<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission File Number: 0-9788
RICHEY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0594451
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7441 Lincoln Way, Garden Grove, California 92641
(Address of Principal Executive Office) (Zip Code)
(714) 898-8288
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of May 11, 1995, 8,889,341 shares of the registrant's Common Stock,
$0.001 par value, were issued and outstanding.
<PAGE>
RICHEY ELECTRONICS, INC.
Condensed Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 9,000 $ 9,000
Trade receivables 13,258,000 11,167,000
Inventories 16,217,000 14,913,000
Deferred income taxes 1,427,000 1,427,000
Other current assets 584,000 435,000
----------- ----------
Total current assets 31,495,000 27,951,000
----------- ----------
LEASEHOLD IMPROVEMENTS, EQUIPMENT, 1,125,000 1,017,000
FURNITURE AND FIXTURES, net ----------- ----------
OTHER ASSETS AND INTANGIBLES
Deferred income taxes 2,430,000 2,430,000
Intangibles 2,696,000 3,261,000
Deposits and other 337,000 354,000
----------- -----------
5,463,000 6,045,000
$38,083,000 $35,013,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of subordinated notes payable $ 0 $1,600,000
Notes payable, revolving line of credit 13,864,000 8,843,000
Accounts payable 9,734,000 10,457,000
Accrued expenses 1,426,000 1,734,000
----------- -----------
Total current liabilities 25,024,000 22,634,000
----------- -----------
SUBORDINATED NOTES PAYABLE 3,594,000 3,594,000
----------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par value, authorized
10,000 shares, issued none $ 0 $ 0
Common Stock, $0.001 par value, authorized
30,000,000 shares, issued and outstanding
5,889,000 shares 6,000 6,000
Additional paid-in-capital 5,240,000 5,240,000
Retained earnings 4,219,000 3,539,000
----------- -----------
9,465,000 8,785,000
----------- -----------
Total stockholders' equity $38,083,000 $35,013,00
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
2
<PAGE>
RICHEY ELECTRONICS, INC.
Condensed Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
----------------------------
March 31, April 1,
1995 1994
---------- ---------
<S> <C> <C>
Net sales $26,596,000 $20,247,000
Cost of goods sold 20,083,000 15,392,000
----------- -----------
Gross profit 6,513,000 4,855,000
----------- -----------
Operating expenses:
Selling, warehouse, general and administrative 4,842,000 3,726,000
Amortization of intangibles 113,000 156,000
----------- -----------
4,955,000 3,882,000
----------- -----------
Operating income 1,558,000 973,000
Interest expense 422,000 376,000
----------- -----------
Income before income taxes 1,136,000 597,000
Federal and state income tax 456,000 242,000
----------- -----------
Net income $ 680,000 $ 355,000
------------ -----------
------------ -----------
Earnings per common share $ 0.12 $ 0.06
------------ ------------
------------ ------------
Weighted average number of common shares
outstanding 5,889,000 5,889,000
------------ -----------
------------ -----------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
3
<PAGE>
RICHEY ELECTRONICS, INC.
Condensed Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock
----------------------------------
Additional
Preferred Shares Par Paid-In Retained
Stock Outstanding Value Capital Earnings Total
--------- ----------- ------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 _ 5,889,000 $6,000 $5,240,000 $3,539,000 $8,785,000
Net Income _ _ _ _ 680,000 680,000
---------- ---------- ------ ---------- ---------- ----------
Balance, March 31, 1995 _ 5,889,000 $6,000 $5,240,000 $4,219,000 $9,465,000
---------- ---------- ------ ---------- ---------- ----------
---------- ---------- ------ ---------- ---------- ----------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
4
<PAGE>
RICHEY ELECTRONICS, INC.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------
March 31, April 1,
1995 1994
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 680,000 $ 355,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 200,000 193,000
Deferred income taxes 456,000 242,000
Changes in operating assets and liabilities:
(Increase) in trade receivables (2,091,000) (684,000)
(Increase) decrease in inventories (1,304,000) 525,000
(Increase) in other assets (44,000) (115,000)
(Decrease) in accounts payable
and accrued expenses (1,005,000) (906,000)
----------- ---------
Net cash (used in) operating activities (3,108,000) (390,000)
----------- ---------
CASH FLOWS (USED IN) INVESTING ACTIVITIES
Purchase of leasehold improvements and equipment (202,000) (76,000)
Business acquisitions (23,000) (296,000)
----------- ---------
Net cash (used in) investing activities (225,000) (372,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances on revolving line of credit 5,021,000 3,719,000
Transaction costs associated with
common stock offering (88,000) _
Principal payments on subordinated debt (1,600,000) (2,957,000)
---------- ---------
Net cash provided by financing activities 3,333,000 762,000
---------- ---------
Increase in cash 0 0
CASH
Beginning $ 9,000 $ 7,000
---------- ---------
Ending $ 9,000 $ 7,000
---------- ---------
---------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash Payments For:
Interest $ 539,000 $ 615,000
---------- ---------
---------- ---------
Income taxes $ 57,000 $ 7,000
---------- ---------
---------- ---------
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS
5
<PAGE>
RICHEY ELECTRONICS, INC.
