RICHEY ELECTRONICS INC, POS AM, 1996-09-27

RICHEY ELECTRONICS INC
POS AM, 1996-09-27
ELECTRONIC PARTS & EQUIPMENT, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996

REGISTRATION STATEMENT NO. 333-02893
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

POST EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
RICHEY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 33-0594451
(State or other jurisdiction (I.R.S. Employer
of Identification No.)
incorporation or organization)
</TABLE>

7441 LINCOLN WAY, GARDEN GROVE, CALIFORNIA 92641
(714) 898-8288
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

WILLIAM C. CACCIATORE, PRESIDENT
RICHEY ELECTRONICS, INC.
7441 LINCOLN WAY
GARDEN GROVE, CALIFORNIA 92641
(714) 898-8288
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------

COPIES OF COMMUNICATIONS TO:
Robert M. Smith
Dewey Ballantine
333 South Hope Street, Suite 3000
Los Angeles, California 90071
(213) 626-3399
--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
--------------------------

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, check the following box. /X/
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, 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. / /
--------------------------

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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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[LOGO]

$55,755,000 PRINCIPAL AMOUNT OF 7% CONVERTIBLE
SUBORDINATED NOTES DUE 2006
(INTEREST PAYABLE MARCH 1 AND SEPTEMBER 1)

3,947,256 SHARES OF COMMON STOCK
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This prospectus relates to $55,755,000 aggregate principal amount of 7%
Convertible Subordinated Notes due 2006 (the "Notes") of Richey Electronics,
Inc., a Delaware corporation ("Richey Electronics" or the "Company") and
3,947,256 shares of the common stock, par value $0.001 per share (the "Common
Stock"), of the Company which are initially issuable upon conversion of the
Notes plus such additional indeterminate number of shares of Common Stock as may
become issuable upon conversion of the Notes as a result of adjustments to the
conversion price (the "Conversion Shares"). The Notes and the Conversion Shares
that are being registered hereby are to be offered (the "Offering") for the
account of the holders thereof (the "Selling Securityholders"). The Notes were
acquired from the Company by Jefferies & Company, Inc. and Cruttenden Roth
Incorporated (the "Initial Purchasers") in February and March 1996 in connection
with a private offering. See "Description of Notes."

The Notes are convertible into Common Stock of the Company, at the holder's
option, at any time after 60 days following March 22, 1996 (the latest date of
original issuance thereof) and prior to maturity, unless previously redeemed, at
a conversion price of $14.125 per share, subject to adjustment in certain
events. On September 16, 1996, the last bid price of the Common Stock on the
Nasdaq Stock Market ("Nasdaq") was $8 1/2 per share. The Common Stock is traded
under the symbol RCHY.

The Notes will bear interest at the rate of 7% per annum, payable
semi-annually on each March 1 and September 1 of each year, commencing September
1, 1996. The Notes are redeemable at the option of the Company, in whole or in
part, at the redemption prices set forth in this prospectus, together with
accrued interest, except that no redemption may be made prior to March 4, 1999.
Upon a Designated Event (as defined herein), each holder of Notes shall have the
right, at the holder's option, to require the Company to repurchase such
holder's Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest to the Repurchase Date, if any. See
"Description of Notes -- Repurchase at Option of Holder Upon Change in Control
or Termination of Trading."

The Notes are unsecured obligations of the Company and are subordinated to
all present and future Senior Indebtedness of the Company. The Indenture does
not restrict the incurrence of any other indebtedness or liabilities by the
Company. See "Description of Notes -- Subordination of Notes."

The Notes are eligible for trading in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") market.

The Initial Purchasers have advised the Company that they are making and
currently intend to continue making a market in the Notes. The Initial
Purchasers, however, are not obligated to do so and any such market making may
be discontinued at any time without notice, in the sole discretion of the
Initial Purchasers. No assurance can be given that any market for the Notes will
develop or be maintained.

The Notes and the Conversion Shares are being registered to permit public
secondary trading of the Notes and, upon conversion, the Conversion Shares, by
the holders thereof from time to time after the date of this prospectus. The
Company has agreed, among other things, to bear substantially all expenses
(other than underwriter's discount or commission) in connection with the
registration and sale of the Notes and the Conversion Shares.

The Company will not receive any of the proceeds from the sales of the Notes
or the Conversion Shares by the Selling Securityholders. The Notes and the
Conversion Shares may be offered in negotiated transactions or otherwise, at
market prices prevailing at the time of sale or at negotiated prices. In
addition, the Conversion Shares may be offered from time to time through
ordinary brokerage transactions on Nasdaq. See "Plan of Distribution." The
Selling Securityholders may be deemed to be "Underwriters" as defined in the
Securities Act of 1933, as amended (the "Securities Act"). If any broker-dealers
are used by the Selling Securityholders, any commissions paid to broker-dealers
and, if broker-dealers purchase any Notes or Conversion Shares as principals,
any profits received by such broker-dealers on the resale of the Notes or
Conversion Shares, may be deemed to be underwriting discounts or commissions
under the Securities Act. In addition, any profits realized by the Selling
Securityholders may be deemed to be underwriting commissions.

SEE "RISK FACTORS" ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE
COMMISSION OR BY 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 SEPTEMBER 27, 1996.

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AVAILABLE INFORMATION

The Company is subject to the information 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
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information are available for inspection and copying at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, 13th Floor,
New York, New York 10048; and, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials may also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
quoted on Nasdaq and material filed by the Company can be inspected at the
offices of The Nasdaq Stock Market, Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.

The Company has filed with the Commission a registration statement on Form
S-2 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Notes and the
Conversion Shares offered hereby. This prospectus does not contain all of the
information set forth or incorporated by reference in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of
documents filed as exhibits to the Registration Statement are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission. Copies of the Registration Statement and the exhibits may be
inspected, without charge, at the offices of the Commission, or obtained at
prescribed rates from the Public Reference Section of the Commission at the
address set forth above.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed with the Commission are hereby
incorporated by reference into this prospectus:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;

2. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 29, 1996;

3. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 28, 1996;

4. The Company's Current Report on Form 8-K/A dated January 31, 1996;

5. The Company's Current Reports on Form 8-K dated February 27, 1996 and
March 22, 1996;

6. The description of the Common Stock of the Company contained in its
Registration Statement on Form 8-A/A dated January 11, 1996.

This prospectus is accompanied by the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, a copy of which is attached as
Exhibit A, and the Company's Quarterly Report on Form 10-Q for the quarter ended
June 28, 1996, a copy of which is attached as Exhibit B.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this prospectus and prior to
the termination of this Offering shall be deemed to be incorporated by reference
into this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
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 other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.

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The Company will provide, without charge, to each person to whom this
prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents described above, other than the exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the documents so incorporated. Requests for such copies should be directed to
Richard N. Berger, Secretary, Richey Electronics, Inc., 7441 Lincoln Way, Garden
Grove, California 92641, telephone number (714) 898-8288.

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THE COMPANY

The Company distributes a broad line of connectors, switches, wire, cable
and heat shrinkable tubing and other interconnect, electromechanical and passive
electronic components used in the assembly and manufacturing of electronic
equipment. In 1995, Richey Electronics and Deanco distributed electronic
components for more than 120 component manufacturers. Richey Electronics also
provides a wide variety of value-added assembly services, which typically
generate higher gross margins than traditional component distribution. The
Company's customers are primarily small- and medium-sized original equipment
manufacturers ("OEMs") that produce electronic equipment used in a wide variety
of industries, including the telecommunications, computer, medical,
transportation and aerospace industries.

On March 19, 1996, the Company completed the acquisition of the assets and
business of MS Electronics, Inc. ("MS Electronics"). MS Electronics, which is
privately held, had sales of approximately $11.0 million in 1995. MS Electronics
specializes in the value-added distribution of interconnect, electromechanical
and passive electronic components in the Baltimore/Washington marketplace. The
addition of MS Electronics adds new customers, complementary product lines and a
strong sales organization, which management expects to integrate into the
Company.

The Company's principal executive offices are located at 7441 Lincoln Way,
Garden Grove, California 92641, and its telephone number is (714) 898-8288.

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RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FACTORS SET FORTH BELOW,
AS WELL AS THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS,
BEFORE MAKING A DECISION TO PURCHASE THE NOTES OR THE CONVERSION SHARES OFFERED
HEREBY.

DEPENDENCE ON KEY SUPPLIERS

Most of the electronic components distributed by the Company are purchased
from manufacturers through non-exclusive distribution agreements which may be
canceled upon relatively short notice, subject to certain conditions.
Manufacturers have from time to time terminated such agreements with the Company
and there can be no assurance that such terminations will not occur in the
future. In addition, as a result of many component manufacturers' increasing
preference for using fewer distributors, there can be no assurance that the
Company will be able to maintain its authorized distributorships with its
current suppliers. Furthermore, as a result of the Deanco Acquisition, some of
the Company's and Deanco's suppliers have reevaluated and terminated, or
indicated that they may terminate, their relationship with the Company. There
can be no assurance that additional suppliers will not similarly reevaluate and
terminate their relationship with the Company. For the year ended December 31,
1995, the Company's five largest suppliers (excluding Deanco suppliers)
accounted for approximately 39% of net sales, and there can be no assurance that
the loss of any one of its larger suppliers, or any substantial amount of their
business, would not have a material adverse effect on the Company. Pro forma for
the Deanco Acquisition, for the year ended December 31, 1995, the Company's five
largest suppliers accounted for approximately 42% of net sales. While most
products distributed by the Company are available from multiple sources, there
can be no assurance that the Company would be able to replace lost suppliers. As
a result of the Deanco Acquisition, the Company's largest supplier is now
Raychem, which accounted for approximately 35% of Deanco's net sales in 1995.
Pro forma for the Deanco Acquisition, Raychem would have accounted for
approximately 17% of the Company's net sales in 1995. The loss of Raychem or any
one of the Company's other large suppliers could have a material adverse effect
on the Company. In September 1996, the Company decided to discontinue its
representation of AMP, Inc. ("AMP") in the distribution market, effective
January 1, 1997. This decision was made in response to a new distribution policy
of AMP which requires all AMP franchised distributors to limit the number of
competitive connector lines they carry to six by January 1, 1997. AMP
distribution products represent approximately 3.5% of the Company's net sales.
The Company believes that it can recover a large part of these AMP sales with
sales of other suppliers' lines, but expects that termination of the
distribution relationship with AMP will adversely affect the Company's revenues.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

The Company's results of operations may fluctuate from period to period due
to the effect of the Deanco Acquisition and possible future acquisitions, the
number of shipping days in the quarter, loss of key suppliers, uncollectibility
of accounts receivable, inventory write-offs and loss of key customers, as well
as other factors. Significant fluctuations in these results of operations may
have a material adverse effect on the Company. There can be no assurances that
the recent Deanco Acquisition, the MS Electronics Acquisitions and the
acquisition of Inland Empire Interconnects in August 1995 (the "IEI
Acquisition") or any future acquisitions will produce expected increases in the
Company's sales and earnings and that such acquisitions will not have an adverse
impact on the Company's business and results of operations.

UNCERTAINTY OF FUTURE ACQUISITIONS

The Company may make acquisitions in the future and regularly evaluates
potential acquisition opportunities. Acquisitions entail numerous risks,
including difficulties and expenses associated with the negotiating process,
increased leverage of the Company resulting from the acquisition, difficulties
in the assimilation of acquired operations, personnel and product lines,
diversion of management's attention and potential loss of key employees of
acquired companies. The Company's acquisition strategy depends on its ability to
identify and acquire compatible electronics distributors, and integrate the
acquired operations effectively and efficiently. There can be no assurance that
the Company will be able to locate appropriate acquisition candidates or that
identified candidates will be acquired or integrated in a timely and efficient
manner. No assurance can be given as to the Company's ability to integrate
successfully any operations, personnel or products that might be acquired in the
future,

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and the failure of the Company to do so could have a material adverse effect on
the Company's business and results of operations. Moreover, unexpected problems
or delays encountered in connection with any acquisition or integration could
have a material adverse effect on the Company. The Company may incur additional
indebtedness in connection with future acquisitions which may result in
increased leverage.

INCREASED LEVERAGE

As of September 16, 1996, the Company had outstanding indebtedness of
approximately $69.8 million. The Company maintains a secured revolving line of
credit facility with aggregate credit limits (subject to the Company's
satisfying certain conditions to borrowing thereunder) of approximately $45
million. As of September 16, 1996, approximately $11.1 million was outstanding
under this facility and $27.0 million was available for borrowing. Substantially
all of the Company's assets have been pledged to secure the Company's credit
facilities. This substantial leverage will have several important consequences
for the Company's future operations, including the following: (i) a substantial
portion of the Company's cash flow from operations will be dedicated to the
payment of interest on, and principal of, its indebtedness; (ii) the covenants
contained in the credit facilities impose certain restrictions on the Company
that, among other things, will limit its ability to borrow additional funds or
to dispose of assets; (iii) the Company's ability to obtain additional financing
in the future for capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired; and (iv) the Company's ability to withstand
competitive pressures, adverse economic conditions and adverse changes in
governmental regulations and to make acquisitions or otherwise take advantage of
significant business opportunities that may arise may be negatively impacted.
The Company's ability to meet its debt service obligations and to reduce its
total indebtedness will be dependent upon the Company's future performance,
which will be subject to financial, business and other factors affecting the
operations of the Company, many of which are beyond its control. If the Company
is unable to generate sufficient cash flow from operations in the future to
service its debt, it may be required to refinance all or a portion of such debt,
including the Notes, or to obtain additional financing. However, there can be no
assurance that any refinancing would be possible or that any additional
financing could be obtained.

COMPETITION AND INDUSTRY CONSOLIDATION

The electronics distribution industry is highly competitive, primarily with
respect to price and product availability. The Company believes that breadth of
product line, level of technical expertise and quality of service are also
particularly important to small- and medium-sized OEMs. The Company competes
with large national distributors, as well as regional and specialty
distributors, many of whom distribute the same or competitive products. Many of
the Company's competitors have significantly greater assets, greater financial
and personnel resources and larger investments in technology and infrastructure
than the Company. If such competitors were to focus their attention and
resources on the Company's markets, several important consequences to the
Company's future operations could result, including a reduction in the pool of
potential acquisition candidates, outbidding of the Company in a contested
acquisition transaction and loss of customers and suppliers. Moreover, the
electronics distribution industry is increasing its efficiency and operating
leverage in response to the industry's rapid consolidation and technological
advances. These trends are intensifying competition and as a result, many
distributors have reported a decline in their gross margins. If demand
decreases, pressure on gross margins is likely to increase. Although the Company
believes that most of the declines in gross margin have generally occurred among
distributors serving larger customers, there is no assurance that these
pressures will not affect distributors, like the Company, who serve small-and
medium-sized OEMs. Existing and future competition could result in downward
pressure on the Company's gross margins or could otherwise have a material
adverse effect on the Company.

INDUSTRY CYCLICALITY

Historically, the electronics industry has been affected by general economic
and industry-wide downturns which have adversely affected electronic component
manufacturers, certain end-users of such components and distributors. Although
the industry has experienced rapid growth over the past few years, there can be
no assurance that such growth can be sustained in the future. Since July 1996,
the Company's customers have been decreasing their inventory stocking levels
which may reflect slowing end-user demand or a general business slow down. In
addition, the life-cycle of existing

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electronic products and the timing of new product development and introduction
can affect demand for electronic components. Reduced demand for electronic
components could have a material adverse effect on the Company.

RELIANCE ON KEY PERSONNEL

The Company is currently dependent upon the efforts and leadership abilities
of its experienced management team, including: William C. Cacciatore, Chairman
of the Board, President and Chief Executive Officer; C. Don Alverson, Executive
Vice President -- Sales; Norbert W. St. John, Executive Vice President --
Marketing; and Charles W. Mann, Vice President -- Value-Added Services. Although
the Company believes that it would be able to locate suitable replacements for
its executives if their services were lost, there can be no assurance it would
be able to do so. Accordingly, the loss of services of one or more of the
Company's key executives could have a material adverse effect upon the business
of the Company.

LIMITATIONS ON AVAILABILITY OF THE COMPANY'S NET OPERATING LOSS CARRYFORWARDS

As of December 31, 1995, the Company had United States federal income tax
net operating loss carryforwards ("NOLs") of approximately $19.6 million and
state tax NOLs of approximately $1.3 million, primarily California, most of
which expire between 1998 and 2009. The NOLs resulted from Brajdas Corporation's
("Brajdas") losses prior to the Richey-Brajdas Merger (as defined herein).
Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"),
imposes annual limitations on NOLs in the event certain changes in a company's
stock ownership over a three-year period exceed a specified threshold (a "Change
in Ownership"). As a result of the Company's secondary public offering of Common
Stock in April 1995, pursuant to which the Company and certain shareholders of
the Company sold 3,615,000 shares of the Company's Common Stock, the use of such
NOLs will be limited to approximately $5.0 million per year until they are fully
utilized or expire, whichever occurs first. The Company's NOLs are subject to
review by the Internal Revenue Service ("IRS"). If the Company's NOLs were
disallowed or their use was further limited, there could be a material adverse
effect on the Company's cash flow. See Note 8 of Notes to Financial Statements
which are included in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, a copy of which accompanies this prospectus.

POSSIBLE ISSUANCE OF PREFERRED SHARES; ANTI-TAKEOVER PROVISIONS

The Company's Restated Certificate of Incorporation authorizes the issuance
of 10,000 shares of preferred stock. The Company's Board of Directors has the
power to issue any or all of these additional shares without stockholder
approval, which shares can be issued with such rights, preferences and
limitations as are determined by the Board. The Company presently has no
commitments or contracts to issue any shares of preferred stock. The Company is
also subject to the Delaware statute regulating business combinations. These
provisions, as well as certain provisions of the Company's bylaws, could delay,
discourage, hinder or preclude an unsolicited acquisition of the Company, could
make it less likely that stockholders receive a premium for their shares as a
result of any such attempt and could adversely affect the market price of and
the voting and other rights of the holders of the Common Stock. See "Description
of Capital Stock."

VOLATILITY OF PRICE OF STOCK AND NOTES

The trading price of the Company's Common Stock and the Notes could be
subject to fluctuations in response to variations in quarterly operating
results, the gain or loss of significant contracts, changes in management,
future announcements concerning the Company, general trends in the industry and
other events or factors. In addition, the volatility of the prices of the
Company's Common Stock, changes in prevailing interest rates and changes in
perceptions of the Company's creditworthiness may adversely affect the price of
the Notes offered hereby.

SUBORDINATION OF NOTES

The Notes are subordinate in right of payment to all existing and future
Senior Indebtedness of the Company. Senior Indebtedness includes all secured
indebtedness of the Company, whether existing on or created or incurred after
the date of the issuance of the Notes, that is not made subordinate to or pari
passu with the Notes by the instrument creating the indebtedness. As of
September 16, 1996, the Company had approximately $11.1 million of Senior
Indebtedness outstanding, substantially all of which represents borrowings under
its $45 million revolving credit facility.

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The Indenture (as defined herein) does not limit the amount of additional
indebtedness, including Senior Indebtedness, which the Company can create,
incur, assume or guarantee. By reason of such subordination of the Notes, in the
event of the insolvency, receivership, liquidation, reorganization, dissolution
or winding up of the business of the Company or upon a default in payment with
respect to any Senior Indebtedness of the Company or an event of default with
respect to such indebtedness resulting in the acceleration thereof, the assets
of the Company will be available to pay the amounts due on the Notes only after
all of the Senior Indebtedness of the Company has been paid in full.

LIMITATIONS ON REPURCHASE UPON A DESIGNATED EVENT

In the event of a Designated Event, which includes a Change in Control and a
Termination of Trading (each as defined herein), each holder of Notes will have
the right, at the holder's option, to require the Company to repurchase all or a
portion of such holder's Notes at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest to the Repurchase Date
(as defined herein). The Company's ability to repurchase the Notes upon a
Designated Event may be limited by the terms of the Company's Senior
Indebtedness and the subordination provisions of the Indenture. In addition, the
revolving credit facility allows the lender to terminate the commitments on 30
days' notice if there is a change in control of the Company (as defined in the
revolving credit facility). Further, the ability of the Company to repurchase
the Notes upon a Designated Event will be dependent on the availability of
sufficient funds and compliance with applicable securities laws. Accordingly,
there can be no assurance that the Company will be able to repurchase the Notes
upon a Designated Event. The term "Designated Event" is limited to certain
specified transactions and may not include other events that might adversely
affect the financial condition of the Company or result in a downgrade of the
credit rating of the Notes, nor would the requirement that the Company offer to
repurchase the Notes upon a Designated Event necessarily afford holders of the
Notes protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving the Company. See "Description of Notes."

ABSENCE OF A PUBLIC MARKET FOR THE NOTES

Although the Notes have been approved for trading in the PORTAL market,
there can be no assurance that any market for the Notes will develop, or if one
does develop, that it will be maintained. If an active market for the Notes
fails to develop or be sustained, the trading price of such Notes could be
adversely affected.

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING

The Company anticipates that its existing capital resources and credit
facilities will be adequate to satisfy its capital requirements for at least the
next twelve months. The Company's future capital requirements will depend,
however, on many factors, including, but not limited to, the size and timing of
future acquisitions, if any, and the availability of additional financing. To
the extent that existing resources and future earnings are insufficient to fund
the Company's activities, the Company may need to raise additional funds through
debt or equity financings. No assurance can be given that such additional
financing will be available or that, if available, it can be obtained on terms
favorable to the Company and its stockholders. In addition, any equity financing
could result in dilution to the Company's stockholders. The unavailability of
adequate funds could adversely affect the Company's future operations.

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SHARES ELIGIBLE FOR FUTURE SALES

Sale of a substantial number of shares of the Company's Common Stock in the
public market could adversely affect the market price of the Common Stock.
Substantially all shares of Common Stock are eligible for sale subject, in
certain instances, to the resale limitations of Rule 144 promulgated under the
Securities Act.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Notes or the
Conversion Shares by the Selling Securityholders. See "Selling Securityholders"
for a list of those persons and entities receiving the proceeds from the sales
of the Notes or the Conversion Shares.

RATIO OF EARNINGS TO FIXED CHARGES

For purposes of calculating the ratio of earnings to fixed charges, (i)
earnings consist of income before income taxes, plus fixed charges and (ii)
fixed charges consist of interest expense incurred, amortization of deferred
debt costs, plus the portion of rental expense under operating leases deemed by
the Company to be representative of the interest factor.

The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:

<TABLE>
<CAPTION>
YEARS ENDED (1) SIX MONTHS ENDED
- ------------------------------------------------------------------------------- -------------------
JANUARY 3, JANUARY 1, DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 28,
1992 1993 1993 1994 1995 1996
- ------------- ------------- --------------- --------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
2.5x 2.1x 1.7x 2.5x 4.3x 2.4x
</TABLE>

- ------------------------
(1) On December 20, 1995, the Company completed the Deanco Acquisition. On
August 16, 1995, the Company completed the IEI Acquisition. On April 4,
1994, the Company completed the acquisition (the "In-Stock Acquisition") of
the business of the In-Stock division of Anchor Group, Inc. ("In-Stock"). On
April 6, 1993, RicheyImpact Electronics, Inc. ("RicheyImpact") completed a
merger with Brajdas through the issuance of 3,114,286 shares of Common Stock
(the "Richey-Brajdas Merger"). After the Richey-Brajdas Merger, management
of RicheyImpact assumed control of the combined company, which changed its
name to Richey Electronics, Inc. In December 1990, RicheyImpact acquired the
operations of Richey/Impact Electronics Inc. ("Old Richey") from Lex Service
Inc. ("Lex"). The financial data used to calculate the ratio of earnings to
fixed charges exclude the results of operations of Brajdas prior to the
Richey-Brajdas Merger in April 1993, of In-Stock prior to the In-Stock
Acquisition in April 1994, of IEI prior to the IEI Acquisition in August
1995 and of Deanco prior to the Deanco Acquisition in December 1995.

DESCRIPTION OF NOTES

The Notes were issued under an Indenture, dated as of February 15, 1996 (the
"Indenture"), between the Company and First Trust of California, National
Association, as Trustee (the "Trustee"). The Notes and the Conversion Shares
were registered pursuant to the Registration Rights Agreement dated February 26,
1996 among the Company and the Initial Purchasers (the "Registration Rights
Agreement"). The following summaries of certain provisions of the Indenture and
the Registration Rights Agreement do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Indenture and the Registration Rights Agreement including the definitions
therein of certain terms which are not otherwise defined in this prospectus.

GENERAL

The Notes are in aggregate principal amount of $55,755,000. The Notes mature
on March 1, 2006 unless earlier redeemed at the option of the Company or
repurchased by the Company at the option of the holder upon a Designated Event.
The Notes are unsecured obligations of the Company subordinate in right of
payment to certain other obligations of the Company as described under
"Subordination of Notes" and convertible into Common Stock as described under
"Conversion of Notes."

The Notes bear interest from the most recent date to which interest has been
paid, or if no interest has been paid, from February 26, 1996, at the rate of 7%
per annum computed on the basis of a

9
<PAGE>
360-day year of twelve 30-day months. Interest will be payable semi-annually on
March 1 and September 1 of each year (each an "Interest Payment Date"),
commencing on September 1, 1996, to the person in whose name the Notes are
registered at the close of business on the preceding February 15 or August 15,
respectively (in each case, a "Record Date," and the holder of such Note on a
Record Date, the "Record Holder"). With respect to a Note or portion thereof
that is called for redemption, or that is repurchased in connection with a
Designated Event, in either case during the period from a Record Date to (but
excluding) the next succeeding Interest Payment Date, interest shall be paid to
the Record Holder in an amount equal to the accrued interest as of the date
immediately preceding the date fixed for redemption or repurchase. Principal of
and premium, if any, and interest on the Notes will be payable, and the Notes
may be surrendered for conversion and registration of transfer, at the office or
agency of the Company in New York City (which initially will be the agency of
the Trustee at 100 Wall Street, 20th floor, New York, New York 10005, Attention:
Bond Holder Window). In addition, payment of interest may, at the option of the
Company, be made by check mailed to the address of the Person entitled thereto
as it appears in the Security Register.

The Indenture does not contain any financial covenants, and does not limit
or contain any restriction on (i) the payment of dividends, (ii) the Company's
ability to incur Senior Indebtedness or other indebtedness or (iii) the
repurchase of securities of the Company. The Indenture contains no covenants or
other provisions to afford protection to holders of Notes in the event of a
highly leveraged transaction or a Change in Control of the Company except to the
extent described under "-- Repurchase at Option of Holder Upon Change in Control
or Termination of Trading."

The Indenture and the Notes are governed by and construed under the laws of
the State of New York.

CONVERSION OF NOTES

The holder of any Note will have the right, at the holder's option, to
convert such Note, or any portion thereof which is an integral multiple of
$1,000, into shares of Common Stock of the Company at any time after the date 60
days following March 22, 1996 (the latest date of original issuance of the
Notes) and prior to the close of business on the maturity date (unless earlier
redeemed or repurchased), initially at the conversion price of $14.125 per share
(which is equivalent to a conversion rate of 70.7965 shares per $1,000 principal
amount of Notes), subject to adjustment as described below. The right to convert
Notes called for redemption will terminate at the close of business on the
second trading day prior to the redemption date (unless the Company defaults in
payment of the redemption price). A Note for which a holder has delivered a
notice to require the Company to repurchase such Note upon a Change in Control
may be converted only if such notice is properly withdrawn by such holder prior
to the close of business on the Repurchase Date (as defined herein) in
accordance with the terms of the Indenture.

The conversion price will be subject to adjustment in certain events,
including:

(i) dividends (and other distributions) payable in Common Stock on shares of
any class of capital stock of the Company;

(ii) subdivisions, combinations and reclassifications of Common Stock;

(iii) the issuance to all holders of Common Stock of rights, options or
warrants entitling the holder thereof to subscribe for or purchase Common Stock
at less than the then current market price (as defined in the Indenture);

(iv) distributions to all holders of Common Stock of evidences of
indebtedness of the Company, cash or other assets, including shares of its
capital stock (other than Common Stock) and other securities, but excluding (A)
those rights, options, warrants, dividends and distributions referred to in
clauses (i) and (iii) above and subdivisions of shares referred to in clause
(ii) above and (B) dividends and distributions paid exclusively in cash in an
aggregate amount that (combined together with (x) all other such all-cash
dividends and distributions made within the preceding 12 months in respect of
which no adjustment has been made and (y) the excess of (1) any consideration
paid in respect of repurchases by the Company or any of its subsidiaries of
Common Stock referred to in clause (v) concluded within the preceding 12 months
in respect of which no adjustment has been made over

10
<PAGE>
(2) the then current market price of the Common Stock does not exceed 10% of the
Company's market capitalization (being the product of the then current market
price of the Common Stock times the number of shares of Common Stock then
outstanding) on the record date for such distribution; and

(v) certain repurchases by the Company and its subsidiaries of Common Stock
(including repurchases in connection with a tender offer) in which the
repurchase price exceeds both the then current conversion price of the Notes and
the then current market price of the Common Stock, but excluding repurchases in
which the excess of the consideration paid over the current market price of the
Common Stock (together with the amount of any such excess with respect to any
other such repurchases, and the amount of any all-cash dividends, in each case
concluded or paid within the preceding 12 months and in respect of which no
adjustment has been made) do not exceed 10% of the Company's market
capitalization.

In addition to the foregoing adjustments, the Company will be permitted to
make such reductions in the conversion price as it considers to be advisable in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the recipients. No adjustment in
the conversion price will be required unless such adjustment would require a
change of at least 1% of the price then in effect; provided, however, that any
adjustment that would otherwise be required to be made shall be carried forward
and taken into account in any subsequent adjustment.

The right of conversion may be exercised by the holder by delivering the
Notes to the office or agency of the Company maintained for such purpose in the
City of New York, accompanied by a duly signed and completed notice of
conversion. The conversion date will be the date on which the Note and the duly
signed and completed notice of conversion are so delivered. As promptly as
practicable on or after the conversion date, the Company will issue and deliver
a certificate or certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share.

