<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 13, 1997
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RICHEY ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-9788 33-0594451
- -------------- ---------------- -------------------------
(State of (Commission file (IRS Employer
incorporation) Number) Identification Number)
7441 Lincoln Way, Garden Grove, California 92641
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 898-8288
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<PAGE>
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
See Appendix 1 attached hereto which includes the following:
Unaudited Pro Forma Condensed Balance Sheets
(March 31, 1997)
Unaudited Pro Forma Condensed Statements of Operations
(Year Ended December 31, 1996)
Unaudited Pro Forma Condensed Statements of Operations
(Three Months Ended March 31, 1997)
Notes to Unaudited Pro Forma Financial Statements
<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
July 8, 1997
<PAGE>
APPENDIX 1
RICHEY ELECTRONICS, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
These pro forma condensed financial statements reflect the June 13, 1997
acquisition of Simmonds Technologies Inc. (STI). The pro forma condensed
statements present the balance sheet as if the transaction had occurred on March
31, 1997 and the income statements as if the transaction occurred at January 1,
1996 for the year ended December 31, 1996 and carried through the three months
ended March 31, 1997.
The following unaudited pro forma condensed statements of operations are derived
from the audited statement of income of Richey Electronics, Inc. (Richey or the
Company) for the year ended December 31, 1996 and the audited statement of
income of STI for the year ended December 31, 1996. The March 31, 1997 balance
sheet and the statement of operations for the three months ended March 31, 1997
are derived from their unaudited interim financial statements. The unaudited
financial information herein reflects all adjustments, consisting only of normal
recurring adjustments which, in the opinion of management of the respective
companies, are necessary to fairly state the Company's financial position and
results of its operations.
These pro forma condensed statements of operations and balance sheet do not
purport to represent what the Company's results or financial condition would
actually have been if the STI Acquisition had occurred on the dates 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 condensed financial statements should be read in
conjunction with the historical financial statements and related notes of Richey
and STI.
Certain amounts reported in the STI historical financial information have been
reclassified to conform with the Richey presentations in the unaudited pro forma
condensed balance sheet and statements of operations. The historical financial
statements of STI have been translated to U.S. dollars in accordance with
Statement of Financial Accounting Standards No. 52, FOREIGN CURRENCY
TRANSLATION, utilizing the exchange rate in effect at March 31, 1997 of 1.3725
Canadian dollars to $1 and the average exchange rate of 1.3592 Canadian dollars
to $1 and 1.3622 Canadian dollars to $1 for the three-month period ended March
31, 1997 and the year ended December 31, 1996, respectively.
The pro forma statements are presented to reflect the STI Acquisition accounted
for under the purchase method of accounting.
A further description of the acquisition, nature and amount of consideration
given and pro forma adjustments follow the pro forma condensed statements.
<PAGE>
RICHEY ELECTRONICS, INC.
PRO FORMA CONDENSED BALANCE SHEETS
MARCH 31, 1997
(UNAUDITED)
(IN 000s)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Unaudited
Unaudited Unaudited Pro Forma Unaudited
Richey Simmonds Unaudited Adjustments Pro Forma
ASSETS Electronics Technologies Combined (Note 5) Combined
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current Assets
Cash $ 29 $ - $ 29 $ - $ 29
Trade receivables 29,367 4,460 33,827 (260) 33,567
Inventories 41,865 7,616 49,481 (3,424) 46,057
Deferred taxes 2,629 - 2,629 - 2,629
Other current assets 750 15 765 - 765
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TOTAL CURRENT ASSETS 74,640 12,091 86,731 (3,684) 83,047
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Improvements and Equipment, net 3,648 4,623 8,271 (3,170) 5,101
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Other Assets and Intangibles
Deferred taxes 1,842 - 1,842 3,000 4,842
Deferred debt costs 2,451 - 2,451 - 2,451
Other 435 - 435 - 435
1,328
Goodwill 46,930 285 47,215 (285) 48,258
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51,658 285 51,943 4,043 55,986
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$129,946 $16,999 $146,945 $(2,811) $144,134
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------
Current Liabilities
Revolving line of credit $ - $ 5,756 $ 5,756 $ (5,756) $ -
Current maturities of long-term debt 3,553 885 4,438 (597) 3,841
Accounts payable and accrued expenses 25,252 4,794 30,046 750 30,796
Accrued restructuring costs 280 - 280 - 280
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TOTAL CURRENT LIABILITIES 29,085 11,435 40,520 (5,603) 34,917
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Long-term Debt
Due to related party - 8,860 8,860 (8,860) -
Subordinated notes payable 2,000 - 2,000 - 2,000
5,756
Other long-term debt 7,450 3,013 10,463 (2,256) 15,056
1,093
Convertible subordinated notes payable 55,755 - 55,755 - 55,755
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65,205 11,873 77,078 (4,267) 72,811
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Stockholders' Equity
Preferred stock, $.001 par value,
authorized 10,000 shares, issued none - - - - -
Common stock, $.001 par value,
authorized 30,000,000 shares 9 866 875 (866) 9
Additional paid-in capital 21,001 - 21,001 750 21,751
Retained earnings 14,646 (7,175) 7,471 7,175 14,646
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TOTAL STOCKHOLDERS' EQUITY 35,656 (6,309) 29,347 7,059 36,406
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$129,946 $ 16,999 $146,945 $ (2,811) $144,134
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</TABLE>
See Notes to Pro Forma Condensed Financial Statements.
