<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1997 or
--------------------------------------
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ ------------
-------------------
Commission File No. 0-15551
DATAFLEX CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 22-2163376
------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2145 CALUMET STREET
CLEARWATER, FLORIDA 33765
------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 562-2200
N/A
- --------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
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 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 February 11, 1998, there were 5,963,669 shares of the Registrant's Common
Stock outstanding.
<PAGE> 2
DATAFLEX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1997
(unaudited) and March 31, 1997 1
Consolidated Statements of Operations - Three
months and nine months ended December 31, 1997
and 1996 (unaudited) 2
Consolidated Statements of Cash Flows - Nine
months ended December 31, 1997 and 1996
(unaudited) 3
Notes to Consolidated Financial Statements 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Report on Form 8-K 11
Signatures 12
Exhibit Index 13
</TABLE>
<PAGE> 3
DATAFLEX CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 101,105 $ 1,721,922
Restricted Cash - 3,875,202
Accounts Receivable, Net 23,939,763 21,719,863
Inventory, Net 6,110,110 5,489,153
Net Assets Held for Sale - 3,800,063
Income Taxes Receivable - 1,908,222
Other Current Assets 2,964,819 2,979,125
----------- ------------
Total Current Assets 33,115,797 41,493,550
Property and Equipment, Net 3,102,014 2,708,408
Other Assets 842,188 853,228
Deferred Tax Asset 5,955,443 6,183,780
Assets Held for Sale - Long Term - 1,150,000
Goodwill 9,986,576 8,685,745
----------- ------------
Total Assets $53,002,018 $ 61,074,711
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current Portion of Long-Term Debt $ 1,563,287 $ 1,730,362
Short-Term Debt 18,309,433 20,374,713
Accounts Payable 2,034,352 5,938,021
Accrued Expenses and Other Payables 2,127,139 4,735,576
Income Taxes Payable 186,447 -
----------- ------------
Total Current Liabilities 24,220,658 32,778,672
Long-Term Debt 2,358,219 3,141,701
----------- ------------
Total Liabilities 26,578,877 35,920,373
----------- ------------
Commitments and Contingencies
Shareholders' Equity:
Common Stock - No Par Value;
Authorized 20,000,000 Shares; Issued
5,961,169 Shares at December 31, 1997
and March 31, 1997 24,071,628 24,017,343
Less: Loans Receivable for Exercised
Stock Options (203,170) (194,269)
Retained Earnings 3,158,161 1,934,742
----------- ------------
27,026,619 25,757,816
Less: Treasury Stock - At Cost;
115,382 shares at December 31, 1997
and March 31, 1997 (603,478) (603,478)
----------- ------------
Total Shareholders' Equity 26,423,141 25,154,338
----------- ------------
Total Liabilities and Shareholders' Equity $53,002,018 $ 61,074,711
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
1
<PAGE> 4
DATAFLEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Equipment $35,867,525 $37,119,763 $99,156,319 $186,832,329
Services 2,514,931 3,872,882 8,799,467 24,066,295
----------- ----------- ----------- ------------
38,382,456 40,992,645 107,955,786 210,898,624
----------- ----------- ----------- ------------
Cost of Revenue
Equipment 31,467,507 32,285,700 87,341,912 166,059,432
Services 2,577,952 3,034,517 8,229,021 19,267,304
----------- ----------- ----------- ------------
34,045,459 35,320,217 95,570,933 185,326,736
----------- ----------- ----------- ------------
Gross Profit 4,336,997 5,672,428 12,384,853 25,571,888
Selling, General and Administrative Expenses 3,556,129 4,372,487 9,816,360 21,594,231
Amortization of Goodwill 104,028 148,000 312,082 529,420
----------- ----------- ----------- ------------
Operating Income 676,840 1,151,941 2,256,411 3,448,237
Interest Expense, Net (37,167) 715,906 221,465 4,051,539
Loss on Dispositions of Businesses - - - 6,229,975
----------- ----------- ----------- ------------
(Loss) Income Before Income Taxes 714,007 436,035 2,034,946 (6,833,277)
(Benefit from) Provision for Income Taxes 285,617 178,774 811,527 (2,412,112)
----------- ----------- ----------- ------------
Net Income (Loss) $ 428,390 $ 257,261 $ 1,223,419 $ (4,421,165)
=========== =========== =========== ============
Basic (Loss) Earnings Per Common Share -