Notes surrendered for conversion after any Record Date and prior to the next
succeeding Interest Payment Date (except Notes called for redemption on a
redemption date that is prior to the date two trading days after such Interest
Payment Date) must be accompanied by payment of an amount equal to the interest
thereon which the Record Holder thereof on such Record Date is to receive on
such Interest Payment Date. A Note surrendered for conversion on an Interest
Payment Date need not be accompanied by any such payment. In the case of any
Note which has been converted after any Record Date and on or before the next
Interest Payment Date, interest shall be paid on such Interest Payment Date to
the Record Holder of such Note on such Record Date. As a result, holders that
surrender Notes for conversion on a date that is not an Interest Payment Date
will not receive a net payment of interest for the period from the Interest
Payment Date next preceding the date of conversion to the date of conversion or
for any later period, even if the Notes are surrendered after a notice of
redemption (except for the payment of interest on Notes called for redemption on
a redemption date that is after a Record Date and is prior to the date two
trading days after the next Interest Payment Date). Subject to the aforesaid
right of the Record Holder on any Record Date to receive an installment of
interest, no payment or adjustment will be made on conversion for interest
accrued on the converted Note or for dividends on the Common Stock issued on
conversion. No fractional shares of Common Stock will be issued upon conversion,
but, in lieu thereof, the Company will pay a cash adjustment based upon the
market price of the Common Stock on the trading day prior to the date of
conversion, as provided in the Indenture.

In case of any consolidation or merger of the Company with or into any other
corporation, or in the case of any consolidation or merger of another
corporation into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of shares of Common
Stock), or any sale or transfer of all or substantially all of the assets of the
Company, each Note shall become convertible only into the kind and amount of
securities, cash or other property which the holder of such Note would have been
entitled to receive upon such consolidation, merger, sale or transfer if such
holder had held the Common Stock issuable upon the conversion of such Note
immediately prior to such consolidation, merger, sale or transfer (assuming that
such holder failed to exercise any rights of election and that such Note was
then convertible).

If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (E.G., distributions of

11
<PAGE>
evidences of indebtedness or assets of the Company, but generally not stock
dividends on Common Stock or rights to subscribe for Common Stock) and, pursuant
to the anti-dilution provisions of the Indenture, the number of shares into
which Notes are convertible is increased, such increase may be deemed for
federal income tax purposes to be the payment of a taxable dividend to holders
of Notes.

SUBORDINATION OF NOTES

The payment of the principal of and premium, if any, and interest on the
Notes (including the payment of the redemption price or repurchase price with
respect to the Notes) will be subordinated in right of payment to the extent set
forth in the Indenture to the prior payment in full of the principal of, and
premium, if any, and interest on all existing and future Senior Indebtedness of
the Company. The Indenture does not limit the amount of Senior Indebtedness that
may be incurred by the Company or any other indebtedness or obligations that may
be incurred by the Company. The Company expects from time to time to incur
additional Senior Indebtedness and other indebtedness and obligations.

The Indenture provides that in the event, and during the continuance, of a
default in any payment of any Senior Indebtedness (including a default under any
repurchase or redemption obligation), no payment may be made by the Company on
or in respect of the Notes after written notice to the Company and the Trustee
by any holder of Senior Indebtedness. Upon the occurrence and during the
continuance of a default on any Senior Indebtedness (other than a payment event
of default) that permits the holders of such Senior Indebtedness to accelerate
its maturity, and following receipt by the Company and the Trustee of the notice
provided for by the Indenture, no payment may be made on the Notes for a period
of up to 179 days (a "Payment Blockage Period") during any consecutive 365-day
period, unless such default is cured or waived. No more than one Payment
Blockage Period may be imposed in any one 365-day period. In the event of any
payment or distribution of assets of the Company resulting from any liquidation,
dissolution, winding-up, reorganization or any insolvency or receivership
proceedings of the Company or upon an assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of the Company, the holders
of all Senior Indebtedness will first be entitled to receive payment in full
before the holders of the Notes will be entitled to receive any payment. As a
result of these subordination provisions, in the event of insolvency, holders of
the Notes may recover less ratably than general creditors of the Company, and
such subordination may result in a reduction or elimination of payments to
holders of Notes.

The term "Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent, fees,
expenses, indemnities and other amounts payable on or in connection with secured
Indebtedness of the Company, excluding the claims of trade creditors of the
Company, whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed or guaranteed by the Company, unless in the case of
any particular Indebtedness the instrument creating or evidencing the same or
the assumption or guarantee thereof provides that such Indebtedness shall not be
senior in right of payment to the Notes or provides that such Indebtedness is
"pari passu" or subordinated to the Notes. Notwithstanding the foregoing, Senior
Indebtedness shall not include (i) any Indebtedness of the Company to any
subsidiary of the Company or (ii) any Indebtedness to the extent that it is not
secured. The term "Indebtedness" means, with respect to any Person, (a) all
obligations and other liabilities of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or similar instruments (other than amounts
owed for goods or materials purchased in the ordinary course of business or for
services) or (iii) with respect to letters of credit, bank guarantees or
bankers' acceptances, (b) all obligations for the payment of money in respect of
leases of such Person as lessee required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease obligations on
the balance sheet of such Person, (c) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
of such Person to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of, indebtedness, obligations or liabilities of another
Person of the kind described in clauses (a) and (b), (d) any indebtedness or
other obligations described in clauses (a) and (b) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person and (e) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or

12
<PAGE>

supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (d). As of September 16, 1996, the Company had
approximately $11.1 million of Senior Indebtedness outstanding, substantially
all of which represents borrowings under its Revolving Line of Credit.

The Notes are obligations exclusively of the Company and not of any
subsidiary. The operations of Deanco were acquired through the acquisition of
the stock of its parent holding company and Deanco continues to operate as a
wholly-owned subsidiary of the Company. The Company has not historically
conducted operations through subsidiaries, and currently is in the process of
merging Deanco into the Company. However, no assurances can be given as to the
timing of any such merger or as to whether the Company will in the future
conduct significant operations through subsidiaries. Unless and until Deanco is
merged into the Company, the Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables and lease payables)
of Deanco, and if the Company begins to conduct business through subsidiaries,
the Notes will be effectively subordinated to all such indebtedness and other
liabilities and commitments of such subsidiaries. To the extent that any
significant operations of the Company are conducted through subsidiaries, the
cash flow and the consequent ability to service debt, including the Notes, of
the Company will be partially dependent upon the earnings of any such
subsidiaries and the distribution of those earnings, or upon loans or other
payments of funds by those subsidiaries, to the Company. Neither Deanco nor any
future subsidiary will have any obligation to pay any amounts due pursuant to
the Notes or to make any funds available to the Company therefor. In addition,
the payment of dividends and the making of loans and advances to the Company by
Deanco and any other such subsidiaries are and would be (i) subject to certain
statutory or contractual restrictions, (ii) dependent upon the earnings of such
subsidiaries and (iii) subject to various business considerations. The Indenture
does not limit the amount of indebtedness which any subsidiary can create,
incur, assume or guarantee.

In the event that, notwithstanding the foregoing, the Trustee or any holder
of Notes receives any payment or distribution of assets of the Company of any
kind in contravention of any of the terms of the Indenture, whether in cash,
property or securities, including, without limitation, by way of set-off or
otherwise, in respect of the Notes before all Senior Indebtedness is paid in
full, then such payment or distribution will be held by the recipient in trust
for the benefit of holders of Senior Indebtedness of the Company, and will be
immediately paid over or delivered to the holders of Senior Indebtedness of the
Company or their representative or representatives to the extent necessary to
make payment in full of all Senior Indebtedness of the Company remaining unpaid,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Indebtedness of the Company.

REDEMPTION AT OPTION OF COMPANY

The Notes may not be redeemed by the Company prior to March 4, 1999.
Thereafter, the Notes may be redeemed at the option of the Company, in whole or
in part, upon not less than 20 nor more than 60 days' notice by mail. The
redemption prices (expressed as a percentage of principal amount) are as follows
for the 12-month period beginning March 1 of the following years:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------- -------------
<S> <C>
1999......................................................... 103.5%
2000......................................................... 103.0%
2001......................................................... 102.5%
2002......................................................... 102.0%
2003......................................................... 101.5%
2004......................................................... 101.0%
2005......................................................... 100.5%
</TABLE>

and 100% on March 1, 2006, in each case together with accrued interest to the
date of redemption; provided that if the date fixed for redemption shall be a
date after a Record Date and on or before the related Interest Payment Date,
then the semi-annual payment of interest becoming due on the Interest Payment
Date shall be payable to the Record Holders on such Record Date.

If less than all of the Notes are to be redeemed, the Trustee will select
the particular Notes (or the portions thereof) to be redeemed either by lot or,
in its discretion, on a pro rata basis. If any Note is to be redeemed in part
only, a new Note or Notes in principal amount equal to the unredeemed principal

13
<PAGE>
portion thereof will be issued. If a portion of a holder's Notes are selected
for partial redemption and such holder converts a portion of such Notes, such
converted portion shall be deemed to be taken from the portion selected for
redemption.

No sinking fund is provided for the Notes.

REPURCHASE AT OPTION OF HOLDER UPON CHANGE IN CONTROL OR TERMINATION OF TRADING

Upon any Designated Event (as defined below), each holder of Notes shall
have the right (the "Repurchase Right"), at the holder's option, subject to the
terms and conditions of the Indenture, to require the Company to repurchase all
of such holder's Notes, or a portion thereof which is $1,000 or any integral
multiple thereof, on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined below) at a price equal to 101% of the
principal amount of the Notes, plus accrued and unpaid interest to the
Repurchase Date.

Within 30 days after the occurrence of a Designated Event, the Company is
obligated to mail to the Trustee and to each holder of the Notes a notice (the
"Company Notice") of the occurrence of such Designated Event, and the Repurchase
Right arising as a result thereof setting forth, among other things, the terms
and conditions of, and the procedures required for the exercise of, such
Repurchase Right. To exercise the Repurchase Right, a holder of Notes must
deliver on or before the close of business on the date five days prior to the
Repurchase Date written notice to the Company (or an agent designated by the
Company for such purpose) and the Trustee of the holder's exercise of such
Repurchase Right specifying the Notes with respect to which the right is being
exercised. Such notice of exercise may be withdrawn by the holder by a written
notice of withdrawal delivered to the Company or such agent at any time on or
before the close of business on the Repurchase Date.

"DESIGNATED EVENT" means a Change in Control or a Termination of Trading
(each as defined below).

"CHANGE IN CONTROL" means an event or series of events as a result of which
(i) any "person" or "group" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act) of shares representing more than 50% of
the combined voting power of the then outstanding securities entitled to vote
generally in elections of directors of the Company ("Voting Stock"), (ii) the
Company consolidates with or merges into any other corporation, or conveys,
transfers or leases all or substantially all of its assets to any person, or any
other corporation merges into the Company, and, in the case of any such
transaction, the outstanding common stock of the Company is changed or exchanged
as a result, unless the stockholders of the Company immediately before such
transaction own, directly or indirectly immediately following such transaction,
at least 51% of the combined voting power of the outstanding voting securities
of the corporation resulting from such transaction in substantially the same
proportion as their ownership of the Voting Stock immediately before such
transaction, or (iii) at any time Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of the Company (or, if
applicable, a successor corporation to the Company); provided that a Change in
Control shall not be deemed to have occurred if either (x) the last sale price
of the Common Stock for any five trading days during the ten trading days
immediately preceding the Change in Control is at least equal to 105% of the
conversion price in effect on such five trading days or (y) both (i) at least
90% of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change in Control consists of
common stock or securities convertible into common stock that are, or upon
issuance will be, traded on a United States national securities exchange or
approved for trading on an established automated over-the-counter trading market
in the United States and (ii) the last sale price of such common stock for any
five trading days during the ten trading days immediately preceding the Change
in Control is at least equal to 105% of the conversion price in effect on such
five trading days.

"CONTINUING DIRECTOR" means at any date a member of the Company's Board of
Directors (i) who was a member of such board on February 21, 1996 or (ii) who
was nominated or elected by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Company's Board of Directors was recommended or endorsed by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election.

14
<PAGE>
(Under this definition, if the current Board of Directors of the Company were to
approve a new director or directors and then resign, no Change in Control would
occur even though the current Board of Directors would thereafter cease to be in
office).

No quantitative or other established meaning has been given to the phrase
"all or substantially all" (which appears in the definition of Change in
Control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. To the extent the meaning of such phrase is uncertain, uncertainty
will exist as to whether or not a Change in Control may have occurred (and,
accordingly, whether or not the holders of Notes will have the right to require
the Company to repurchase their Notes).

"TERMINATION OF TRADING" shall have occurred if the Common Stock (or other
common stock into which the Notes are then convertible) is neither listed for
trading on a United States national securities exchange nor approved for trading
on an established automated over-the-counter trading market in the United
States.

Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the Repurchase Right becomes available to holders of the
Notes. The Company will comply with this rule to the extent applicable at that
time and with Rule 14e-1 and all other applicable federal and state securities
laws in connection with any such repurchase option.

The Company may not repurchase any Notes upon a Designated Event if at such
time the subordination provisions of the Indenture would prohibit the Company
from making payments of principal in respect of the Notes. Agreements relating
to the Company's Senior Indebtedness contain, and agreements relating to Senior
Indebtedness incurred by the Company in the future are likely to contain,
restrictions relating to the repurchase by the Company of the Notes pursuant to
the Repurchase Right. Such provisions, together with the subordination of the
Notes to all existing and future Senior Indebtedness of the Company, and the
funds then available to the Company, may limit the ability of the Company to
repurchase the Notes in the event of a Designated Event. Failure by the Company
to repurchase the Notes when required upon a Designated Event will result in an
Event of Default under the Indenture whether or not such repurchase is permitted
by the subordination provisions. See -- "Subordination of Notes" and "Risk
Factors -- Limitations on Repurchase Upon a Designated Event."

The Indenture does not permit the Company's Board of Directors to waive the
Company's obligation to repurchase the Notes at the option of the holder
pursuant to the Repurchase Right in the event of a Designated Event. The
Repurchase Right, however, would not necessarily afford holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect holders of the Notes. Notwithstanding the
foregoing, the right to require the Company to repurchase the Notes pursuant to
the Repurchase Right could delay or deter a potential acquisition of the Company
regardless of whether such acquisition is supported or approved by the Board of
Directors of the Company.

If a Designated Event were to occur, there can be no assurance that the
Company would be able to obtain sufficient funds with which to repurchase all
the Notes tendered by the holders thereof.

MERGERS AND SALES OF ASSETS BY THE COMPANY

The Company may not consolidate with or merge into any other Person, or
transfer or lease its properties and assets substantially as an entirety to any
Person, unless (i) either the Company is the surviving corporation or the Person
formed by such consolidation or into which the Company is merged or the Person
to which the properties and assets of the Company are so transferred or leased
shall be a corporation organized and existing under the laws of the United
States, any State thereof or the District of Columbia and shall expressly assume
the payment of the principal of and premium, if any, and interest on the Notes
and the performance of the other covenants of the Company under the Indenture
and shall have provided for conversion rights in accordance with the Indenture,
and

15
<PAGE>
(ii) immediately after giving effect to such transaction, no Event of Default,
or event which, with the giving of notice or the passing of time, or both, would
become an Event of Default, shall have occurred and be continuing.

TRANSACTIONS WITH AFFILIATES

The Indenture provides that the Company will not sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company than those
that would have been obtained on an arm's-length basis in a comparable
transaction by the Company or with an unrelated Person and (ii) prior to the
consummation of any such Affiliate Transaction the Company delivers to the
Trustee (x) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate payments in excess of $500,000, a
resolution of the disinterested members of the Board of Directors set forth in
an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (i) above and that such Affiliate Transaction was approved by a
majority of the disinterested members of the Board of Directors and (y) with
respect to any Affiliate Transaction involving aggregate payments in excess of
$15 million, in addition to the requirements specified in clause (x), a written
opinion as to the fairness of such Affiliate Transaction to the Company from a
financial point of view issued by an investment banking firm of national
standing, or in the case of a transaction involving the sale, lease, transfer or
purchase of assets subject to valuation, such as real estate, a written
appraisal by a nationally recognized appraisal firm; PROVIDED, HOWEVER, that any
employment agreement or management agreement entered into by the Company in the
ordinary course of business and consistent with the past practice of the Company
that is approved by the Board of Directors of the Company (including a majority
of the disinterested members in the case of an agreement with a person who is a
member of the Board of Directors) shall not be deemed to be an Affiliate
Transaction.

MODIFICATION OF THE INDENTURE

Modifications and amendments of the Indenture may be made, and certain
defaults by the Company may be waived, with the consent of the holders of not
less than a majority in aggregate principal amount of the Notes at the time
Outstanding. However, no such modification or amendment may, without the consent
of the holder of each Outstanding Note affected thereby, (i) change the stated
maturity date of the principal of, or any installment of interest on, any Note,
(ii) reduce the principal amount of, or the rate of interest on, or any premium
payable on, any Note, whether upon acceleration, redemption or otherwise, (iii)
change the place or currency for payment of principal of, or premium or interest
on, any Note, (iv) impair the right to institute suit for the enforcement of any
such payment when due, (v) adversely affect the right provided in the Indenture
to convert any Note, (vi) modify the provisions of the Indenture with respect to
the subordination of the Notes in a manner adverse to the holders, (vii) modify
the provisions relating to the Repurchase Right of the holders in a manner
adverse to the holders, (viii) reduce the percentage of principal amount of
Outstanding Notes necessary to modify or amend the Indenture or to consent to
any waiver provided for in the Indenture, or (ix) modify the obligation of the
Company to deliver information required under Rule 144A to permit resales of
Notes and Common Stock issuable upon conversion thereof in the event the Company
ceases to be subject to certain reporting requirements under the United States
securities laws. Without the consent of or notice to any holder of the Notes,
the Company and the Trustee may amend or supplement the Indenture to cure any
ambiguity, omission, defect or inconsistency, to provide for the assumption by a
successor corporation of the obligations of the Company under the Indenture if
in compliance with the Indenture, to make any change that does not adversely
affect the rights of any holder of the Notes or to comply with any requirement
of the Commission in connection with the qualification of the Indenture under
the Trust Indenture Act.

EVENTS OF DEFAULT

The following are Events of Default under the Indenture: (i) default in the
payment of any interest on any Note when due, continuing for 30 days, whether or
not such payment is prohibited by the subordination provisions of the Indenture,
(ii) default in the payment of principal or premium, if any, or in the payment
of any redemption obligation, when due, whether or not such payment is
prohibited by the subordination provisions of the Indenture, (iii) failure to
perform any other covenant of the Company under the Indenture, continuing for 60
days after written notice as provided in

16
<PAGE>
the Indenture, (iv) default (after giving effect to any applicable grace periods
or waivers or any extension of any maturity date) under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness by the Company (or the payment of which is
guaranteed by the Company) whether such Indebtedness or guarantee now exists, or
is created after the date of the Indenture if (a) either (1) such default
results from the failure to pay principal of, or interest on, such Indebtedness
or (2) as a result of such default the maturity of such Indebtedness has been
accelerated, and (b) the principal amount of such Indebtedness, together with
the principal amount of any other such Indebtedness with respect to which such a
payment default (after the expiration of any applicable grace period or any
extension of the maturity date) has occurred, or the maturity of which has been
so accelerated, exceeds $2.5 million in the aggregate at

17
<PAGE>
any one time; (v) failure by the Company to pay final judgments in excess of
$1.0 million which judgments are not stayed within 60 days after their entry,
and (vi) certain events of bankruptcy, insolvency or reorganization.

If an Event of Default shall occur and be continuing, the Trustee or the
holders of not less than 25% in principal amount of the Outstanding Notes may
accelerate the maturity of all Notes. Under certain circumstances, however, such
declarations may be annulled and past defaults (other than certain payment
defaults) may be waived by the holders of a majority in principal amount of the
Outstanding Notes. If an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization were to occur, all unpaid principal of
and accrued interest on the Outstanding Notes will become due and payable
immediately without any declaration or other act on the part of the Trustee or
any holders of Notes.

The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default, give to the registered holders of Notes notice of all
uncured defaults known to it, but the Trustee shall be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the best interest of such registered holders, except in the case of a
default in the payment of the principal of, or premium, if any, or interest on,
any of the Notes when due or in the payment of any redemption obligation.

The holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the holders of all Notes waive any past
defaults, except a default in payment of the principal of, or premium, if any,
or interest on, any Note when due or in respect of certain provisions of the
Indenture which cannot be modified or amended without the consent of the holder
of each Outstanding Note affected thereby.

The Company is required to furnish to the Trustee annually a statement of
certain officers of the Company stating whether or not to the best of their
knowledge the Company is in default in the performance and observance of certain
terms of the Indenture and, if they have knowledge that the Company is in
default, specifying such default.

REGISTRATION RIGHTS

Pursuant to the Registration Rights Agreement between the Company and the
Initial Purchasers, the Company has filed with the Commission a registration
statement on Form S-2 (the "Shelf Registration Statement"), of which this
prospectus is a part, to cover resales by holders of the Notes and the sale of
the Conversion Shares (together, the "Securities"). The Shelf Registration
Statement became effective on June 7, 1996. The Company will use its best
efforts to keep the Shelf Registration Statement effective for three years after
March 22, 1996 (the latest date of original issuance of any of the Notes). The
Company will be permitted, upon notice (a "Suspension Notice") to each record
holder of Securities (and to certain other owners of Securities of which the
Company has actual knowledge as provided in the Registration Rights Agreement),
to suspend the use of this prospectus (which is a part of the Shelf Registration
Statement) in connection with sales of Securities by holders during certain
periods of time (each a "Suspension Period") under certain circumstances
relating to pending corporate developments and public filings with the
Commission and similar events. The Registration Rights Agreement provides that
if (i) the Shelf Registration Statement is not filed with the Commission on or
prior to 60 days after February 26, 1996, (ii) the Shelf Registration Statement
has not been declared effective by the Commission within 120 days after February
26, 1996, (iii) the Shelf Registration Statement is filed and declared effective
but shall thereafter cease to be effective (without being succeeded immediately
by an additional Shelf Registration Statement filed and declared effective) for
more than 30 days, (iv) the Company shall have delivered a Suspension Notice to
holders of Securities suspending the use of the prospectus, and the related
Suspension Period shall have continued for over 30 days after any such holder
has delivered a notice to the Company representing that it has a good faith
present intention to sell Securities under the Shelf Registration Statement, or
(v) there shall be more than an aggregate of 60 days in any twelve consecutive
months in which one or more Suspension Periods shall be continuing following
such notice from any holder or holders of their intention to sell Securities
(each such event referred to in clauses (i) through (v), a "Registration
Default"), the Company will pay liquidated damages to each holder of Securities,
during the first 90- day period immediately following the occurrence of such
Registration Default in an amount equal to $0.05 per week per $1,000 principal
amount of Notes and, if applicable, $0.01 per

18
<PAGE>
week per share (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) of Common Stock issued upon
conversion of the Notes held by such holder. The amount of the liquidated
damages will increase by an additional $0.05 per week per $1,000 principal
amount of Notes or $0.01 per week per share (subject to adjustment as set forth
above) of Common Stock upon conversion of the Notes for each subsequent 90-day
period until the applicable Registration Statement is filed and the applicable
Registration Statement is declared effective, or the Shelf Registration
Statement again becomes effective, as the case may be, up to a maximum amount of
liquidated damages of $0.25 per week per $1,000 principal amount of Notes or
$0.05 per week per share (subject to adjustment as set forth above) of Common
Stock. Following the cure of a Registration Default, liquidated damages will
cease to accrue with respect to such Registration Default. The Company will
provide to each registered holder copies of this prospectus, notify each
registered holder when the Shelf Registration Statement has become effective and
take certain other actions as are required to permit unrestricted resales of the
Securities. A holder who sells the Securities pursuant to the Shelf Registration
Statement generally will be required to be named as a Selling Securityholder in
the related prospectus and to deliver a prospectus to purchasers and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such holder (including certain indemnification provisions).

The specific provisions relating to the registrations described above are
contained in the Registration Rights Agreement.

FORM AND REGISTRATION

GLOBAL NOTE; BOOK ENTRY FORM

Notes held by "qualified institutional buyers," as defined in Rule 144A
under the Securities Act ("Qualified Institutional Buyers" or "QIBs") or by a
person who is not a U.S. person who acquired such Note in an "offshore
transaction" in reliance on Regulation S under the Securities Act (a "Non-U.S.
Person"), but not by other purchasers, are evidenced by a global note (the
"Global Note") which has been deposited with, or on behalf of, The Depository
Trust Company, New York, New York ("DTC") and registered in the name of Cede &
Co. ("Cede") as DTC's nominee. Except as set forth below, the record ownership
of the Global Note may be transferred, in whole or in part, only to another
nominee of DTC or to a successor of DTC or its nominee.

A Qualified Institutional Buyer or Non-U.S. Person may hold its interest in
the Global Note directly through DTC if such Qualified Institutional Buyer is a
participant in DTC, or indirectly through organizations which are participants
in DTC (the "Participants"). Transfers between Participants will be effected in
the ordinary way in accordance with DTC rules and will be settled in clearing
house funds. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in the Global Note to such persons may be limited.

Qualified Institutional Buyers and Non-U.S. Persons who are not Participants
may beneficially own interests in the Global Note held by DTC only through
Participants or certain banks, brokers, dealers, trust companies and other
parties that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). So long as
Cede, as the nominee of DTC, is the registered owner of the Global Note, Cede
for all purposes will be considered the sole holder of the Global Note. Owners
of beneficial interests in the Global Note will be entitled to have certificates
registered in their names and to receive physical delivery of certificates in
definitive form.

Payment of interest on and the redemption price of the Global Note will be
made to Cede, the nominee for DTC as the registered owner of the Global Note by
wire transfer of immediately available funds on each Interest Payment Date.
Neither the Company, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of a beneficial ownership interest in the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

The Company has been informed by DTC that, with respect to any payment of
interest on and the redemption price of the Global Note, DTC's practice is to
credit Participants' accounts on the payment date therefor with payments in
amounts proportionate to their respective beneficial interests in the

19
<PAGE>
principal amount represented by the Global Note as shown on the records of DTC,
unless DTC has reason to believe that it will not receive payment on such
payment date. Payments by Participants to owners of beneficial interests in the
principal amount represented by the Global Note held through such Participants
will be the responsibility of such Participants, as is now the case with
securities held for the accounts of customers registered in "street name."

Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the principal amount represented by the Global
Note to pledge such interest to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.

Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Notes (including, without limitation, the
presentation of Notes for exchange as described below) only at the direction of
one or more Participants to whose account DTC interests in the Global Note are
credited and only in respect of the principal amount of the Notes represented by
the Global Note as to which such Participant or Participants has or have given
such direction.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchasers. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depository and a successor depository is not appointed by
the Company within 90 days, the Company will cause the Notes to be issued in
definitive form in exchange for the Global Note.

CERTIFICATED NOTES

Notes sold to investors that are not Qualified Institutional Buyers or
Non-U.S. Persons will be issued in definitive registered form and may not be
represented by the Global Note. In addition, Qualified Institutional Buyers may
request that certificated Notes be issued in exchange for Notes represented by
the Global Note. Furthermore, certificated Notes may be issued in exchange for
Notes represented by the Global Note if no successor depository is appointed by
the Company as set forth above.

THE TRUSTEE

The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
be required to exercise such rights and powers vested in it under the Indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of Notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.

20
<PAGE>
The Indenture contains limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions,
provided, however, that if it acquires any conflicting interest (as defined in
the Indenture) it must eliminate such conflict within 90 days, apply to the
Commission for permission to continue, or resign.

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company has 30,000,000 authorized shares of the Common Stock, $0.001 par
value, of which 9,062,685 shares were issued and outstanding as of September 16,
1996. Holders of the Common Stock are entitled to one vote per share on all
matters requiring stockholder action. The Company's Restated Certificate of
Incorporation does not permit cumulative voting for the election of directors.
The holders of the Common Stock have no preemptive or other subscription rights
and there are no redemption, sinking fund or conversion privileges applicable
thereto. The holders of the Common Stock are entitled to receive dividends as
and when declared by the Board of Directors out of funds legally available
therefor. Upon liquidation, dissolution or winding up of the Company, holders of
the Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities. All outstanding shares of the Common Stock are fully
paid and non-assessable.

PREFERRED STOCK

The Company has 10,000 authorized shares of preferred stock, $0.001 par
value, none of which was issued and outstanding as of September 16, 1996. The
Company's Restated Certificate of Incorporation permits the terms, rights and
preferences of any preferred stock issued in the future, including dividend
rates, voting rights, redemption prices, maturity dates, liquidation preference
and similar matters, to be determined by the Company's Board of Directors at the
time such issuance is approved. Management does not presently know whether any
shares of preferred stock will actually be issued or, if issued, what the terms,
rights and preferences thereof will be. Under the Delaware General Corporation
Law ("Delaware Law"), however, the holders of such preferred stock will not have
any preemptive rights with respect to any future issuance of shares of the
Common Stock or preferred stock, unless the Company's Restated Certificate of
Incorporation is amended to provide for such rights.

CERTAIN CERTIFICATE OF INCORPORATION AND STATUTORY PROVISIONS

LIMITATIONS OF LIABILITY OF DIRECTORS. The Company's Restated Certificate
of Incorporation includes a provision eliminating director liability to the
fullest extent permissible under Delaware Law, as such law currently exists or
as it may be amended in the future. Delaware corporations are permitted to adopt
provisions in their certificates of incorporation eliminating the monetary
liability of directors for certain breaches of duty. Such provisions are subject
to exceptions, as described below.

Under Delaware Law, a Delaware corporation may include a provision in its
certificate of incorporation which eliminates or limits the personal liability
of a director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. However, such a provision may not
eliminate or limit a director's liability for (i) breaches of the duty of
loyalty to the corporation or its stockholders, (ii) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law,
(iii) the payment of unlawful dividends or unlawful stock purchases or
redemptions, or (iv) transactions in which a director receives an improper
personal benefit.

DELAWARE ANTI-TAKEOVER LAW. The Company is subject to Section 203 of
Delaware Law. Section 203 prohibits a publicly held Delaware corporation from
engaging in certain "business combinations" with an "interested stockholder" for
three years following the date that a person becomes an interested stockholder
unless the transaction is approved in the prescribed manner. A business
combination includes mergers, stock or asset sales and other transactions
resulting in a financial benefit to the interested stockholders. With certain
exceptions, an interested stockholder is a person who (i) owns 15% or more of
the corporation's outstanding voting stock, and the affiliates and associates of
such person, or (ii) is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the previous three years, and the affiliates and associates of such
person.

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<PAGE>
Certain of the provisions described above may have the effect of delaying
stockholder actions with respect to certain business combinations and the
election of new members to the Board of Directors. As such, the provisions could
have the effect of discouraging open market purchases of shares of the Company's
Common Stock because they may be considered disadvantageous by a stockholder who
desires to participate in a business combination or elect a new director.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's securities is OTR, Inc.,
Portland, Oregon.

