UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________ to __________
__________
Commission File No. 0-15551
DATAFLEX CORPORATION
(Exact name of Registrant as specified in its charter)
New Jersey 22-2163376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3920 Park Avenue
Edison, New Jersey 08820
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (908) 321-1100
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act: None
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 twelve (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 _____
As of August 9, 1996 there were 5,563,206 shares of the
Registrant's Common Stock outstanding.
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<CAPTION>
DATAFLEX CORPORATION
Consolidated Balance Sheets
June 30, March 31,
1996 1996
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $2,063,539 $ 499,144
Accounts Receivable, Net 44,341,148 57,333,174
Inventory, Net 29,570,982 25,754,983
Net Assets Held for Sale 4,500,000 45,229,410
Deferred Tax Asset 300,000 3,287,647
Income Taxes Receivable 2,206,046 828,823
Other Current Assets 11,447,936 8,428,151
Total Current Assets 94,429,651 141,361,332
Property and Equipment, Net 9,747,036 9,436,611
Other Assets 658,088 798,919
Deferred Tax Asset 1,700,519 -
Goodwill 18,524,913 18,715,751
Total Assets $ 125,060,207 $ 170,312,613
Liabilities and Shareholders' Equity
Current Liabilities:
Current Portion of Long-Term Debt $7,213,483 32,967,368
Accounts Payable 20,019,754 42,477,509
Accrued Expenses and Other Payables 7,712,883 8,385,420
Total Current Liabilities 34,946,120 83,830,297
Long-Term Debt 58,341,546 54,061,619
Deferred Tax Liability - 347,640
Other Long-Term Liabilities 209,226 224,627
Total Liabilities 93,496,892 138,464,183
Commitments and Contingencies
Shareholders' Equity:
Common Stock - No Par Value;
Authorized 20,000,000 Shares; Issued
5,599,281 and 5,587,661 Shares at June 30,
1996 and March 31, 1996, respectively 23,196,255 23,064,542
Less: Loans Receivable for Exercised Options (194,269) (311,024)
Retained Earnings 9,156,474 9,690,057
32,158,460 32,443,575
Less: Treasury Stock - At Cost;
113,901 Shares at June 30,
1996 and March 31, 1996 (595,145) (595,145)
Total Shareholders' Equity 31,563,315 31,848,430
Total Liabilities and Shareholders' Equity $ 125,060,207 $ 170,312,613
See Notes to Consolidated Financial Statements
</TABLE>
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<TABLE>
<CAPTION>
DATAFLEX CORPORATION
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,
1996 1995
<S> <C> <C>
Revenue
Equipment $ 75,951,996 $ 99,376,132
Service 10,079,398 10,948,792
Total Revenue 86,031,394 110,324,924
Cost of Revenue
Equipment 67,376,631 89,684,640
Service 8,285,911 8,740,465
Total Cost of Revenue 75,662,542 98,425,105
Gross Profit 10,368,852 11,899,819
Selling, General & Administrative Expenses 9,430,563 9,419,522
Amortization of Goodwill 190,710 283,695
Operating Income 747,579 2,196,602
Interest Expense, Net 1,683,688 1,653,630
(Loss) Income Before Income Taxes (936,109) 542,972
(Benefit from) Provision for Income Taxes (402,527) 233,478
Net (Loss) Income $ (533,582) $ 309,494
(Loss) Earnings Per Common Share $ (0.10) $ 0.06
Weighted Average Common
Shares Outstanding 5,482,123 5,281,697
</TABLE>
See Notes to Consolidated Financial Statements
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<TABLE>
<CAPTION>
DATAFLEX CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended June 30,
1996 1995
<S> <C> <C>
Operating Activities:
Net (Loss) Income $ (533,582) $ 309,494
Adjustments to Reconcile Net Income to Net Cash:
Depreciation and Amortization 808,144 1,047,848
Amortization of Restricted Stock Grants 77,533 40,397
Deferred Taxes 939,488 (10,496)
Change in Assets and Liabilities:
Accounts Receivable 12,992,026 (8,716,195)
Inventory (3,815,999) (4,334,595)
Net Assets Held for Sale 40,729,410 -
Other Current Assets (3,138,320) 1,218,377
Income Taxes Receivable (1,377,223) -
Other Assets 131,743 (197,195)
Accounts Payable 22,457,754 (4,546,762)
Accrued Expenses and Other Payables (672,538) 305,105
Income Taxes Payable - 143,053
Other Long-Term Liabilities (15,401) (23,795)
Net Cash - Operating 23,667,527 (14,764,764)
Investing Activities:
Capital Expenditures (918,643) (822,064)
