SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended January 1, 1995 Commission file no. 0-10611
MILGRAY ELECTRONICS, INC.
[Exact name of Registrant as specified in its charter]
New York 13-5600636
[State or other jurisdiction of [I.R.S. employer
incorporation or organization] identification no.]
77 Schmitt Boulevard, Farmingdale, N.Y. 11735
[Address of principal executive offices] [Zip code]
Registrant's telephone number, including
area code: [516] 420-9800
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, 3,354,588 shares as of January 27, 1995
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Condensed Consolidated Balance Sheets -
January 1, 1995 and September 30, 1994 2
Consolidated Statement of Stockholders' Equity -
Three Months Ended January 1, 1995 3
Condensed Consolidated Statements of Income -
Three Months Ended January 1, 1995
and January 2, 1994 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended January 1, 1995 and
January 2, 1994 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II - Other Information
Signatures 9
- 1 -
<TABLE>
PART I - FINANCIAL INFORMATION
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 1, September 30,
1995 1994
<S>
ASSETS
Current assets <C> <C>
Cash and other current assets $ 2,668,895 $ 3,551,045
Trade accounts receivable 28,631,324 29,527,495
Inventories 40,139,947 33,676,367
Total current assets 71,440,166 66,754,907
Property, plant and equipment - at cost
less accumulated depreciation and
amortization of $1,936,766 at January
1, 1995 and $1,815,986 at September
30, 1994 3,330,221 3,248,041
Other assets 414,261 441,326
$75,184,648 $70,444,274
</TABLE>
<TABLE>
<CAPTION>
<S>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities <C> <C>
Accounts payable $20,910,517 $15,529,987
Other current liabilities 4,029,698 3,865,814
Total current liabilities 24,940,215 19,395,801
Long-term debt 20,145,836 22,733,333
Deferred income taxes payable 317,247 317,247
Stockholders' equity
Common stock - par value $.25 per share
Authorized 4,000,000 shares; issued,
3,398,314 shares at January 1, 1995
and September 30, 1994 849,579 849,579
Capital in excess of par value 729,801 729,801
Retained earnings 28,271,726 26,488,269
29,851,106 28,067,649
Less treasury stock - at cost [43,726
shares at January 1, 1995 and
September 30, 1994] 69,756 69,756
29,781,350 27,997,893
$75,184,648 $70,444,274
<F1>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED JANUARY 1, 1995
<CAPTION>
Capital
in Excess
Common Stock of Par Retained Treasury
Shares Amount Value Earnings Stock Total
<S>
Balance, <C> <C> <C> <C> <C> <C>
September 30, 1994 3,398,314 $849,579 $729,801 $26,488,269 $[69,756] $27,997,893
Net Income 1,783,457 1,783,457
Balance,
January 1, 1995 3,398,314 $849,579 $729,801 $28,271,726 $[69,756] $29,781,350
<F2>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
THREE MONTHS ENDED
January 1, January 2,
1995 1994
<S> <C> <C>
Net Sales $51,282,517 $42,813,677
Costs and expenses
Cost of sales 39,470,936 32,657,953
Selling, general and
administrative expenses 8,641,975 7,294,868
Interest expense, net 339,149 241,606
48,452,060 40,194,427
Income before income taxes 2,830,457 2,619,250
Income taxes 1,047,000 969,000
Net Income 1,783,457 1,650,250
Retained earnings at beginning of
period 26,488,269 20,295,144
Retained earnings at end of period $28,271,726 $21,945,394
Income per share $ .53 $ .49
Weighted average common shares 3,354,588 3,331,142
outstanding
<F3>
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE>
<TABLE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
THREE MONTHS ENDED
January 1, January 2,
1995 1994
<S>
Cash flows from operating activities
Net cash provided by [used in] <C> <C>
operating activities $2,459,524 $[2,943,299]
Cash flows from investing activities
Acquisition of property and equipment [202,960] [73,449]
Net cash used in investing
activities [202,960] [73,449]
Cash flows from financing activities
Notes payable - bank [153,952] 171,432
Increase [decrease] in long-term debt,
including current maturities [2,587,497] 2,618,141
Other - 201,309
Net cash provided by [used in]
financing activities [2,741,452] 2,990,882
Net decrease in cash [484,888] [25,866]
Cash at beginning of year 2,387,945 1,869,954
Cash at end of period $1,903,057 $1,844,088
Supplemental cash flow information
Interest paid $322,000 $251,000
Income taxes paid 402,000 2,480,000
<F4>
See notes to condensed consolidated financial statements.