SELLING SECURITYHOLDERS

The Notes were initially issued and sold pursuant to a purchase agreement
dated February 21, 1996 (the "Purchase Agreement") among the Company and the
Initial Purchasers. The Notes were acquired (a) from the Initial Purchasers by
the Selling Securityholders in compliance with Rule 144A, Regulation D or
Regulation S under the Securities Act or (b) in other permitted resale
transactions exempt from registration under the Securities Act from the Initial
Purchasers or holders who acquired the Notes from the Initial Purchasers or
other prior holders thereof. The Company has agreed to indemnify and hold the
Initial Purchasers harmless against certain liabilities under the Securities Act
that could arise in connection with the sale of the Notes by the Initial
Purchasers.

Jefferies & Company, Inc. ("Jefferies") was one of the Initial Purchasers of
the Notes. Jefferies has from time to time rendered financial advisory services
on behalf of the Company.

Except as set forth above, none of the Selling Securityholders has had a
material relationship with the Company or any of its predecessors or affiliates
within the past three years.

The following table sets forth certain information as of May 9, 1996 as to
the security ownership of the Selling Securityholders. The chart includes
information furnished to the Company by DTC.

Information concerning the Selling Securityholders may change from time to
time and any such changed information will be set forth in supplements to this
prospectus if and when necessary.

<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL NUMBER OF SHARES OF
AMOUNT COMMON STOCK THAT
NAME OF NOTES THAT MAY BE SOLD MAY BE SOLD (1)
- --------------------------------------------- ------------------------- -------------------
<S> <C> <C>
American Express Financial................... 3,000,000 212,389
Bank of New York............................. 11,940,000 845,309
Bankers Trust Company........................ 9,635,000 682,123
Barclay Bank................................. 350,000 24,778
Bear, Stearns & Co., Inc..................... 1,000,000 70,796
Boston Safe.................................. 965,000 68,318
Alex. Brown & Sons, Inc...................... 250,000 17,699
Chase Manhattan Bank, N.A.................... 100,000 7,079
Chemical Bank................................ 1,000,000 70,796
Custodial Trust.............................. 3,880,000 274,690
Firstar Trust Company........................ 500,000 35,398
First National Bank of Omaha................. 500,000 35,398
First Alabama Bank........................... 300,000 21,238
Gales and Company............................ 125,000 8,849
Hare & Co.................................... 245,000 17,345
Harris Trust & Savings Bank.................. 1,400,000 99,115
Jefferies & Company, Inc..................... 1,115,000 78,938
Lazard Freres................................ 100,000 7,079
Lazard Freres & Co. LLC...................... 230,000 16,283
Lehman Brothers.............................. 250,000 17,699
Morgan Guaranty Trust Co..................... 1,500,000 106,194
NBD Bank..................................... 750,000 53,097
Northern Trust Co............................ 2,130,000 150,796
PNC Bank, NA................................. 200,000 14,159
Provident Life............................... 1,000,000 70,796
Republic Bank of New York.................... 600,000 42,477
</TABLE>

22
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL NUMBER OF SHARES OF
AMOUNT COMMON STOCK THAT
NAME OF NOTES THAT MAY BE SOLD MAY BE SOLD (1)
- --------------------------------------------- ------------------------- -------------------
<S> <C> <C>
Society Bank................................. 2,385,000 168,849
Spear Leads.................................. 1,500,000 106,194
SSB Custodial................................ 5,130,000 363,185
Suntrust Banks............................... 25,000 1,769
Wachovia Bank................................ 610,000 43,185
Wagner, Stott & Co........................... 400,000 28,318
First Trust NA............................... 140,000 9,911
The Fifth-Third Bank......................... 2,500,000 176,991
</TABLE>

- ------------------------
(1) Assumes a conversion price of $14.125 per share and a cash payment in lieu
of any fractional interest.

PLAN OF DISTRIBUTION

The Notes and the Conversion Shares are being registered to permit public
secondary trading of such securities by the holders thereof from time to time
after the date of this prospectus. The Company has agreed, among other things,
to bear substantially all expenses (other than broker's commission or
underwriter's discount or commission) in connection with the registration and
sale of the Notes and the Conversion Shares covered by this prospectus.

The Company will not receive any of the proceeds from the offering of Notes
and the Conversion Shares by the Selling Securityholders. The Selling
Securityholders may sell all or a portion of the Notes and the Conversion Shares
beneficially owned by them and offered hereby from time to time on any exchange
on which the securities are listed on terms to be determined at the times of
such sales. The Selling Securityholders may also make private sales directly or
through a broker or brokers. Alternatively, any of the Selling Securityholders
may from time to time offer the Notes or shares of Common Stock beneficially
owned by them through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, commissions or concessions
from the Selling Securityholders and the purchasers of the Notes or Conversion
Shares for whom they may act as agent. The aggregate proceeds to the Selling
Securityholders from the sale of the Notes or Conversion Shares offered by them
hereby will be the purchase price of such Notes or Conversion Shares less
discounts and commissions, if any.

The Notes and the Conversion Shares may be sold from time to time in one or
more transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.

The Company's outstanding Common Stock is listed for trading on Nasdaq and
the Company has listed the Conversion Shares on Nasdaq. The Initial Purchasers
have advised the Company that they are making and currently intend to continue
making a market in the Notes; however, they are not obligated to do so and any
such market-making may be discontinued at any time without notice, in the sole
discretion of the Initial Purchasers. The Company does not intend to apply for
listing of the Notes on any securities exchange. Accordingly, no assurance can
be given as to the development of any trading market that may develop for the
Notes. See "Risk Factors -- Absence of a Public Market for the Notes."

In order to comply with the securities laws of certain states, if
applicable, the Notes and the Conversion Shares will be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Notes and the Conversion 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 requirement is available
and is complied with.

The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Notes or the Conversion Shares may be deemed to be "underwriters" within the
meaning of the Securities Act, in which event any commissions

23
<PAGE>
received by such broker-dealers, agents or underwriters and any profits realized
by the Selling Securityholders on the resale of the Notes or the Conversion
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.

In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Notes or
Common Stock described herein, and any Selling Securityholder may transfer,
devise or gift such securities by other means not described herein.

The Notes were originally sold to the Initial Purchasers in February and
March 1996 in a private placement. The Company agreed to indemnify and hold the
Initial Purchasers harmless against certain liabilities which they may incur
under the Securities Act, the Exchange Act or otherwise that could arise in
connection with the sale of the Notes by the Initial Purchasers.

The Shelf Registration Statement to which this prospectus relates became
effective on June 7, 1996. The Company will use its best efforts to keep the
Shelf Registration Statement effective for a period of three years from March
22, 1996 (the latest date of original issuance of the Notes), or until the Shelf
Registration Statement is no longer required for transfer of the Notes or the
Conversion Shares. The Company is permitted to suspend the use of this
prospectus in connection with the sales of Notes and the Conversion Shares by
holders upon the happening of certain events or if there exists any fact that
makes any statement of material fact made in this prospectus untrue or that
requires the making of additions to or changes in the prospectus in order to
make the statements herein not misleading until such time as the Company advises
the Selling Securityholders that use of the prospectus may be resumed. Expenses
of preparing and filing the registration statement and all post-effective
amendments will be borne by the Company.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general discussion of certain United States federal
income tax considerations relevant to beneficial owners ("Owners") of the Notes
or the Conversion Shares. This discussion is based on the Internal Revenue Code
of 1986, as amended (the "Code"), existing and proposed Treasury Regulations and
Internal Revenue Service ("IRS") rulings, changes to any of which subsequent to
the date hereof may affect the tax considerations discussed herein.

This discussion is for general information only and does not address all
aspects of United States federal income taxation that may be relevant to Owners
of the Notes or the Conversion Shares. This discussion does not describe the tax
consequences arising under the laws of any foreign, state or local jurisdiction,
nor does it describe all of the tax consequences that may be relevant to
particular purchasers in light of their personal circumstances, or to certain
types of purchasers (such as certain financial institutions, insurance
companies, tax-exempt entities, dealers in securities or persons who hold the
Notes or the Conversion Shares in connection with a straddle) who may be subject
to special rules. This discussion assumes that each Owner holds the Notes or the
Conversion Shares as capital assets within the meaning of section 1221 of the
Code.

For the purpose of this discussion, the term "U.S. Person" means a citizen
or resident of the United States, a corporation or partnership created or
organized in the United States or any state thereof, or an estate or trust, the
income of which is includible in income for United States federal income tax
purposes regardless of its source.

PROSPECTIVE PURCHASERS OF THE NOTES OR THE CONVERSION SHARES SHOULD CONSULT
THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THEIR PARTICIPATION IN THIS OFFERING, OWNERSHIP AND DISPOSITION
OF THE NOTES, INCLUDING CONVERSION OF THE NOTES, AND THE EFFECT THAT THEIR
PARTICULAR CIRCUMSTANCES MAY HAVE ON SUCH TAX CONSEQUENCES.

24
<PAGE>
U.S. PERSONS

OWNERSHIP OF NOTES

INTEREST. Interest on a Note will be taxable to an Owner who is a U.S.
Person as ordinary interest income in accordance with the Owner's method of tax
accounting at the time that such interest is accrued or actually or
constructively received.

MARKET DISCOUNT. An Owner that purchases a Note at a "market discount"
(i.e., at a price less than its stated principal amount) will be required
(unless such difference is less than a specified DE MINIMIS amount) to treat any
principal payments on, or any gain realized upon the disposition or retirement
of, such Note as interest income to the extent of the market discount that
accrued while such Owner held such Note, unless the Owner elects to include such
market discount in income on a current basis. If such Note is disposed of in a
nontaxable transaction (other than conversion of the Note for common stock or a
nonrecognition transaction described in section 1276(d) of the Code), accrued
market discount will be includible as ordinary income to the Owner as if such
Owner had sold the Note as its then fair market value. An Owner of a Note that
acquired it at a market discount and that does not elect to include market
discount in income on a current basis also may be required to defer the
deduction for a portion of the interest expense on any indebtedness incurred or
continued to purchase or carry the Note until the deferred income is realized.

PREMIUM. An Owner that purchases a Note for an amount in excess of the sum
of its stated principal amount and the fair market value of the conversion right
as of the date of purchase will be treated as having premium with respect to
such Note in the amount of such excess. If such an Owner makes an election under
section 171(c)(2) of the Code to treat such premium as "amortizable bond
premium," the amount of interest that must be included in such Owner's income
for each taxable year will be reduced by the portion of the premium allocable to
such year. An Owner's amortizable bond premium generally is allocated first to
(i) each period ending on a call date, if any, after such Owner's Note
acquisition date and (ii) the period ending on the date such Note is sold or
otherwise disposed of. Amortizable bond premium is further allocated to the
Owner's taxable years within each such period by the constant yield method. The
practical effect of this method of allocation is to defer the tax benefits
attributable to an Owner's bond premium to the later years in which its Notes
are outstanding. If the Note is in fact redeemed, any unamortized premium
allocable to the taxable year of the redemption may be deducted in that year. If
an Owner makes the election under section 171(c)(2), the election also shall
apply to all bonds the interest on which is not excludible from gross income
("fully taxable bonds") held by the Owner at the beginning of the first taxable
year to which the election applies and to all fully taxable bonds thereafter
acquired by it, and the election is irrevocable without the consent of the IRS.
If the election is not made, an Owner must include the full amount of each
interest payment in income in accordance with its regular method of accounting
and will receive a tax benefit from the premium only in computing its gain or
loss upon the sale or other disposition or retirement of the Note.

THE TAX ACCOUNTING FOR BOND PREMIUM, IF ANY, PAID ON THE ACQUISITION OF A
NOTE IS COMPLICATED AND UNCERTAIN IN SEVERAL RESPECTS, PARTICULARLY IN
CONNECTION WITH THE ALLOCATION OF BOND PREMIUM TO AN OWNER'S TAXABLE YEAR. IN
ADDITION, ON JUNE 27, 1996, THE IRS PROPOSED REGULATIONS CONCERNING THE TAX
TREATMENT OF AMORTIZABLE BOND PREMIUM. THESE REGULATIONS, IF EFFECTIVE, MAY
CHANGE THE TAX ACCOUNTING FOR AMORTIZABLE BOND PREMIUM AS DESCRIBED HEREIN. THE
IRS HAS PROPOSED THAT THESE REGULATIONS BECOME EFFECTIVE FOR BONDS ISSUED ON OR
AFTER THE DATE THAT IS 60 DAYS AFTER THE DATE SUCH REGULATIONS ARE ISSUED IN
FINAL FORM IN THE FEDERAL REGISTER. THE COMPANY ADVISES EACH PURCHASER TO
CONSULT ITS OWN TAX ADVISOR REGARDING THE TAX ACCOUNTING FOR BOND PREMIUM
RELATING TO THE NOTES.

ACCRUAL METHOD ELECTION. Under applicable Treasury regulations, an Owner of
a Note is permitted to elect to include in gross income its entire return on a
Note (i.e., the excess of all remaining payments to be received on the Note over
the amount paid for the Note by such Owner) based on the compounding of interest
at a constant rate. Such an election for a Note with amortizable bond

25
<PAGE>
premium (or market discount) will result in a deemed election for all of the
Owner's debt instruments with amortizable bond premium (or market discount) and
may be revoked only with the permission of the IRS.

ADJUSTMENTS TO THE CONVERSION PRICE. The Indenture provides for an
adjustment to the conversion price of the Notes upon the occurrence of certain
events, one of which is a distribution by the Company of cash or property to its
stockholders together with a reduction in the conversion price to the Owners.
Such a reduction in the conversion price could be treated as a taxable stock
dividend under section 305 of the Code, and the Owners would recognize taxable
income as the result of an event with respect to which they receive no cash or
property from the Company.

CONVERSION OF NOTES. An Owner of a Note will not recognize gain or loss on
the conversion of the Note into the Conversion Shares except to the extent, if
any, that the Common Stock issued upon the conversion is attributable to accrued
interest on the Note. The Owner's aggregate tax basis in the Conversion Shares
will equal the Owner's aggregate basis in the Note exchanged therefor (less any
portion of that basis allocable to cash received in lieu of a fractional share).
The holding period of the Conversion Shares received by the Owner upon
conversion of the Note will include the period during which the Owner held the
Note prior to the conversion.

Cash received in lieu of a fractional share of Common Stock will be treated
as a payment in exchange for such fractional share. Gain or loss recognized on
the receipt of cash paid in lieu of such fractional shares generally will equal
the difference between the amount of cash received and the basis allocable to
the fractional shares.

If an Owner acquires the Note at a market discount and receives Common Stock
upon conversion of the Note, the amount of accrued market discount with respect
to the converted Note through the date of the conversion will be treated as
ordinary income on the disposition of the Common Stock.

OWNERSHIP OF SHARES OF COMMON STOCK. Distributions on shares of Common
Stock will constitute dividends for United States federal income tax purposes to
the extent of current or accumulated earnings and profits of the Company as
determined under United States federal income tax principles. Dividends paid to
Owners that are United States corporations may qualify for the
dividends-received deduction. Individuals, partnerships, trusts, and certain
corporations, including certain corporations that are not U.S. Persons, are not
entitled to the dividends-received deduction.

To the extent, if any, that an Owner receives a distribution on shares of
Common Stock that would otherwise constitute a dividend for United States
federal income tax purposes but that exceeds current and accumulated earnings
and profits of the Company, such distribution will be treated first as a
non-taxable return of capital reducing the Owner's basis in the shares of Common
Stock. Any such distribution in excess of the Owner's basis in the shares of
Common Stock will be treated as a capital gain.

SALE OR EXCHANGE OF NOTES OR SHARES OF COMMON STOCK

In general, an Owner of a Note will recognize gain or loss upon the sale,
redemption, retirement or other disposition of the Note measured by the
difference between the amount of cash and the fair market value of any property
received (except to the extent attributable to the payment of accrued interest)
and the Owner's adjusted tax basis in the Note. An Owner's tax basis in a Note
generally will equal the cost of the Note to the Owner increased by the amount
of market discount previously taken into income by the Owner or decreased by any
bond premium applied to reduce interest payments as described above. In general,
each Owner of Common Stock into which the Notes are converted will recognize
gain or loss upon the sale, exchange, redemption or other disposition of the
Common Stock under rules similar to those applicable to the Notes. The basis and
holding period of shares of Common Stock is discussed above under "CONVERSION OF
NOTES." Special rules may apply to redemptions of Common Stock which may result
in the amount paid being treated as a dividend. Subject to the market discount
rules discussed above, the gain or loss on the disposition of the Notes or
shares of Common Stock will be capital gain or loss and will be long-term gain
or loss if the Notes or shares of Common Stock have been held for more than one
year at the time of such disposition.

26
<PAGE>
NON-U.S. PERSONS

PAYMENTS OF INTEREST. Each payment of interest on a Note to an Owner who is
not a U.S. Person (a "Non-U.S. Person") will be subject to a 30 percent U.S.
income and withholding tax, unless one of the following three exemptions
applies:

EXEMPTION FOR NON-U.S. PERSONS WHO PROVIDE IRS FORM W-8. Payment of
interest on a Note to any Non-U.S. Person will be exempt from U.S. federal
income and withholding taxes, provided the following conditions are satisfied.

(1) the last U.S. payor in the chain of payment prior to payment to a
Non-U.S. Person (the "Withholding Agent") has received in the year in which
such payment occurs, or in either of the two preceding years, a statement
that (a) is signed by the Owner of the Note under penalties of perjury, (b)
certifies that such Owner is not a U.S. Person and (c) provides the name,
address and taxpayer identification number, if any, of the Owner;

(2) neither the Withholding Agent nor any intermediary between the Owner
and the Withholding Agent has actual knowledge that such non-U.S. beneficial
ownership statement is false; and

(3) the Owner is not an "excluded person" (i.e., (a) a bank that
receives payments on the Notes that are described in section 881(c)(3)(A) of
the Code, (b) a 10 percent shareholder of the Corporation within the meaning
of section 871(h)(3)(B) of the Code, or (c) a "controlled foreign
corporation" related to the Company within the meaning of section
881(c)(3)(C) of the Code).

The non-U.S. beneficial ownership statement referred to above may be made on
an IRS Form W-8 or a substantially similar substitute form. The Owner must
inform the Withholding Agent (or the last intermediary in the chain between the
Withholding Agent and the Owner) of any change in the information on the
statement within 30 days of such change. If a Note is held through a securities
clearing organization or certain other financial institutions, the organization
or institution may provide a signed statement to the Withholding Agent on behalf
of the Owner. In such case, however, the signed statement must be accompanied by
a copy of a Form W-8 or substitute form provided by the Owner to the
organization or institution. In all cases, the Form W-8 or substitute form must
be filed by the Withholding Agent with the IRS. The U.S. Treasury Department is
empowered to publish a determination that a beneficial ownership statement from
any person or class of persons will not be sufficient to preclude the imposition
of federal withholding tax with respect to payments of interest made at least
one month after the publication of such determination.

REDUCED RATE FOR NON-U.S. PERSONS ENTITLED TO THE BENEFITS OF A TREATY (IRS
FORM 1001). An Owner that is a Non-U.S. Person entitled to the benefit of an
income tax treaty to which the United States is a party can obtain a reduction
of income and withholding tax (depending on the terms of the treaty) by
providing to the Withholding Agent a properly completed IRS Form 1001 prior to
the payment of interest, unless the Withholding Agent has actual knowledge that
the form is false.

EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (IRS FORM
4224). An Owner that is a Non-U.S. Person that conducts a trade or business in
the United States with which income on a Note is effectively connected can
obtain an exemption from withholding tax by providing to the Withholding Agent a
properly completed IRS Form 4224 prior to the payment of interest, unless the
Withholding Agent has actual knowledge that the form is false. Payments of
interest on a Note that are effectively connected with the conduct of a trade or
business in the United States by an Owner who is a Non-U.S. Person, although
exempt from the withholding tax, may be subject to graduated U.S. federal income
tax as if such amounts were earned by a U.S. Person.

In certain circumstances, amounts not exempted from tax and withheld may be
allowed as a refund or as a credit against the Owner's U.S. federal income tax.

CONVERSION OF NOTES. An Owner that is a Non-U.S. Person generally will not
be subject to United States federal income tax on the conversion of a Note into
shares of Common Stock. To the extent a Non-U.S. Person receives cash in lieu of
a fractional share on conversion, such cash may give rise to gain that would be
subject to the rules described below with respect to the sale or exchange of a
Note or shares of Common Stock.

27
<PAGE>
DISTRIBUTIONS ON SHARES OF COMMON STOCK. Generally, any distribution on
shares of Common Stock to an Owner that is a Non-U.S. Person will be subject to
United States federal income tax withholding at a rate of 30 percent unless one
of the following two rules applies:

REDUCED RATE FOR NON-U.S. PERSONS ENTITLED TO THE BENEFITS OF A TREATY (IRS
FORM 1001). Under current Treasury regulations, dividends paid to an address in
a foreign country are presumed to be paid to a resident of that country for
purposes of determining the applicability of a tax treaty providing for a
reduced rate of withholding to a resident of a treaty partner. Treasury
regulations issued in April 1996, however, would, if finalized in their current
form, require Non-U.S. Persons to file a withholding certificate with the
Withholding Agent (or under certain circumstances, a "qualified intermediary")
to obtain the benefit of an applicable tax treaty providing a reduced rate of
withholding on dividends. The required withholding certificate would have to
contain the name and address of the Non-U.S. Person and the basis for any
reduced rate claimed. See the discussion below under "Proposed Regulations
Relating to Withholding and Information Reporting".

EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (IRS FORM
4224). An Owner that is a Non-U.S. Person that conducts a trade or business in
the United States with which dividends on common stocks are effectively
connected can obtain an exemption from withholding tax by providing to the
Withholding Agent a properly completed IRS Form 4224 prior to the payment of
dividends, unless the Withholding Agent has actual knowledge that the form is
false. Payments of dividends that are effectively connected with the conduct of
a trade or business in the United States by an Owner who is a Non-U.S. Person,
although exempt from the withholding tax, may be subject to graduated U.S.
federal income tax as if such amounts were earned by a U.S. Person.

In certain circumstances, amounts not exempted from tax and withheld may be
allowed as a refund or as a credit against the Owner's U.S. federal income tax.

SALE OR EXCHANGE OF NOTES OR SHARES OF COMMON STOCK. An Owner that is a
Non-U.S. Person generally will not be subject to United States federal income
tax on gain recognized upon the sale or other disposition (including a
redemption) of a Note or the Conversion Shares (including the receipt of cash in
lieu of a fractional share upon such conversion) unless (i) the gain is
effectively connected with the conduct of a trade or business within the United
States by the Non-U.S. Person, or (ii) in the case of an Owner who is a
nonresident alien individual and holds the Common Stock as a capital asset, such
Owner is present in the United States for 183 or more days in the taxable year
and certain other circumstances are present. Any amount withheld pursuant to
these rules will be creditable against such Owner's United States federal income
tax liability and may entitle such Owner to a refund upon furnishing the
required information to the IRS. Owners should consult applicable income tax
treaties, which may provide different rules.

INFORMATION REPORTING AND BACKUP WITHHOLDING

U.S. HOLDERS OR OWNERS. Information reporting and backup withholding may
apply to payments of interest or dividends on or the proceeds of the sale or
other disposition of the Notes or shares of Common Stock made by the Company
with respect to certain noncorporate U.S. holders or Owners. Such U.S. holders
or Owners generally will be subject to backup withholding at a rate of 31
percent unless the recipient of such payment supplies a taxpayer identification
number, certified under penalties of perjury, as well as certain other
information, or otherwise establishes, in the manner prescribed by law, an
exemption from backup withholding. Any amount withheld under backup withholding
is allowable as a credit against the Owner's federal income tax, upon furnishing
the required information.

NON-U.S. HOLDERS OR OWNERS. Generally, information reporting and backup
withholding of United States federal income tax at a rate of 31 percent may
apply to payments of principal, interest and premium (if any) to non-U.S.
holders if the payee fails to certify that he or she is not a U.S. person or if
the Company or any of its paying agents has actual knowledge that the payee is a
U.S. Person.

The 31 percent backup withholding tax generally will not apply to dividends
paid to Non-U.S. holders or Owners outside the United States that are subject to
30 percent withholding discussed above or that are not so subject because a tax
treaty applies that reduces or eliminates such withholding. In that regard,
under temporary regulations, dividends payable at an address located outside of
the United States to a Non-U.S. holder or Owners are not subject to the backup
withholding rules.

28
<PAGE>

Proposed Treasury regulations issued in April 1996, would, if finalized in
their current form, require a Non-U.S. holder of common stock to file a
withholding certificate with the Withholding Agent (or, under certain
circumstances, a "qualified intermediary") representing that such Non-U.S.
holder is a foreign person in order to avoid backup withholding on dividends
paid on those shares. See the discussion below and under "Proposed Regulations
Relating to Withholding and Information Reporting."

In addition, if a Note or share of Common Stock is sold before the stated
maturity to (or through) a "broker," the broker may be required to withhold 31
percent of the entire sale price, unless either (i) the broker determines that
the seller is a corporation or other exempt recipient or (ii) the seller
provides, in the required manner, certain identifying information and, in the
case of a Non-U.S. Person, certifies that such seller is not a U.S. Person (and
certain other conditions are met). Such a sale also must be reported by the
broker to the IRS, unless either (i) the broker determines that the seller is an
exempt recipient or (ii) the seller certifies its non-U.S. status (and certain
other conditions are met). Certification of the Owner's non-U.S. status normally
would be made on IRS Form W-8 under penalties of perjury, although in certain
cases it may be possible to submit certain other signed forms. The term
"broker," as defined by Treasury regulations, includes all persons who, in the
ordinary course of business, stand ready to effect sales made by others. This
information reporting requirement generally will apply to a U.S. office of a
broker and to a foreign office of a U.S. broker, as well as to a foreign office
of a foreign broker (i) that is a "controlled foreign corporation" within the
meaning of section 957(a) of the Code or (ii) 50 percent or more of whose gross
income from all sources for the three-year period ending with the close of its
taxable year preceding the payment (or for such part of the period that the
foreign broker has been in existence) was effectively connected with the conduct
of a trade or business within the United States, unless such foreign office has
documentary evidence that the seller is not a U.S. Person and has no actual
knowledge that such evidence is false.

Any amounts withheld under the backup withholding rules from a payment to a
person would be allowed as a refund or a credit against such person's U.S.
federal income tax, provided that the required information is furnished to the
IRS. Furthermore, certain penalties may be imposed by the IRS on a holder or
Owner who is required to supply information but who does not do so in the proper
manner.

PROPOSED REGULATIONS RELATING TO WITHHOLDING AND INFORMATION REPORTING

On April 22, 1996, the IRS issued proposed regulations relating to (i)
withholding income tax on U.S.-source income paid to Non-U.S. persons, (ii)
claiming Non-U.S. holder status to avoid backup withholding, and (iii) reporting
to the IRS of payments to Non-U.S. persons. The proposed regulations would
substantially revise some aspects of the current system for withholding on and
reporting amounts paid to Non-U.S. Persons. The regulations would unify current
certification procedures and clarify forms and reliance standards. Most forms
are proposed to be combined into a single new Form W-8. In general, the
regulations are proposed to be effective for payments made after December 31,
1997. Certificates issued on or before the date that is 60 days after the
proposed regulations are made final, however, will continue to be valid until
they expire. All proposed regulations are subject to change before adoption in
final form. No reliable prediction can be made as to when, if ever, the proposed
regulations will be made final and, if so, as to their final form.

LEGAL MATTERS

The validity of the issuance of the Notes and the Conversion Shares will be
passed upon for the Company by Dewey Ballantine, Los Angeles, California 90071.

EXPERTS

The financial statements of Richey Electronics as of December 31, 1994 and
December 31, 1995 and for each of the three years in the period ended December
31, 1995, incorporated by reference in this prospectus and the Registration
Statement from the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by McGladrey & Pullen, LLP, whose report is
incorporated by reference herein in reliance upon such report and upon the
authority of such firm as an expert in accounting and auditing matters. The
consolidated financial statements of EDAC as of December 19, 1995 and for the
period from January 1, 1995 through December 19, 1995, incorporated

29
<PAGE>
by reference in this prospectus and in the Registration Statement from the
Company's Current Report on Form 8-K/A dated January 31, 1996 (the "Form
8-K/A"), have been audited by McGladrey & Pullen, LLP, whose report is
incorporated by reference herein in reliance upon such report and upon the
authority of such firm as an expert in accounting and auditing matters.

The financial statements of Deanco as of June 30, 1993 and June 30, 1994 and
for each of three years in the period ended June 30, 1994 and for the period
from July 1, 1994 through September 30, 1994 and as of December 31, 1994 and for
the period from October 1, 1994 through December 31, 1994, incorporated by
reference in this prospectus and in the Registration Statement from the Form
8/K-A, have been audited by Ernst & Young LLP, independent auditors, whose
reports are incorporated by reference herein and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing. The consolidated financial statements of EDAC as of December 31, 1994
and for the period from October 1, 1994 through December 31, 1994, incorporated
by reference in this prospectus and in the Registration Statement from the Form
8-K/A, have been audited by Ernst & Young LLP, independent auditors, whose
reports are incorporated by reference herein and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.

30
<PAGE>
EXHIBIT A TO THE PROSPECTUS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

<TABLE>
<S> <C>
For the fiscal year ended December 31, 1995 Commission
file number: 0-9788
</TABLE>

RICHEY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
Delaware 33-0594451
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>

7441 Lincoln Way, Suite 100, Garden Grove, California 92641
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code: (714) 898-8288

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value
------------------------
(Title of class)

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 ____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant as of March 22, 1996, was $53,179,177 based on
the last sale price on the Nasdaq Stock Market ("Nasdaq") on that date.

As of March 22, 1996, 9,057,827 shares of the registrant's Common Stock were
outstanding.

- --------------------------------------------------------------------------------

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of Richey Electronics, Inc.'s (the "Company" or "Richey
Electronics") proxy statement for the annual meeting of stockholders to be held
on May 7, 1996, to be filed with the Securities and Exchange Commission (the
"Commission") no later than 120 days after the end of the Company's fiscal year
ended December 31, 1995, are incorporated by reference into Part III of this
Form 10-K (Items 10 through 13).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

A-1
<PAGE>
PART I

ITEM 1. BUSINESS
GENERAL

Richey Electronics is a leading multi-regional, specialty distributor of
interconnect, electromechanical and passive electronic components and a provider
of value-added assembly services. The Company has been built through a series of
transactions beginning in December 1990 with RicheyImpact Electronics, Inc.'s
("RicheyImpact") acquisition of the operations of Richey/Impact Electronics,
Inc. ("Old Richey") and recently through the acquisitions of Inland Empire
Interconnects in August, 1995 (the "IEI Acquisition") and of Deanco, Inc.
("Deanco") and its parent holding company, Electrical Distribution Acquisition
Company ("EDAC"), in December 1995 (the "Deanco Acquisition"). Since the initial
acquisition, the Company's growth has been directed by one of the most
experienced management teams in its industry. Through acquisitions and internal
growth that improved the Company's operating leverage, Richey Electronics' sales
and earnings have increased from approximately $33.0 million and $700,000,
respectively, in 1991 to $117.1 million and $2.9 million, respectively, in 1995.
Giving pro forma effect to the Deanco Acquisition, the Company's sales and
earnings were $217.0 million and $4.4 million, respectively, in 1995 and the
Company would have ranked as the fifth largest distributor in its market niche
of interconnect, electromechanical and passive components in the United States,
based on information presented in the April 1995 edition of ELECTRONIC BUSINESS
BUYER.