Net Cash - Investing (918,643) (822,064)
Financing Activities:
Proceeds from Issuance of Notes Payable 40,855,362 72,862,929
Payments of Notes Payable (62,307,323) (57,191,506)
Payments on Long-Term Borrowings (21,999) (23,795)
Receipts on Officers Loans Receivable 235,290 70,655
Proceeds - Common Stock, Options 54,181 -
Net Cash - Financing (21,184,489) 15,718,283
Net Increase in Cash 1,564,395 131,455
Cash - Beginning of Year 499,144 5,589,741
Cash - End of Year $ 2,063,539 $ 5,721,196
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
DATAFLEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the Company and its wholly-
owned subsidiary. All significant intercompany accounts and transactions have
been eliminated in consolidation.
The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
for reporting on Form 10-Q. Certain information and footnote disclosures
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.
These consolidated financial statements should be read in conjunction with
the summary of accounting policies and notes to consolidated financial
statements included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1996.
In the opinion of management, the consolidated financial statements reflect
all adjustments consisting of normal recurring adjustments necessary for a fair
presentation of the financial condition, results of operations and cash flows
for such periods. However, these results are not necessarily indicative of the
results for any other interim period or the full year.
B) INVENTORY
Inventory consists of:
June 30, March 31,
1996 1996
Finished Goods $26,001,798 $21,989,311
Spare Parts, Net 3,569,184 3,765,672
$29,570,982 $25,754,983
Accumulated amortization of spare parts inventory was $1,226,414 and
$906,887 at June 30, 1996 and March 31, 1996, respectively. Amortization
expense amounted to $287,243 and $373,741 for the three-month periods ended June
30, 1996 and 1995, respectively.
C) OTHER CURRENT ASSETS
The balance in other current assets at June 30, 1996 and March 31, 1996
includes receivables from major vendors for returned goods, marketing and other
programs of $6,331,286 and $7,375,799, respectively.
D) DISPOSITIONS OF BUSINESSES
In May, the Company completed the sale of substantially all the assets and
the transfer of substantially all the liabilities of its Western region
(primarily its Alameda, California and Tempe, Arizona locations) for
approximately $42,000,000 in cash, including $5,000,000 placed in escrow pending
final adjustments. The cash proceeds were used to reduce the Company's
accounts payable and interest-bearing obligations on its credit facility
with IBM Credit Corporation.
In July, the Company completed the sale of substantially all the assets and
the transfer of substantially all the liabilities of its Valtron division for
$2,900,000 in cash, $750,000 in forgiveness of a note payable and the receipt of
a three-year note of $850,000, bearing interest at 9% per annum.
The aggregate anticipated loss on these transactions was recorded at March
31, 1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship to total revenues of the items listed in the Company's Consolidated
Statements of Operations:
Percentage of Revenue
Quarters Ended June 30,
1996 1995
Revenue 100.0% 100.0%
Cost of Revenue 87.9 89.2
Gross Profit 12.1 10.8
Selling, General and
Administrative Expenses 11.0 8.5
Amortization of Goodwill .2 .3
Operating Income .9 2.0
Interest Expense, Net 2.0 1.5
(Loss) Income Before Income Taxes (1.1) .5
(Benefit from) Provision for
Income Taxes ( .5) .2
Net (Loss) Income ( .6%) .3%
QUARTER ENDED JUNE 30, 1996 COMPARED TO THE QUARTER ENDED
JUNE 30, 1995
Revenues decreased by $24,294,000, or 22%, to $86,031,000 for the quarter
ended June 30, 1996, as compared with $110,325,000 for the quarter ended June
30, 1995. The decrease was due to the sale of the Company's Western region as
of April 1, 1996. On a comparable basis, excluding revenues associated with the
Western region for the first quarter of fiscal 1996, revenues increased by
$9,860,000, or 13%. This increase primarily relates to incremental revenues
from one significant customer in the Company's Midwest region and continued
growth in the middle market accounts supported by the Company's Southeast
region.
