful
lives of the property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred. Building
and equipment repairs for the year ended December 31, 1996 were $25,030.
Income Taxes: The Company, with the consent of its shareholders, has
elected under the Internal Revenue Code to be an S corporation. In lieu
of corporation income taxes, the shareholders of an S corporation are
taxed on their proportionate share of the Company's taxable income.
Therefore, no provision or liability for federal income taxes has been
included in the financial statements.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts in
the financial statements and accompanying notes. Actual results could
differ from those estimates.
F-6
<PAGE>
NOTE 3 - INVENTORIES
Inventories consisted of the following on December 31, 1996:
Raw materials $ 9,540
Jobs in process 45,709
---------
$ 55,249
=========
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
Original Cost
----------
Leasehold Improvements $ 63,880
Machinery and Equipment 1,102,624
Motor Vehicles 24,735
Office Furniture and Equipment 131,864
----------
Total 1,323,106
Accumulated depreciation (868,566)
----------
Net Property Plant and Equipment $ 454,540
==========
NOTE 5 - CAPITALIZED LEASE OBLIGATION
The Company acquired equipment under the provisions of a long-term lease
in August of 1994. For financial reporting purposes, minimum lease
payments relating to the equipment have been capitalized. The lease
payments are $4,550 per month and expire August 1997. The original cost
of the leased equipment was $216,682. The present value of the lease
payments as of December 31, 1996 was $31,992 and the entire portion is a
current liability.
The future minimum lease payments under the capital lease and the net
present value of the future minimum lease payments are as follows:
Total minimum lease payments $ 35,382
Less amount representing interest 3,390
----------
Present value of net minimum lease payments $ 31,992
==========
F-7
<PAGE>
NOTE 6 - SHAREHOLDER NOTE AND LOAN PAYABLE
Shareholder note payable, unsecured, bearing
interest at the rate of 8.25%. $ 100,000
Shareholder loan payable, unsecured, bearing
interest at the rate of the applicable federal
rate plus one-half percent (7.75% as of
December 31, 1996). $1,525,148
There are no repayment terms set forth for the above note and loan
payable. Repayment of the loan will not be demanded prior to February
1998.
NOTE 7 - COMMITMENTS
As of December 31, 1996, the Company operated its facilities on a one
year noncancellable lease which will expire on October 31, 1997. The
lease is for $74,420 per year ($6,202 per month) plus applicable sales
tax. Rental Expense for the year ended December 31, 1996 was $72,706.
NOTE 8 - MAJOR CUSTOMER
The Company had one customer that accounted for approximately 20% of its
revenue in 1996.
NOTE 9 - EMPLOYEE BENEFIT PLAN
On January 1, 1991 the Company established a Salary Allowance Reduction
Simplified Employee Pension Plan (SARSEP). Under the plan, employees may
elect to defer up to fifteen percent of their salary, subject to
Internal Revenue Service limits. The Company, at their discretion
contributes matching of employee contributions. In addition, the plan
allows for the Company to make additional discretionary contributions.
The Company made no contributions to the plan in 1996.
NOTE 10 - SUBSEQUENT EVENT
On June 30, 1997 the Company's principal stockholders entered into an
agreement in principle to sell the Company to DDL Electronics, Inc.
("DDL"), a publicly owned company, in exchange for DDL stock. Pursuant
to the agreement in principle, the Company's shareholder loans payable
and accrued interest thereon will be converted to equity on or before
the closing date of the sale to DDL.
F-8
<PAGE>
<TABLE>
<S> <C>
---------------------------- ------------------------------
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained in this
Prospectus, and, if given or made, such information
or representations must not be relied upon as having
been authorized by the Company or any Selling
Stockholder. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy,
to any person in any jurisdiction in which such
offer or solicitation is not authorized, or in which DDL ELECTRONICS, INC.
the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. COMMON STOCK
Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances,
create any implication that the information
contained herein is correct as of any date
subsequent to the date hereof.
-------------------------------
Table of Contents
-------------------------------
---------------------
Page
PROSPECTUS
Additional Information 4
---------------------
Incorporation of Certain Information by
Reference 4
Risk Factors 5
October___, 1997
The Company 11
Pro Forma Financial Statements 16
Use of Proceeds 21
Determination of Offering Price 21
Selling Stockholders 21
Plan of Distribution 22
Legal Matters 22
Experts 22
Jolt Financial Statements F-1
---------------------------- ------------------------------
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be incurred in connection
with the Offering, all of which are to be borne by the Registrant.