Notes to Condensed Financial Statements
(Unaudited)
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Richey Electronics, Inc. (which conducts business under the name
RicheyCypress Electronics) is a multi-regional, specialty distributor of
electronic components and a provider of value-added assembly services. The
Company distributes connectors, switches, cable and other interconnect,
electromechanical and passive components used in the assembly and
manufacturing of electronic equipment. Richey Electronics also provides a
wide variety of value-added assembly services. These value-added assembly
services consist of (i) component assembly, which is the assembly of
components to manufacturer specifications and (ii) contract assembly, which
is the assembly of cable assemblies, battery packs and mechanical
assemblies to customer specifications. The Company's customers are
primarily small- and medium-sized original equipment manufacturers.
Approximately 80% of the Company's inventory is located at its centralized
distribution facility in Los Angeles, and the remaining inventory is
located in regional warehouses in Boston, San Diego and San Jose.
Significant accounting policies
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for the
complete financial statements. In management's opinion, the accompanying
financial statements reflect all material adjustments, consisting of only
normal and recurring adjustments, necessary for a fair statement of the
results for the interim periods presented. The results for the interim
periods ended March 31, 1995 and April 1, 1994 are not necessarily
indicative of the results which will be reported for the entire year.
Income tax expense in these interim financial statements is recorded
based upon the Company's expected annual effective income tax rate. The
benefit from the previously unrecognized net operating loss carryforwards
acquired in the merger of RicheyImpact Electronics, Inc. and Brajdas
Corporation (the "Richey-Brajdas Merger") is used to reduce the carrying
value of intangibles. Amortization expense of the reduced intangibles is
adjusted prospectively on a monthly basis.
For further information, refer to the audited financial statements of
the Company and notes thereto for the year ended December 31, 1994,
included in the Company's Annual Report on Form 10-K.
6
<PAGE>
RICHEY ELECTRONICS, INC.
Notes to Condensed Financial Statements - (Continued)
(Unaudited)
NOTE 2. BUSINESS COMBINATION
In-Stock
On April 4, 1994, the Company completed the purchase of the assets and
business of the In-Stock Products Division of Anchor Group, Inc.
("In-Stock"), a Boston, Massachusetts area distributor of electronic
components, for approximately $1,841,000 in cash, including acquisition
costs (the "In-Stock Acquisition"). The In-Stock Acquisition was accounted
for as a purchase. The fair value of assets acquired was $2,787,000 and
the liabilities assumed totaled $946,000. Goodwill of $274,000 is included
in other assets and is being amortized over 15 years. The results of
operations of In-Stock subsequent to the date of the In-Stock Acquisition
are included in the Company's financial statements.
The following pro forma results of continuing operations assume the In-
Stock Acquisition (which occurred on April 4, 1994) had occurred as of the
beginning of 1994 after giving effect to certain adjustments, including
amortization of acquired intangibles, reduction in interest expense and
related tax effects.
<TABLE>
<CAPTION>
Quarter Ended
April 1, 1994
(Unaudited)
-------------
<S> <C>
Net sales $22,945,000
Net income 470,000
Net income per share .08
</TABLE>
The pro forma financial information does not purport to be indicative
of the results of operations that would have occurred had the transactions
actually taken place at the beginning of the periods presented.
NOTE 3. PUBLIC OFFERING (Subsequent Event) AND
NET OPERATING LOSS CARRYFORWARDS
Public Offering
On April 27, 1995, the Company sold 3,000,000 shares of common stock
through an underwritten public offering. The Company has granted to the
underwriters an option to purchase an additional 165,000 shares of common
stock, at $5.115 per share. This option expires on May 20, 1995.
7
<PAGE>
RICHEY ELECTRONICS, INC.