Net Income $ 0.07 $ 0.04 $ 0.21 $ (0.78)
=========== =========== =========== ============
Diluted (Loss) Earnings Per Common Share -
Net Income $ 0.07 $ 0.04 $ 0.20 $ (0.78)
=========== =========== =========== ============
Basic Weighted Average Common
Shares Outstanding 5,961,169 5,729,060 5,961,169 5,644,341
Effect of dilutive options 253,915 78,415 220,763 -
Diluted Weighted Average Common
Shares Outstanding 6,215,084 5,807,475 6,181,432 5,644,341
=========== =========== =========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 5
DATAFLEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
Operating Activities:
Net Income (Loss) $ 1,223,419 $ (4,421,165)
Adjustments to Reconcile Net Income
to Net Cash:
Depreciation and Amortization 833,567 1,977,272
Deferred Taxes 228,337 41,293
Loss on Disposition of Businesses - 6,229,975
Amortization of Restricted Stock Grants 54,285 62,164
Interest on Loans Receivable for Exercised
Stock Options (8,901) -
Changes in Assets and Liabilities:
Restricted Cash 3,875,202 -
Accounts Receivable (2,219,900) 34,598,091
Inventory (620,957) 17,075,803
Other Current Assets 14,307 (2,306,980)
Other Assets (4,710) (178,810)
Accounts Payable (3,903,671) (39,131,340)
Accrued Expenses and Other Payables (2,608,437) (3,637,109)
Income Taxes Receivable and Payable 2,094,669 (1,836,180)
Other Long-Term Liabilities - (224,627)
----------- ------------
Net Cash - Operating (1,042,790) 8,248,387
----------- ------------
Investing Activities:
Proceeds from disposals of land, buildings
and equipment 4,950,063 45,229,410
Capital Expenditures (899,643) (1,477,063)
Payment of contingent purchase price of a
previous acquisition of a business (1,612,613) -
----------- ------------
Net Cash - Investing 2,437,807 43,752,347
----------- ------------
Financing Activities:
Proceeds (Payments) from Issuance of Notes (2,065,277) (52,427,490)
Payments on Long-Term Borrowings (950,557) (159,896)
Proceeds from Common Stock and Options - 288,853
Sale of Treasury Stock - (8,333)
Payments on Officers Loans Receivable
for Exercised Stock Options - 235,290
----------- ------------
Net Cash - Financing (3,015,834) (52,071,576)
----------- ------------
Net Increase (Decrease) in Cash (1,620,817) (70,842)
Cash - Beginning of Year 1,721,922 499,144
----------- ------------
Cash - End of Year $ 101,105 $ 428,302
=========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 6
DATAFLEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A) PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
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, as amended, for the
fiscal year ended March 31, 1997.
In the opinion of management, the consolidated financial statements reflect all
adjustments, consisting only 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) EARNINGS PER SHARE
For the period ending December 31, 1997, the Company adopted the Statement of
Financial Accounting Standards No. 128 "Earnings Per Share" which requires
disclosure of basic and diluted earnings per share. Under the new standard,
basic earnings per share is computed as earnings divided by weighted average
shares outstanding, excluding the dilutive effects of stock options and other
potentially dilutive securities to determine basic earnings per share.
Diluted earnings per share is calculated reflecting all dilutive options
and warrants. The adoption of this new standard had an immaterial impact on
basic and diluted earnings per share for the three and nine month periods
ending December 31, 1997 and 1996. All prior period disclosures have been
restated to conform to the current presentation.
Options to purchases 349,700 and 600,020 shares of common stock at prices
ranging from $4 to $8.50 per share were outstanding during 1997 and 1996, but
were not included in the computation of diluted earnings per share because the
options' exercise price was greater than the average market price of the common
shares. The options, which expire on various dates ranging from October 10,
2000 through August 6, 2007, were still outstanding at December 31, 1997 and
1996.
C) ACQUISITIONS OF BUSINESSES
In September 1997, the Company paid $1.6 million to National Data Products Inc.
("NDP"), formerly a computer reseller that was acquired by the Company in
January 1995. The payment related to resolution of the contingent purchase
price under the
4
<PAGE> 7
acquisition agreement and is included in Goodwill.