The Company completed the Deanco Acquisition on December 20, 1995. Deanco is
a multi-regional, specialty distributor of electronic components and a provider
of value-added assembly services with operations primarily serving markets in
the northeast and on the west coast. Deanco's sales and EBITDA through December
19, 1995 were $99.9 million and $4.3 million, respectively. Deanco's product
offering is similar to that of Richey Electronics, providing a variety of
interconnect, electromechanical and passive products primarily to small- and
medium-sized OEMs. The Deanco Acquisition provides the Company with certain
product lines that it did not previously carry, including heat shrinkable tubing
supplied by Raychem, and significantly enhances the Company's position in the
passive components market. Management believes that the Deanco Acquisition is
consistent with the Company's growth strategy, primarily due to the
opportunities that the Deanco Acquisition provides to increase operating
leverage by expanding sales in its existing and adjacent markets. Approximately
$58.0 million, or 58%, of Deanco's 1995 net sales were generated in or adjacent
to markets served by Richey Electronics in 1995. Management believes it can
effectively integrate these sales into the Company's operations and, by
spreading these sales over the Company's fixed cost base, improve the Company's
operating leverage.

In April 1995 the Company issued 3,165,000 shares of the Company's common
stock, $0.001 par value, in a secondary offering. The Company and certain
stockholders of the Company, pursuant to an agreement with the underwriters,
sold an additional 450,000 shares of the Company's common stock in that
offering. The net proceeds to the Company from the secondary offering were
approximately $15.7 million. The Company used the net proceeds to reduce the
Company's existing indebtedness.

In February 1996, the Company sold through a private offering (the "Note
Offering") $50.0 million aggregate principal amount of 7% Convertible
Subordinated Notes due 2006 (the "Notes"). The Notes are convertible into the
Company's common stock at a conversion price of $14.125 per share (subject to
adjustment). In March 1996, the Company completed the Note Offering by issuing
an additional $5,755,000 aggregate principal amount of Notes to cover
over-allotments. The Company has agreed to file a shelf registration statement
with the Commission registering the Notes and the

A-2
<PAGE>
common stock issuable upon conversion. The net proceeds from the Note Offering
were approximately $53.8 million and were used to repay the Company's $30.0
million term loan and to pay down its revolving line of credit.

On March 19, 1996, the Company completed the acquisition of the assets and
business of MS Electronics, Inc. ("MS Electronics"). MS Electronics, which is
privately held, had sales of approximately $11.0 million in 1995. MS Electronics
specializes in the value-added distribution of interconnect, electromechanical
and passive electronic components in the Baltimore\Washington marketplace. The
addition of MS Electronics adds new customers, complementary product lines and a
strong sales organization, which management expects to integrate into the
Company.

The Company's principal executive offices are located at 7441 Lincoln Way,
Garden Grove, California 92641, and its telephone number is (714) 898-8288.

INDUSTRY OVERVIEW

Over the last 30 years, the electronics industry has grown significantly as
a result of increased demand for products incorporating sophisticated electronic
components, such as telecommunications and computer equipment. This industry
growth has been matched by an increase in the number of products, component
manufacturers and OEMs.

The electronics distribution industry has become an increasingly important
sales channel for the electronics industry because distributors can market
component manufacturers' products to a broader range of OEMs than suppliers
could economically serve with their direct sales forces. Historically,
manufacturers of electronic components have sold directly to larger OEMs and
relied upon distributors to serve smaller customers. Today, distributors have
become more of an extension of component manufacturers' product delivery channel
by providing value-added assembly services and technical support to customers,
stocking sufficient local inventory to ensure timely delivery of components and
managing customer credit. Distributors also work with OEMs to ensure that
component manufacturers' products are designed into new products. This is
particularly important because product innovations in the electronics industry
often come from smaller, entrepreneurial companies.

As component manufacturers have increasingly focused their direct sales
efforts on the largest OEMs, and less on smaller customers, the distribution
segment has increased its share of the total United States connector market from
an estimated 22% in 1980 to an estimated 31% in 1995, according to the August
28, 1995 edition of ELECTRONIC NEWS. The Company estimates that approximately
one-half of all electronic components are purchased by the top 100 customers who
purchase many of their components directly from component manufacturers.
Approximately 100,000 other OEMs purchase products from both distributors and
manufacturers, with smaller customers purchasing a greater proportion of their
products from distributors.

MARKET SIZE. According to the December 4, 1995 edition of ELECTRONIC NEWS,
the electronics distribution industry recorded approximately $20 billion in
sales in 1995. Of these sales, the Company estimates that approximately $15
billion consisted of sales of semiconductors and computer related peripherals,
which management believes are generally characterized by lower margins and are
not sold by the Company. The remaining $5 billion consisted of sales of
interconnect (connectors, sockets), electromechanical (relays, switches) and
passive (resistors, capacitors) components, which are marketed by the Company.
Giving pro forma effect to the Deanco Acquisition, the Company would have ranked
as the 16th largest electronic components distributor in the United States in
1995 and as the fifth largest distributor within its market niche of
interconnect, electromechanical and passive components, based on information
provided in industry publications. The Company does not intend to directly
compete in the semiconductor or computer peripheral markets of the electronics
distribution industry.

TRENDS. Consolidation is one of the most significant trends affecting the
electronic component distribution industry. Of the 25 largest electronics
distributors in 1985, only 13 remain independent today. The factors driving
consolidation among electronic component distributors include the desire of
manufacturers to sell through fewer distributors, the need for distributors to
increase operating leverage and the desire of OEMs to satisfy component
requirements with fewer vendors. A series of mergers and acquisitions over the
last ten years have created a number of very large distribution companies that
have increasingly focused on their larger customers and on expanding
international

A-3
<PAGE>
operations. As a result of this large customer focus, regional and specialty
distributors such as the Company have gained market share among small-and
medium-sized OEMs. These smaller customers often require value-added assembly
services, detailed technical information about available products, assistance in
coordinating product design and engineering with materials resource planning,
fast response to inventory availability inquiries, dependable on-time deliveries
and other services.

In addition to the consolidation of distributors, manufacturers are limiting
the number of distributors through which they market their products in an effort
to improve operating efficiency. Regional distributors must therefore
demonstrate strong local market positions and client relationships when
competing to obtain or retain top manufacturer franchises. Many of these
distributors have made substantial efforts to expand local market share by
emphasizing customer services, such as value-added assembly, just-in-time
inventory management, automatic replenishment and in-plant stores.

Another key trend is the outsourcing of component assembly, which allows
OEMs to enhance profitability by concentrating resources on product design,
marketing and other core aspects of their business. By serving a number of
customers, distributors can often produce subassemblies more efficiently than
many small- and medium-sized OEMs. The September 12, 1994 edition of OUTSOURCE
MAGAZINE estimates that OEM outsourcing is now an $11 billion industry growing
at an estimated 14.5% per annum.

DISTRIBUTION AND SERVICES

The Company distributes interconnect, electromechanical and passive
electronic 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 value-added assembly services respond to an industry trend toward
outsourcing in which purchasing, manufacturing and distribution functions are
allocated to the most efficient provider. The Company believes that outsourcing
represents a significant opportunity to expand sales, margins and operating
profits.

COMPONENT DISTRIBUTION. The distribution of interconnect, electromechanical
and passive electronic components accounted for approximately 71% of the
Company's net sales in 1995, and pro forma for the Deanco Acquisition,
approximately 76% of net sales. These products include connectors, wire, cable,
relays, switches, motors, batteries, power supplies, resistors, capacitors,
transformers, heat shrinkable tubing and potentiometers. The Company sources its
products from such leading suppliers as AMP, Burndy, C&K, Delta, Deutsch,
Dialight, Eaton, Grayhill, MicroSwitch, 3M, Molex, Panasonic, Panduit, Power
General, Precicontact, Samtec, Sullins, TDK, TI Klixon and Wieland. The Deanco
Acquisition expands the Company's line card with the addition of a number of new
product lines, including Bentley-Harris, Berg, Dale, Emerson-Cummings, Raychem
and Sprague. Moreover, Richey Electronics and Deanco represented 18 common
suppliers in 1995, expanding the number of authorized locations in which the
Company is franchised.

VALUE-ADDED ASSEMBLY SERVICES. The electronics industry's trend toward the
use of outside vendors to provide value-added assembly services represents a
growth opportunity for the Company. Outsourcing offers OEMs the opportunity to
invest financial resources in areas with higher returns, such as engineering and
marketing. Additionally, the capital investment required to stay current in
manufacturing technologies is beyond the financial capability of many smaller
OEMs. By servicing a large number of such customers, the Company spreads such
costs over a larger business base. Moreover, by integrating assembly services
with extensive inventories, the Company is able to eliminate a large amount of
shipping, handling and receiving costs from the process. For many OEMs, the
Company is able to offer assembly services at a lower cost to the customer while
producing higher margins for itself. The Company currently builds a variety of
component assemblies to customer or manufacturer specifications, including
cable, battery pack, switch and mechanical assemblies, wire harnesses, fan and
motor assemblies, and provides engraving and molding services. With the Deanco

A-4
<PAGE>
Acquisition, Richey obtained the capability to encase its cable and harness
assemblies in heat shrinkable tubing, which was a significant portion of
Deanco's value-added assembly business. The Company has increased its emphasis
on higher-margin, value-added assembly services, which grew from $10.9 million,
or 17% of net sales, in 1993 to $21.2 million, or 23.5% of net sales, in 1994
and to $33.0 million, or 29% of net sales, in 1995.

The Company currently provides value-added assembly services primarily from
its Los Angeles, California, Boston, Massachusetts and Portland, Oregon
facilities, having an aggregate of approximately 81,000 square feet dedicated to
value-added assembly services. In addition, the Company also provides
value-added assembly services from its San Diego and San Francisco Bay Area,
California facilities and from its Dallas, Texas facility.

SALES AND MARKETING

The Company provides its customers with a wide range of products from a
large number of electronic component manufacturers. The Company believes that it
has developed valuable long-term customer relationships and an in-depth
understanding of its customers' needs and purchasing patterns. Richey
Electronics serves a broad range of customers in a wide variety of industries,
including the telecommunications, computer, medical, transportation and
aerospace industries. In 1995, Richey Electronics and Deanco together
distributed electronic components to more than 15,000 customers, none of which
represented more than 1.5% of net sales of the Company on a pro forma basis.

The Company's sales representatives are trained to identify their customers'
electronic component requirements and to actively market the Company's entire
product line to satisfy these needs. During the design process, sales
representatives meet with the customers' engineers and designers to discuss
their component needs and any design or procurement problems. The sales
representatives suggest components that meet performance criteria, are cost
effective and focus on specific problems. Through this approach, components
carried by the Company are often incorporated into final product specifications.

Including Deanco, the Company had approximately 215 sales representatives as
of December 31, 1995. Sales representatives are compensated primarily by
commission based on the gross profits obtained on their sales. The Company now
has sales offices in 20 of the 31 major metropolitan distribution markets in the
United States, which accounted for 80% of the total distribution market in 1995
according to the December 4, 1995 edition of ELECTRONIC NEWS. The Company's
market positions are particularly strong in the northeastern and western United
States. Due to the low level of overlap among Richey Electronics and Deanco
customers, the Company expects to retain most of Deanco's sales organization in
order to accommodate the expanded customer base. In addition, the Company
believes that the Deanco Acquisition has created an opportunity for the Company
to sell to the Company's new customers many product lines which Deanco did not
carry and to sell Deanco product lines to the Company's original customers.

The Company's local sales efforts are supported by central marketing groups,
located in Garden Grove and the San Francisco Bay Area, California and in
Boston, Massachusetts which are responsible for identifying new suppliers and
developing supplier relations, coordinating national advertising, negotiating
supplier agreements and promoting new and existing product lines within the
Company.

OPERATIONS

DISTRIBUTION. The principal focus of the Company's distribution business is
to provide OEM customers with rapid and reliable deliveries of electronic
components and a wide variety of related value-added assembly services. The
Company utilizes a computerized system of inventory control to assist in
marketing its products and to coordinate purchases from manufacturers. Each
sales office and warehouse (other than the Deanco operations which are currently
being integrated), as well as management, are linked through the Company's
computer system, providing detailed on-line information regarding the price and
availability of the Company's entire stock of inventory, as well as on-line
access to the inventories of several of the Company's major suppliers. The
Company also offers its customers a number of operational services, including
just-in-time delivery and electrical data interchange programs.

After product price and availability are established, the Company's system
automatically places an order for shipment, or allocates inventory to the
assembly operations, if so required. The system

A-5
<PAGE>
then instructs warehouse personnel to pull products for shipment and, via its
locator system, informs them as to the location of the inventory. In order to
optimize use of available warehouse space, the Company uses a random-access,
multi-bin system whereby inventory is stored in the first available space.

If the order is scheduled for delivery over an extended period of time or
requires inventory purchases to fulfill all or part of the customer's
requirements, the system will inform the product management team, via a buy
action report, that action must be taken. The product manager makes the
appropriate buying decision which is forwarded, in most cases, by electronic
purchase order to component manufacturers.

Prior to the Deanco Acquisition, approximately 80% of the Company's
inventory was located at its centralized distribution facility in Los Angeles,
and 15% was stored in Boston. Pursuant to the Company's consolidation plan, the
Company expects to locate approximately 60% of its inventory in Los Angeles and
30% in Boston. Management is considering, however, retaining a warehouse in the
San Francisco Bay Area for an intermediate period of time. In the event such a
facility is retained, approximately 47% of the Company's inventory would be
located in Los Angeles, 30% in Boston and 20% in the San Francisco Bay Area. The
Company constantly reviews inventories in an effort to maximize inventory
turnover and customer service. The Company believes its turnover ratio (5.0x for
1995) compares favorably with those achieved by competitors for similar
interconnect, electromechanical and passive component inventories.

VALUE-ADDED ASSEMBLY SERVICES. The Company offers a wide variety of
value-added assembly services, including component assemblies, cable and harness
assemblies, battery packs, heat shrinkable tubing and other related
electromechanical subassemblies. After a customer's assembly order is taken, the
inventory requirements are automatically routed, via the computer system, to the
warehouse and assembly facilities. The system tracks the order through the
entire assembly process, including final inspection and shipment to the
customer. The Company conducts stringent quality control tests in-line during
assembly, and also conducts physical, mechanical and electrical tests at the
conclusion of the assembly process. A Company-wide emphasis on quality is
evidenced by the certification of its Garden Grove and Los Angeles facilities to
the ISO 9002 standard. The Company has met the certification requirements of the
International Standards Organization for ISO 9002 certification by operating its
Garden Grove and Los Angeles facilities in accordance with established, written
procedures.

DEANCO INTEGRATION PLAN

The Company has developed and begun to implement an operating plan designed
to integrate the operations of Richey Electronics and Deanco. The Company
expects to generate the majority of its cost savings from the termination of
redundant employees and the closing of duplicate facilities. The most critical
part of the integration is the conversion of Deanco's computer data to the
Company's system. This conversion is expected to be completed during the second
quarter of 1996. In 1995, Deanco's operating expenses were 21.6% of net sales as
compared to 17.9% of net sales for Richey Electronics, excluding the
restructuring reserve. The Company believes that by integrating the operations,
computer systems and facilities of Deanco into Richey Electronics, it can reduce
Deanco's operating expenses as a percentage of net sales.

As a result of the integration, management expects that the Deanco
Acquisition will give the Company the opportunity to expand the coverage of the
Company's existing supplier franchises. Management believes that the Company's
expanded geographic scope gives it the potential to increase the number of
markets in which it is franchised by existing suppliers.

The Company believes that less than 25% of Deanco's customers in 1995 were
also served by Richey Electronics prior to the Deanco Acquisition. Of these,
management believes that less than 10% were significant customers of both Richey
Electronics and Deanco. As a result, in the markets where Richey Electronics and
Deanco overlapped, including Boston, Denver, Los Angeles, Phoenix, Portland, San
Diego, the San Francisco Bay Area and Seattle, management believes that the
Company's sales force will be able to cross-sell several of the new products
available on its expanded line card. The Company believes that cross-selling may
lead to a significant increase in sales volume. The Company

A-6
<PAGE>
has begun emphasizing cross-selling opportunities in training programs for the
integrated sales force; however, until the computer conversion is completed,
management does not expect to realize significant sales from cross-selling.

COMPONENT MANUFACTURERS

The Company's base of suppliers has increased significantly over the past
five years. With the addition of Deanco, the Company has non-exclusive franchise
(distribution) agreements with more than 100 component manufacturers, including
AMP, Bentley-Harris, Berg, C&K, Dale, Delta, Deutsch, Dialight, Eaton,
Emerson-Cummings, Kemet, Microswitch, 3M, Molex, Papst, Raychem, Samtec,
Sprague, Sullins and Wieland. Management believes that it has one of the
strongest product offerings, or line cards, in the markets it serves. As a
result of the Deanco Acquisition, the Company believes that it is the only
distributor to represent the world's seven largest connector manufacturers. The
Company is now the largest electronic components distributor for many major
national manufacturers, including Deutsch, 3M, Raychem and Samtec. Based on
information presented in the April 1995 edition of ELECTRONIC BUSINESS BUYER,
the Company would have ranked as the fifth largest distributor in the
interconnect, electromechanical and passive component markets in the United
States if the acquisition of Deanco had been consummated at that time.

For the year ended December 31, 1995, the Company's top five suppliers
accounted for approximately 39% of net sales, although no single manufacturer
accounted for more than 12% of net sales. Pro forma for the Deanco Acquisition,
the Company's top five suppliers accounted for approximately 42% of net sales.
As a result of the Deanco Acquisition, the Company's largest supplier is now
Raychem, which accounted for approximately 35% of Deanco's net sales in 1995. On
a pro forma basis, Raychem would have accounted for approximately 17% of the
Company's net sales in 1995.

The Company generally purchases products from manufacturers pursuant to
franchise agreements. Being a local authorized distributor is a valuable
marketing tool for the Company because customers receive warranty benefits and
support from the component manufacturer when they purchase products from Richey
Electronics. As an authorized distributor, the Company provides customers a
benefit from the marketing and engineering support available from the Company's
manufacturers, who assist the Company in closing sales and attracting new
customers. The Company expects that the Deanco Acquisition will enable it to
better address the desire of its suppliers to reduce the number of distributors
with which they deal.

Most of the Company's franchise agreements are cancelable by either party,
typically upon 30 to 90 days' notice. These agreements generally provide for
price protection, stock rotation privileges and the right to return certain
inventory if the agreement is canceled. Price protection is usually in the form
of a credit to the distributor for any inventory in the distributor's possession
for which the manufacturer reduces its prices. Stock rotation privileges
typically allow the Company to exchange inventory in an amount up to 5% of a
prior period's purchases. Upon termination of a franchise agreement, the right
of return generally requires the manufacturer to repurchase the Company's
inventory at the Company's adjusted purchase price. If the Company terminates
the franchise agreement, there is usually a 10% to 15% restocking charge. The
Company believes that the provisions of these franchise agreements should
generally reduce the Company's exposure to significant inventory losses,
although there can be no assurance that the Company will not experience
significant inventory losses as a result of such potential terminations or
otherwise.

COMPETITION

In 1995, total North American sales in the electronic components
distribution industry (including semiconductors and computer related
peripherals) were approximately $20 billion, of which the top 25 distributors
had sales of approximately $17 billion. Richey Electronics and Deanco were
ranked as the

A-7
<PAGE>
22nd and 23rd, respectively, largest electronic components distributors in the
United States by ELECTRONIC NEWS in its December 4, 1995 edition. Pro forma for
the Deanco Acquisition, the Company would have ranked as the 16th largest
electronic components distributor. Within the interconnect, electromechanical
and passive electronic components markets in which the Company competes, it is
ranked considerably higher.

EMPLOYEES

Including employees acquired from Deanco, the Company had approximately
1,080 employees as of December 31, 1995. Approximately 110 of the Company's
employees are corporate personnel involved in product management, finance,
quality control or senior management. Another 90 employees work in the Company's
Los Angeles, Boston and branch warehouses; 330 individuals are employed in
branch sales and marketing efforts and 550 persons are employed on a full-time
or on-call basis in value-added assembly services. As the Company consolidates
its operations with those of Deanco, the Company expects to be able to reduce
the total number of employees required to continue business at current levels.
There are no collective bargaining contracts covering any of the Company's
employees. The Company believes its relationship with its employees is
satisfactory.

BACKLOG

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 grew throughout
1995 and at year end was $53.0 million, up 166.0% from $19.9 million at December
31, 1994. Deanco contributed $21.5 million to backlog at December 31, 1995.
Excluding Deanco's contribution, the Company's backlog grew 58% to $31.5 million
in 1995. The Company believes that the increase in order backlog is attributable
to the general world-wide economic advance in the telecommunications and
computer industries, as well as to various sales, marketing and operational
programs implemented by management. Order backlog is not necessarily indicative
of future sales for any particular period. Orders constituting the Company's
backlog are subject to delivery rescheduling, price negotiations and
cancellation at the option of the buyer without significant penalty.

WORKING CAPITAL

The Company must have sufficient inventories on hand to satisfy the needs of
its customers. For the quarter ended December 31, 1995, the Company's inventory
turnover (excluding the balance sheet effect of the Deanco Acquisition) was
5.0x, compared to 4.9x for 1994 and 4.4x for 1993. The Company believes it has
sufficient working capital and borrowing capacity available to maintain adequate
levels of inventory for the foreseeable future. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

ENVIRONMENTAL PROTECTION

The nature of the Company's operations do not present any significant risks
to the environment. Therefore, no material capital expenditures were or are
expected to be required for environmental protection.

ITEM 2. PROPERTIES

The Company leases all facilities used in its business. The following table
summarizes the principal properties occupied by the Company:

<TABLE>
<CAPTION>
EXPIRATION DATE
LOCATION SQUARE FOOTAGE OF LEASE
- ------------------------------------------------------------- --------------- -----------------
<S> <C> <C>
ADMINISTRATIVE AND SALES OFFICE:
Garden Grove, California................................... 27,500 2001
WAREHOUSING, ASSEMBLY AND SALES:
Boston, Massachusetts...................................... 60,000 2004
Dallas, Texas.............................................. 15,300 2001
Los Angeles, California.................................... 55,000 2000
Portland, Oregon........................................... 30,000 2001
San Jose, California....................................... 13,400 1999
Santa Clara, California.................................... 42,200 2002
</TABLE>

A-8
<PAGE>
The Company also leases sales offices in Arizona, California, Colorado,
Connecticut, Florida, Georgia, Illinois, Kansas, Maryland, Minnesota, Missouri,
New Jersey, New York and Washington which range in size from 600 to 6,000 square
feet.

In consolidating Richey Electronics' and Deanco's businesses, management is
implementing its plan to close redundant facilities, including Deanco's Ithaca,
New York offices and Richey Electronics' Boston, Massachusetts facility (which
facilities are not reflected in the above table). The Company is evaluating its
options with respect to the Company's San Jose and Deanco's Santa Clara,
California facilities. The Company may close its San Jose facility and retain
Deanco's Santa Clara facility or close both facilities and consolidate such
operations into a new facility. Upon completion of the Company's consolidation
plan, Richey Electronics will have 21 facilities in 20 markets in 17 states,
located predominantly in the major western and northeastern markets.

The Company believes its facilities are suitable for their uses and are, in
general, adequate for the Company's current needs. The Company believes that
lease extensions or replacement space may be obtained for all of its leased
facilities upon the expiration of the current lease terms, in most cases at
rates which are not materially higher than those currently in effect.

ITEM 3. LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

A-9
<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On April 14, 1994, the Company's Common Stock began trading on the Nasdaq
Stock Market under the symbol "RCHY." From January 25, 1994 until April 13,
1994, the Company's Common Stock traded on the Nasdaq Small-Cap Market. Prior to
January 25, 1994, the Company's Common Stock was traded in the over-the-counter
market on what is commonly referred to as the "bulletin board."

The following table sets forth, for the periods indicated, certain high and
low bid information of the Common Stock as reported by IDD/Tradeline until
January 24, 1994 and certain high and low sale prices of the Common Stock as
reported by Nasdaq beginning January 25, 1994. High and low bid quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not necessarily reflect actual transactions.

<TABLE>
<CAPTION>
STOCK PRICE
----------------
HIGH LOW
------- ------
<S> <C> <C>
CALENDAR YEAR 1994:
First quarter................................................................................... $10 $5
Second quarter.................................................................................. 9 1/2 5 1/2
Third quarter................................................................................... 7 1/2 6
Fourth quarter.................................................................................. 7 1/2 6

CALENDAR YEAR 1995:
First quarter................................................................................... $ 7 3/4 $6
Second quarter.................................................................................. 7 1/2 5 1/2
Third quarter................................................................................... 9 6
Fourth quarter.................................................................................. 13 3/4 7 1/2

CALENDAR YEAR 1996:
First quarter (through March 22, 1996).......................................................... $13 1/4 $9 1/2
</TABLE>

On March 22, 1996, there were approximately 1468 holders of record of the
Company's Common Stock.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock.
The Company intends to retain earnings for working capital to support growth, to
reduce outstanding indebtedness and for general corporate purposes. In addition,
the Company's Senior Credit Facility (as hereinafter defined) contains
provisions that prohibit the Company from paying cash dividends on its Common
Stock. Accordingly, the Company does not expect to pay any dividends on its
Common Stock in the foreseeable future. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 4 of Notes
to Financial Statements.

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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

The following table summarizes certain selected financial data of the
Company and should be read in conjunction with and is qualified by "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Financial Statements, Notes to Financial Statements and other
financial information included or incorporated by reference herein. All of the
financial information is derived from financial statements that have been
audited by McGladrey & Pullen, LLP, independent auditors.
<TABLE>
<CAPTION>
YEARS ENDED (1)
---------------------------------------------------------------------
JANUARY 3, JANUARY 1, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1993 1993 1994 1995
----------- ----------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<S> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Net sales................................... $ 32,994 $ 31,387 $ 64,995 $ 90,266 $ 117,057
Cost of goods sold.......................... 24,123 23,105 48,741 68,176 89,080
----------- ----------- ------------- ------------- -------------
Gross profit................................ 8,871 8,282 16,254 22,090 27,977
Selling, warehouse general and
administrative and amortization............ 7,233 7,144 13,889 17,318 20,874
Acquisition-related restructuring costs
(2)........................................ -- -- -- -- 1,450
----------- ----------- ------------- ------------- -------------
Operating income............................ 1,638 1,138 2,365 4,772 5,653
Interest expense, net....................... 476 388 1,198 1,606 867
Income tax expense (3)...................... 473 308 460 1,273 1,918
----------- ----------- ------------- ------------- -------------
Net income.................................. $ 689 $ 442 $ 707 $ 1,893 $ 2,868
----------- ----------- ------------- ------------- -------------
----------- ----------- ------------- ------------- -------------
Earnings per common share (4)............... $ 0.25 $ 0.16 $ 0.14 $ 0.32 $ 0.36
----------- ----------- ------------- ------------- -------------
----------- ----------- ------------- ------------- -------------
Weighted average number of common shares
outstanding (4)............................ 2,774 2,774 5,085 5,889 8,036
OTHER FINANCIAL DATA:
EBITDA (5).................................. $ 1,788 $ 1,283 $ 3,362 $ 5,537 $ 6,565(6)
EBITDA margin (5)........................... 5.4% 4.1% 5.2% 6.1% 5.6%(6)
Depreciation and amortization............... 132 145 997 765 912
Inventory turnover ratio (7)................ 4.3x 3.7x 4.4x 4.9x 5.0x
Days sales outstanding in accounts
receivable (7)............................. 34 41 43 42 42

JANUARY 3, JANUARY 1, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1992 1993 1993 1994 1995 (8)
----------- ----------- ------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 2,500 $ 3,014 $ 6,888 $ 5,317 $ 34,076
Total assets................................ 9,370 9,669 30,918 35,013 118,941
Short-term debt............................. 3,510 3,181 6,995 10,443 835
Long-term debt.............................. -- -- 8,151 3,594 61,652
Stockholders' equity........................ 2,891 3,333 6,898 8,785 27,392
</TABLE>

- ------------------------------
(1) Unless otherwise noted, excludes results of operations of Brajdas prior to
the Richey-Brajdas Merger in April 1993, of In-Stock prior to the In-Stock
Acquisition in April 1994, of IEI prior to the IEI Acquisition in August
1995 and of Deanco prior to the Deanco Acquisition in December 1995. See
Note 2 of Notes to Financial Statements for a discussion of the
Richey-Brajdas Merger, the In-Stock Acquisition, the IEI Acquisition, the
Deanco Acquisition and pro forma information.

(2) Consists of restructuring costs associated with the consolidation of the
operations of Deanco into the Company, including the Company's closure of
certain of its facilities and other costs associated with the
consolidation.

(3) The Company had approximately $19.6 million in federal and $1.3 million in
state tax net operating loss carry forwards ("NOLs"), primarily California,
as of December 31, 1995, which have resulted in reduced cash tax payments.
For the period ended December 31, 1995, cash tax payments were reduced
approximately $1.7 million for the utilization of federal and state NOLs.

(4) The Richey-Brajdas Merger was accounted for as a reverse purchase
acquisition with RicheyImpact being the accounting acquirer. Per share data
for all periods from January 1, 1991 through April 6, 1993, the date of the
Richey-Brajdas Merger, are based upon the weighted average number of shares
of Brajdas indirectly acquired by the former stockholders of RicheyImpact.

(5) EBITDA consists of earnings before interest, income taxes, depreciation and
amortization. The Company has included EBITDA data (which are not a measure
of financial performance under generally accepted accounting principles)
because it understands such data are used by certain investors. EBITDA
margin represents EBITDA as a percentage of net sales.

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<PAGE>
Because of the significant amortization of intangible assets and non-cash
income tax expense incurred as a result of the Company's NOLs, the Company
believes that EBITDA may be a meaningful measure of its financial
performance. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Deferred Tax Assets."