Notes to Condensed Financial Statements - (Continued)
(Unaudited)
Proceeds to the Company were $14.9 million, net of underwriting
discounts and estimated expenses associated with the offering. The
proceeds were used to repay approximately $3.6 million in senior and junior
subordinated debt, and the balance was used to reduce the Company's
revolving line of credit with its asset based lender by $11.3 million. The
Company has, as a result of the offering, entered into negotiations with
its asset based lender to revise the terms and conditions of its loan
agreement.
Net Operating Loss Carryforwards
As of December 31, 1994, the Company had net operating loss
carryforwards ("NOLs") with the following expiration dates:
<TABLE>
<CAPTION>
Expiration Date Federal California
- --------------- ------- ----------
<S> <C> <C>
1997 $ - $3,599,000
1998 3,450,000 953,000
1999 2,935,000 270,000
2000 490,000 _
2005 2,000,000 _
2006 2,053,000 _
2007 9,700,000 _
2008 2,500,000 _
2009 771,000 _
---------- ----------
$23,899,000 $4,822,000
---------- ----------
---------- ----------
</TABLE>
Section 382 of the Internal Revenue Code of 1986, as amended
("Section 382") and the related regulations impose certain limitations on a
corporation's ability to use NOLs if more than a 50% ownership change
occurs. California law conforms to the provisions of Section 382. The
Richey-Brajdas Merger did not result in a more than 50% ownership change.
However, as a result of the offering, the Company effectuated a "change of
ownership" as understood by Section 382. This "change of ownership" will
restrict the Company's use of the NOLs to $2.1 million per year.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
Richey Electronics is a multi-regional, specialty distributor of
electronic components and a provider of value-added assembly services. The
Company distributes connectors, switches, cable and other interconnect,
electromechanical and passive components used in the assembly and
manufacturing of electronic equipment. Richey Electronics also provides a
wide variety of value-added assembly services, which typically generate
higher gross margins than traditional component distribution. These value-
added assembly services consist of (i) component assembly, which is the
assembly of components to manufacturer specifications and (ii) contract
assembly, which is the assembly of cable assemblies, battery packs and
mechanical assemblies to customer specifications. The Company's customers
are primarily small- and medium-sized original equipment manufacturers.
Approximately 80% of the Company's inventory is located at its centralized
distribution facility in Los Angeles, and the remaining inventory is
located in regional warehouses in Boston, San Diego and San Jose.
Management and an investor group built the Company through a series of
transactions, beginning with the acquisition of the operations of
Richey/Impact Electronics Inc. in December 1990 for $5.5 million ($5.9
million, including acquisition costs), consisting of $3.7 million in cash
funded by the revolving line of credit, senior preferred stock valued at
$1.0 million and $800,000 ($1.2 million, including acquisition costs) in
cash contributed by the investors. This was followed by the merger (the
"Richey-Brajdas Merger") of RicheyImpact and Brajdas Corporation
("Brajdas") in April 1993 through the issuance of 10,900,000 shares of
common stock valued at $4.1 million. The Company completed the acquisition
(the "In-Stock Acquisition") of the In-Stock Division of Anchor Group, Inc.
("In-Stock") in April 1994 for $1.9 million in cash funded by the revolving
line of credit. The Company has devoted significant efforts to improving
the performance of those operations. The Company's financial statements
exclude the financial results of In-Stock prior to the In-Stock Acquisition.
According to the April 17, 1995 edition of Electronic Buyers' News, the
Company ranked as the 26th largest electronics distributor in the United
States in 1994.
9
<PAGE>
Results of Operations
Richey Electronics, Inc.
Summary of Selected Data
(Unaudited)
The following table sets forth certain items in the statements of income
as a percent of net sales for periods shown and additional items of a
statistical nature.