Gross profit decreased by 12.9%, or $1,531,000, from $11,900,000 in the
first quarter of last year to $10,369,000 in the first quarter of the current
fiscal year. This decrease results from the exclusion of gross profit
contribution provided by the Western region. As a percentage
of revenues, gross profit increased to 12.1% for the quarter ended June 30, 1996
as compared to 10.8% for the quarter ended June 30, 1995. This increase is
primarily due to the disposition of less profitable services business in the
Western region.
Selling, general and administrative expenses increased by $11,000, or 0.1%,
for the quarter ended June 30, 1996 as compared to the same quarter in the prior
year. As a percentage of revenues, selling, general and administrative expenses
increased to 11% in the quarter ended June 30, 1996 from 8.5% in the comparable
quarter in the last fiscal year. This increase is primarily due to selling,
general and administrative expenses associated with the Company's Valtron
division which was acquired in July 1995.
Amortization of goodwill decreased $93,000, or 32.8%, to $191,000 in the
first quarter of fiscal 1997 from $284,000 in the comparable quarter of last
year due to the disposition of goodwill associated with the sale of the
Company's Western region.
Interest expense increased by $30,000, or 2%, to $1,684,000 in the first
quarter of fiscal 1997 as compared to $1,654,000 in the comparable quarter last
year. This increase primarily results from higher interest costs due to higher
interest rates partially offset by lower average borrowings.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was funded by the Company's
Inventory and Working Capital Agreement with IBM Credit Corporation, cash
flow from operations and proceeds from the sale of the Company's Western
operations.
Net cash used in investing activities of $919,000 reflects capital
expenditures in support of the Company's growth. The Company has no material
commitments for capital expenditures for the fiscal year ending March 31, 1997.
Net cash provided by financing activities increased primarily due to the
net decrease in notes payable of $21,184,000 under an Inventory and Working
Capital Agreement executed between the Company, Dataflex Southwest Corporation
and IBM Credit Corporation. This decrease is due to the proceeds received from
the sale of the Company's Western region.
The Company presently is involved in negotiations to sell its New Jersey,
New York, Illinois and Wisconsin operations. No agreement has been signed and
there can be no assurance that a sale will be consummated.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - None required to be filed for Part II of this report.
b. Report on Form 8-K
(1) Report on Form 8-K reporting Items 2 and 7, dated May 24, 1996,
filed June 10, 1996.
<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 under-
signed thereunto duly authorized.
Dated: August 19, 1996
DATAFLEX CORPORATION
____________________________________
By: /s/ Richard C. Rose
Richard C. Rose
Chairman and Chief Executive Officer
____________________________________
By: /s/ Raymond DioGuardi
Raymond DioGuardi
Senior Vice President, Finance
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,063,539
<SECURITIES> 0
<RECEIVABLES> 44,341,148
<ALLOWANCES> 0
<INVENTORY> 29,570,982
<CURRENT-ASSETS> 94,429,651
<PP&E> 13,782,038
<DEPRECIATION> 4,035,002
<TOTAL-ASSETS> 125,060,207
<CURRENT-LIABILITIES> 34,946,120
<BONDS> 1,165,919
0
0
<COMMON> 23,196,255
<OTHER-SE> 8,367,060
<TOTAL-LIABILITY-AND-EQUITY> 125,060,207
<SALES> 86,031,394
<TOTAL-REVENUES> 86,031,394
<CGS> 75,662,542
<TOTAL-COSTS> 75,662,542
<OTHER-EXPENSES> 9,621,273
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,683,688
<INCOME-PRETAX> (936,109)
<INCOME-TAX> (402,527)
<INCOME-CONTINUING> 1,683,688
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (533,582)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