<PAGE>
RICHEY ELECTRONICS, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN 000s EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Unaudited Unaudited Unaudited Unaudited
Richey Simmonds Unaudited Pro Forma Pro Forma
Electronics Technologies Combined Adjustments Combined
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 226,215 $ 30,651 $ 256,866 $ $ 256,866
Cost of goods sold 168,664 23,077 191,741 191,741
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GROSS PROFIT 57,551 7,574 65,125 65,125
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Operating expenses:
Selling, warehouse, general and
administrative 39,622 12,294 51,916 51,916
Amortization 1,448 509 1,957 58 (1)
(478)(4) 1,537
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41,070 12,803 53,873 (420) 53,453
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OPERATING INCOME (LOSS) 16,481 (5,229) 11,252 420 11,672
(325)(4)
Interest expense 5,569 1,310 6,879 (326)(2) 6,228
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Income before income taxes 10,912 (6,539) 4,373 1,071 5,444
Federal and state income taxes 4,376 37 4,413 482 (3) 4,895
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NET INCOME (LOSS) $ 6,536 $ (6,576) $ (40) $ 589 $ 549
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Earnings per common share:
Primary $ 0.72 $ 0.06
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------- -------
Fully diluted $ 0.70 $ 0.06
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------- -------
Weighted average number of shares
outstanding:
Primary 9,060 9,060
------- -------
------- -------
Fully diluted 12,376 12,376
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------- -------
</TABLE>
See Notes to Pro Forma Condensed Financial Statements.
<PAGE>
RICHEY ELECTRONICS, INC.
PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(IN 000s EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Unaudited Unaudited Unaudited Unaudited
Richey Simmonds Unaudited Pro Forma Pro Forma
Electronics Technologies Combined Adjustments Combined
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 56,794 $ 6,509 $ 63,303 $ $ 63,303
Cost of goods sold 42,265 4,910 47,175 47,175
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GROSS PROFIT 14,529 1,599 16,128 16,128
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Operating expenses:
Selling, warehouse, general and
Administrative 10,054 2,617 12,671 12,671
15 (1)
Amortization 369 188 557 (181)(4) 391
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10,423 2,805 13,228 (166) 13,062
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OPERATING INCOME (LOSS) 4,106 (1,206) 2,900 166 3,066
(81)(4)
Interest expense 1,261 270 1,531 (82)(2) 1,368
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Income before income taxes 2,845 (1,476) 1,369 329 1,698
Federal and state income taxes 1,142 2 1,144 148 (3) 1,292
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NET INCOME (LOSS) $ 1,703 $ (1,478) $ 225 $ 181 $ 406
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Earnings per common share:
Primary $ 0.19 $ 0.05
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Fully diluted $ 0.18 $ 0.05
------- -------
------- -------
Weighted average number of shares
outstanding:
Primary 9,063 9,063
------- -------
------- -------
Fully diluted 13,010 13,010
------- -------
------- -------
</TABLE>
See Notes to Pro Forma Condensed Financial Statements.