<TABLE>
<CAPTION>
Quarter Ended
-------------------------
Mar 31, Apr 1,
1995 1994
------ -----
<S> <C> <C>
Statements of Income Data:
Net Sales .......................................... 100.0% 100.0%
Cost of Goods Sold ................................. 75.5 76.0
----- -----
Gross Profit ..................................... 24.5 24.0
----- -----
Selling, warehouse, general & administrative ....... 18.2 18.4
Amortization of intangibles ........................ 0.4 0.8
----- -----
Operating Income ................................. 5.9 4.8
Interest Expense ................................... 1.6 1.9
----- -----
Income before income taxes ....................... 4.3 2.9
Federal and state income taxes ..................... 1.7 1.2
----- -----
Net Income ......................................... 2.6% 1.7%
----- -----
----- -----
</TABLE>
<TABLE>
<CAPTION>
Mar 31, Dec 31, Sept 30, July 1, April 1,
1995 1994 1994 1994 1994
-------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets (000) ............................ $38,083 $35,013 $34,434 $33,090 $30,834
Working capital (000) ......................... $ 6,471 $ 5,317 $ 5,908 $ 5,235 $ 4,573
Ratio of current assets to current liabilities. 1.3 1.2 1.3 1.3 1.2
Line of credit (000) .......................... $13,864 $ 8,843 $10,714 $10,731 $10,714
Subordinated notes payable (000)............... $ 3,594 $ 5,194 $ 5,194 $ 5,194 $ 5,194
Inventory turnover ............................ 5.0 4.9 4.9 5.4 5.2
Days sales outstanding in accounts receivable . 45.4 42.3 44.0 41.5 41.2
Stockholders' equity .......................... $ 9,465 $ 8,785 $ 8,250 $ 7,779 $ 7,247
Return on stockholders' equity ................ 29.8% 24.1% 26.2% 25.7% 21.0%
</TABLE>
Net sales for the quarter ended March 31, 1995 increased to $26,596,000
from $20,247,000 for the corresponding period of 1994, an increase of 31%.
Net sales of electronic components increased to $19,193,000 in the first
quarter of 1995 from $16,388,000 in the first quarter of 1994, an increase
of 17%. Net sales of value-added assembly services increased to $7,403,000
for the quarter ended March 31, 1995 from $3,859,000 for the corresponding
first quarter of 1994, an increase of 92%. Management estimates that
approximately one-third of the increase in value-added assembly service
revenues is due to the In-Stock Acquisition, with the balance due to
internal growth. The
10
<PAGE>
overall increase in net sales for the first quarter of 1995 was
attributable primarily to a strengthening of the distribution marketplace
in the past several months as well as the addition of the sales of In-Stock.
See Note 2 of Notes to Condensed Financial Statements. The Company has
fully integrated the operations of In-Stock with its existing operations
and has not maintained separate sales records since the In-Stock acquisition;
however, the Company estimates, based solely upon In-Stock's historical
sales rates, that at least 13% of the increase in net sales is attributable
to the In-Stock Acquisition.
The Company believes that order backlog (confirmed orders from customers
for shipment within the next 12 months) generally averages two to three
months' sales in the electronics distribution industry. Order backlog at
March 31, 1995 was $25,750,000, up 59% from $16,175,000 at April 1, 1994.
Gross profit as a percentage of net sales increased by 0.5% to 24.5% for
the quarter ended March 31, 1995 from 24.0% for the comparable period in 1994.
Management attributes the improvement in gross margins to its emphasis on
value-added services, which usually obtain higher gross margins, and its
institution of what it believes to be more stringent gross margin audits
and disciplines. Management's emphasis on value-added services has
increased value-added sales from 19% of total sales in the first quarter of
1994 to 28% of total sales in the first quarter of 1995 and has caused the
improved gross profit margins reflected in the first quarter of 1995.
Operating expenses for the quarter ended March 31, 1995 increased to
$4,955,000 from $3,882,000 for the corresponding period in 1994, an
increase of 28%, but, as a percentage of net sales, decreased 0.6% for the
quarter ended March 31, 1995 from the corresponding period in 1994. The
Company's operations have benefitted from economies of scale that have
increased operating leverage (reduced operating expenses as a percentage of
net sales). Operating income increased 60.1% from $973,000 during the
first quarter of 1994 to $1,558,000 during the first quarter of 1995.
Interest expense for the first quarter of 1995 was $422,000 as compared
with $376,000 for the first quarter of 1994. The increase in interest
expense for the first quarter of 1995 was primarily due to the effects of
the purchase of In-Stock in April 1994. In addition, the interest rate on
the Company's revolving line of credit has increased as a result of
increases in bank prime lending rates over those which prevailed in the
first quarter of 1994.
Federal and state income tax expense increased to $456,000 (40%
effective rate) for the quarter ended March 31, 1995 from $242,000 (40%
effective rate) for the corresponding period of 1994. This increase was
proportional to the increase in pre-tax earnings for the quarter. See Note
3 of Notes to Condensed Financial Statements for further discussion of
income tax matters.