D) DISPOSITION OF BUSINESSES
On April 18, 1997, the Company completed the sale of certain assets of its
Kindergarten through 12th Grade Education division (the "Education Division") to
Computer Plus, Inc. ("Computer Plus") for approximately $4,300,000, including a
$150,000 escrow pending the future settlement of contingencies as described in
the agreement. The estimated fair market value of the net assets were included
in "Assets Held for Sale" in the March 31, 1997 Consolidated Balance Sheet. The
proceeds from the sale were used to reduce the Company's short term debt. The
Company recorded a loss on impairment of $2,941,185 related to this transaction
primarily due to the write off of Goodwill of $5,864,000 attributable to the
Education Division. The loss is included in the Consolidated Statement of
Operations for the year ended March 31, 1997. The Education Division recorded
revenues of $4,242,581 for the three months ended December 31, 1996.
In October 1996, the Company completed the sale of substantially all the assets
and the transfer of certain liabilities of its Eastern and Midwestern regional
operations (located in Edison, New Jersey, New York, New York, Bensenville,
Illinois and Milwaukee, Wisconsin) to Ameridata of New Jersey, Inc. for
$42,300,000 in cash, after reconciliation in accordance with the asset purchase
agreement, and $1,900,000 in accounts receivable from the Midwestern and
Eastern regional operations. The cash proceeds were used to reduce the
Company's revolving line of credit (the "Line of Credit")with NationsCredit
Commercial Corporation of America ("NationsCredit") and NationsBank, N.A.
(South) ("NationsBank"). The loss on this transaction of $8,978,970 is
included in the Consolidated Statement of Operations for the year ended March
31, 1997. The Eastern and Midwestern regions had no revenues recorded for the
three months ended December 31, 1996.
In July 1996, 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. No
revenues were recorded for the Valtron division for the three months ended
December 31, 1996.
In May 1996, the Company completed the sale of substantially all the assets and
the transfer of substantially all the liabilities of its Western region to
Vanstar Corporation (primarily its Alameda, California and Tempe, Arizona
locations) for approximately $38,100,000 and $400,000 in vendor receivables,
after the settlement of contingencies in accordance with the agreement. The
cash proceeds were used to reduce the Company's accounts payable and interest-
bearing obligations under its credit facility. The loss on disposition of
$4,631,820 was recorded in the Consolidated Statement of Operations for the
year ended March 31, 1996.
5
<PAGE> 8
E) LOSS ON IMPAIRMENT OF ASSETS
The Company also recorded a loss on impairment of $339,040 on the proposed sale
of certain land and buildings in the fourth quarter of fiscal 1997. In August
1997, the Company completed the sale of its headquarters located in Clearwater,
Florida for approximately $1.0 million dollars and $150,000 in deferred rent
expense. The $1.0 million was used to retire the Company's existing mortgage
on the property. The estimated fair market value of the net assets to be
disposed was included in the "Assets Held for Sale - Long Term" at March 31,
1997. The loss on impairment was included in Consolidated Statement of
Operations for the year ended March 31, 1997.
F) CREDIT FACILITY
In December 1996, the Company entered into a two year $38,000,000 credit
facility with NationsCredit and NationsBank, which replaces its former
$120,000,000 credit facility with another bank. The new facility reduces
interest rates the Company is paying for its working capital loans. The
structure of the short-term debt includes the Line of Credit and an inventory
financing agreement.
G) CONTINGENCIES
In August 1996, the Company and Richard C. Rose were named as defendants in a
suit filed in state court in New Jersey, by Gordon McLenithan, a former
executive officer of the Company. Mr. McLenithan alleges that the Company
failed to pay him an amount allegedly owed to Mr. McLenithan upon a change in
control of the Company. Mr. McLenithan also charges Mr. Rose with defamation
and interference with contractual relations. The lawsuit is in the initial
stages of litigation and the Company has denied Mr. McLenithan's allegations
and intends to vigorously contest the suit. The Company is currently unable to
predict the outcome of this lawsuit.
Other claims, suits and complaints arise in the ordinary course of the
Company's business. In the opinion of Company management, such pending matters
are without merit or are of such kind, or involve such amounts, as would not
have a material adverse effect on the financial position or results of
operations of the Company.
6
<PAGE> 9
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements,
particularly with respect to the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Additional written or oral forward-looking statements may be made
by the Company from time to time, in filings with the Securities and Exchange
Commission or otherwise. Such forward-looking statements are within the meaning
of that term in Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such statements may include, but not be
limited to, projections of revenue, income, losses, cash flows, capital
expenditures, plans for future operations, financing needs or plans, plans
relating to products or services of the Company, estimates concerning the
effects of litigation or other disputes, as well as assumptions to any of the
foregoing.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted. Future events and actual results could
differ materially from those set forth in or underlying the forward-looking
statements.