</TABLE>
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MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JANUARY 1, 1995 AND JANUARY 2, 1994
NOTE 1: The accompanying condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q and do not include all the information and footnote
disclosure required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments [consisting of normal recurring accruals]
necessary for a fair presentation have been included. Operating
results for the three months ended January 1, 1995 are not
necessarily indicative of the results that may be expected for
the year ending September 30, 1995. These statements should be
read in conjunction with the consolidated financial statements
and related notes included in the Company's annual report to
shareholders on Form 10-K for the year ended September 30, 1994.
NOTE 2: Inventories consist of electronic components, computer
peripherals and wire products held for resale and components used
in the assembly of connectors and are priced at the lower of cost
or market by the use of an estimated gross profit percentage.
NOTE 3: Earnings per share were calculated by dividing the
weighted average number of common shares outstanding during each
period. Earnings were restated to give effect to a stock split
[Note 4].
NOTE 4: On August 9, 1994, the Board of Directors declared a two-
for-one stock split in the form of 100% stock dividend payable
on September 23, 1994 to stockholders of record on August 30,
1994. Accordingly, the weighted average common shares
outstanding for the three months ended January 2, 1994 were
restated to give effect to this stock split.
- 6 -<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Company relies upon cash flow provided from operations and
bank financing to provide the cash flow necessary for its business
operations. On September 29, 1993, the Company entered into an
unsecured revolving credit agreement with two major money center
banks which provides for maximum borrowings of $20,000,000. This
agreement was amended in December 1993 to provide for additional
borrowings of $10,000,000 allowing for maximum borrowings of
$30,000,000. This facility permits the Company to borrow at the
banks' prime rate less a negotiated discount for one of the banks,
or at its option, the banks' Bankers Acceptance Discount Rate plus
negotiated commissions or the banks' Eurodollar rate plus
negotiated commissions. At January 1, 1995, the banks' prime rate
available to the Company after adjustment for a negotiated
discount, was 7.95%, the Bankers Acceptance Discount Rate including
the negotiated commissions was 6.6% weighted average interest rate
and the Eurodollar rate including the negotiated commissions was
6.6% weighted average interest rate. Maximum borrowings are based
on the sum of 90% of eligible receivables and the lower of 50% of
eligible inventory or $9,000,000. The agreement as amended expires
on December 31, 1996 and any outstanding balances on such date are
to be repaid.
The Company does not currently have or anticipate material
commitments for capital expenditures. Working capital at January
1, 1995 amounted to $46,500,000 versus $47,400,000 at September 30,
1994. At January 1, 1995, liabilities to net worth ratio
[leverage] was 1.52 times the stockholders' equity, the same as the
leverage ratio at September 30, 1994.
The Company believes that its cash flow requirements for
fiscal 1995 will be met by its operating results and the use of its
bank credit facility.
Three months ended January 1, 1995
Compared to the three months ended
January 2, 1994
Results of Operations
Net sales were $51,283,000 in the first quarter of fiscal 1995
compared to $42,814,000 in the like period in the preceding year.
This increase in sales volume of approximately 20% resulted
primarily from improved customer demand across a broad spectrum of
product lines. Gross profit decreased from 23.7% in the first
fiscal quarter of 1994 to 23.0% in the same period in 1995 as a
result of changes in product mix and increased competition.
Selling, general and administrative expenses amounted to $8,642,000
[16.8% of sales] in the first quarter of fiscal 1995 compared to
$7,295,000 [17.0% of sales] in the comparable quarter in the 1994
- 7 -<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations. [cont'd.]
fiscal year. The increase in selling, general and administrative
expenses of $1,347,000 or 18.1% when compared to the like period in
the preceding year is primarily due to increases in salaries,
commissions and other costs needed to support the higher sales
volume and the addition of sales and marketing staff to enable the
Company to sustain its rate of growth. Interest costs in the
current quarter amounted to $339,000 [0.7% of sales] compared to
$242,000 [0.6% of sales] in the previous year as a result of higher
interest rates and higher levels of borrowing. Income taxes
amounted to $1,047,000 [37% of pre-tax income] in the fiscal 1994
period and $969,000 [37% of pre-tax income] in the comparable
quarter of the preceding year.
Net income was $1,783,000 for the fiscal quarter ended January
1, 1995 compared to $1,650,000 for the first three months of fiscal
1994 as a result of the factors previously discussed.
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<PAGE>
PART II - OTHER INFORMATION
No information to be reported.
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.
Date February 8, 1995 MILGRAY ELECTRONICS, INC.
[Registrant]
By: John Tortorici
John Tortorici, Vice President-Finance
[Authorized officer and principal
financial officer]