Liquidity And Capital Resources
The Company currently maintains, with its asset based lender, a
revolving line of credit of up to $15,000,000 based upon eligible accounts
receivable and inventory, with an interest rate of 1.5% over prime. The
revolving line of credit restricts payment of cash dividends on the
Company's common stock, without prior approval of the lender. As of
March 31, 1995, the Company had outstanding borrowings thereunder of
$13,864,000 with an additional
11
<PAGE>
borrowing capacity of $1,136,000. On April 28, 1995, as a result of the
successful sale of 3,000,000 shares of the Company's common stock on
April 27, 1995, the Company paid down all of its senior and junior
subordinated notes completely and approximately $11,300,000 of the outstanding
balance under its revolving line of credit. The Company believes that its
line of credit will be adequate to meet its anticipated funding commitments
for the remainder of 1995. The Company is currently in negotiations with
its asset based lender to increase the size and modify the terms of its
revolving line of credit.
Working capital increased to $6,471,000 on March 31, 1995 from
$5,317,000 on December 31, 1994, an increase of $1,154,000. During the
first quarter of 1995, the Company generated $1,671,000 of earnings before
interest, income taxes, depreciation and amortization ("EBITDA") as
compared to EBITDA of $1,129,000 for the first quarter of 1994. Overall,
the Company experienced a net use of funds of $3,108,000 from operating
activities in the first quarter of 1995, consisting primarily of $2,091,000
in increased accounts receivable, $1,304,000 in increased inventory and a
$1,005,000 decrease in accounts payable and accrued expenses. Including
$225,000 of net cash used in investing activities, primarily for capital
expenditures, the net use of funds of $3,333,000 was financed by borrowing
against the Company's revolving line of credit. In March 1995, the Company
borrowed an additional $1,600,000 under its revolving line of credit to pay
down the current portion of its senior subordinated debt.
For the quarter ended March 31, 1995, inventory turnover increased to
5.0x compared to 4.9x for the quarter ended December 31, 1994, primarily as
a result of the increase in value-added service sales which historically
have a higher inventory turnover.
Days sales outstanding increased by three days to 45 days at March 31,
1995 from 42 days as of December 31, 1994. Accounts receivables increased
from $11,167,000 at December 31, 1994 to $13,258,000 at March 31, 1995.
This increase relates primarily to a 10.5% increase in overall sales during
the first quarter of 1995 as compared to the fourth quarter of 1994, and an
increase of 18.5% in value-added assembly services over the same period.
The Company does not anticipate that the adoption of any of the recently
issued FASB statements will have a material impact on the Company's
financial statements.
12
<PAGE>
PART II - OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K.
</TABLE>
<TABLE>
<CAPTION>
Number Exhibit Page
------ ------- ----
<S> <C> <C> <C>
10.1 Agreement To Terminate Stockholders' Agreement
(b) Reports on Form 8-K.
None.
</TABLE>
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
RICHEY ELECTRONICS, INC.
(Registrant)
By /s/ Richard N. Berger
------------------------------------
Richard N. Berger
Vice President,
Chief Financial Officer
and Secretary
May 11, 1995
14
<PAGE>
RICHEY ELECTRONICS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 1995
EXHIBIT INDEX
<TABLE>
<CAPTION>
Begin on
Exhibit sequential
Number page number
- ------ -----------
<S> <C> <C>
10.1 Agreement To Terminate Stockholders' Agreement
</TABLE>
15
<PAGE>
AGREEMENT TO TERMINATE
STOCKHOLDERS AGREEMENT
THIS AGREEMENT TO TERMINATE STOCKHOLDERS AGREEMENT (this
"Agreement") dated as of March __, 1995 is by and among Richey Electronics,
Inc., a Delaware corporation (the "Company"), and the undersigned (collectively,
the "Stockholders"), with reference to the following facts:
A. The Company is the successor to Richey Electronics, Inc., a
California corporation formerly known as Brajdas Corporation ("Brajdas").
RicheyImpact Electronics, Inc., a Delaware corporation, was merged into Brajdas
on April 6, 1993, and BRJS Investment Holding Corp., a California corporation,
was merged into Brajdas on November 18, 1993.
B. The Company and the Stockholders are parties to that certain
Stockholders Agreement dated as of March __, 1993, as amended by that certain
First Amendment to Stockholders Agreement dated as of December 14, 1994 (as so
amended, the "Stockholders Agreement").
C. On January 7, 1994, the Company filed with the Securities and
Exchange Commission (the "SEC") a Form S-1 Registration Statement (the "Shelf
Registration Statement") with respect to the public offering by the Stockholders
of their shares of common stock of the Company. The Shelf Registration
Statement was declared effective by the SEC on April 19, 1994.