SEC registration fee $ 1,653
Exchange listing fees* 25,000
Accounting fees and expenses* 10,000
Legal fees and expenses* 15,000
Miscellaneous* 3,347
-------
Total* $55,000
=======
- -------------
* Estimated.
Item 15. Indemnification of Directors and Officers.
The Company has a policy of directors and officers liability
insurance which insures directors and officers against liabilities for
securities law violations.
In addition, the Company's Bylaws provide as follows in Article
VII:
SECTION 7.01. Actions, Etc. Other Than by or in the Right of the
Corporation [i.e., the Company]. Any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, proceeding or investigation, whether civil, criminal,
administrative, and whether external or internal to the Corporation
(other than an action by or in the right of the Corporation), by reason
of the fact that he is or was a director, officer, employee or agent of
the Corporation, or, while serving as a director or officer, is or was
serving at the request of the Corporation as a director, officer,
employee, trustee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, trustee, employee or agent or in any other capacity, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by law, including, but not limited to, the Delaware General
Corporation Law, as the same exists or may thereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification
rights than said Law permitted the Corporation to provide prior to such
amendment), against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to
any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, that he had reasonable cause to believe that his conduct
was unlawful.
SECTION 7.02. Actions, Etc. by or in the right of the Corporation.
Any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed judicial action or suit by or in
the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director or officer, employee or
agent of the Corporation, or, while serving as a director or officer, is
or was serving at the request of the Corporation as a director, officer,
employee, trustee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, trustee, employee or agent or in any other capacity, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by law, including, but not limited to, the Delaware General
Corporation Law, as the same exists or may thereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification
rights than said Law permitted the Corporation to provide prior to such
amendment), against all expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and except that no indemnification shall
be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only
to the extent that the court of Chancery or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other
court shall deem proper.
SECTION 7.03. Determination of Right of Indemnification. Any
indemnification under Section 7.01 or 7.02 (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 7.01 and 7.02. Such
determination shall be made (i) by the Board by a majority vote of a
quorum consisting of directors who were not parties to such action, suit
or proceeding, or (ii) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the
stockholders.
SECTION 7.04. Indemnification Against Expenses of Successful
Party. Notwithstanding the other provisions of this Article, to the
extent that a director, officer, employee or agent of the Corporation
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Section 7.01 or 7.02, or in defense of
any claim, issue or matter therein, he shall be indemnified against all
expenses (including attorneys' fees) incurred by him in connection
therewith.
SECTION 7.05. Prepaid Expenses. Expenses incurred by an officer
or director in defending a civil or criminal action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of any undertaking by or on
behalf of the director or officer to repay such amount if it shall
ultimately by determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article. Such expenses incurred
by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate.
SECTION 7.06. Right to Indemnification Upon Application; Procedure
Upon Application. Any indemnification under or advancement of expenses
provided by, or granted pursuant to, this Article shall be made
promptly, and in any event within ninety days, upon written request of
the director or officer, employee or agent, unless with respect to
applications under Section 7.02 and 7.03, a determination is reasonably
and promptly made by the Board by a majority vote of quorum of
disinterested directors that such director or officer, employee or agent
acted in a manner set forth in such Sections as to justify the
Corporation's not indemnifying the director or officer, employee or
agent. In the event no quorum of disinterested directors is obtainable,
the Board shall promptly direct that independent legal counsel shall
decide whether the director or officer, employee or agent acted in a
manner set forth in such Sections as to justify the Corporation's not
indemnifying or making an advance to the director or officer or, in the
case of indemnification, employee or agent. The right to
indemnification under or advancement of expenses provided by this
Article shall be enforceable by the director, officer, employee or agent
in any court of competent jurisdiction, if the Board or independent
legal counsel denies the claim, in whole or in part, or if no
disposition of such claim is made within ninety days. The director's,
officer's, employee's or agent's expenses incurred in connection with
successfully establishing his right to indemnification or advancement of
expenses, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
SECTION 7.07. Other Rights and Remedies. The indemnification
under and advancement of expenses provided by, or granted pursuant to,
this Article shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled
under any Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person. The right to be indemnified or to
the reimbursement or advancement of expenses pursuant hereto (i) is a
contract right based upon good and valuable consideration, pursuant to
which the person entitled thereto may bring suit as if the provisions
hereof were set forth in a separate written contract between the
Corporation and the director or officer, employee or agent, (ii) is
intended to be retroactive and shall be available with respect to events
occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with
respect to events occurring prior thereto.