(6) Excluding the restructuring reserve of approximately $1.4 million, which is
an operating expense, EBITDA would have been approximately $8.0 million and
EBITDA margin would have been 6.8% for the year ended December 31, 1995.

(7) Inventory turnover ratio and days sales outstanding in accounts receivable
calculations are based upon Richey Electronics' annualized sales and cost
of sales for the latest quarter, excluding the balance sheet effect of the
Deanco Acquisition.

(8) Includes Deanco as the Deanco Acquisition was completed on December 20,
1995.

A-12
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS

The following unaudited Pro Forma Statement of Operations is derived from
the audited statement of income of Richey Electronics for the year ended
December 31, 1995, which are included herewith, and the audited consolidated
statement of income of EDAC for the period ended December 19, 1995, which were
included in Richey Electronics Form 8-K/A dated as of January 31, 1996, and
assumes that the Deanco Acquisition and the sale of the Notes were consummated
as of January 1, 1995. These pro forma results do not give effect to the IEI
Acquisition because it would not have materially changed historical results. The
unaudited Pro Forma Statement of Operations should be read in conjunction with
the Financial Statements of the Company and the Financial Statements of EDAC.
The Company will provide, upon written or oral request, a copy of the Form 8-K/A
containing the Financial Statements of EDAC. Requests should be directed to
Richard N. Berger, Vice President and Secretary, Richey Electronics, Inc., 7441
Lincoln Way, Garden Grove, California, 92641, telephone number (714) 898-8288.

The Pro Forma Statement of Operations does not purport to represent what the
Company's results or financial condition would actually have been if the Deanco
Acquisition and the issuance and sale of the Notes had occurred on the date
indicated or to project the Company's results or financial condition for or at
any future period or date. The pro forma adjustments, as described in the
accompanying data, are based on available information and certain assumptions
that management believes are reasonable.

The unaudited pro forma information with respect to the Deanco Acquisition
is based on the historical financial statements of the business acquired. The
Deanco Acquisition has been accounted for under the purchase method of
accounting.

A-13
<PAGE>
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)

<TABLE>
<CAPTION>
RICHEY EDAC AND ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA FOR
ELECTRONICS DEANCO FOR FOR FOR NOTE ACQUISITION AND
HISTORICAL HISTORICAL ACQUISITION ACQUISITION OFFERING NOTE OFFERING
----------- -------- ----------- ----------- ----------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Net sales............................. $117,057 $99,926 -- $216,983 -- $216,983
Cost of goods sold.................... 89,080 74,804 -- 163,884 -- 163,884
----------- -------- ----------- ---------------
Gross profit............................ 27,977 25,122 -- 53,099 -- 53,099
Selling, warehouse, general and
administrative and amortization...... 20,874 21,558 762(1) 38,694 -- 38,694
(4,500)(2)
Acquisition-related restructuring
costs................................ 1,450 -- (1,450)(3) -- -- --
----------- -------- ----------- ---------------
Operating income...................... 5,653 3,564 5,188 14,405 -- 14,405
Interest expense, net................. 867 2,829 2,400(4) 6,096 (416)(7) 5,680
Other expense......................... -- 598 (476)(5) 125 175(8) 300
3(1)
Income tax expense.................... 1,918 264 1,625(6) 3,807 96(6) 3,903
----------- -------- ----------- ---------------
Net income (loss)..................... $ 2,868 $ (127) 1,636 $ 4,377 145 $ 4,522
----------- -------- ----------- ---------------
----------- -------- ----------- ---------------
Earnings per common share:
primary............................. $ 0.36 -- -- $ 0.54 -- $ 0.56
----------- ----------- ---------------
----------- ----------- ---------------
fully diluted....................... $ 0.56
---------------
---------------
Weighted average number of common
shares outstanding:
primary............................. 8,036 -- -- 8,036 -- 8,036
fully diluted....................... 11,576

OTHER FINANCIAL DATA:
EBITDA................................ $ 6,565 $ 4,305 5,950 $ 16,820 -- $ 16,820
EBITDA margin......................... 5.6% 4.3% -- 7.8% -- 7.8%
Depreciation and amortization......... 912 1,339 289 2,540 175 2,715
</TABLE>

The accompanying notes are an integral part of the pro forma statement of
operations (unaudited).

A-14
<PAGE>
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<S> <C> <C>
(1) Amortization of goodwill and deferred debt costs have been adjusted to reflect the following:
Elimination of goodwill amortization in Deanco's income statement.................................. $ (359)
Goodwill amortization for a full year in the Company's income statement as the result of the
Deanco Acquisition............................................................................... 1,121
---------
$ 762
---------
---------
Elimination of amortization of deferred debt costs for Deanco.................................... $ (122)
Amortization of deferred debt costs associated with Senior Credit Facility....................... 125
---------
$ 3
---------
---------
(2)* The Company anticipates the following annual cost savings directly attributable to the Deanco
Acquisition:
Closure of seven redundant operating facilities and related lease costs.......................... $ 625
Salary and related benefit costs associated with the termination of approximately 60 people,
principally corporate and management personnel, as the result of the closure of redundant
facilities, consolidation of warehouse facilities and elimination of Deanco corporate staff...... 2,555
Fringe benefit savings, as Richey Electronics benefit plans were adopted for the combined
operations....................................................................................... 350
Expected salary cost and benefit savings associated with consolidation of redundant branches..... 550
Expected savings resulting from the elimination of duplicate corporate expenses.................. 200
Elimination of management fee contract for services to Deanco that terminated at the date of the
Deanco Acquisition............................................................................... 220
---------
$ 4,500
---------
---------
In addition to the cost savings initiatives described above directly attributable to the Deanco Acquisition, all of which
are reflected in pro forma adjustments, the Company estimates it can eliminate an additional $1,000 of annual duplicate
costs through further reductions in branch operating expenses, freight and advertising costs. The $1,000 of additional
cost savings are not reflected in the Pro Forma Statement of Operations.
(3) Material non-recurring charges for restructuring costs of $1,450 charged to the Company's fourth
quarter 1995 income statement have been eliminated.
(4) Interest expense has been increased to reflect the following assumptions:
Additional debt to fund payment of stock payment notes of $34,106 was outstanding for the full
year at the incremental borrowing rate of 8.2% on the Revolving Line of Credit................... $ 2,800
Notes payable to former EDAC management and stockholders had been financed at the Company's
incremental borrowing rate of 8.2% for the year as compared to the contractual rate of 9.0%...... (50)
Average bank debt outstanding for Deanco has been assumed to incur interest at the Company's
incremental borrowing rate of 8.2% for the period from January 1, 1995 to December 19, 1995,
instead of the approximate average rate of 10.75%................................................ (350)
---------
$ 2,400
---------
---------
The annual effect on income of the interest rate varying by 1/8% from the amount used in this
calculation would be approximately $75 before taxes.
(5) Material non-recurring charge for write-off of Deanco deferred debt costs of $476 as a result of
the refinancing of the combined operations have been eliminated.
(6) The pro forma adjustments to income taxes are based on a 40% tax rate applied to taxable income.
Taxable income is income before provision for income taxes plus non-deductible goodwill.
(7) Interest expense has been adjusted to reflect the Note Offering and the application of net proceeds
therefrom, prior to the exercise of the overallotment option.
(8) Deferred debt cost amortization has been increased to reflect amortization of costs over the ten
year life of the Notes offered hereby.
</TABLE>

- ------------------------------

* The pro forma information presented in note 2, when prepared, assumed the
closure of Deanco's Santa Clara facility. The Company is evaluating its
options with respect to the Company's San Jose and Deanco's Santa Clara,
California facilities. The Company may close its San Jose facility and
retain Deanco's Santa Clara facility or close both facilities and
consolidate such operations into a new facility. See "Properties." In the
event that the Company determines not to close Deanco's Santa Clara
facility, the adjustment to annual cost savings reflected in the pro forma
financials would not be material.

A-15
<PAGE>
ITEM 7. 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 a broad line of connectors, switches, wire, cable and heat
shrinkable tubing and other interconnect, electromechanical and passive
electronic 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 OEMs. The Company
intends to capitalize on a trend toward outsourcing by increasing sales of
value-added assembly services. These sales increased from $10.9 million, or 17%
of net sales, in 1993 to $21.2 million, or 23.5% of net sales, in 1994 and to
$33.0 million, or 29% of net sales, in 1995. Pro forma for the acquisition of
Deanco, 1995 sales of value-added assembly services were $51.5 million.

The Company has been built through a series of transactions beginning with
the acquisition of the operations of Old Richey in December 1990 for $5.9
million, including expenses, consisting of $3.7 million in cash funded by its
revolving line of credit, senior preferred stock valued at $1.0 million and $1.2
million in cash contributed by the former RicheyImpact stockholders. The Company
completed the Richey-Brajdas Merger in April 1993 through the issuance of
3,114,286 shares of Common Stock to the former Brajdas shareholders valued at
$4.1 million. The Company completed the In-Stock Acquisition in April 1994 for
$1.9 million in cash funded by its revolving line of credit. The Company
completed the IEI Acquisition in August 1995 for $1.2 million in cash funded by
its revolving line of credit. The Company has devoted significant efforts to
improving the performance of those operations. The Company completed the Deanco
Acquisition in December 1995 for consideration comprised of an aggregate stock
purchase price of approximately $34.1 million in cash, the redemption of EDAC
stockholder notes of approximately $6.6 million and the assumption of Deanco
debt of approximately $19.3 million. The Deanco Acquisition was accounted for as
a purchase. The Company funded the purchase consideration by drawing upon its
$75 million Senior Credit Facility. The Company completed the acquisition of
certain assets and the business of MS Electronics, in March, 1996 for the
purchase price of approximately $2.5 million in cash and the assumption of MS
Electronics' debt of approximately $500,000. The Company's financial statements
exclude the financial results of Brajdas prior to the Richey-Brajdas Merger, of
In-Stock prior to the In-Stock Acquisition, of IEI prior to the IEI Acquisition
and of Deanco prior to the Deanco Acquisition. The Company will seek to complete
additional strategic acquisitions in connection with the ongoing consolidation
occurring in the electronics distribution industry.

A-16
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth certain items in the statements of operations
as a percentage of net sales for the periods shown.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Net sales...................................................................... 100.0% 100.0% 100.0%
Cost of goods sold............................................................. 75.0 75.5 76.1
----- ----- -----
Gross profit................................................................... 25.0 24.5 23.9
Selling, warehouse, general and administrative and amortization................ 21.4 19.2 17.9
Acquisition-related restructuring costs........................................ -- -- 1.2
----- ----- -----
Operating income............................................................... 3.6 5.3 4.9
Interest expense, net.......................................................... 1.8 1.8 0.7
----- ----- -----
Income before income taxes....................................................... 1.8 3.5 4.1
Income tax expense............................................................. 0.7 1.4 1.6
----- ----- -----
Net income..................................................................... 1.1% 2.1% 2.5%
----- ----- -----
----- ----- -----
</TABLE>

YEAR ENDED DECEMBER 31, 1995 AS COMPARED WITH YEAR ENDED DECEMBER 31, 1994

Net sales were $117.1 million in 1995, an increase of $26.8 million, or
29.7%, from $90.3 million in 1994. Excluding sales of approximately $3.5 million
from acquired Deanco operations after December 19, 1995, net sales increased
25.8% in 1995. Excluding Deanco, net sales of electronic components increased
16.6% to $80.6 million in 1995 from $69.1 million in 1994, while net sales of
value-added assembly services increased 55.7% to $33.0 million in 1995 from
$21.2 million in 1994. Component sales increased in 1995 due to (i) the general
strength of the market for electronic products, such as computers,
telecommunications and aerospace equipment, and (ii) the addition of new
franchised lines to the Company's product offering together with geographic
expansion of existing franchises. Rapid growth in net sales of value-added
assembly services resulted from the continuing trend of OEMs to outsource the
assembly of their products as well as management's decision to accept larger
contract assembly orders from larger customers than it had in the past. On a pro
forma basis, assuming the In-Stock Acquisition and Deanco Acquisition had
occurred as of January 1, 1994, net sales would have been $193.5 million and
$217.0 million for 1994 and 1995, respectively. See Note 2 of Notes to Financial
Statements.

Gross profit was $28.0 million in 1995, an increase of $5.9 million, or
26.7%, from $22.1 million in 1994. Excluding gross profit of approximately
$800,000 from acquired Deanco operations after December 19, 1995, gross profit
increased 23.5% in 1995. Overall, the Company's gross margin declined to 23.9%
in 1995 from 24.5% in 1994. The Company's component distribution gross margins
remained approximately the same in 1995 as compared to 1994. Value-added
assembly gross margins declined in 1995 compared to 1994 due to (i) an increase
in the number of larger orders from larger customers which typically provide
lower gross margins than the Company previously experienced, (ii) the
acquisition of IEI which had historically lower gross margins than the Company
and (iii) inefficiencies related to the closing of IEI's facility and the move
and integration of IEI into one of the Company's existing facilities. Management
believes that these inefficiencies have now been corrected and it has begun to
implement procedures designed to limit the acceptance of large, low margin
orders and increase the gross profit margins on the larger orders it will accept
in the future.

Operating expenses were $22.3 million in 1995, an increase of $5.0 million,
or 28.9%, from $17.3 million in 1994. These expenses as a percentage of sales
declined to 19.1% in 1995 from 19.2% in 1994. In the fourth quarter of 1995, the
Company recognized a charge to operating expenses related to the Deanco
Acquisition of $1.5 million, or 1.2% of net sales, to cover the costs of closing
certain of the Company's facilities and consolidating the operations of Deanco
into the Company. This restructuring charge accounted for approximately 30% of
the increase in operating expenses in 1995. After giving

A-17
<PAGE>
effect to the restructuring charge, operating profit rose $900,000, or 18.8%, to
$5.7 million in 1995 from $4.8 million in 1994. Excluding the restructuring
charge, operating expenses rose $3.6 million, or 20.5%, to $20.9 million in
1995. Operating expenses, excluding the restructuring charge, declined to 17.9%
of sales in 1995 compared to 19.2% in 1994 as a direct result of the Company's
strategy to increase its operating leverage by spreading its fixed costs over a
larger sales base, while operating profit rose 48.8% to $7.1 million, or 6.1% of
sales, as the decline in gross margin was more than offset by increased
operating leverage. The Company expects to pay out the restructuring costs
accrued in 1995 over the next year, except for amounts related to longer term
leases. See Note 2 of Notes to Financial Statements.

Net interest expense declined 44% to $900,000 in 1995 from $1.6 million in
1994. The decrease in interest expense was a result of the Company using the
$15.7 million proceeds from the sale of 3,165,000 shares of Common Stock, in
April and May of 1995, to retire its subordinated debt and pay down
substantially all of its revolving line of credit. See "Liquidity and Capital
Resources."

The Company's provision for federal and state income tax expense increased
to $1.9 million in 1995 from $1.3 million in 1994, proportional to the increase
in pre-tax earnings as the effective tax rate remained the same. The Company had
approximately $19.6 million in federal and $1.3 million in state tax NOLs,
primarily California, as of December 31, 1995, which substantially reduced cash
tax payments. For the period ended December 31, 1995, cash tax payments were
reduced approximately $1.7 million for the utilization of federal and state
NOLs. See "Deferred Tax Assets" and Note 8 of Notes to Financial Statements.

YEAR ENDED DECEMBER 31, 1994 AS COMPARED WITH YEAR ENDED DECEMBER 31, 1993

Net sales were $90.3 million in 1994, an increase of $25.3 million, or
38.9%, from $65.0 million in 1993. Net sales of electronic components increased
to $69.1 million in 1994 from $54.1 million in 1993, an increase of 27.7%. Net
sales of value-added assembly services increased to $21.2 million from $10.9
million in 1993, an increase of 94.5%. Although the Company fully integrated
In-Stock with its existing operations in 1994 and has not maintained separate
sales records since the In-Stock Acquisition, the Company estimates that at
least $7.0 million of the increase in net sales are attributable to the In-Stock
Acquisition. This estimate is based solely on In-Stock's historical sales rates
and backlog at the time of the In-Stock Acquisition and, among other things,
does not take into account post-acquisition results of In-Stock's operations or
variations due to overlapping product lines or customers. The balance of the
increase in net sales is attributable to internal growth and the benefit of
twelve months of Brajdas' integrated operations in 1994 as compared to only nine
months in 1993. In 1994, the Company experienced net sales growth in most of the
ten metropolitan distribution markets it served. On a pro forma basis, assuming
the Richey-Brajdas Merger and the In-Stock Acquisition occurred as of January 1,
1993, sales would have been $84.6 million and $93.0 million for 1993 and 1994,
respectively.

Gross profit was $22.1 million in 1994, an increase of $5.8 million, or
35.6%, from $16.3 million in 1993. Net sales in 1993 include $540,000 of special
inventory acquired at no cost subsequent to the Company's acquisition of Old
Richey. Net sales of special inventory in 1994 were not significant. Component
distribution gross margins remained essentially flat in 1994 compared to 1993.
Value-added assembly margins declined in 1994 compared to 1993 because of lower
gross margins from value-added assembly sales at In-Stock, which the Company
acquired in April 1994. The Company took a number of actions to improve
operating efficiencies at its In-Stock operations and believes that by the end
of 1994 gross margins from value-added assembly sales at those operations were
roughly comparable to gross margins from its other value-added assembly sales.
Excluding sales of special inventory, overall gross margins increased slightly
from 24.4% in 1993 to 24.5% in 1994, due to a changing sales mix increasingly
oriented toward value-added assembly services.

Operating expenses were $17.3 million in 1994, an increase of $3.4 million,
or 24.5%, from $13.9 million in 1993. These expenses as a percentage of sales
declined to 19.2% from 21.4% in 1993. Increased sales from internal growth as
well as from the Richey-Brajdas Merger and the In-Stock

A-18
<PAGE>
Acquisition, coupled with cost-saving initiatives, have allowed the Company to
substantially improve its operating leverage. The reduction in operating
expenses as a percentage of net sales resulted in part from the elimination of
duplicate personnel, sales, warehouse and corporate facilities, computer systems
and communication networks.

Interest expense increased to $1.6 million in 1994 from $1.2 million in
1993. Interest expense rose as a result of increases in prime lending rates and
average borrowings brought about by the financing of the In-Stock Acquisition.

The Company's provision for federal and state income tax expense increased
to $1.3 million from $460,000 in 1993. The effective tax rate for 1994 increased
slightly to 40% from 39% for 1993. For the period ended December 31, 1994 cash
tax payments were reduced approximately $1.2 million for the utilization of
federal and state NOLs.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity and capital resources were significantly affected in
1995 and the first quarter of 1996 by (i) the use of the $15.7 million net
proceeds from the sale of 3,165,000 shares of Common Stock, in April and May of
1995, to retire its subordinated debt and pay down substantially all of its then
outstanding revolving line of credit, (ii) the December 20, 1995 Deanco
Acquisition for consideration of $60.0 million, including the assumption of
Deanco's outstanding indebtedness and (iii) the use of the $53.8 million net
proceeds from the Note Offering to pay down indebtedness under its $75 million
revolving credit and term loan facility (the "Senior Credit Facility") with
First Interstate Bank of California ("FICAL"), as agent, and certain other
lenders. The Company funded the Deanco Acquisition by drawing upon its Senior
Credit Facility, which was obtained for that purpose.

On December 20, 1995, the Company replaced its existing credit facility with
Sanwa Business Credit Corporation and Deanco's existing credit facility with
Mellon Bank, N.A. with the Senior Credit Facility consisting of a $45 million
revolving line of credit (the "Revolving Line of Credit") and a $30 million term
loan (the "Term Loan"), with FICAL, as agent, and certain other lenders. The
Revolving Line of Credit terminates December 31, 1999. In the first quarter of
1996, the Company used the net proceeds of the Note Offering to repay the Term
Loan and to pay down the Revolving Line of Credit. The Senior Credit Facility is
secured by substantially all of the Company's and Deanco's assets and by a
pledge of the Deanco stock held by the Company. Loans under the Senior Credit
Facility bear interest, at the Company's option, at one of the following two
rates: (i) the sum of (a) the Applicable Margin (as defined in the FICAL loan
agreement, currently 1%) plus (b) the higher of FICAL's prime rate or the
federal funds rate plus 1/2 of 1% or (ii) in the case of Eurodollar Rate loans,
the sum of (a) the Eurodollar Rate (as defined in the FICAL loan agreement) plus
(b) the Applicable Margin (as defined in the FICAL loan agreement, currently
2.25%). See Note 4 of Notes to Financial Statements.

The loan agreement evidencing the Senior Credit Facility limits the
Company's ability to create or incur liens on assets, to make distributions or
investments, to enter into any mergers or make additional acquisitions or
dispositions of assets and to enter into transactions with affiliates. In
addition, the Company must comply with various financial and other covenants
established by its lender. The loan agreement also provides the banks with the
right to terminate the commitments on 30 days' notice if there is a change in
control of the Company (generally, the acquisition of more than 50% of the
Company's capital stock).

As of December 31, 1995, the Company had outstanding borrowings under the
Senior Credit Facility of $18.4 million, with additional borrowing capacity of
$48.2 million available, including the $30 million unadvanced portion of the
Term Loan. On January 2, 1996, the Company paid approximately $40.8 million in
notes and accrued interest payable to the EDAC stockholders by borrowing under
the Senior Credit Facility. As of January 26, 1996, the Company had $1 million
in cash and $6 million of additional borrowing capacity available.

A-19
<PAGE>
On February 26, 1996, net proceeds from the Note Offering were used to repay
the Term Loan and pay down the Revolving Line of Credit. On March 22, 1996, net
proceeds from the over-allotments under the Note Offering were used to further
pay down the Revolving Line of Credit. As of March 22, 1996, after giving effect
to the Note Offering and the application of the $53.8 million net proceeds
therefrom, approximately $30 million was available for borrowing under the
Revolving Line of Credit. The $30.0 million Term Loan, having been repaid, is no
longer available to the Company. The Company believes that the combination of
cash, available borrowing capacity under the Senior Credit Facility and cash
generated by operations will be adequate to meet its anticipated funding
commitments for the remainder of 1996, including the pay down of accrued
restructuring costs associated with the Deanco Acquisition.

Working capital increased to $34.1 million as of December 31, 1995 from $5.3
million as of December 31, 1994. During 1995, the Company's working capital was
affected by the sale of Common Stock and the Deanco Acquisition, as well as
operations. Working capital began the year at $5.3 million, as the outstanding
balance on the Company's then existing revolving line of credit was classified
as a current liability. Proceeds from the sale of Common Stock in April and May
of 1995 were used to pay down substantially all of the balance on that revolving
line of credit, increasing working capital to approximately $20 million by
mid-May, where it remained until the Deanco Acquisition. With the classification
of the balance outstanding at December 31, 1995 under the Revolving Line of
Credit used to finance the Deanco Acquisition as long term debt, working capital
increased to $34.1 million. The Company intends to maintain borrowings of at
least the amount outstanding at December 31, 1995 plus the portion of the
Revolving Line of Credit drawn on January 2, 1996 for an uninterrupted period
extending beyond one year; therefore, the December 31, 1995 balance of $18.4
million under the revolving line of credit is classified as long-term debt. See
Note 4 of Notes to Financial Statements.

Excluding the effects of the Deanco Acquisition, the Company's net cash from
operating activities was $200,000 in 1995, compared to $4.0 million in 1994 and
$500,000 in 1993. In 1995, net income provided $2.9 million, while non-cash
transactions provided $2.0 million ($900,000 from depreciation and amortization
and $1.1 million from deferred taxes) and $1.4 million from the restructuring
reserve. The $4.9 million in cash generated and the $1.4 million restructuring
reserve financed a $2.5 million increase in trade receivables, a $2.7 million
increase in inventories, and a $300,000 increase in other current assets, all
associated with the Company's rapid sales growth in 1995. Furthermore, accounts
payable and accrued expenses declined $600,000, bringing net cash provided by
1995 operations to $200,000. In 1994, net income provided $1.9 million and
non-cash transactions provided $1.9 million, which was used to fund $1.1 million
in increased receivables and $1.5 million in increased inventories. An increase
of $2.8 million in accounts payable and accrued liabilities brought net cash
provided by 1994 operations to $4.0 million. Net cash generated from operations
in 1994 increased compared to 1993, primarily due to increased net income,
increased use of the Company's NOLs and the increase in accounts payable and
accrued liabilities, offset somewhat by the increase in trade receivables.

Net cash used in investing activities increased to $3.3 million in 1995 from
$2.9 million in 1994 and $3.2 million in 1993. In 1995, the Company invested
$1.3 million in improvements and equipment, primarily leasehold improvements at
its principal assembly facility in Los Angeles and its corporate headquarters in
Garden Grove. An additional $1.2 million was used for the IEI Acquisition.
During 1994, the Company spent $400,000 on improvements and equipment to enhance
its value-added assembly capabilities, $1.8 million for the In-Stock
Acquisition, and $500,000 in Richey-Brajdas Merger costs. During 1993, the
Company spent $3.2 million on costs associated with the Richey-Brajdas Merger.
In 1995, the Company financed its capital expenditure and acquisition activities
with net cash from operating activities and borrowings under its revolving line
of credit arrangements. In 1994 and 1993, the Company financed its investing
activities with net cash from operating activities and borrowings under its
revolving line of credit. The Company anticipates incurring capital expenditures
of approximately $1.0 million in 1996, all of which will be financed with net
cash from operating

A-20
<PAGE>
activities and borrowings under its Revolving Line of Credit. The Company's
actual capital expenditures may vary significantly from its current
expectations, based on a number of factors, including but not limited to
additional acquisitions, if any.

For the quarter ended December 31, 1995, inventory turnover was 5.0x
compared to 4.9x in 1994 and 4.4x in 1993. In 1995, management maintained
enhanced inventory control programs initiated in earlier years. Prior to the
Deanco Acquisition, approximately 80% of the Company's inventory was located at
its centralized distribution facility in Los Angeles and 15% was located in
Boston. Pursuant to the Company's plan to integrate Deanco, the Company expects
to locate approximately 60% of its inventory in Los Angeles and approximately
30% in Boston.

The number of days sales outstanding decreased by 0.5 days to 41.8 days in
the fourth quarter of 1995 from 42.3 days in the final quarter of 1994.
Management believes that the Company's performance in managing its receivables
is among the best in its industry. The Company did not experience any
significant trade collection difficulties in 1995.

DEFERRED TAX ASSETS

As of December 31, 1995, the Company had approximately $19.6 million in
federal and $1.3 million in state tax NOLs, primarily California, most of which
expire between 1998 and 2009. The NOLs resulted from Brajdas' losses prior to
the Richey-Brajdas Merger.

Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382")
and related regulations impose certain limitations on a corporation's ability to
use NOLs. In the event certain changes in a company's stock ownership over a
three-year period exceed a specified threshold (a "Change of Ownership"), the
use of NOLs is restricted. California law conforms to the provisions of Section
382. The public offering of 3,165,000 shares of the Company's Common Stock in
April and May of 1995 resulted in a Change in Ownership. The Company estimates
that its use of the NOLs is limited to approximately $3.0 million per year until
the NOLs are fully utilized or expire, whichever occurs first.

As discussed in Note 8 of Notes to Financial Statements, at December 31,
1995, the Company recorded a deferred tax asset of $8.9 million, net of a $2.1
million valuation allowance. The estimated future tax benefits of the NOLs
comprise the principal portion of the deferred tax asset. SFAS No. 109,
"Accounting for Income Taxes," requires that a valuation allowance be recorded
when it is "more likely than not" that any portion of the deferred tax asset
will not be realized. Due to the inherent uncertainty in forecasts of future
events and operating results, the Company, consistent with prior practice, has
continued to maintain a $2.1 million valuation allowance which reduces the
December 31, 1995 net deferred tax asset to the tax benefit expected to be
realized during approximately the next four years after giving effect to the
annual limitation resulting from the Change in Ownership.

The Company has been consistently profitable since December 28, 1990 and
generated taxable income before NOLs of $6.4 million in 1995. Based on its
historic and current level of profitability, the Company believes that it is
"more likely than not" that the Company will be able to generate the $26.0
million of future taxable income needed to realize the recorded amount of the
net deferred tax asset prior to expiration of the NOLs. The amount of deferred
tax asset, however, could be reduced in the near term if estimates of future
taxable income are reduced.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements required by this Item 8 are listed in Item 14(a)
and are submitted at the end of this Form 10-K.

SELECTED QUARTERLY FINANCIAL DATA

The following table sets forth certain statements of operations data for the
periods indicated. The quarterly financial information provided excludes the
financial results of Brajdas, In-Stock, IEI and Deanco prior to the date of the
respective acquisition. This information has been derived from

A-21
<PAGE>
unaudited financial statements which, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such information. These operating results are not
necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
1995
Net sales..................................... $ 26,596,000 $ 28,305,000 $ 28,803,000 $ 33,353,000
Gross profit.................................. 6,513,000 6,660,000 6,931,000 7,873,000
Net income.................................... 680,000 909,000 1,070,000 209,000
Earnings per common share..................... .12 .11 .12 .02
Shipping days................................. 64 64 62 62
1994
Net sales..................................... $ 20,247,000 $ 23,105,000 $ 22,838,000 $ 24,076,000
Gross profit.................................. 4,855,000 5,562,000 5,793,000 5,880,000
Net income.................................... 355,000 532,000 471,000 535,000
Earnings per common share..................... .06 .09 .08 .09
Shipping days................................. 65 64 63 62
1993
Net sales..................................... $ 8,088,000 $ 19,721,000 $ 18,927,000 $ 18,259,000
Gross profit.................................. 2,154,000 4,782,000 4,686,000 4,632,000
Net income.................................... 85,000 93,000 288,000 241,000
Earnings per common share..................... .03 .02 .05 .04
Shipping days................................. 64 64 63 61
</TABLE>

- ------------------------
The unaudited quarterly results of operations (excluding Deanco) indicate
that net sales rose from $388,000 per shipping day in the fourth quarter of 1994
to $416,000, $442,000, $465,000 and $480,000 per shipping day in the four
consecutive quarters of 1995, respectively. The calendar for 1996 contains 64,
64, 62 and 64 shipping days for the first through fourth quarters, respectively.
Quarterly operating results may fluctuate significantly from quarter to quarter
in the future.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL ACCOUNTING
AND FINANCIAL DISCLOSURE

Not applicable.

