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 December 31, 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, 6,773,176 shares as of January 22, 1996
<PAGE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
INDEX
Page No.
Part I - Financial Information
Condensed Consolidated Balance Sheets -
December 31, 1995 and September 30, 1995 2
Condensed Consolidated Statements of Income and
Retained Earnings - Three Months Ended
December 31, 1995 and January 1, 1995 3
Condensed Consolidated Statements of Cash Flows -
Three Months Ended December 31, 1995 and
January 1, 1995 4
Notes to Condensed Consolidated Financial
Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K 8
Signatures 8
Exhibit Index 9
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<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
[dollars in thousands]
<CAPTION>
December 31, September 30,
1995 1995
ASSETS
<S>
Current assets <C> <C>
Cash and other current assets $ 1,970 $ 2,986
Trade accounts receivable 38,484 39,105
Inventories 63,250 55,457
Total current assets 103,704 97,548
Property, plant and equipment - at cost
less accumulated depreciation and
amortization of $2,379 at December
31, 1995 and $2,246 at September 30,
1995 3,614 3,347
Other assets 443 383
$ 107,761 $ 101,278
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S>
Current liabilities <C> <C>
Accounts payable $ 26,433 $ 26,212
Other current liabilities 5,323 5,676
Total current liabilities 31,756 31,888
Long-term debt 36,259 31,633
Deferred income taxes payable 330 330
Stockholders' equity
Common stock - par value $.25 per share;
authorized 60,000,000 shares; issued,
6,816,902 shares at December 31, 1995
and September 30, 1995 1,704 1,704
Retained earnings 37,782 35,793
39,486 37,497
Less treasury stock - at cost [43,726
shares at December 31, 1995 and
September 30, 1995] 70 70
39,416 37,427
$ 107,761 $ 101,278
<F1>
See notes to condensed consolidated financial statements.
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</TABLE>
<TABLE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
[in thousands, except per share data]
<CAPTION>
THREE MONTHS ENDED
December 31, January 1,
1995 1995
<S> <C> <C>
Net sales $68,059 $51,282
Costs and expenses
Cost of sales 53,834 39,471
Selling, general and
administrative expenses 10,360 8,642
Interest expense, net 604 339
64,798 48,452
Income before income taxes 3,261 2,830
Income taxes 1,272 1,047
Net Income 1,989 1,783
Retained earnings at beginning of
period 35,793 26,488
Retained earnings at end of period $37,782 $28,271
Income per share $ .29 $ .27
Weighted average common shares
outstanding 6,773,176 6,709,176
<F2>
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
[in thousands]
<CAPTION>
THREE MONTHS ENDED
December 31, January 1,
1995 1995
<S> <C> <C>
Cash flows from operating activities
Net cash provided by [used in]
operating activities $[5,260] $2,459
Cash flows from investing activities
Acquisition of property and equipment [400] [203]
Net cash used in investing
activities [400] [203]
Cash flows from financing activities
Notes payable - bank [27] [154]
Increase [decrease] in long-term debt
including current maturities 4,644 [2,587]
Net cash provided by [used in]
financing activities 4,617 [2,741]
Net decrease in cash [1,043] [485]
Cash at beginning of year 1,909 2,388
Cash at end of period $866 $1,903
Supplemental cash flow information
Interest paid $603 $322
Income taxes paid 1,118 402
<F3>
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 DECEMBER 31, 1995 AND JANUARY 1, 1995
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 December
31, 1995 are not necessarily indicative of the results that may
be expected for the year ending September 30, 1996. 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, 1995.
NOTE 2: Inventories consist primarily 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 per share were restated to give effect to a stock split
[Note 4].
NOTE 4: On July 19, 1995, the Board of Directors authorized a two-
for-one stock split in the form of a 100% stock dividend payable
on October 19, 1995 to stockholders of record on September 28,
1995. Accordingly, the weighted average common shares
outstanding for the three months ended January 1, 1995 were
restated to give effect to this stock split.
- 5 -
<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
November 7, 1995, the Company entered into an unsecured revolving credit
agreement with three banks which provides for maximum borrowings of
$50,000,000. This facility permits the Company to borrow at the banks'
alternate base rate less a negotiated discount for one of the banks, or at
the Company's option, the banks' Eurodollar rate plus negotiated commissions
or the banks' Bankers Acceptance Discount Rate plus negotiated commissions.