D. On February 23, 1995, the Company filed with the SEC a Form
S-2 Registration Statement (the "Registration Statement") with respect to the
public offering by the Company of 3 million shares of its common stock (the
"Offering"). In connection with such offering, the underwriters require that
the Company terminate the Shelf Registration by removing from registration
thereunder the common stock being offered by the Stockholders. In addition, the
underwriters require that the Stockholders agree not to sell any of their shares
of common stock of the Company for a period of 180 days after the date on which
the Registration Statement becomes effective without the prior consent of the
underwriters (the "Lock-up").
E. The Stockholders are willing to consent to the termination of
the Shelf Registration and to agree to the Lock-up provided that the
Stockholders Agreement is terminated in its entirety.
NOW, THEREFORE, for good and valuable consideration, it is agreed as
follows:
-1-
<PAGE>
1. The Stockholders Agreement and each and all of the provisions
thereof, including without limitation the indemnification provisions contained
in Article 4 thereof, shall be terminated and shall be of no further force or
effect, effective as of the Effective Date (as hereinafter defined).
2. The Stockholders hereby consent to the termination of the
Shelf Registration Statement, effective as of the Effective Date.
3. Each Stockholder hereby agrees to execute a lock-up agreement
with the underwriters, agreeing to the Lock-up.
4. This Agreement and the agreements and consents contained
herein shall become effective if and only if the Registration Statement becomes
effective in accordance with the Securities Act of 1933 (the "Act") and the
Offering commences. As used herein, the term "Effective Date" shall mean the
date on which the Registration Statement becomes effective in accordance with
the Act.
5. COUNTERPARTS. This Agreement may be executed by the parties
hereto in counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument. Signatures may be exchanged by telecopy and each party agrees
to be bound by its own telecopied signature and to accept the telecopied
signatures of the other parties.
[Signature Pages Follow]
-2-
<PAGE>
Signature Page to Agreement to Terminate Stockholders Agreement
Richey Electronics, Inc. Barclay and Company, Inc.
By_________________________ By_______________________
William C. Cacciatore Donald I. Zimmerman
President President
___________________________ Palisades Associates
C. Don Alverson
By_______________________
___________________________ Greg A. Rosenbaum
Thomas W. Blumenthal President
___________________________
William C. Cacciatore
___________________________
Edward L. Gelbach
___________________________
Greg A. Rosenbaum
___________________________
Greg A. Rosenbaum, as
Custodian for Eli, Elliott
and Eve Rosenbaum
___________________________
Norbert W. St. John
___________________________
Donald I. Zimmerman
-3-
<PAGE>
Signature Page to Agreement to Terminate Stockholders Agreement
____________________________ First Investment Group
Otto Bochow
By____________________
____________________________ Its___________________
Frank Buzyn
____________________________
Estate of David Davenport
____________________________
Benjamin Fishoff
____________________________
Deborah A. Levy
____________________________
Saul Levy
_____________________________
David Zimmerman
_____________________________
Michael A. Zimmerman
_____________________________
Steven A. Zimmerman
-4-
<PAGE>
Signature Page to Agreement to Terminate Stockholders Agreement
______________________________
Piers Lingle
_______________________________
Stefanie Lingle
______________________________
Barry and Barbara Rosenbaum,
as joint tenants
_______________________________
Martha R. Rosenbaum
_______________________________
Heidi R. Saunders
_______________________________
Robert S. Saunders
_______________________________
Richard L. Wellek
Saunders Capital Group, Inc.
By____________________________
Robert S. Saunders
President
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 9,000
<SECURITIES> 0
<RECEIVABLES> 13,258,000
<ALLOWANCES> 241,000
<INVENTORY> 16,217,000
<CURRENT-ASSETS> 31,495,000
<PP&E> 1,125,000
<DEPRECIATION> 801,000
<TOTAL-ASSETS> 38,083,000
<CURRENT-LIABILITIES> 25,024,000
<BONDS> 0
<COMMON> 6,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 38,083,000
<SALES> 26,596,000
<TOTAL-REVENUES> 26,596,000
<CGS> 20,083,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,955,000
<LOSS-PROVISION> 67,000
<INTEREST-EXPENSE> 422,000
<INCOME-PRETAX> 1,136,000
<INCOME-TAX> 456,000
<INCOME-CONTINUING> 680,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 680,000
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