SECTION 7.08. Insurance. Upon resolution passed by the Board, the
Corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation, as a director,
officer, employee, trustee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power
to indemnify him against such liability under the provisions of this
Article.
SECTION 7.09. Constituent Corporations. For the purposes of this
Article, references to "the Corporation" include any constituent
corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation, so that any person who is or was a
director, officer, employee, trustee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee, trustee or agent of
another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the
same capacity.
SECTION 7.10. Other Enterprises, Fines, and Serving at
Corporation's Request. For purposes of this Article, references to
"other enterprises" shall include employee benefit plan; references to
"fines" shall include any excise taxes assessed on a person with respect
to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer,
employee, trustee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, trustee or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article.
SECTION 7.11. Savings Clause. If this Article or any portion
thereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each
director, officer, employee or agent as to expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with
respect to any action, suit, proceeding or investigation, whether civil,
criminal or administrative, and whether internal or external, including
a grand jury proceeding and an action or suit brought by or in the right
of the Corporation, to the full extent permitted by any applicable
portion of this Article that shall not have been invalidated by any
other applicable law.
SECTION 7.12. Liability of Directors for Breaches of Fiduciary
Duty. Notwithstanding any provision to the contrary contained in these
Bylaws, to the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a
director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director.
Section 102(b)(7) of the Delaware General Corporation Law provides
that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for
willful or negligent conduct in paying dividends or repurchasing stock
out of other than lawfully available funds or (iv) for any transaction
from which the director derived an improper personal benefit. No such
provision shall eliminate or limit the liability of a director for any
act or omission occurring prior to the date when such provision becomes
effective.
Item 16. Exhibits.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4-a Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8, Commission File No. 33-7440)
4-b Bylaws of the Company, amended and restated effective March 1993
(incorporated by reference to Exhibit 3-b to the Company's 1993 Annual
Report on Form 10-K)
4-c Common Stock Purchase Agreement dated as of June 3, 1997 among the
Company and certain Purchasers (incorporated by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K dated June 12, 1997)
5 Opinion of Nelson Mullins Riley & Scarborough, L.L.P. as to
the legality of the securities being registered (filed previously)
23-a Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included in
Exhibit 5 to this Registration Statement)
23-b Consent of KPMG Peat Marwick LLP
23-c Consent of Brunt & Company, P.A.
24 Power of Attorney (included on the signature page of this Registration
Statement)
</TABLE>
<R/>
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
(b) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim or indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newbury Park,
State of California, on October 23, 1997.
DDL ELECTRONICS, INC.
By: /s/ Gregory L. Horton
-------------------------------
Gregory L. Horton
Chief Executive Officer,
President and Chairman of the
Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Gregory L. Horton Chief Executive Officer, October 23, 1997
- ----------------------- President (principal
Gregory L. Horton executive officer) and
Chairman of the
Board of Directors
/s/ Richard K. Vitelle Chief Financial Officer October 23, 1997
- ----------------------- (principal financial and
Richard K. Vitelle accounting officer)
/s/ Karen B. Brenner * Director October 23, 1997
- -----------------------
Karen B. Brenner
/s/ Melvin Foster * Director October 23, 1997
- -----------------------
Melvin Foster
/s/ Charlene A. Gondek * Director October 23, 1997
- -----------------------
Charlene A. Gondek
/s/ Thomas M. Wheeler * Director October 23, 1997
- -----------------------
Thomas M. Wheeler
/s/ Robert G. Wilson * Director October 23, 1997
- -----------------------
Robert G. Wilson
* By: /s/Richard K. Vitelle
------------------------------------
Richard K. Vitelle, Attorney-in-Fact
EXHIBIT 23-b
Consent of Independent Accountants
The Board of Directors
DDL Electronics, Inc.:
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG Peat Marwick
Los Angeles, California
October 22, 1997
EXHIBIT 23-c
BRUNT & COMPANY, P.A.
6365 TAFT STREET, SUITE 3003
HOLLYWOOD, FLORIDA 33024
Consent of Independent Certified Public Accountants
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ Brunt & Company, P.A.
Brunt & Company, P.A.
Certified Public Accountants
October 22, 1997