A-22
<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item regarding directors and executive
officers of the Company is set forth in the Company's definitive Proxy Statement
(the "1996 Proxy Statement") to be filed with the Commission relating to its
Annual Meeting of Stockholders to be held on May 7, 1996, under the headings
"Nominees for Election as Directors," "Other Executive Officers of the Company"
and "Compliance with Section 16(a) of the Exchange Act," and is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item regarding compensation of the
Company's directors and executive officers, set forth in the 1996 Proxy
Statement under the heading "Executive Compensation" is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item regarding beneficial ownership of the
Common Stock by certain beneficial owners and by management of the Company set
forth in the 1996 Proxy Statement under the heading "Security Ownership of
Certain Beneficial Owners and Management" is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item regarding certain relationships and
related transactions with management of the Company set forth in the 1996 Proxy
Statement under the heading "Compensation Committee Interlocks and Insider
Participation" is incorporated herein by reference.

A-23
<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) Documents filed as part of this report:

1. Financial Statements

Independent Auditor's Report

Balance Sheets at December 31, 1994 and 1995

Statements of Income for the Years ended December 31, 1993, 1994
and 1995

Statements of Stockholders' Equity for the Years ended December
31, 1993, 1994 and 1995

Statements of Cash Flows for the Years ended December 31, 1993,
1994 and 1995

Notes to Financial Statements

2. Financial Statement Schedules

Not Applicable.

3. Exhibits

<TABLE>
<S> <C>
2.1 Stock Purchase Agreement, dated November 15, 1995, among Richey Electronics,
Inc., Deanco, Inc., Electrical Distribution Acquisition Company and all of
the stockholders of Electrical Distribution Acquisition Company. *4* (2.1)

2.3 Sales Tax Indemnification Agreement dated December 20, 1995 among Richey
Electronics, Inc. and the stockholders of Electrical Distribution
Acquisition Company identified therein. *4* (2.3)

3.1 Restated Certificate of Incorporation of Richey Electronics, Inc. *5* (3.1)

3.2 Bylaws of Richey Electronics, Inc. *5* (3.2)

4.1 Indenture between Richey Electronics, Inc. and First Trust of California,
National Association, dated as of February 15, 1996.

10.1 Indemnification Agreement among Barclay and Company, Inc., Brajdas
Corporation, Donald I. Zimmerman and certain former shareholders of
RicheyImpact Electronics, Inc. identified therein dated as of April 5, 1993.
*2* (E)

10.2 Letter re Amendment to Indemnification Agreement by Barclay and Company,
Inc. and Donald I. Zimmerman, and agreed to by BRJS Investment Holding
Corp., Brajdas Corporation and the other persons and entities identified
therein dated April 23, 1993. *1* (10.3)

10.3 Registration Rights Agreement between Brajdas Corporation and BRJS
Investment Holding Corp. dated April 2, 1993. *2* (10.4)

10.4 Amended and Restated Loan and Security Agreement dated as of April 7, 1993
between Sanwa Business Credit Corporation and Brajdas Corporation. *1*
(10.15)
</TABLE>

A-24
<PAGE>
<TABLE>
<S> <C>
10.5 Employment Agreement between William C. Cacciatore and Brajdas Corporation
dated as of April 1, 1993. *1* (10.18)

10.6 Addendum to Employment Agreement (William C. Cacciatore) dated as of
February 21, 1995. *9* (10.37)

10.7 Employment Agreement between C. Don Alverson and Brajdas Corporation dated
as of April 1, 1993. *1* (10.17)

10.8 Addendum to Employment Agreement (C. Don Alverson) dated as of February 21,
1995. *9* (10.38)

10.9 Employment Agreement between Richard N. Berger and Brajdas Corporation dated
as of April 1, 1993. *1* (10.20)

10.10 Addendum to Employment Agreement (Richard N. Berger) dated as of February
21, 1995. *9* (10.39)

10.11 Employment Agreement between Norbert W. St. John and Brajdas Corporation
dated as of April 1, 1993. *1* (10.19)

10.12 Addendum to Employment Agreement (Norbert W. St. John) dated as of February
21, 1995. *9* (10.40)

10.13 Brajdas Corporation Bonus Plan. *1* (10.21)

10.14 Service and Management Agreement dated December 18, 1990 by and among
RicheyImpact Electronics, Inc., Palisades Associates, Inc. and Saunders
Capital Group, Inc. *3* (10.2)

10.15 Agreement to Assume and Amend the Service and Management Agreement among
Brajdas Corporation, Palisades Associates, Inc. and Saunders Capital Group,
Inc. dated as of April 6, 1993. *3* (10.3)

10.16 1993 Stock Appreciation Rights Plan. *6* (A)

10.17 Modification Agreement among the Company, Palisades Associates, Inc. and
Saunders Capital Group, Inc. dated as of January 2, 1995. *9* (10.26)

10.18 Assumption and Amendment Agreement to Loan and Security Agreement dated as
of December 31, 1993 by and between Sanwa Business Credit Corporation and
Richey Electronics, Inc. *8* (10.31)

10.19 Second Amendment to Amended and Restated Loan and Security Agreement dated
as of March 29, 1994 by and between Sanwa Business Credit Corporation and
Richey Electronics, Inc. *8* (10.32)

10.20 First Amendment to Stockholders Agreement dated December 14, 1994 among the
Company and the individuals and entities listed on Schedule I to the
Stockholders Agreement. *9* (10.31)

10.21 Lease between Principal Mutual Life Insurance Company and Richey
Electronics, Inc. for lease of premises at 7441 Lincoln Way, Garden Grove,
California. *9* (10.32)

10.22 Lease between M&M Enterprises, a California General Partnership and Richey
Electronics, Inc. for lease of premises at 10871 La Tuna Canyon Road, Sun
Valley, California. *9* (10.33)

10.23 Lease between Anchor Group, Inc. and Richey Electronics, Inc. for lease of
premises at 11 Walkup Drive, Westborough, Massachusetts. *9* (10.34)
</TABLE>

A-25
<PAGE>
<TABLE>
<S> <C>
10.24 Lease between Hownat Trust and Deanco, Inc. for lease of premises at 87
Concord Street, North Reading, Massachusetts, Boston Massachusetts.

10.25 Lease between Murray Center Venture and Deanco ACA Manufacturing, Inc. for
lease of premises at Building 1, Murray Business Center, 3601 SW Murray
Blvd., Beaverton, Oregon 97201, Beaverton, Oregon

10.26 1992 Stock Option Plan. *9* (10.35)

10.27 Form of Incentive Stock Option Agreement. *9* (10.36)

10.28 Modification Agreement by and between Richey Electronics, Inc. and Palisades
Associates, Inc. dated as of February 21, 1995. *9* (10.41)

10.29 Loan Agreement dated as of December 20, 1995 among Richey Electronics, Inc.,
the banks named therein and First Interstate Bank of California, as Agent.
*4* (10.1)

10.30 First Amendment to the Loan Agreement dated as of February 26, 1996 among
Richey Electronics, Inc, the banks named therein and First Interstate Bank
of California, as Agent.

10.31 Second Addendum to Employment Agreement (William C. Cacciatore) dated as of
May 17, 1995.

10.32 Second Addendum to Employment Agreement (C. Don Alverson) dated as of May
17, 1995.

10.33 Second Addendum to Employment Agreement (Norbert W. St. John) dated as of
May 17, 1995.

10.34 Agreement to Terminate Stockholders' Agreement *10* (10.1)

21.1 Subsidiaries of Richey Electronics, Inc.

23.1 Consent of Ernst & Young LLP

23.2 Consent of McGladrey & Pullen, LLP
</TABLE>

- ------------------------
*1* Incorporated by reference to the designated exhibit of the Annual Report on
Form 10-K for Brajdas Corporation for the fiscal year ended February 28,
1993, filed May 28, 1993.

*2* Incorporated by reference to the designated exhibit of the Statement on
Schedule 13D filed on behalf of BRJS Investment Holding Corp., C. Don
Alverson, William C. Cacciatore, Greg A. Rosenbaum and Norbert W. St. John
with the Securities and Exchange Commission on April 20, 1993.

*3* Incorporated by reference to the designated exhibit of the Transition
Report on Form 10-Q for Brajdas Corporation for the period from January 1,
1993 through July 2, 1993, filed August 4, 1993.

*4* Incorporated by reference to the designated exhibit of Form 8-K for Richey
Electronics, Inc. dated December 20, 1995, filed January 3, 1996.

*5* Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-1, filed January 7, 1994, Registration No. 33-73916
(the "Shelf Registration Statement").

*6* Incorporated by reference to the designated exhibit of the definitive proxy
statement for the 1993 Annual Meeting of Stockholders.

*7* Incorporated by reference to the designated exhibit of the Form 8-K for
Brajdas Corporation dated July 7, 1993, filed July 13, 1993.

A-26
<PAGE>
*8* Incorporated by reference to the designated exhibit of Post-Effective
Amendment No. 1 to the Shelf Registration Statement on April 18, 1994.

*9* Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-2, filed February 23, 1995, Registration Statement No.
33-89690.

*10* Incorporated by reference to the designated exhibit of the Quarterly report
on Form 10-Q for Richey Electronics, Inc. for the period ending March 31,
1995, filed May 15, 1995.

*11* Incorporated by reference to the designated exhibit of the Quarterly report
on Form 10-Q for Richey Electronics, Inc. for the period ending September
29, 1995, filed November 13, 1995.

Exhibits 10.5-10.17, Exhibits 10.26 - 10.28 and Exhibits 10.31 - 10.33 are
management contracts or compensatory plans or arrangements required to be filed
as exhibits pursuant to Item 14(c) of Form 10-K.

(b) Reports on Form 8-K

Form 8-K dated November 20, 1995 reporting events under item 5 and an
exhibit under item 7.

Form 8-K dated December 20, 1995 reporting the acquisition of assets
under Item 2 and exhibits under item 7.

Form 8-KA dated January 31, 1996 reporting events under item 5 and
Financial Statements under item 7.

Form 8-K dated February 27, 1996 reporting events under item 5 and on
exhibit under item 7.

Deanco, Inc.

Independent Auditor's Report

Balance Sheets at June 30, 1993, June 30, 1994, and December 31, 1994

Statements of Operations for the years ended June 30, 1992, June 30,
1993 and June 30, 1994, for each of the three month periods
ended September 30, 1994 and December 31, 1994

Statements of Stockholders' Equity for the years ended June 30, 1992,
June 30, 1993 and June 30, 1994, and for the three months ended
December 31, 1994

Statements of Cash Flows for the years ended June 30, 1992, June 30,
1993 and June 30, 1994, and for each of the three month periods
ended September 30, 1994 and December 31, 1994

Notes to Financial Statements

Electrical Distribution Acquisition Company and Subsidiary

Independent Auditor's Report

Balance Sheet at December 31, 1994

Statement of Operations for the three months ended December 31, 1994

Statement of Stockholders' Equity for the three months ended
December 31, 1994

Statement of Cash Flows for the three months ended December 31, 1994

Notes to Financial Statements

A-27
<PAGE>
Electrical Distribution Acquisition Company and Subsidiary

Independent Auditor's Report

Consolidated Balance Sheet at December 19, 1995

Consolidated Statement of Income for the period ended December 19,
1995

Consolidated Statement of Stockholders' Equity for the period ended
December 19, 1995

Consolidated Statement of Cash Flows for the period ended December
19, 1995

Notes to Financial Statements

Pro Forma Financial Information

Unaudited Pro Forma Condensed Income Statement

Unaudited Pro Forma Condensed Balance Sheet

Notes to Pro Forma Financial Statements

A-28
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Garden
Grove, State of California, on March 26, 1996.

RICHEY ELECTRONICS, INC.

By: /s/ RICHARD N. BERGER

-----------------------------------
Richard N. Berger
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------ ------------------------------------------- ------------------

/s/ WILLIAM C. CACCIATORE Chairman of the Board, President, Chief
- -------------------------------------- Executive Officer (Principal Executive March 26, 1996
William C. Cacciatore Officer)

/s/ C. DON ALVERSON
- -------------------------------------- Director March 26, 1996
C. Don Alverson

/s/ RICHARD N. BERGER Vice President, Chief Financial Officer and
- -------------------------------------- Secretary (Principal Financial and March 26, 1996
Richard N. Berger Accounting Officer)

/s/ GREG A. ROSENBAUM
- -------------------------------------- Director March 26, 1996
Greg A. Rosenbaum

/s/ NORBERT W. ST. JOHN
- -------------------------------------- Director March 26, 1996
Norbert W. St. John
</TABLE>

A-29
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Richey Electronics, Inc.
Garden Grove, California

We have audited the accompanying balance sheets of Richey Electronics, Inc.
as of December 31, 1994 and 1995, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Richey Electronics, Inc. as
of December 31, 1994 and 1995 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.

MCGLADREY & PULLEN, LLP

Pasadena, California
January 19, 1996

A-30
<PAGE>
RICHEY ELECTRONICS, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995

<TABLE>
<CAPTION>
1994 1995
-------------- ----------------
<S> <C> <C>
ASSETS (Note 4)

CURRENT ASSETS
Cash.......................................................................... $ 9,000 $ 572,000
Trade receivables............................................................. 11,167,000 25,622,000
Inventories................................................................... 14,913,000 31,450,000
Deferred income taxes (Note 8)................................................ 1,427,000 3,948,000
Other current assets.......................................................... 435,000 1,481,000
-------------- ----------------
Total current assets........................................................ 27,951,000 63,073,000
-------------- ----------------
IMPROVEMENTS AND EQUIPMENT, NET (Note 3)........................................ 1,017,000 3,469,000
-------------- ----------------
OTHER ASSETS AND INTANGIBLES
Deferred income taxes (Note 8)................................................ 2,430,000 4,979,000
Distribution agreements....................................................... 2,304,000 --
Customer lists................................................................ 957,000 --
Other......................................................................... 80,000 1,161,000
Costs in excess of net assets of acquired businesses (Note 2)................. 274,000 46,259,000
-------------- ----------------
6,045,000 52,399,000
-------------- ----------------
$ 35,013,000 $ 118,941,000
-------------- ----------------
-------------- ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term debt (Note 4)................................. $ 1,600,000 $ 835,000
Notes payable, revolving line of credit (Note 4).............................. 8,843,000 --
Accounts payable.............................................................. 10,457,000 18,250,000
Accrued expenses (Note 5)..................................................... 1,734,000 6,088,000
Accrued restructuring costs (Note 2).......................................... -- 3,824,000
-------------- ----------------
Total current liabilities................................................... 22,634,000 28,997,000
-------------- ----------------
ACCRUED RESTRUCTURING COSTS (Note 2)............................................ -- 900,000
-------------- ----------------
LONG-TERM DEBT (Note 4)
Subordinated Notes Payable.................................................... 3,594,000 2,982,000
Other Long-term Debt.......................................................... -- 58,670,000
-------------- ----------------
3,594,000 61,652,000
-------------- ----------------
STOCKHOLDERS' EQUITY (Note 9)
Preferred stock, $.001 par value, authorized 10,000 shares, issued none....... -- --
Common stock, $.001 par value, authorized 30,000,000 shares................... 6,000 9,000
Additional paid-in capital.................................................... 5,240,000 20,976,000
Retained earnings............................................................. 3,539,000 6,407,000
-------------- ----------------
8,785,000 27,392,000
-------------- ----------------
$ 35,013,000 $ 118,941,000
-------------- ----------------
-------------- ----------------
</TABLE>

See Notes to Financial Statements.

A-31
<PAGE>
RICHEY ELECTRONICS, INC.
STATEMENTS OF INCOME
THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
1993 1994 1995
-------------- -------------- ----------------
<S> <C> <C> <C>
Net sales...................................................... $ 64,995,000 $ 90,266,000 $ 117,057,000
Cost of goods sold............................................. 48,741,000 68,176,000 89,080,000
-------------- -------------- ----------------
Gross profit............................................... 16,254,000 22,090,000 27,977,000
-------------- -------------- ----------------
Operating expenses:
Selling, warehouse, general and administrative (Note 7)...... 13,002,000 16,750,000 20,415,000
Amortization of intangibles.................................. 887,000 568,000 459,000
Restructuring costs (Note 2)................................. -- -- 1,450,000
-------------- -------------- ----------------
13,889,000 17,318,000 22,324,000
-------------- -------------- ----------------
Operating income........................................... 2,365,000 4,772,000 5,653,000
Interest expense (Note 4).................................... 1,198,000 1,606,000 867,000
-------------- -------------- ----------------
Income before income taxes................................. 1,167,000 3,166,000 4,786,000
Federal and state income taxes (Note 8)........................ 460,000 1,273,000 1,918,000
-------------- -------------- ----------------
Net income................................................. $ 707,000 $ 1,893,000 $ 2,868,000
-------------- -------------- ----------------
-------------- -------------- ----------------
Earnings per common share...................................... $ 0.14 $ 0.32 $ 0.36
-------------- -------------- ----------------
-------------- -------------- ----------------
Weighted average number of common shares outstanding........... 5,085,000 5,889,000 8,036,000
-------------- -------------- ----------------
-------------- -------------- ----------------
</TABLE>

See Notes to Financial Statements.

A-32
<PAGE>
RICHEY ELECTRONICS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------
SENIOR ADDITIONAL
PREFERRED SHARES PAID-IN RETAINED
STOCK OUTSTANDING PAR VALUE CAPITAL EARNINGS TOTAL
----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993......... $ 1,194,000 6,000 $ -- $ 1,200,000 $ 939,000 $ 3,333,000
Cancellation of senior
preferred stock (Note 2)...... (1,194,000) -- -- 1,194,000 -- --
Merger (Note 2):
Recapitalization............. -- 9,705,000 971,000 (971,000) -- --
Issuance of common stock..... -- 10,905,000 1,091,000 2,961,000 -- 4,052,000
Issuance of junior
subordinated notes.......... -- -- -- (1,194,000) -- (1,194,000)
Effect of three and one
half-to-one reverse stock
split......................... -- (14,727,000) (1,473,000) 1,473,000 -- --
Effect of change in par value
from $.10 per common share to
$.001 per common share........ -- -- (583,000) 583,000 -- --
Net income..................... -- -- -- -- 707,000 707,000
----------- ----------- ----------- ----------- ---------- -----------
BALANCE, DECEMBER 31, 1993....... -- 5,889,000 6,000 5,246,000 1,646,000 6,898,000
Reverse stock split
adjustments................... -- -- -- (6,000) -- (6,000)
Net income..................... -- -- -- -- 1,893,000 1,893,000
----------- ----------- ----------- ----------- ---------- -----------
BALANCE, DECEMBER 31, 1994....... -- 5,889,000 6,000 5,240,000 3,539,000 8,785,000
Issuance of common stock, in
public offering, net of
offering expenses............. -- 3,165,000 3,000 15,736,000 -- 15,739,000
Net income..................... -- -- -- -- 2,868,000 2,868,000
----------- ----------- ----------- ----------- ---------- -----------
BALANCE, DECEMBER 31, 1995....... $ -- 9,054,000 $ 9,000 $20,976,000 $6,407,000 $27,392,000
----------- ----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ----------- ---------- -----------
</TABLE>

See Notes to Financial Statements.

A-33
<PAGE>
RICHEY ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
1993 1994 1995
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................... $ 707,000 $ 1,893,000 $ 2,868,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................ 997,000 765,000 912,000
Deferred taxes............................................... 465,000 1,157,000 1,065,000
Change in operating assets and liabilities, net of effect of
business combinations:
(Increase) decrease in:
Trade receivables........................................ (255,000) (1,107,000) (2,448,000)
Inventories.............................................. (1,345,000) (1,518,000) (2,727,000)
Other current assets..................................... (161,000) 14,000 (260,000)
Increase (decrease) in:
Accounts payable and accrued expenses.................... 60,000 2,820,000 (624,000)
Accrued restructuring costs.............................. -- -- 1,450,000
-------------- -------------- --------------
Net cash provided by operating activities.................. 468,000 4,024,000 236,000
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment................................ 42,000 -- --
Purchase of improvements and equipment......................... (89,000) (401,000) (1,316,000)
Payment of acquisition and restructuring costs................. (3,188,000) (2,512,000) (2,025,000)
-------------- -------------- --------------
Net cash (used in) investing activities...................... (3,235,000) (2,913,000) (3,341,000)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances (repayments) on revolving line of credit........ 3,859,000 1,848,000 (8,843,000)
Borrowings under long-term revolving line of credit
arrangement................................................. -- -- 1,974,000
Payments on long-term debt................................... (1,088,000) (2,957,000) (5,202,000)
Proceeds of common stock offering, net of expenses........... -- -- 15,739,000
-------------- -------------- --------------
Net cash provided by (used in) financing activities.......... 2,771,000 (1,109,000) 3,668,000
-------------- -------------- --------------
INCREASE IN CASH................................................. $ 4,000 $ 2,000 $ 563,000
CASH
Beginning...................................................... 3,000 7,000 9,000
-------------- -------------- --------------
Ending......................................................... $ 7,000 $ 9,000 $ 572,000
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

A-34
<PAGE>
RICHEY ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

<TABLE>
<CAPTION>
1993 1994 1995
----------- ---------- ------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest.................................................................... $ 994,000 $1,675,000 $ 1,230,000
----------- ---------- ------------
----------- ---------- ------------
Income taxes................................................................ $ -- $ 46,000 $ 1,249,000
----------- ---------- ------------
----------- ---------- ------------
Supplemental Schedule of Noncash Investing and Financing Activities (Note 2)
Cancellation of senior preferred stock...................................... $ 1,194,000
-----------
-----------
Assets acquired, liabilities assumed and securities issued in business
combinations:
Current assets................................................................ $10,416,000 $2,410,000 $ 28,093,000
Current liabilities........................................................... (5,093,000) (946,000) (12,731,000)
Leasehold improvements and equipment.......................................... 188,000 103,000 1,646,000
Customer lists and distribution agreements.................................... 10,220,000 -- --
Other assets.................................................................. 69,000 -- 861,000
Costs in excess of net assets of acquired businesses.......................... -- 274,000 47,287,000
Restructuring and transaction costs........................................... (3,748,000) -- (3,427,000)
Subordinated notes payable.................................................... (8,000,000) -- (2,982,000)
Common stock issued........................................................... (4,052,000) -- --
Other liabilities assumed..................................................... -- -- (23,434,000)
Stock payment notes........................................................... -- -- (34,106,000)
----------- ---------- ------------
Net cash paid............................................................. $ -- $1,841,000 $ 1,207,000
----------- ---------- ------------
----------- ---------- ------------
Issuance of subordinated notes payable in connection with merger................ $(1,194,000)
-----------
-----------
</TABLE>

See Notes to Financial Statements.

A-35
<PAGE>
RICHEY ELECTRONICS, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

The Company is a multiregional, specialty distributor of electronic
components and provider of value added assembly services. The Company
distributes a broad line of connectors, switches, wire, cable and heat
shrinkable tubing and other interconnect, electromechanical and passive
electronic components used in assembly and manufacture of electronic equipment.
Richey Electronics has distribution rights from major worldwide suppliers, none
of which individually accounted for sales greater than 12% in 1995. Richey
Electronics' corporate headquarters are based in California and it has markets
in 17 states located predominantly in major western and eastern markets.

A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES FOLLOWS:

YEAR END

The Company reports its annual operating results based upon a calendar year
end (December 31) and its quarterly results using the Friday nearest the end of
each quarter.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses during the reporting period. Actual results could differ from those
estimates and could materially impact the reported amount of assets and
liabilities and future operating results.

CONCENTRATION OF CREDIT RISK

The Company distributes electronic components to small and medium-sized
manufacturers in a wide variety of industries including telecommunications,
computer, medical, transportation and aerospace. Credit is extended based on an
evaluation of the customer's financial condition and collateral is typically not
required. Credit losses are provided for in the financial statements through a
charge to operations. Credit losses have been consistently within management's
expectations and were not material in any year presented. A valuation allowance
for known and anticipated credit losses is maintained.

INVENTORIES

Inventories consist of electronic components held for sale and are valued at
the lower of cost (first-in, first-out method) or market. The Company
periodically reviews the age and turnover of its inventory to determine whether
any inventory has become obsolete or has declined in value and incurs a charge
to operations for known and anticipated inventory obsolescence. The Company has
not incurred any material charges to operations for inventory obsolescence
during any year presented.

1993 sales and gross profit include $540,000 of special inventory acquired
at no cost subsequent to the Company's original 1990 business combination. The
1994 and 1995 sales of this special inventory were not material.

IMPROVEMENTS AND EQUIPMENT

Improvements and equipment are stated at cost, less accumulated depreciation
and amortization. Equipment is depreciated using the straight-line method over
estimated service lives ranging from three to seven years. Improvements are
amortized over the life of the lease or the economic life of the asset,
whichever is shorter.

DISTRIBUTION AGREEMENTS AND CUSTOMER LISTS

Distribution agreements and customer lists acquired in the Richey-Brajdas
Merger have been amortized using the straight-line method over their respective
estimated economic lives of five and fifteen years. As the benefits of the
Company's purchased net operating loss carryforwards were realized, through the
results of operations or reductions in the deferred tax asset valuation
allowance, the carrying value of the distribution agreements and customer lists
was reduced proportionately.

A-36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COSTS IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES (GOODWILL)

The Company is generally amortizing goodwill on a straight-line method over
a 40-year period. Goodwill shown in the financial statements relates to the
Company's 1994 acquisition of In-Stock (current balance $242,000), and the
Company's 1995 acquisitions of IEI (current balance $162,000) and Deanco
(current balance $45,855,000).

The Company periodically reviews the value of its goodwill to determine if
an impairment has occurred. The Company does not believe that an impairment of
its goodwill has occurred based on an evaluation of operating income, cash flows
and business prospects.

INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax
liabilities are recognized for taxable temporary differences and deferred tax
assets are recognized for deductible temporary differences and operating loss
and tax credit carryforwards. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when it cannot be demonstrated that
the deferred tax assets are more likely than not to be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment.

EARNINGS PER COMMON SHARE

Earnings per common share are computed using the weighted average number of
shares of common stock outstanding. On December 30, 1993, the Company effected a
reverse stock split by issuing one share for every three and one-half shares of
common stock previously outstanding. All previously reported earnings per share
have been restated to give retroactive effect to this reverse stock split.
Common stock equivalents were not material in any year presented.

NEW PRONOUNCEMENTS

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF

In March 1995 the FASB issued Statement No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of.
Statement No. 121 establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. Statement No. 121 will first be
required for the Company's year ending December 31, 1996. The Company does not
anticipate that the adoption of Statement No. 121 will have a material impact on
the financial statements as of the date of adoption.

FAIR VALUE OF FINANCIAL INSTRUMENTS

During 1995 the Company adopted Statement of Financial Accounting Standards
No. 107, Disclosures about Fair Value of Financial Instruments. The carrying
amounts of accounts receivable and accounts payable approximate fair value. The
carrying amounts of the revolving line of credit and amounts to be refinanced
under the revolving line of credit and term loan approximate their fair value
given their interest rate pricing. The carrying amounts of subordinated debt and
other debt approximate fair value.

ACCOUNTING FOR STOCK-BASED COMPENSATION

In 1995 the FASB issued Statement No. 123, Accounting for Stock-based
Compensation. Statement No. 123, establishes financial accounting and reporting
standards for stock-based employee compensation plans such as a purchase plan.
The statement generally suggests stock-based compensation transactions be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, whichever is more reliably measurable.
An enterprise may continue to follow the requirements of Accounting Principles
Board (APB) Opinion No. 25, which does not require compensation to be recorded
if the consideration to be received is at least equal to the fair value at the
measurement date. If an enterprise elects to follow APB Opinion No. 25, it must
disclose the pro forma effects on net income as if compensation were measured in
accordance with the

A-37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
suggestions of Statement No. 123. The Company has not determined if it will
continue to follow APB Opinion No. 25 or follow the guidance of Statement No.
123. However, adoption of this pronouncement in 1996 is not expected to have a
material impact on the financial statements.

NOTE 2. BUSINESS COMBINATIONS
In the period from 1993 to 1995, the Company completed several business
combinations. All of these acquisitions were accounted for as purchase business
combinations with the operations of the acquired business included subsequent to
the acquisition date. Each of the acquired businesses had operations similar to
the Company's. These acquisitions are described as follows:

BRAJDAS ACQUISITION

On April 6, 1993, RicheyImpact merged with Brajdas Corporation, a California
corporation ("Brajdas"), with Brajdas as the surviving legal entity (the
"Richey-Brajdas Merger"). Brajdas subsequently changed its name to Richey
Electronics, Inc. (the "Company") and reincorporated in Delaware. The
Richey-Brajdas Merger was recorded as a reverse purchase acquisition with
RicheyImpact as the accounting acquirer.

IN-STOCK ACQUISITION

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),
located in Boston, Massachusetts.

EDAC AND SUBSIDIARY (DEANCO ACQUISITION)

On December 20, 1995, the Company completed the purchase of all the issued
and outstanding capital stock of Electrical Distribution Acquisition Company
("EDAC"). EDAC, a holding company, and its wholly owned subsidiary, Deanco, Inc.
("Deanco"), were acquired for $34,106,000 of stock payment notes, the assumption
of $5,962,000 of existing EDAC stockholder notes and the assumption of all other
debt of Deanco. The Company merged EDAC into the Company in January 1996 and has
made applications with the applicable state authorities to merge Deanco into the
Company as soon as practical.

The preliminary allocation of the purchase price is as follows:

<TABLE>
<S> <C>
CONSIDERATION
Purchase price for EDAC stock, consideration provided with stock payment
notes, due January 2, 1996................................................. $34,106,000
Assumption of EDAC stockholder notes, due January 2, 1996................... 5,962,000
Assumption of other interest-bearing debt................................... 19,300,000
Liabilities assumed, not including EDAC stockholder notes and stock payment
notes and other interest-bearing debt...................................... 12,511,000
Restructuring costs of acquired company..................................... 3,100,000
Transaction costs, including debt issuance costs............................ 1,400,000
-----------
$76,379,000
-----------
-----------
ALLOCATED TO
Estimated fair value of tangible assets acquired............................ $29,998,000
Debt issuance costs......................................................... 500,000
Cost in excess of net assets of business acquired (goodwill)................ 45,881,000
-----------
$76,379,000
-----------
-----------
</TABLE>

On December 20, 1995, the Company also entered into a new credit facility
(see Note 4). This credit facility provided the funds necessary to refinance
$15,713,000 of Deanco debt as of December 20, 1995 and pay off the EDAC stock
payment notes and stockholder notes on January 2, 1996.

In connection with the Deanco Acquisition, the Company will close certain of
its own facilities and incur other costs associated with the consolidation of
the operations of Deanco into the Company. During the fourth quarter, the
Company recognized a restructuring charge of $1,450,000. These costs

A-38
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. BUSINESS COMBINATIONS (CONTINUED)
are expected to be paid out over the next year, except for amounts related to
longer term real and personal property leases of approximately $300,000.
Substantially all of the original accrual remained unpaid at December 31, 1995.
The restructuring charges consisted of $400,000 for lease obligations for
Company facilities that will be consolidated into Deanco facilities, severance
costs for the Company's employees of $100,000, inventory adjustments related to
supplier terminations of $200,000, computer conversion costs of $250,000,
write-down of Company furniture and fixtures of $150,000 and other items of
$350,000.