<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. DESCRIPTION OF ACQUISITION
On June 13, 1997, Richey Electronics, Inc. (the Company or Richey) purchased
from Simmonds Capital Limited (Simmonds) all of the common stock of Simmonds
Technologies Inc. (STI), an indirect wholly owned subsidiary of Simmonds, for
$1. STI is a distributor of interconnect, electromechanical and passive
electronic components headquartered in Toronto, Ontario, with additional branch
locations in the Montreal, Ottawa, Winnipeg, Saskatoon, Calgary, Edmonton and
Vancouver regions.
In events related to the acquisition, Richey also issued to Simmonds a warrant
to purchase 197,044 shares of Richey common stock at an exercise price of $10.15
per share. For purchase accounting purposes, the value of the warrant was
estimated to be $750,000. In addition, Richey, through STI, contributed
approximately $1.1 million toward the settlement of certain of STI's long-term
capital lease obligations and facility leases to be retained by Simmonds and
agreed to transfer to Simmonds $3.4 million of STI non-core inventory which
Richey believes it will not be able to use in its operations. Simmonds also
received a right to a future payment due March 31, 2002 from STI based upon a
percentage of STI's operating earnings in 2001 as defined by Agreement. For
purchase accounting purposes, this future payment will be accounted for as
contingent consideration and will be recorded as additional purchase price when
the amount is determinable. The additional consideration would be recorded as
goodwill and amortized over the remaining economic life of the goodwill, or
approximately ten years.
Under the terms of the transaction, Richey refinanced STI's bank indebtedness of
approximately $5.8 million. Richey funded the STI bank debt refinancing and the
contribution toward settlement of certain long-term obligations referred to in
the previous paragraph by drawing upon the Company's $45 million revolving line
of credit with Wells Fargo Bank, N.A.
STI has net operating loss carryforwards of approximately $8,800,000
(C$12,000,000) that are available to reduce future Canadian taxes.
NOTE 2. NATURE AND AMOUNT OF CONSIDERATION GIVEN
The preliminary allocation of the purchase price after adjusting to fair value
the assets and liabilities of STI is based upon estimates that are currently
available and is subject to change based upon final numbers. The final
allocation will be contingent upon completion of management's assessment of the
fair value of net assets acquired.
The preliminary allocation of the purchase price is as follows:
U.S. Dollars
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Consideration and liabilities assumed:
Bank debt assumed and then refinanced $ 5,756
Accounts payable, accrued expenses and lease obligations assumed 5,839
Cash contribution toward settlement of long-term lease obligations 1,093
Transaction costs 750
Common stock warrants 750
Contingent payment obligation -
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$ 14,188
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<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 2. NATURE AND AMOUNT OF CONSIDERATION GIVEN, CONTINUED
Allocated to:
Current assets $ 8,407
Deferred tax assets 3,000
Leasehold improvements, fixtures and assets acquired
under capital leases 1,453
Goodwill 1,328
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$14,188
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In the preliminary allocation of the purchase price, the Company has recorded a
deferred tax asset of $3,000,000, which is net of a valuation allowance of
approximately $1,000,000. Realization of this deferred tax asset is dependent
upon the Company generating Canadian taxable income of approximately $6,500,000
before the final expiration of these loss carryforwards which is 2002 and 2003.
Due to the uncertainty inherent in forecasts of future results, management has
established the valuation allowance to reduce the net deferred tax asset to the
tax benefit expected to be realized over the next three to five years.