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 Statement of Operations:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of Revenue 88.7% 86.2% 88.5% 87.9%
----- ----- ----- -----
Gross Profit 11.3% 13.8% 11.5% 12.1%
Selling, General and Administrative Expenses 9.3% 10.7% 9.1% 10.2%
Amortization of Goodwill 0.3% 0.4% 0.3% 0.3%
----- ----- ----- -----
Operating Income 1.7% 2.7% 2.1% 1.6%
Interest Expense, Net -0.1% 1.7% 0.2% 1.9%
Loss on Disposition of Businesses 0.0% 0.0% 0.0% 2.9%
----- ----- ----- -----
(Loss) Income Before Income Taxes 1.8% 1.0% 1.9% -3.2%
Income Taxes 0.7% 0.4% 0.8% -1.1%
----- ----- ----- -----
Net (Loss) Income 1.1% 0.6% 1.1% -2.1%
----- ----- ----- -----
</TABLE>
Revenues decreased by $2,610,189 or 6.4%, to $38,382,456 for the three months
ended December 31, 1997 as compared to $40,992,645 for the three months ended
December 31, 1996. For the nine months ended December 31, 1997, revenues
decreased by $102,942,838 or 48.8% to $107,955,786, as compared with
$210,898,624 for the nine months ended December 31, 1996. The decrease in
revenues is due primarily to the sale of the Midwestern and Eastern regions
operations in October 1996 and the sale of the Education Division in April
1997. On a comparable basis, excluding revenues for the Midwestern and
Eastern regions and the Education Division, revenues increased by $1,636,207,
or 4.5% and $19,517, or less than .1%, for the three months and nine months
ended December 31, 1997, as compared to the three and nine months ended
December 31, 1996.
7
<PAGE> 10
Gross Profit decreased by $1,335,431, or 23.5%, to $4,336,997 for the three
months ended December 31, 1997 as compared to $5,672,428 for the three months
ended December 31, 1996. For the nine months ended December 31, 1997, gross
profit decreased by $13,187,035 or 51.6% to $12,384,853 as compared to
$25,571,888 for the nine months ended December 31, 1996. On a comparable basis,
excluding the Midwestern and Eastern regions and the Education Division from
1996 results, gross profit increased by $182,377 or 4.4% and $184,990 or 1.5%
for the three and nine month periods ended December 31, 1997 as compared to the
three and nine months ended December 31, 1996.
As a percentage of revenues, gross profit was 11.3% and 11.5%, respectively, for
the three and nine months ended December 31, 1997 as compared to 13.8% and 12.1%
for the three and nine months ended December 31, 1996. The decrease in gross
profit, as a percentage of sales, for the three months ended December 31, 1997
is primarily due to the sale of the Education division, which contributed a high
gross margin percentage. Gross margins also decreased due to a decline in
service revenues, which yield a higher gross margin percentage. On a comparable
basis, excluding the Midwestern and Eastern regions and the Education Division,
the gross profit percentage was 11.3% and 11.5%, respectively, for the three and
nine months ended December 31, 1997 as compared to 11.3% for the three and nine
months ended December 31, 1996.
Selling, general and administrative expenses decreased by $816,358 or 18.7%
and $11,777,871 or 54.5% to $3,556,129 and $9,816,360, respectively for the
three and nine months ended December 31, 1997 as compared to $4,372,487 and
$21,594,231 for the three and nine months ended December 31, 1996. This
decrease primarily relates to the sale of the Midwestern and Eastern regions in
October 1996 and the sale of the Education Division in April 1997. As a
percentage of revenues, selling, general and administrative expenses were 9.3%
and 9.1%, respectively, for the three and nine months ended December 31, 1997,
as compared to 10.7% and 10.2% for the three and nine months ended December 31,
1996. The decrease in selling, general and administrative expenses as a
percentage of revenues reflects lower corporate overhead following the sales of
the Midwestern and Eastern regions and the Education Division.
Amortization of goodwill decreased by $43,972 or 29.7% and $217,338 or 41.1% to
$104,028 and $312,082, respectively, for the three and nine months ended
December 31, 1997 as compared to $148,000 and $529,420 for the three and nine
months ended December 31, 1996, primarily due to the dispositions of the
Midwestern region and the Education Division.