Also in conjunction with the Deanco Acquisition, the Company accrued
restructuring costs of $3,100,000 relating to the consolidation of Deanco's
operations into the Company. Those costs related to the operations of Deanco
were recorded as a purchase accounting adjustment, resulting in an increase in
goodwill in the preliminary purchase price allocation. The accrued restructuring
costs consist of approximately $1,000,000 for severance for Deanco employees,
$1,750,000 for lease and facility costs for Deanco facilities to be closed and
other items of $350,000. At December 31, 1995, only a nominal amount of these
costs have been paid. The Company expects all of these costs to be paid within
the next 12 months, except those related to longer term facility leases of
$600,000.

Goodwill represents the costs in excess of tangible net assets acquired in
the acquisition. The Company believes that no separately identifiable intangible
assets were acquired and has assigned a 40-year life to this asset.

INLAND EMPIRE INTERCONNECTS ACQUISITION

On August 16, 1995, the Company completed the purchase of the assets and
business of Inland Empire Interconnects ("IEI"), an Ontario, California cable
assembly company. The purchase price and related transaction costs were
approximately $1,217,000 and were paid in cash. The fair value of the tangible
assets acquired was $1,370,000 and the liabilities assumed totaled $769,000.
Intangibles of $616,000, including goodwill of $166,000 are included in other
assets and are being amortized over their estimated useful lives.

PRO FORMA RESULTS (UNAUDITED)

The following pro forma results assume the acquisition of the assets and
business of In-Stock occurred as of the beginning of 1994 and the Deanco
Acquisition occurred as of the beginning of 1994 and 1995. The IEI acquisition
would not have materially changed pro forma reported sales or net income. The
unaudited pro forma results have been prepared utilizing the historical
financial statements of the Company and the acquired businesses before
extraordinary item. The unaudited pro forma results give effect to certain
adjustments, including amortization of acquired intangibles and goodwill,
elimination of duplicate facilities and redundant salaries, interest expense and
related tax effects.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1995
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales........................................................... $ 193,527,000 $ 216,983,000
Net income.......................................................... 2,499,000 4,377,000
Earnings per share.................................................. 0.42 0.54
</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.

A-39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. IMPROVEMENTS AND EQUIPMENT
Improvements and equipment at December 31 consist of the following:

<TABLE>
<CAPTION>
1994 1995
------------- -------------
<S> <C> <C>
Improvements.............................................................. $ 293,000 $ 2,084,000
Furniture, fixtures and equipment......................................... 1,431,000 2,597,000
------------- -------------
1,724,000 4,681,000
Less accumulated depreciation and amortization............................ 707,000 1,212,000
------------- -------------
$ 1,017,000 $ 3,469,000
------------- -------------
------------- -------------
</TABLE>

NOTE 4. REVOLVING LINE OF CREDIT, LONG-TERM DEBT, SUBORDINATED DEBT AND
SUBSEQUENT EVENT
REVOLVING LINE OF CREDIT

On December 20, 1995, the Company entered into a new credit agreement
secured by all assets which expires December 31, 1999. The new credit
arrangement is comprised of a revolving line of credit of $45,000,000 and a term
loan facility of $30,000,000. The revolving line of credit allows advances of up
to 85% of eligible receivables and 50% of eligible inventory, as defined. The
revolving line of credit has several interest rate pricing features available
and at December 31, 1995 $17,411,000 bears interest at the Eurodollar rate plus
2.25% (total of 8.06% at December 31, 1995) and $950,000 bears interest at 1%
above the bank's prime rate (total of 9.5% at December 31, 1995). The Company
intends to maintain borrowings of at least the amount outstanding at December
31, 1995 and the portion to be drawn on January 2, 1996 for an uninterrupted
period extending beyond one year; therefore, the December 31, 1995 outstanding
balance of $18,361,000 and $10,068,000 to be refinanced under the revolving line
of credit is classified as long-term debt.

The term loan has similar pricing options. The term loan requires no
principal payments in 1996, $7,500,000 in 1997, $10,000,000 in 1998 and
$12,500,000 in 1999. The term loan agreement requires that all proceeds from any
future equity or debt issuance be applied to repay the $30,000,000 term loan.
The Company is required to pay the lender a quarterly unused line fee equal to
3/8%, quarterly, of the difference between the maximum commitments and the daily
average outstanding borrowings for the prior quarter. The credit agreement
contains various restrictive covenants which require the Company to meet certain
financial conditions, including maintaining a minimum level of stockholders'
equity, minimum profitability, fixed charge coverage and cash flow leverage
ratios. In addition, the Company is restricted from the payment of cash
dividends. The loan agreement allows the lender to terminate the commitments on
30 days' notice if there is a change in control of the Company (generally, the
acquisition of more than 50% of the Company's capital stock).

The following is a summary of borrowings under revolving lines of credit:

<TABLE>
<CAPTION>
1993 1994 1995
------------- ---------------- ----------------
<S> <C> <C> <C>
Weighted average interest rate in effect at year
end................................................ 8.5% 10.0% 8.2%
Available borrowings at year end.................... $ 533,000 $ 5,452,000 $ 18,261,000
Maximum outstanding borrowings during the year...... 695,000 12,610,000 18,361,000
Weighted average interest rate for the borrowings
outstanding during the year........................ 8.5% 8.9% 9.3%
</TABLE>

The Company's revolving line of credit provides that up to $3,000,000 of the
available line can be used for letters of credit. None were outstanding at year
end.

SUBSEQUENT EVENT

On January 2, 1996, the stock payment notes and subordinated promissory
notes payable to former EDAC management and stockholders discussed below were
repaid through the $30,000,000 term loan and a $10,068,000 advance from the
revolving line of credit.

A-40
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. REVOLVING LINE OF CREDIT, LONG-TERM DEBT, SUBORDINATED DEBT AND
SUBSEQUENT EVENT (CONTINUED)
LONG-TERM DEBT

Long-term debt at December 31 is as follows:

<TABLE>
<CAPTION>
1994 1995
------------- --------------
<S> <C> <C>
Revolving line of credit................................................. $ -- $ 18,361,000
Stock payment notes for Deanco Acquisition, interest at 4.79%, paid
January 2, 1996......................................................... -- 34,106,000
Subordinated promissory notes payable to former EDAC management and
stockholders, interest at 9%, paid January 2, 1996...................... -- 5,962,000
Subordinated promissory notes payable to former stockholders of Deanco,
unsecured, due in annual installments of $1,000,000 beginning in 1997
with a final payment of $982,000 on September 30, 1999, interest payable
annually at 8%.......................................................... -- 2,982,000
Unsecured subordinated note payable to a corporation, due on January 1,
1996, interest payable annually at 8%, subordinated to all bank debt.... -- 700,000
Other.................................................................... -- 376,000
10% senior subordinated note payable to Barclay Financial Group, a
related party, and unsecured. Interest expense was $479,000 and $118,000
for 1994 and 1995, respectively......................................... 4,000,000 --
12% junior subordinated notes payable to stockholders and unsecured.
Interest expense was $145,000 and $43,000 for 1994 and 1995,
respectively............................................................ 1,194,000 --
------------- --------------
5,194,000 62,487,000
Less current maturities.................................................. 1,600,000 835,000
------------- --------------
$ 3,594,000 $ 61,652,000
------------- --------------
------------- --------------
</TABLE>

Aggregate maturities of long-term debt as of December 31, 1995, are as
follows:

NOTE 5. ACCRUED EXPENSES
Accrued expenses at December 31 consist of the following:

<TABLE>
<CAPTION>
1994 1995
------------- -------------
<S> <C> <C>
Compensation.............................................................. $ 1,163,000 $ 3,193,000
Rent and facilities costs................................................. 85,000 112,000
Interest.................................................................. 273,000 1,040,000
Other..................................................................... 213,000 1,743,000
------------- -------------
$ 1,734,000 $ 6,088,000
------------- -------------
------------- -------------
</TABLE>

The accrual for rent and facilities costs is net of sublease income of
$255,000 and $60,000 at December 31, 1994 and 1995, respectively.

A-41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES

The Company leases office and warehouse space under operating lease
agreements with various terms and conditions, expiring in years ending 1995
through 2000, with rent escalations typically based on the Consumer Price Index.

Future minimum lease payments under these leases, exclusive of lease
payments on duplicate facilities which have been accrued, are as follows:

<TABLE>
<S> <C>
1996................................................................... $1,475,000
1997................................................................... 1,440,000
1998................................................................... 1,415,000
1999................................................................... 1,250,000
2000................................................................... 760,000
Thereafter............................................................. 1,835,000
----------
$8,175,000
----------
----------
</TABLE>

Total rent expense under operating leases, including rent for facilities
leased on a month-to-month basis, was $846,000, $678,000 and $903,000 for 1993,
1994 and 1995, respectively.

CONTINGENT LIABILITIES

There are no material legal proceedings pending, or to the knowledge of
management, threatened against the Company.

NOTE 7. SERVICE AND MANAGEMENT AGREEMENT
The Company is party to a Service and Management Agreement dated December
18, 1990, as amended and modified. The Service and Management Agreement
terminates on December 31, 1997; however, the term is automatically extended for
additional two-year consecutive periods unless earlier terminated. Management
fees payable under this and prior agreements were approximately $244,000 in 1993
and 1994 and $234,000 in 1995, including a $64,000 termination payment to a
former party to this agreement.

NOTE 8. INCOME TAXES
Components of income tax expense are as follows:

<TABLE>
<CAPTION>
1993 1994 1995
----------- ------------- -------------
<S> <C> <C> <C>
Currently paid or payable:
Federal.................................................... $ (8,000) $ 60,000 $ 745,000
State...................................................... 3,000 56,000 108,000
Deferred..................................................... 465,000 1,157,000 1,065,000
----------- ------------- -------------
$ 460,000 $ 1,273,000 $ 1,918,000
----------- ------------- -------------
----------- ------------- -------------
</TABLE>

The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pretax income due to the following:

<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Computed "expected" statutory rate..................... 35% 35% 35%
Increase (decrease) in rate resulting from:
Benefit of income taxed at lower rate................ (1) (1) (1)
State income taxes, net of federal tax benefit....... 7 5 5
Other................................................ (2) 1 1
---- ---- ----
39% 40% 40%
---- ---- ----
---- ---- ----
</TABLE>

A-42
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. INCOME TAXES (CONTINUED)
Net deferred taxes at December 31 consist of the following:

<TABLE>
<CAPTION>
1994 1995
-------------- --------------
<S> <C> <C>
Deferred tax liabilities:
Intangibles recorded at the purchase price for financial reporting
purposes, not recognized in tax-free merger.......................... $ 1,348,000 $ --
Other................................................................. 337,000 314,000
-------------- --------------
1,685,000 314,000
-------------- --------------
Deferred tax assets:
Net operating loss carryforwards (NOLs)............................... 8,421,000 7,096,000
Costs capitalized to inventory for tax purposes....................... 320,000 919,000
Accrued expenses not deductible until paid............................ 210,000 2,462,000
Other................................................................. 244,000 890,000
-------------- --------------
9,195,000 11,367,000
Less valuation allowance.............................................. (3,653,000) (2,126,000)
-------------- --------------
5,542,000 9,241,000
-------------- --------------
Net................................................................. $ 3,857,000 $ 8,927,000
-------------- --------------
-------------- --------------
</TABLE>

Net deferred tax assets described above have been included in the
accompanying balance sheets as follows:

<TABLE>
<CAPTION>
1994 1995
-------------- --------------
<S> <C> <C>
Current assets.......................................................... $ 1,427,000 $ 3,948,000
Noncurrent assets....................................................... 2,430,000 4,979,000
-------------- --------------
$ 3,857,000 $ 8,927,000
-------------- --------------
-------------- --------------
</TABLE>

As of December 31, 1995, the Company had acquired net operating loss
carryforwards which have the following expiration dates:

<TABLE>
<CAPTION>
EXPIRATION DATE FEDERAL CALIFORNIA
- ------------------------------------------------------------------------- -------------- -------------
<S> <C> <C>
1997..................................................................... $ -- $ 76,000
1998..................................................................... -- 953,000
1999..................................................................... 2,242,000 290,000
2000..................................................................... 490,000 --
2005..................................................................... 2,000,000 --
2006..................................................................... 2,053,000 --
2007..................................................................... 9,700,000 --
2008..................................................................... 2,500,000 --
2009..................................................................... 580,000 --
-------------- -------------
$ 19,565,000 $ 1,319,000
-------------- -------------
-------------- -------------
</TABLE>

Section 382 of the Internal Revenue Code of 1986 and the related regulations
and California law impose certain limitations on a corporation's ability to use
net operating loss carryforwards if more than a 50% ownership change occurs. The
Company's issuance of additional common stock in 1995, together with the Richey
Brajdas Merger, constitutes a more than 50% ownership change. As a result, the
usage of the NOLs are restricted to approximately $3,000,000 on an annual basis.

The Company has been consistently profitable and generated taxable income
before NOL carryforwards of approximately $6.4 million in 1995. Based on its
current level of profitability, management believes that the Company will be
able to fully utilize the NOLs prior to their expiration. However, consistent
with prior practice, management has continued to maintain a valuation allowance
to reduce the net deferred tax asset to the tax benefit expected to be realized
during approximately the next four years. Management believes that it is "more
likely than not" that the Company

A-43
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. INCOME TAXES (CONTINUED)
will be able to generate the approximately $26 million of future taxable income
necessary to realize the recorded amount of the net deferred tax asset prior to
the expiration of the NOLs. The amount of deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced.

NOTE 9. EMPLOYEE BENEFIT PLANS
STOCK APPRECIATION RIGHTS PLAN

On July 7, 1993, the Company adopted a Stock Appreciation Rights Plan. Each
stock appreciation right (SAR) provides the recipient with the right to receive
a cash payment equal to the excess, if any, of the fair market value of a share
of the Company's common stock on the date the SAR is exercised over the fair
market value on the date the SAR was granted, or such other value as determined
by the Compensation Committee. The maximum number of rights that may be awarded
under the plan may not exceed approximately 589,000. To date, no rights have
been granted under this plan.

STOCK OPTION PLAN

The Company has a stock option plan adopted in 1992. The options granted
vest at a rate of 25% per year over a four-year period and expire ten years from
the date of grant. The options are granted at fair market value at the date of
grant.

<TABLE>
<CAPTION>
1994 1995
--------- ---------
<S> <C> <C>
Under option, beginning of year.................................................. -- 226,737
Granted........................................................................ 226,737 266,334
Terminated and canceled........................................................ -- --
Exercised...................................................................... -- --
--------- ---------
Under option, end of year........................................................ 226,737 493,071
--------- ---------
--------- ---------
Options exercisable, end of year................................................. -- 45,642
Available for grant, end of year................................................. 362,197 95,863
Average prices of options:
Granted during the year........................................................ $6.00 $6.63
Under option, end of year...................................................... 6.00 6.34
</TABLE>

401(K) SAVINGS PLAN

The Company has a defined contribution 401(k) savings plan covering
substantially all its employees. The plan does not provide for the Company to
match any contributions by participants, and no contributions were made by the
Company during 1993, 1994 or 1995. As a result of the Deanco acquisition, the
Company acquired Deanco's 401(k) profit sharing plan whereby Deanco had
contributed 25% of each plan participant's covered contribution up to certain
specified limits.

HEALTH INSURANCE TRUST

The Company, through the Deanco Acquisition, has a health insurance trust
which provides benefits to certain employees and their eligible dependents for
medical and dental expenses. The trust is funded by the Company and employee
contributions and reimburses covered claims directly from the trust's funds. The
Company has purchased an insurance policy to provide coverage which pays
benefits if an individual's claims exceed $50,000 and aggregate claims for a
year exceed 150% of the annual expected claims, as computed by the insurance
company. An estimate of the liability for the incurred but not reported claims
is recorded in the financial statements.

A-44
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. QUARTERLY FINANCIAL DATA (UNAUDITED)

1994
Net sales....................................... 20,247,000 23,105,000 22,838,000 24,076,000
Gross profit.................................... 4,855,000 5,562,000 5,793,000 5,880,000
Net income...................................... 355,000 532,000 471,000 535,000
Earnings per common share....................... 0.06 0.09 0.08 0.09

1993
Net sales....................................... 8,088,000 19,721,000 18,927,000 18,259,000
Gross profit.................................... 2,154,000 4,782,000 4,686,000 4,632,000
Net income...................................... 85,000 93,000 288,000 241,000
Earnings per common share....................... 0.03 0.02 0.05 0.04
</TABLE>

A-45
<PAGE>
EXHIBIT B TO THE PROSPECTUS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

<TABLE>
<S> <C>
For the quarterly period ended: Commission file number:
June 28, 1996 0-9788
</TABLE>

------------------------

RICHEY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 33-0594451
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

7441 LINCOLN WAY,
GARDEN GROVE, CALIFORNIA
(Address of Principal 92641
Executive Office) (Zip Code)
</TABLE>

Registrant's Telephone Number, including Area Code: (714) 898-8288

------------------------

As of August 6, 1996, 9,073,685 shares of the registrant's Common Stock,
$0.001 par value, were issued and outstanding.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

B-1
<PAGE>
PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

RICHEY ELECTRONICS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 28, DECEMBER 31,
1996 1995
---------------- ----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash........................................................................ $ 25,000 $ 572,000
Trade receivables........................................................... 29,653,000 25,622,000
Inventories................................................................. 35,521,000 31,450,000
Deferred income taxes....................................................... 3,948,000 3,948,000
Other current assets........................................................ 1,457,000 1,481,000
---------------- ----------------
Total current assets...................................................... $ 70,604,000 $ 63,073,000
---------------- ----------------
LEASEHOLD IMPROVEMENTS, EQUIPMENT
Furniture and Fixtures, net................................................. $ 3,648,000 $ 3,469,000
---------------- ----------------
OTHER ASSETS AND INTANGIBLES
Deferred income taxes....................................................... $ 4,209,000 $ 4,979,000
Deferred debt costs......................................................... 2,966,000 500,000
Other....................................................................... 593,000 661,000
Goodwill.................................................................... 47,808,000 46,259,000
---------------- ----------------
$ 55,576,000 $ 52,399,000
---------------- ----------------
$ 129,828,000 $ 118,941,000
---------------- ----------------
---------------- ----------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt........................................ $ 219,000 $ 835,000
Accounts payable............................................................ 20,088,000 18,250,000
Accrued expenses............................................................ 6,918,000 6,088,000
Accrued restructuring costs................................................. 2,158,000 3,824,000
---------------- ----------------
Total current liabilities................................................. $ 29,383,000 $ 28,997,000
---------------- ----------------
ACCRUED RESTRUCTURING COSTS................................................... $ 900,000 $ 900,000
---------------- ----------------
LONG-TERM DEBT
Subordinated notes payable.................................................. $ 2,956,000 $ 2,982,000
Convertible subordinated notes payable...................................... 55,755,000 --
Other long-term debt........................................................ 10,546,000 58,670,000
---------------- ----------------
$ 69,257,000 $ 61,652,000
---------------- ----------------
STOCKHOLDERS' EQUITY
Preferred Stock............................................................. -- --
Common Stock................................................................ 9,000 9,000
Additional paid-in-capital.................................................. 20,995,000 20,976,000
Retained earnings........................................................... 9,284,000 6,407,000
---------------- ----------------
Total stockholders' equity................................................ $ 30,288,000 $ 27,392,000
---------------- ----------------
$ 129,828,000 $ 118,941,000
---------------- ----------------
---------------- ----------------
</TABLE>

See Notes to Condensed Financial Statements

B-2
<PAGE>
RICHEY ELECTRONICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------------------------ --------------------------------
JUNE 28, JUNE 30, JUNE 28, JUNE 30,
1996 1995 1996 1995
-------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net Sales:..................................... $ 58,212,000 $ 28,305,000 $ 116,596,000 $ 54,901,000
Cost of Goods Sold:............................ 43,406,000 21,645,000 87,477,000 41,728,000
-------------- -------------- ---------------- --------------
Gross Profit:.................................. $ 14,806,000 $ 6,660,000 $ 29,119,000 $ 13,173,000
-------------- -------------- ---------------- --------------
Operating expenses:
Selling, warehouse, general, and
administrative.............................. $ 10,206,000 $ 4,859,000 $ 20,986,000 $ 9,701,000
Amortization of intangibles.................... 366,000 97,000 703,000 210,000
-------------- -------------- ---------------- --------------
$ 10,572,000 $ 4,956,000 $ 21,689,000 $ 9,911,000
-------------- -------------- ---------------- --------------
Operating income............................. $ 4,234,000 $ 1,704,000 $ 7,430,000 $ 3,262,000
Interest Expense............................... 1,339,000 185,000 2,631,000 607,000
-------------- -------------- ---------------- --------------
Income before income taxes................... $ 2,895,000 $ 1,519,000 $ 4,799,000 $ 2,655,000
Federal and state income taxes................. 1,160,000 610,000 1,922,000 1,066,000
-------------- -------------- ---------------- --------------
Net income................................... $ 1,735,000 $ 909,000 $ 2,877,000 $ 1,589,000
-------------- -------------- ---------------- --------------
-------------- -------------- ---------------- --------------
Earnings per Share
Primary...................................... $0.19 $0.11 $0.32 $0.23
-------------- -------------- ---------------- --------------
-------------- -------------- ---------------- --------------
Fully Diluted................................ $0.18 $0.11 $0.31 $0.23
-------------- -------------- ---------------- --------------
-------------- -------------- ---------------- --------------
Weighted Average number of shares outstanding
Primary...................................... 9,058,000 8,101,000 9,058,000 7,001,000
-------------- -------------- ---------------- --------------
-------------- -------------- ---------------- --------------
Fully Diluted................................ 13,006,000 8,101,000 11,720,000 7,001,000
-------------- -------------- ---------------- --------------
-------------- -------------- ---------------- --------------
</TABLE>

See Notes to Condensed Financial Statements

B-3
<PAGE>
RICHEY ELECTRONICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------
JUNE 28, JUNE 30,
1996 1995
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................................................... $ 2,877,000 $ 1,589,000
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization.................................................. 1,420,000 392,000
Deferred income taxes.......................................................... 770,000 757,000
Changes in operating assets and liabilities:
(Increase) in trade receivables................................................ (2,636,000) (1,936,000)
(Increase) in inventories...................................................... (3,293,000) (1,721,000)
Decrease in other assets....................................................... 17,000 131,000
Increase (decrease) in accounts payable and accrued expenses................... 1,380,000 (667,000)
--------------- --------------
Net cash provided by (used in) operating activities.......................... $ 535,000 $ (1,455,000)
--------------- --------------
CASH FLOWS (USED IN) INVESTING ACTIVITIES
Purchase of leasehold improvements and equipment............................... $ (692,000) $ (413,000)
Payment of acquisition and restructuring costs................................. (4,779,000) (42,000)
--------------- --------------
Net cash (used in) investing activities...................................... $ (5,471,000) $ (455,000)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net advances on short-term revolving line of credit............................ -- $ (5,631,000)
Payments on long-term revolving line of credit................................. $ (7,911,000) --
Payments on long-term debt..................................................... (40,855,000) (5,194,000)
Proceeds from issuance of convertible debt..................................... 55,755,000 --
Transaction costs associated with refinancing activities....................... (2,619,000) (437,000)
Proceeds from issuance of common stock......................................... 19,000 16,185,000
--------------- --------------
Net cash provided by financing activities.................................... $ 4,389,000 $ 4,923,000
--------------- --------------
Increase (decrease) in cash.................................................. $ (547,000) $ 3,013,000
CASH
Beginning...................................................................... $ 572,000 $ 9,000
--------------- --------------
Ending......................................................................... $ 25,000 $ 3,022,000
--------------- --------------
--------------- --------------
</TABLE>

See Notes to Condensed Financial Statements

B-4
<PAGE>

RICHEY ELECTRONICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)

<TABLE>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Payments For:
Interest...................................................................... $ 1,306,000 $ 834,000
------------ -----------
------------ -----------
Income taxes.................................................................. $ 116,000 $ 203,000
------------ -----------
------------ -----------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of MS Electronics:
Working capital acquired...................................................... $ 888,000
Fair market value of other assets acquired including goodwill................. 2,231,000
------------
Purchase price and related transaction costs.................................. $ 3,119,000
------------
------------
</TABLE>

See Notes to Condensed Financial Statements

B-5
<PAGE>
RICHEY ELECTRONICS, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 28, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------------
ADDITIONAL
PREFERRED SHARES PAID-IN RETAINED
STOCK OUTSTANDING PAR VALUE CAPITAL EARNINGS TOTAL
--------- ----------- ----------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995.......... -- 9,054,000 $ 9,000 $ 20,976,000 $ 6,407,000 $ 27,392,000
Stock issued for options &
other............................ -- 8,000 -- 19,000 -- 19,000
Net income...................... -- -- -- -- 2,877,000 2,877,000
--------- ----------- ----------- -------------- ------------- --------------
Balance, June 28, 1996.............. -- 9,062,000 $ 9,000 $ 20,995,000 $ 9,284,000 $ 30,288,000
--------- ----------- ----------- -------------- ------------- --------------
--------- ----------- ----------- -------------- ------------- --------------
</TABLE>

See Notes to Condensed Financial Statements

B-6
<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. is a multi-regional, specialty distributor of
electronic components and a provider of value-added assembly services. The
Company distributes a broad line of connectors, switches, wire, cable and heat
shrinkable tubing 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.

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 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 June 28, 1996 and
June 30, 1995 are not necessarily indicative of the results which will be
reported for the entire year.

EARNINGS PER SHARE

The weighted average number of shares used for computing fully diluted
earnings per share assumes that the 7% Convertible Subordinated Notes due 2006
(the "Notes") which were sold by the Company in the first quarter of 1996
through a private offering (the "Note Offering") are converted at $14.125 per
share on the date they were issued. The Notes are not common stock equivalents
and, therefore, are not considered in determining the primary weighted average
number of shares. Net income used in computing fully diluted earnings per share
is increased for the interest expense, net of tax, associated with the Notes.

INCOME TAXES

Income tax expense in these interim financial statements is recorded based
upon the Company's expected annual effective income tax rate.

For further information, refer to the audited financial statements of the
Company and notes thereto for the year ended December 31, 1995, included in the
Company's Annual Report on Form 10-K.

NOTE 2. BUSINESS COMBINATIONS

INLAND EMPIRE INTERCONNECTS

On August 16, 1995, the Company completed the purchase (the "IEI
Acquisition") of the assets and business of Inland Empire Interconnects ("IEI"),
an Ontario, California cable assembly company specializing in molded
interconnect products. The IEI Acquisition was accounted for as a purchase. The
results of operations of IEI subsequent to the date of the IEI Acquisition are
included in the Company's financial statements.

EDAC AND SUBSIDIARY (DEANCO ACQUISITION)

On December 20, 1995, the Company completed the purchase (the "Deanco
Acquisition") of all the issued and outstanding capital stock of Electrical
Distribution Acquisition Company ("EDAC")

B-7
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

NOTE 2. BUSINESS COMBINATIONS (CONTINUED)
and its wholly owned subsidiary, Deanco, Inc. ("Deanco"). The Deanco Acquisition
was accounted for as a purchase. The results of operations of Deanco subsequent
to the date of the Deanco Acquisition are included in the Company's financial
statements.

In connection with the Deanco Acquisition, the Company has consolidated
facilities and is eliminating redundant administrative costs. As part of the
consolidation, the Company has closed certain of its own facilities and incurred
other integration costs. During the fourth quarter of 1995, the Company
recognized a restructuring charge of $1,450,000. During the six-month period
ended June 28, 1996, $973,000 of these restructuring costs were paid. No
adjustments were made to the original estimates of this restructuring charge.

Also in connection with the Deanco Acquisition, the Company accrued
restructuring costs of $3,100,000 relating to the consolidation of Deanco's
operations into the Company. Those costs were recorded as a purchase accounting
adjustment, resulting in an increase in goodwill in the preliminary purchase
price allocation. The preliminary allocation of the Deanco purchase price is
expected to be finalized within the next six months once all final costs are
established. No adjustments were made to the original estimates of these
restructuring costs. At June 28, 1996, $733,000 of these costs have been paid.
The Company expects the remaining costs to be paid out over the next 6 months as
the integration is completed, except for those related to longer term facility
leases of $600,000.

The Company merged EDAC into the Company in January 1996 and has made
applications with the applicable state authorities to merge Deanco into the
Company as soon as practical.

MS ELECTRONICS

On March 19, 1996, the Company completed the acquisition (the "MS
Acquisition") of the assets and business of MS Electronics, Inc. ("MS
Electronics"). MS Electronics specializes in the distribution of interconnect,
electromechanical and passive electronic components and provides value-added
assembly services in the Baltimore\Washington marketplace. The MS Acquisition
was accounted for as a purchase. The purchase price and related transaction
costs, including the assumption of MS Electronics' debt of $525,000, were
approximately $3,119,000 and were paid in cash. The preliminary allocation of
the purchase price is as follows: $2,231,000 to estimated fair value of tangible
assets acquired, $1,288,000 to liabilities assumed and $2,176,000 to cost in
excess of net assets of business acquired (goodwill to be amortized over 15
years). The results of operations of MS Electronics subsequent to the date of
the MS Acquisition are included in the Company's financial statements.

PRO FORMA FINANCIAL INFORMATION

The following pro forma results of continuing operations assume that the
Deanco Acquisition (which occurred on December 20, 1995) had occurred on January
1, 1995, after giving effect to certain adjustments including amortization of
acquired intangibles and goodwill, elimination of duplicate facilities and
redundant salaries, interest expense and related tax effects.

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995
-------------- -----------------
<S> <C> <C>
Net sales.................................................. $ 54,224,000 $ 107,514,000
Net income................................................. $ 1,345,000 $ 2,339,000
Earnings per share......................................... $ .17 $ .33
Weighted average number of shares outstanding.............. 8,101,000 7,001,000
</TABLE>

The IEI and MS Electronics Acquisitions would not have materially changed
pro forma net sales or net income. This pro forma financial information does not
purport to be indicative of the results of operations that would have occurred
had the Deanco Acquisition actually taken place at the beginning of 1995.

B-8
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

NOTE 3. PUBLIC COMMON STOCK OFFERING, PRIVATE CONVERTIBLE DEBT OFFERING, STOCK
OPTIONS AND NET OPERATING LOSS CARRYFORWARDS

PUBLIC COMMON STOCK OFFERING

In the second quarter of 1995, the Company issued 3,165,000 shares of its
common stock in a secondary offering. The net proceeds to the Company from that
offering were approximately $15,700,000. The Company used the net proceeds to
reduce the Company's existing indebtedness.