At December 31, 1995, the banks' alternate base rate available to the
Company, after adjustment for a negotiated discount, was 8.24% weighted
average interest rate, the Bankers Acceptance Discount Rate including the
negotiated commissions was 6.82% weighted average interest rate and the
Eurodollar rate plus the negotiated commissions was 6.41% 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 $20,000,000. The
agreement as amended expires on December 31, 1998 and any outstanding
balances are to be repaid.
The Company does not currently have or anticipate having material
commitments for capital expenditures. Working capital at December 31, 1995
amounted to $71,900,000 versus $65,700,000 at September 30, 1995. At
December 31, 1995, liabilities to net worth ratio (leverage) was 1.75 times
the Company's tangible net worth compared to 1.72 times at September 30,
1995.
The Company believes that its cash flow requirements for fiscal 1996 will
be met by its operating results and the use of its bank credit facility.
Three months ended December 31, 1995
Compared to the three months ended
January 1, 1995
Results of Operations
Net sales were $68,059,000 in the first quarter of fiscal 1996 compared
to $51,282,000 in the like period in the preceding year. This increase in
sales volume of approximately 33% resulted primarily from improved customer
demand across a broad spectrum of product lines. Gross profit decreased from
23.0% in the first fiscal quarter of 1995 to 20.9% in the same period in 1996
as a result of changes in product mix and increased competition. Selling,
general and administrative expenses amounted to $10,360,000 [15.2% of sales]
in the first quarter of fiscal 1996 compared to $8,642,000 [16.8% of sales]
in the comparable quarter in the 1995 fiscal year. The increase in selling,
general and administrative expenses of $1,718,000 or 19.9% when compared to
the like period in the preceding year is primarily due to increases in
- 6 -<PAGE>
Management's Discussion and Analysis of Financial
Condition and Results of Operations. [cont'd.]
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 $604,000 [0.9% of sales] compared to $339,000 [0.7% of sales] in the
previous year as a result of higher interest rates and higher levels of
borrowing. Income taxes amounted to $1,272,000 [39% of pre-tax income] in
the fiscal 1996 period and $1,047,000 [37% of pre-tax income] in the
comparable quarter of the preceding year. The increase in the effective
income tax rate was due to the impact of varying state income tax rates on
pre-tax income.
Net income was $1,989,000 for the fiscal quarter ended December 31, 1995
compared to $1,783,000 for the first three months of fiscal 1995 as a result
of the factors previously discussed.
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<PAGE>
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K
(a) The Exhibit Index, which follows the signature page
of this Report on Form 10-Q, is incorporated herein
by reference.
(b) No reports on Form 8-K were filed by registrant
during the quarter for which this Report is filed.
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 January 31, 1996 MILGRAY ELECTRONICS, INC.
[Registrant]
By: John Tortorici
John Tortorici, Vice President-Finance
[Authorized officer and principal
financial officer]
- - 8 -
<PAGE>
MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
27 Financial Data Schedule
- 9 -<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED
STATEMENTS OF INCOME OF MILGRAY ELECTRONICS, INC. AND SUBSIDIARIES AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 38,484
<ALLOWANCES> 0
<INVENTORY> 63,250
<CURRENT-ASSETS> 103,704
<PP&E> 3,614
<DEPRECIATION> 0
<TOTAL-ASSETS> 107,761
<CURRENT-LIABILITIES> 31,756
<BONDS> 36,259
0
0
<COMMON> 1,704
<OTHER-SE> 37,782
<TOTAL-LIABILITY-AND-EQUITY> 107,761
<SALES> 68,059
<TOTAL-REVENUES> 68,059
<CGS> 53,834
<TOTAL-COSTS> 53,834
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 604
<INCOME-PRETAX> 3,261
<INCOME-TAX> 1,272
<INCOME-CONTINUING> 1,989
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,989
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<FN>
<F1>ANSWER IS 0 WHEN THE TAG IS NOT APPLICABLE OR THE TAG DOES NOT CORRESPOND
TO OR IS MORE OR LESS INCLUSIVE THAN THE CAPTION USED IN THE CONDENSED
FINANCIAL STATEMENTS FILED ON FORM 10-Q.
</FN>
</TABLE>