Net interest expense decreased by $753,073 or 105.2% and $3,830,074 or 94.5% to
($37,167) and $221,465, respectively, for the three and nine months ended
December 31, 1997, as compared to $715,906 and $4,051,539 for the three and
nine months ended December 31, 1996. The decrease primarily relates to reduced
average borrowings resulting from the reduction of debt from the use of the
proceeds of the sales of the Midwestern and Eastern regions and the Education
Division and a reduction in interest rates. The Company also received $124,000
in interest income from an income tax refund it received during the quarter.
8
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1997, the Company used approximately $1.0 million of cash
flow to fund continuing operations. As of December 31, 1997, $16.2 million was
outstanding under the Company's line of credit with NationsBank, N.A. (South)
and NationsCredit Commercial Corporation of America (the "Line of Credit"). The
Line of Credit currently provides that the Company may borrow up to $38.0
million at the London InterBank Offering interest rate ("LIBOR") plus 2 1/2% per
annum. The Line of Credit has an initial term through December 17, 1998, and
borrowings under the Line of Credit are collateralized by most of the Company's
inventory and accounts receivable.
During the nine months ended December 31, 1997, investing activities provided
$4.1 million, net, from the sale of the Education Division. The funds were
received in April 1997 and were used to further reduce the balance under the
Line of Credit. The Company retained and collected approximately $2.8 million
in accounts receivable in connection with the sale of the Education Division.
Additionally, in May 1997, the Company received approximately $3.8 of the $5.0
million escrowed funds relating to the sale of the Company's Midwestern and
Eastern regions, which were used to further decrease amounts outstanding under
the Line of Credit, which were used to decrease amounts outstanding under the
Line of Credit. The Company also received $1.9 million in accounts receivable
generated by the former Midwestern and Eastern regions, approximately $740,000
of which had been collected as of December 31, 1997.
During the nine months ended December 31, 1997, cash used in investing
activities of $1.6 million reflects cash used for the payment of contingent
purchase price on a previous acquisition of a business. The Company also used
$900,000 for capital expenditures in support of the Company's growth. The
Company has no material commitments for capital expenditures for the year
ending March 31, 1998.
Net cash used in financing activities during the nine months ended December 31,
1997 was $3.0 million, resulting primarily from a decrease in short term debt
of $2.1 million resulting from the use of proceeds from the dispositions of the
Company's Education Division and the Midwestern and Eastern regions.
In August 1997, the Company completed the sale of its headquarters in
Clearwater, Florida for approximately $1.0 million in cash and $150,000 in
credit for future rent expense. The cash was used to retire the Company's
existing mortgage on the property.
The Company believes that the cash flow from operations and borrowings under
the Line of Credit, or other credit facilities that may become available to the
Company in the future, will be adequate to meet the working capital
requirements of the Company's current operations for at least the next 12
months. The Company's estimate of the period of time the cash flow from
operations and borrowings under the Line of Credit will fund its working
capital requirements is a forward-looking statement that is subject to risks
and uncertainties, as noted at the beginning of this statement.
9
<PAGE> 12
DATAFLEX CORPORATION
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
None.
ITEM 5. OTHER INFORMATION
None.
10
<PAGE> 13
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(b) Report on Form 8-K
No reports were filed on Form 8-K during the quarter
for which this report is filed.
11
<PAGE> 14
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.
Dated: February 12, 1998
DATAFLEX CORPORATION
By: /s/Richard C. Rose
-------------------------------
Richard C. Rose
Chief Executive Officer
By: /s/Anthony G. Lembo
-------------------------------
Anthony G. Lembo
President, Chief Operating
Officer And Chief Financial
Officer
12
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule (for SEC use only)
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 101,105
<SECURITIES> 0
<RECEIVABLES> 23,939,763
<ALLOWANCES> 1,622,800
<INVENTORY> 6,110,110
<CURRENT-ASSETS> 33,115,797
<PP&E> 3,102,014
<DEPRECIATION> 2,387,432
<TOTAL-ASSETS> 53,002,018
<CURRENT-LIABILITIES> 24,220,658
<BONDS> 358,219
0
0
<COMMON> 24,071,628
<OTHER-SE> 2,954,991
<TOTAL-LIABILITY-AND-EQUITY> 53,002,018
<SALES> 99,156,319
<TOTAL-REVENUES> 107,955,786
<CGS> 87,341,912
<TOTAL-COSTS> 95,570,933
<OTHER-EXPENSES> 10,128,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221,465
<INCOME-PRETAX> 2,034,946
<INCOME-TAX> 811,527
<INCOME-CONTINUING> 2,256,411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,223,419
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
</TABLE>