PRIVATE CONVERTIBLE DEBT OFFERING

In the first quarter of 1996, the Company sold through the Note Offering
$55,755,000 aggregate principal amount of its 7% Convertible Subordinated Notes
due 2006. The Notes are convertible into 3,948,000 shares of the Company's
common stock at a conversion price of $14.125 per share (subject to adjustment).
The Company has filed a shelf registration statement with the Securities and
Exchange Commission to register resales of the Notes and the common stock
issuable upon conversion. This registration statement became effective on June
7, 1996. The net proceeds from the Note Offering were approximately $53,600,000
and were used to repay the Company's $30,000,000 term loan and to pay down its
revolving line of credit.

STOCK OPTIONS

The Company has a stock option plan adopted in 1992. The options granted
vest at a rate of 25% per year over a four-year period and, in general, expire
ten years from the date of grant. The options granted were granted at fair
market value at the date of grant. Total options authorized for grant are
905,432, of which 533,071 have been granted as of June 28, 1996. During the six
months ended June 28, 1996, 40,000 options were granted at average prices of
$9.75 to $11.00 and 8,360 options were exercised. As of June 28, 1996, 372,361
options were available for grant.

NET OPERATING LOSS CARRYFORWARDS

As of December 31, 1995, the Company had net operating loss carryforwards
("NOLs") with the following expiration dates:

<TABLE>
<CAPTION>
EXPIRATION DATE FEDERAL CALIFORNIA
- --------------------------------------------------------------- -------------- -------------
<S> <C> <C>
1997........................................................... $ -- $ 76,000
1998........................................................... -- 953,000
1999........................................................... 2,242,000 290,000
2000........................................................... 490,000 --
2005........................................................... 2,000,000 --
2006........................................................... 2,053,000 --
2007........................................................... 9,700,000 --
2008........................................................... 2,500,000 --
2009........................................................... 580,000 --
-------------- -------------
$ 19,565,000 $ 1,319,000
-------------- -------------
-------------- -------------
</TABLE>

Section 382 of the Internal Revenue Code of 1986, as amended and the related
regulations and California law impose certain limitations on a corporation's
ability to use NOLs if more than a 50% ownership change occurs. The Company's
issuance of additional common stock in 1995, together with the 1993 merger of
RicheyImpact Electronics, Inc. and Brajdas Corporation constitutes a more than
50% ownership change. As a result, the usage of the NOLs is restricted to
approximately $5,000,000 on an annual basis.

B-9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

SUMMARY OF SELECTED DATA
(UNAUDITED)

The following table sets forth certain items in the statements of operations
as a percent of net sales for periods shown and additional items of a
statistical nature.

<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------------------ ------------------------
JUNE 28, JUNE 30, JUNE 28, JUNE 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net Sales................................................................ 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold....................................................... 74.6 76.5 75.0 76.0
----- ----- ----- -----
Gross Profit......................................................... 25.4 23.5 25.0 24.0
----- ----- ----- -----
Selling, warehouse, general & administrative............................. 17.5 17.2 18.0 17.7
Amortization of intangibles.............................................. 0.6 0.3 0.6 0.4
----- ----- ----- -----
Operating Income..................................................... 7.3 6.0 6.4 5.9
Interest Expense......................................................... 2.3 0.6 2.3 1.1
----- ----- ----- -----
Income before income taxes........................................... 5.0 5.4 4.1 4.8
Federal and state income taxes........................................... 2.0 2.2 1.6 1.9
----- ----- ----- -----
Net Income............................................................... 3.0% 3.2% 2.5% 2.9%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>

<TABLE>
<CAPTION>
JUNE 28, MARCH 29, DEC. 31, SEPT. 29, JUNE 30,
1996 1996 1995 1995 1995
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets (000)................................. $ 129,828 $ 128,099 $ 118,941 $ 42,332 $ 40,810
Working capital (000).............................. $ 41,221 $ 39,717 $ 34,076 $ 19,996 $ 19,828
Ratio of current assets to current liabilities..... 2.4 2.4 2.2 2.3 2.3
Short-term debt (000).............................. $ 219 $ 136 $ 835 $ 3,131 $ 3,212
Subordinated notes payable (000)................... $ 2,956 $ 2,982 $ 2,982 $ 0 $ 0
Convertible subordinated notes payable (000)....... $ 55,755 $ 55,755 $ 0 $ 0 $ 0
Other long-term debt (000)......................... $ 10,546 $ 11,377 $ 58,670 $ 0 $ 0
Inventory turnover................................. 4.9 5.2 5.0 5.0 5.2
Days sales outstanding in accounts receivable...... 46.4 45.7 41.8 45.0 42.1
Stockholders' equity (000)......................... $ 30,288 $ 28,555 $ 27,392 $ 27,183 $ 26,122
</TABLE>

RESULTS OF OPERATIONS

Net income for the second quarter of 1996 was $1,735,000 compared with net
income of $909,000 for the second quarter of 1995, an increase of $826,000 or
91%. For the second quarter of 1996, earnings per share increased to $0.18 based
on fully diluted weighted average number of shares outstanding of 13,006,000, up
from $0.11 per share, for the second quarter of 1995, based on weighted average
number of shares outstanding of 8,101,000. Net income for the six-month period
ended June 28, 1996 was $2,877,000 ($0.31 per share, fully diluted) compared
with $1,589,000 ($0.23 per share, fully diluted) for the corresponding period in
1995.

Net sales for the quarter ended June 28, 1996 rose to $58,212,000 from
$28,305,000 for the quarter ended June 30, 1995, an increase of 106%. Net sales
for the first six months of 1996 were $116,596,000 compared to net sales of
$54,901,000 for the same period in 1995. Net sales of electronic components
increased to $42,405,000 in the second quarter of 1996 from $20,363,000 in the
second quarter of 1995, an increase of 108%. Net sales of value-added assembly
services increased to

B-10
<PAGE>
$15,807,000 for the second quarter of 1996 from $7,942,000 for the corresponding
period of 1995, an increase of 99%. Component and value-added sales increased as
a result of acquisitions and an increase in product offerings due to new
franchises and expanded geographic coverage of existing franchises. Pro forma
for the Deanco Acquisition, net sales would have been $54,224,000 for the second
quarter of 1995 and $107,514,000 for the first six months of 1995 compared with
net sales of $58,212,000 for the second quarter of 1996 and $116,596,000 for the
first six months of 1996.

The Company is currently engaged in discussions with AMP, whose distribution
products represent approximately 3.5% of the Company's net sales, pertaining to
AMP's new policies that, as of January 1, 1997, AMP will no longer supply an AMP
distributor with interconnect products unless the distributor agrees not to
distribute the products of certain competitors of AMP. The Company currently is
evaluating its alternatives with respect to supply arrangements for these
products. In the event that AMP does not change its new policies, the Company
could be required to terminate its relationships with AMP or with one or more of
AMP's competitors. Any such termination(s) would adversely affect the Company's
revenues.

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 June 28, 1996
was $52,612,000, up from $26,500,000 at June 30, 1995 and down from $53,000,000
at December 31, 1995. A reduction of $1,000,000 in order backlog in the first
six months of 1996 is attributable to conforming Deanco's December 31, 1995
order backlog to Company policies.

Gross profit margin for the first six months of 1996 was 25.0% compared to
gross profit margin of 24.0% for the first six months of 1995. The gross profit
margin for the second quarter of 1996 rose by 1.9% from margins achieved in the
second quarter of 1995. Gross profit margin improved from 24.5% in the first
quarter of 1996 to 25.4% in the second quarter of 1996 as a result of changes in
distribution order mix and an increased percentage of orders to be shipped in
under 30 days which typically have higher margins than orders with longer
shipment schedules. The Company also experienced an increase in value-added
gross profit margins for the second quarter of 1996 as a result of short-term
scheduling adjustments by customers. In addition, the Company has installed its
gross margin disciplines in the acquired Deanco operations.

Operating expenses for the quarter ended June 28, 1996 increased to
$10,572,000 from $4,956,000 for the corresponding period in 1995 due primarily
to acquisitions. As a percentage of net sales, operating expenses increased 0.6%
for the quarter ended June 28, 1996 compared to the same period in 1995, half of
which is attributable to the amortization of intangibles associated with the
Deanco Acquisition. In the second quarter of 1996, the Company began to see a
substantial portion of the expected savings from the operating leverage
generated by the Deanco Acquisition. Operating expenses for the first six months
of 1996 increased to $21,689,000 from $9,911,000 for the first six months of
1995. Operating expenses, as a percentage of net sales, were 18.6% for the first
six months of 1996 and 18.1% for the corresponding period in 1995. This increase
in expenses as a percentage of sales was primarily due to the fact that Deanco's
expenses as a percentage of sales were historically significantly higher than
those of the Company and during the first six months of 1996 the Company
realized only a portion of the expected costs savings from the ongoing
integration of Deanco into the Company.

Interest expense for the second quarter of 1996 was $1,339,000 as compared
with $185,000 for the second quarter of 1995. The increase in interest expense
was primarily due to the Company's financing activities relating to
acquisitions.

Federal and state income tax expense increased to $1,160,000 (40% effective
rate) for the quarter ended June 28, 1996 from $610,000 (40% effective rate) for
the corresponding period of 1995. 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.

B-11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

In the first quarter of 1996, the Company sold through a private offering
$55,755,000 aggregate principal amount of its 7% Convertible Subordinated Notes
due 2006. The net proceeds from the Note Offering were approximately $53,600,000
and were used to repay the Company's $30,000,000 term loan and to pay down its
revolving line of credit. See Note 3 of Notes to Condensed Financial Statements.

The Company currently maintains with Wells Fargo Bank, N.A., as successor to
First Interstate Bank of California, a $45 million revolving line of credit. As
of June 28, 1996, the Company had outstanding borrowings under this revolving
line of credit of $10,450,000 and additional borrowing capacity of $30,000,000.

Working capital increased to $41,221,000 on June 28, 1996 from $34,076,000
on December 31, 1995, an increase of $7,145,000. During the first six months of
1996, the Company generated $8,850,000 of earnings before interest, income
taxes, depreciation and amortization ("EBITDA") as compared to EBITDA of
$3,654,000 for the first six months of 1995, an increase of 142%.

During the first six months of 1996, operating activities generated
$6,464,000 in cash from net income, depreciation, amortization, deferred income
taxes, decreases in other assets and increases in accounts payable and accrued
expenses. During the same period, the Company invested $2,636,000 in receivables
and $3,293,000 in inventories. Thus, operating activities for the first six
months of 1996 provided net cash of $535,000, as compared to net cash of
$1,455,000 used in operating activities for the first six months of 1995. During
the first six months of 1996, the Company used an additional $5,471,000 of cash
for investing activities, including $692,000 for capital expenditures and
$4,779,000 for acquisition and restructuring costs relating primarily to the MS
Acquisition and payment of restructuring costs accrued in connection with the
Deanco Acquisition. See Note 2 of Notes to Condensed Financial Statements. This
use of cash was financed by borrowings.

For the quarter ended June 28, 1996, inventory turnover was 4.9x compared to
5.2x for the quarter ended March 29, 1996 and 5.0x for the quarter ended
December 31, 1995. The inventory turnover of 4.9x for the second quarter of 1996
is consistent with the Company's current target for inventory turnover.

Days sales outstanding were 46.4 days at June 28, 1996 compared to 41.8 days
at December 31, 1995 and 45.7 days at March 29, 1996. This increase in the
number of days outstanding is due primarily to the fact that Deanco's days
outstanding were historically higher than those of the Company. Management
expects to be able, over the long term, to improve the number of days
outstanding to those historically experienced by the Company.

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.

B-12
<PAGE>
PART II -- OTHER INFORMATION

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.

The Company held its annual meeting of stockholders on May 7, 1996. C. Don
Alverson, Thomas W. Blumenthal, William C. Cacciatore, Edward L. Gelbach, Greg
A. Rosenbaum, Norbert W. St. John and Donald I. Zimmerman were each reelected to
serve as directors until the next annual meeting of stockholders, and received
votes as follows:

<TABLE>
<CAPTION>
NUMBER OF VOTES NUMBER OF VOTES
CAST FOR WITHHELD FROM
NAME HIS ELECTION HIS ELECTION
- ----------------------------------------------------------- --------------- -----------------
<S> <C> <C>
C. Don Alverson............................................ 6,673,057 935
Thomas W. Blumenthal....................................... 6,673,057 935
William C. Cacciatore...................................... 6,673,057 935
Edward L. Gelbach.......................................... 6,673,050 942
Greg A. Rosenbaum.......................................... 6,672,957 1,035
Norbert W. St. John........................................ 6,673,050 942
Donald I. Zimmerman........................................ 6,673,050 942
</TABLE>

At this annual meeting, stockholders also voted to ratify the appointment of
McGladrey & Pullen, LLP as the Company's independent auditors for 1996.
6,670,227 votes were cast for, 2,620 votes were cast against and 1,145 votes
abstained from ratifying such appointment.

At this annual meeting, stockholders also voted to approve an amendment to
the Company's 1992 Stock Option Plan (the "Plan") to increase the maximum number
of shares which may be sold pursuant to options granted under the Plan to
905,432, subject to adjustment as provided in the Plan upon certain changes in
the Company's stock. 6,546,216 votes were cast for, 76,100 votes were cast
against and 4,215 votes abstained from approving such amendment.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

<TABLE>
<S> <C>
(a) Exhibits required by Item 601 of Regulation S-K.
2.1 Stock Purchase Agreement, dated November 15, 1995, among Richey Electronics,
Inc., Deanco, Inc., Electrical Distribution Acquisition Company and all of
the stockholders of Electrical Distribution Acquisition Company
(Incorporated by reference from the Current Report on Form 8-K for Richey
Electronics, Inc. dated December 20, 1995, filed January 3, 1996 as exhibit
2.1 thereof).
2.2 First Amendment to Stock Purchase Agreement and Instrument of Joinder dated
December 20, 1995 among Richey Electronics, Inc., Deanco, Inc., Electrical
Distribution Acquisition Company and all of the stockholders of Electrical
Distribution Acquisition Company (Incorporated by reference from the Current
Report on Form 8-K for Richey Electronics, Inc. dated December 20, 1995,
filed January 3, 1996 as exhibit 2.2 thereof).
</TABLE>

B-13
<PAGE>
<TABLE>
<S> <C>
2.3 Sales Tax Indemnification Agreement dated December 20, 1995 among Richey
Electronics, Inc. and the stockholders of Electrical Distribution
Acquisition Company identified therein (Incorporated by reference from the
Current Report on Form 8-K for Richey Electronics, Inc. dated December 20,
1995, filed January 3, 1996 as exhibit 2.3 thereof).
3.1 Restated Certificate of Incorporation of Richey Electronics, Inc.
(Incorporated by reference from the Registration Statement on Form S-1,
filed January 7, 1994, Registration No. 33-73916 as exhibit 3.1 thereof).
3.2 Bylaws of Richey Electronics, Inc. (Incorporated by reference from the
Registration Statement on Form S-1, filed January 7, 1994, Registration No.
33-73916 as exhibit 3.2 thereof).
4.1 Indenture between Richey Electronics, Inc. and First Trust of California,
National Association, dated as of February 15, 1996 (Incorporated by
reference from the Annual Report on Form 10-K for Richey Electronics, Inc.
filed March 26, 1996 as exhibit 4.1 thereof).
10.1 Employment Agreement between William Class and Richey Electronics, Inc.
dated as of January 1, 1996.
11.1 Statement regarding computation of per share earnings.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
Current Report on Form 8-K dated March 22, 1996 and filed on April 2, 1996
(reporting on completion of the Note Offering).
</TABLE>

B-14
<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

August 9, 1996

B-15
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Stock Purchase Agreement, dated November 15, 1995, among Richey Electronics, Inc., Deanco, Inc.,
Electrical Distribution Acquisition Company and all of the stockholders of Electrical Distribution
Acquisition Company (Incorporated by reference from the Current Report on Form 8-K for Richey
Electronics, Inc. dated December 20, 1995, filed January 3, 1996 as exhibit 2.1 thereof).

2.2 First Amendment to Stock Purchase Agreement and Instrument of Joinder dated December 20, 1995 among
Richey Electronics, Inc., Deanco, Inc., Electrical Distribution Acquisition Company and all of the
stockholders of Electrical Distribution Acquisition Company (Incorporated by reference from the Current
Report on Form 8-K for Richey Electronics, Inc. dated December 20, 1995, filed January 3, 1996 as
exhibit 2.2 thereof).

2.3 Sales Tax Indemnification Agreement dated December 20, 1995 among Richey Electronics, Inc. and the
stockholders of Electrical Distribution Acquisition Company identified therein (Incorporated by
reference from the Current Report on Form 8-K for Richey Electronics, Inc. dated December 20, 1995,
filed January 3, 1996 as exhibit 2.3 thereof).

3.1 Restated Certificate of Incorporation of Richey Electronics, Inc. (Incorporated by reference from the
Registration Statement on Form S-1, filed January 7, 1994, Registration No. 33-73916 as exhibit 3.1
thereof).

3.2 Bylaws of Richey Electronics, Inc. (Incorporated by reference from the Registration Statement on Form
S-1, filed January 7, 1994, Registration No. 33-73916 as exhibit 3.2 thereof).

4.1 Indenture between Richey Electronics, Inc. and First Trust of California, National Association, dated as
of February 15, 1996 (Incorporated by reference from the Annual Report on Form 10-K for Richey
Electronics, Inc. filed March 26, 1996 as exhibit 4.1 thereof).

10.1 Employment Agreement between William Class and Richey Electronics, Inc. dated as of January 1, 1996.

11.1 Statement regarding computation of per share earnings.

27.1 Financial Data Schedule.
</TABLE>

B-16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE NOTES OR CONVERSION SHARES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information.......................... 2
Incorporation of Certain Information by
Reference..................................... 2
Risk Factors................................... 5
Use of Proceeds................................ 9
Ratio of Earnings to Fixed Charges............. 9
Description of Notes........................... 10
Description of Capital Stock................... 21
Selling Securityholders........................ 22
Plan of Distribution........................... 23
Certain United States Federal Income Tax
Considerations................................ 24
Legal Matters.................................. 30
Experts........................................ 30
</TABLE>

[LOGO]

$55,755,000 PRINCIPAL AMOUNT OF
7% CONVERTIBLE SUBORDINATED

NOTES DUE 2006

3,947,256 SHARES OF
COMMON STOCK

---------------------

PROSPECTUS

---------------------

SEPTEMBER 27, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
the Notes and the Conversion Shares being registered. All amounts are estimates
except the registration fee.

<TABLE>
<S> <C>
Commission registration fee................................... $ 19,225.86
NASD Listing Fee.............................................. 17,500.00
Printing and engraving expenses............................... 4,000.00
Legal fees and expenses....................................... 50,000.00
Trustee's fees (including counsel fees)....................... 1,000.00
Accounting fees and expenses.................................. 10,000.00
Miscellaneous................................................. 8,000.00
-----------
Total..................................................... $109,725.86
-----------
-----------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Subsection (a) of Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal, administrative
or investigative (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 is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against 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.

Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted in
any of the capacities set forth above, against 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, except that no indemnification may be made in respect of 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 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided for by Section
145 shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of such persons' heirs, executors and administrators; and
empowers the corporation to purchase and maintain insurance on behalf of any
director, officer, employee or agent of the corporation against any

II-1
<PAGE>
liability asserted against him and incurred by him in any of the above
capacities, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under Section 145.

The Company currently maintains directors and officers insurance.

Section 102(b)(7) of DGCL provides that a certificate of incorporation may
contain a provision eliminating or limiting 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) under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit.

The Company's Restated Certificate of Incorporation includes a provision
eliminating director liability to the fullest extent permissible under Delaware
Law, as such law currently exists or as it may be amended in the future.

ITEM 16. EXHIBITS

<TABLE>
<C> <S>
1.1 Purchase Agreement among Richey Electronics, Inc. and Jefferies & Company, Inc.
and Cruttenden Roth Incorporated dated as of February 21, 1996.+
2.1 Stock Purchase Agreement, dated November 15, 1995, among Richey Electronics,
Inc., Deanco, Inc., Electrical Distribution Acquisition Company and certain of
the stockholders of Electrical Distribution Acquisition Company. *5* (2.1)
2.2 First Amendment to Stock Purchase Agreement and Instrument of Joinder dated
December 20, 1995 among Richey Electronics, Inc., Deanco, Inc., Electrical
Distribution Acquisition Company and all of the stockholders of Electrical
Distribution Acquisition Company. *5* (2.2)
2.3 Sales Tax Indemnification Agreement dated December 20, 1995 among Richey
Electronics, Inc. and the stockholders of Electrical Distribution Acquisition
Company identified therein. *5* (2.3)
4.1 Indenture among Richey Electronics, Inc. and First Trust of California, National
Association, dated as of February 15, 1996. *1*(4.1)
4.2 Registration Rights Agreement among Richey Electronics, Inc. and Jefferies &
Company, Inc. and Cruttenden Roth Incorporated, dated as of February 26, 1996.+
5.1 Opinion of Dewey Ballantine.+
10.1 Indemnification Agreement among Barclay and Company, Inc., Brajdas Corporation,
Donald I. Zimmerman and certain former shareholders of RicheyImpact
Electronics, Inc. identified therein dated as of April 5, 1993. *3* (E)
10.2 Letter re Amendment to Indemnification Agreement by Barclay and Company, Inc.
and Donald I. Zimmerman, and agreed to by BRJS Investment Holding Corp.,
Brajdas Corporation and the other persons and entities identified therein dated
April 23, 1993. *2* (10.3)
10.3 Registration Rights Agreement between Brajdas Corporation and BRJS Investment
Holding Corp. dated April 2, 1993. *3* (10.4)
10.4 Amended and Restated Loan and Security Agreement dated as of April 7, 1993
between Sanwa Business Credit Corporation and Brajdas Corporation. *2* (10.15)
10.5 Employment Agreement between William C. Cacciatore and Brajdas Corporation dated
as of April 1, 1993. *2* (10.18)
</TABLE>

II-2
<PAGE>
<TABLE>
<C> <S>
10.6 Addendum to Employment Agreement (William C. Cacciatore) dated as of February
21, 1995. *9* (10.37)
10.7 Employment Agreement between C. Don Alverson and Brajdas Corporation dated as of
April 1, 1993. *2* (10.17)
10.8 Addendum to Employment Agreement (C. Don Alverson) dated as of February 21,
1995. *9* (10.38)
10.9 Employment Agreement between Richard N. Berger and Brajdas Corporation dated as
of April 1, 1993. *2* (10.20)
10.10 Addendum to Employment Agreement (Richard N. Berger) dated as of February 21,
1995. *9* (10.39)
10.11 Employment Agreement between Norbert W. St. John and Brajdas Corporation dated
as of April 1, 1993. *2* (10.19)
10.12 Addendum to Employment Agreement (Norbert W. St. John) dated as of February 21,
1995. *9* (10.40)
10.13 Brajdas Corporation Bonus Plan. *2* (10.21)
10.14 Service and Management Agreement dated December 18, 1990 by and among
RicheyImpact Electronics, Inc., Palisades Associates, Inc. and Saunders Capital
Group, Inc. *4* (10.2)
10.15 Agreement to Assume and Amend the Service and Management Agreement among Brajdas
Corporation, Palisades Associates, Inc. and Saunders Capital Group, Inc. dated
as of April 6, 1993. *4* (10.3)
10.16 1993 Stock Appreciation Rights Plan. *6* (A)
10.17 Modification Agreement among the Company, Palisades Associates, Inc. and
Saunders Capital Group, Inc. dated as of January 2, 1995. *9* (10.26)
10.18 Assumption and Amendment Agreement to Loan and Security Agreement dated as of
December 31, 1993 by and between Sanwa Business Credit Corporation and Richey
Electronics, Inc. *8* (10.31)
10.19 Second Amendment to Amended and Restated Loan and Security Agreement dated as of
March 29, 1994 by and between Sanwa Business Credit Corporation and Richey
Electronics, Inc. *8* (10.32)
10.20 First Amendment to Stockholders Agreement dated December 14, 1994 among the
Company and the individuals and entities listed on Schedule I to the
Stockholders Agreement. *9* (10.31)
10.21 Lease between Principal Mutual Life Insurance Company and Richey Electronics,
Inc. for lease of premises at 7441 Lincoln Way, Garden Grove, California. *9*
(10.32)
10.22 Lease between M&M Enterprises, a California General Partnership and Richey
Electronics, Inc. for lease of premises at 10871 La Tuna Canyon Road, Sun
Valley, California. *9* (10.33)
10.23 Lease between Anchor Group, Inc. and Richey Electronics, Inc. for lease of
premises at 11 Walkup Drive, Westborough, Massachusetts. *9* (10.34)
10.24 Lease between Hownat Trust and Deanco, Inc. for lease of premises at 87 Concord
Street, North Reading, Massachusetts, Boston Massachusetts. *1* (10.24)
10.25 Lease between Murray Center Venture and Deanco ACA Manufacturing, Inc. for lease
of premises at Building 1, Murray Business Center, 3601 SW Murray Blvd.,
Beaverton, Oregon 97201, Beaverton, Oregon. *1* (10.25)
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
10.26 1992 Stock Option Plan. *9* (10.35)
10.27 Form of Incentive Stock Option Agreement. *9* (10.36)
10.28 Modification Agreement by and between Richey Electronics, Inc. and Palisades
Associates, Inc. dated as of February 21, 1995. *9* (10.41)
10.29 Loan Agreement dated as of December 20, 1995 among Richey Electronics, Inc., the
banks named therein and First Interstate Bank of California, as Agent. *5*
(10.1)
10.30 First Amendment to the Loan Agreement dated as of February 26, 1996 among Richey
Electronics, Inc, the banks named therein and First Interstate Bank of
California, as Agent. *1* (10.30)
10.31 Second Addendum to Employment Agreement (William C. Cacciatore) dated as of May
17, 1995. *1* (10.31)
10.32 Second Addendum to Employment Agreement (C. Don Alverson) dated as of May 17,
1995. *1* (10.32)
10.33 Second Addendum to Employment Agreement (Norbert W. St. John) dated as of May
17, 1995. *1* (10.33)
10.34 Agreement to Terminate Stockholders' Agreement. *11* (10.1)
10.35 Employment Agreement between Charles W. Mann and Richey Electronics, Inc. dated
as of April 1, 1995.+
10.36 Employment Agreement between William Class and Richey Electronics, Inc. dated as
of January 1, 1996. *12* (10.1)
12.1 Statement re: computation of ratios.+
23.1 Consent of Ernst & Young LLP.+
23.2 Consent of McGladrey & Pullen, LLP.+
23.3 Consent of Dewey Ballantine (included in exhibit 5.1).
24.1 Power of Attorney.+
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of First Trust of California, National Association.+
</TABLE>

- ------------------------
*1* Incorporated by reference to the designated exhibit of the Annual Report on
Form 10-K for Richey Electronics, Inc. for the fiscal year ended December
31, 1995, filed April 1, 1996.

*2* Incorporated by reference to the designated exhibit of the Annual Report on
Form 10-K for Brajdas Corporation for the fiscal year ended February 28,
1993, filed May 28, 1993.

*3* Incorporated by reference to the designated exhibit of the Statement on
Schedule 13D filed on behalf of BRJS Investment Holding Corp., C. Don
Alverson, William C. Cacciatore, Greg A. Rosenbaum and Norbert W. St. John
with the Securities and Exchange Commission on April 20, 1993.

*4* Incorporated by reference to the designated exhibit of the Transition
Report on Form 10-Q for Brajdas Corporation for the period from January 1,
1993 through July 2, 1993, filed August 4, 1993.

*5* Incorporated by reference to the designated exhibit of Form 8-K for Richey
Electronics, Inc. dated December 20, 1995, filed January 3, 1996.

*6* Incorporated by reference to the designated exhibit of the definitive proxy
statement for the 1993 Annual Meeting of Stockholders.

*7* Incorporated by reference to the designated exhibit of the Form 8-K for
Brajdas Corporation dated July 7, 1993, filed July 13, 1993.

II-4
<PAGE>
*8* Incorporated by reference to the designated exhibit of Post-Effective
Amendment No. 1 to the Shelf Registration Statement on April 18, 1994.

*9* Incorporated by reference to the designated exhibit of the Registration
Statement on Form S-2, filed February 23, 1995, Registration Statement No.
33-89690.

*10* Incorporated by reference to the designated exhibit of the Quarterly report
on Form 10-Q for Richey Electronics, Inc. for the period ending March 31,
1995, filed May 15, 1995.

*11* Incorporated by reference to the designated exhibit of the Quarterly report
on Form 10-Q for Richey Electronics, Inc. for the period ending September
29, 1995, filed November 13, 1995.

*12* Incorporated by reference to the designated exhibit of the Quarterly report
on Form 10-Q for Richey Electronics, Inc. for the period ending June 28,
1996, filed August 12, 1996.

+ Previously filed as an exhibit to the Registration Statement on Form S-2
filed April 26, 1996.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.

(2) 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

(3) 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 this
registration statement 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.

Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, 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 Securities Act and is therefore unenforceable. In the event that a claim
of 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 a 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 of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act ("Act") in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.

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<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-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Garden Grove, State of California, on May 30, 1996.

RICHEY ELECTRONICS, INC.

By /s/ RICHARD N. BERGER

--------------------------------------
Richard N. Berger
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND SECRETARY

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
- ----------------------------------- ------------------------- ----------------

Chairman of the Board,
* President, Chief
- ----------------------------------- Executive Officer September 25,
William C. Cacciatore (Principal Executive 1996
Officer)

*
- ----------------------------------- Director, Executive Vice September 25,
C. Don Alverson President -- Sales 1996

Vice President, Chief
Financial
/s/ RICHARD N. BERGER Officer and Secretary September 25,
- ----------------------------------- (Principal 1996
Richard N. Berger Financial and Accounting
Officer)

- ----------------------------------- Director September 25,
Edward L. Gelbach 1996

*
- ----------------------------------- Director, Assistant September 25,
Greg A. Rosenbaum Secretary 1996

*
- ----------------------------------- Director September 25,
Thomas W. Blumenthal 1996

*
- ----------------------------------- Director, Executive Vice September 25,
Norbert W. St. John President -- Marketing 1996

*
- ----------------------------------- Director September 25,
Donald I. Zimmerman 1996

*By: /s/ RICHARD N. BERGER

- ---------------------------------
Richard N. Berger
(Attorney-in-fact)

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