NOTE 3. INCOME STATEMENT PRO FORMA ADJUSTMENTS
The pro forma adjustments associated with the condensed income statements are as
follows:
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, March 31,
1996 1997
--------------------------------
<S> <C> <C>
(1) To record goodwill amortization adjustments to reflect:
Elimination of STI goodwill amortization included in STI's historical
statements $ (31,000) $ (7,000)
Amortization of goodwill on Company's income statement as a result
of STI acquisition based on 15-year estimated life 89,000 22,000
--------------------------------
$ 58,000 $ 15,000
--------------------------------
--------------------------------
(2) To adjust interest expense to reflect the following:
Interest on additional debt of $1,093,000 to fund cash contribution
toward settlement of long-term leases at incremental borrowing
rate of 8% on Richey's revolving line of credit $ 87,000 $ 21,000
Reduced interest costs as average debt of approximately $10,300,000
for STI has been assumed to be incurred at the Company's
incremental borrowing rate of 8% instead of STI's rate of 12% (413,000) (103,000)
--------------------------------
$ (326,000) $ (82,000)
--------------------------------
--------------------------------
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3. INCOME STATEMENT PRO FORMA ADJUSTMENTS, CONTINUED
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, March 31,
1996 1997
--------------------------------
<S> <C> <C>
(3) The tax effect of the pro forma adjustments is based on a 45%
effective tax rate applied to taxable income. $ 482,000 $ 148,000
--------------------------------
--------------------------------
(4) To record adjustments related to long-term capital lease obligations
not assumed by Richey for computer equipment:
Reduction in amortization expense $ (478,000) $ (181,000)
--------------------------------
--------------------------------
Reduction in interest expense $ (325,000) $ (81,000)
--------------------------------
--------------------------------
</TABLE>
NOTE 4. COST SAVINGS
The pro forma income statement does not reflect any cost savings directly
attributable to the acquisition. The Company anticipates significant cost
savings including:
- Reduction in excess facility costs. As part of the Richey
acquisition, STI has new arrangements for reduced space in Toronto,
Montreal and Vancouver. This will result in significant reductions in
facility rent expense. In addition, Richey is not assuming long-term
capital lease obligations for computer equipment. This will result
in significant savings. See pro forma adjustment (4) in Note 3.
Richey is in the process of converting all systems to its mainframe
computer, which it expects to complete in six months. During the
conversion period, Richey will enter into short-term arrangement to
use the STI computer equipment. As part of the transaction, STI,
through Richey, contributed $1,093,000 toward settlement of these
leases with any additional financial costs to settle these leases the
responsibility of Simmonds.
- Reduction in redundant salaries and benefits. In addition to
initiatives taken by past STI management during 1996 to reduce
personnel counts from 280 to 170, Richey is undertaking its own
restructuring that will eliminate approximately 69 additional
redundant positions.
- Elimination of STI management fees of $359,000 that were terminated as
a result of the agreement.
- Reduction in duplicate corporate expenses.
- Reduction in expenses attributed to changes in operating policies
related to branch operating expenses, freight billing policies and
advertising costs.
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 5. BALANCE SHEET PRO FORMA ADJUSTMENTS
The following is a description and summary of the pro forma adjustments to the
condensed balance sheet:
March 31,
1997
Debit (Credit)
--------------
INTERCOMPANY DEBT REPAYMENT AGREEMENT ADJUSTMENTS
Indebtedness due to related party not assumed by Richey.........$ 8,860
Inventory transfer of non-core inventory to Simmonds............ (3,424)
Additional paid-in capital for value of warrants................ (750)
Other long-term debt for financing of amount
for settlement of leases....................................... (1,093)
Contingent payment obligation................................... -
REFINANCING IN CONJUNCTION WITH TRANSACTION
Payoff of STI revolving line of credit for
refinancing of STI debt........................................ 5,756
New line-of-credit borrowings for refinancing of STI debt....... (5,756)
OTHER PURCHASE ACCOUNTING ADJUSTMENTS INCLUDING ASSETS NOT ACQUIRED
AND LIABILITIES NOT ASSUMED
Other........................................................... (260)
Goodwill, acquisition of STI.................................... 1,328
Goodwill, prior acquisitions by STI............................. (285)
Deferred taxes.................................................. 3,000
Assets under capital leases..................................... (3,170)
Accrued transaction costs....................................... (750)
Obligations under capital leases (other long-term debt of $2,256
and current maturities of $597)................................ 2,853
Common stock of STI............................................. 866
Accumulated deficit of STI...................................... (7,175)
To record purchase accounting adjustments in accordance with Accounting
Principles Board Opinion No. 16 and to reflect recapitalization and adjustments
for related party debt repayment agreement, where $3.4 million of non-core
inventory was transferred to Simmonds, Simmonds received 197,044 of Richey
common stock warrants valued at $750,000, STI contributed $1,093,000 toward
settlement of capital lease obligations to be retained by Simmonds and agreed to
make a contingent payment based upon STI earnings in 2001, for settlement of all
related party debt.