<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 17, 1995
WESTERN MICRO TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
California 0-11560 94-2414428
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
12900 Saratoga Avenue, Saratoga, CA 95070
(Address of principal executive offices) (Zip Code)
(408) 725-1660
(Registrant's telephone number,
including area code)
Page 1 of 4
Exhibit Index located at page 4
<PAGE> 2
Item 5. Other Events.
Registrant signed a letter of intent, attached hereto as
Exhibit 99.1, which is incorporated herein by reference and made a part of this
Current Report on Form 8-K, relating to the sale of its electronic semiconductor
components distribution business to Reptron Electronics, Inc., a Florida
corporation. It is proposed that Reptron acquire Registrant's semiconductor
components related inventory and certain receivables, furniture and equipment,
and assume certain payables, for cash at a price of approximately net book
value. In addition, Reptron will agree to assume certain of Registrant's lease
obligations.
The Registrant's press release dated April 17, 1995 announcing
the signing of this letter of intent attached hereto as Exhibit 99.2, is
incorporated herein by reference and made a part of this Current Report on Form
8-K.
The Registrant's press release dated April 24, 1995 announcing
its financial results for the year ended December 31, 1994, attached hereto as
Exhibit 99.3, is incorporated herein by reference and made a part of this
Current Report on Form 8-K.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Letter of Intent dated April 14, 1995 between
Western Micro Technology, Inc. and Reptron, Inc.
99.2 Press Release dated April 17, 1995.
99.3 Press Release dated April 24, 1995.
Page 2 of 4
Exhibit Index located at page 4
<PAGE> 3
SIGNATURE
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 hereunto duly authorized.
Dated: April 25, 1995
WESTERN MICRO TECHNOLOGY, INC.
By /s/ P. SCOTT MUNRO
--------------------------
Page 3 of 4
Exhibit Index located at page 4
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
----------- ----------- -------------
<S> <C> <C>
99.1 Letter of Intent dated April 14, 1995 between Western
Micro Technology, Inc. and Reptron, Inc.
99.2 Press Release dated April 17, 1995
99.3 Press Release dated April 24, 1995
</TABLE>
Page 4 of 4
Exhibit Index located at page 4
<PAGE> 1
April 14, 1995
Board of Directors
Western Micro Technology, Inc.
12900 Saratoga Avenue
Saratoga, CA 95070
Re: Potential Acquisition of Assets Comprising the Component
Distribution Business of Western Micro Technology, Inc.
Gentlemen:
1. By this letter, Reptron Electronics, Inc., a Florida
corporation, expresses its intent to purchase all of the assets comprising the
electronic component distribution business (the "Assets") of Western Micro
Technology, Inc., a California corporation ("Western"), including but not
limited to:
a. Accounts Receivable;
b. Inventory;
c. Furniture and fixtures;
d. Customer/prospective customer lists;
e. Open sales orders ("Backlog");
f. Request for quotations;
g. All real estate and personal property leases and the rights
incident thereto (excepting therefrom (1) the warehouse
facility located in Campbell, California, (2) the office
facility located in Burr Ridge, Illinois, and (3) the office
facility in Raleigh, North Carolina); provided, however,
that Reptron shall assume 50% of the obligations under the
lease for the office facility located in Saratoga,
California until Western has vacated the space, at which
time Reptron shall assume all of the obligations under such
lease.
<PAGE> 2
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 2
h. Rights under contracts and agreements, including the full
benefit of any and all orders, oral or in writing, placed
with and accepted by Western on or prior to the Date of
Closing, which have not been completely performed or filled
prior to the date of closing;
i. All competition and confidentiality agreements and running
to the benefit of Western executed by persons who were
employed and/or associated with the electronic component
distribution business;
j. Hold harmless and indemnification covenants running to the
benefit of Western incident to and in connection with the
electronic component distribution business;
k. Deposits placed as collateral for commercial letters of
credit issued in connection with any transaction associated
with the electronic component distribution business;
l. Computer software attendant to the electronic component
distribution business;
m. Copies of all personnel records for those Western employees
who are hired by Reptron as of or subsequent to the Date of
Closing;
n. The interests of Western in any and all claims of Western
attendant to the electronic component distribution business
against any other person, whether now or hereafter accrued,
contingent or otherwise, known or unknown, including, but
not limited to claims for collection or indemnity, claims in
bankruptcy, claims for contribution and choses in action.
The Assets purchased shall be free and clear of all liens, encumbrances and
security interests. Reptron will also agree to assume certain liabilities of
Western, consisting of the leases identified in paragraph 1.g above, all
accounts payable relating to the electronic component distribution business as
of the Date of Closing and open purchase orders relating to the electronic
component distribution business as of the Date of Closing. The amount of the
accounts payable as of the Date of Closing shall not exceed the amount of the
Purchase Price. In addition, Reptron will agree to offer employment to certain
identified
<PAGE> 3
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 3
Western employees on terms and conditions (i.e., benefits) similar to Reptron's
similarly situated employees.
2. The purchase of the Assets shall be in conformity with the
terms and conditions of definitive Purchase Agreement ("Agreement") anticipated
to be subsequently negotiated between the parties. Except for Paragraphs 3, 4
and 5 hereof, this letter is not contractual in nature, notwithstanding the
signature of each party hereto, and reflects only the intention to proceed
toward the negotiation of an Agreement. Notwithstanding anything in this
letter to the contrary, and further notwithstanding the limited specificity
herein of elements that may be encompassed in an Agreement, if negotiated, if
the parties do not negotiate, execute and deliver an Agreement by the earlier
of: (i) May 5, 1995 or (ii) Reptron's prior written notice to Western that it
will no longer proceed in this regard, this expression of interest shall
thereafter cease, and, except as set forth in Paragraphs 3, 4 and 5, neither
Reptron nor Western shall have any obligation or claims against the other by
way of damages or specific performance, including, but not limited to any
claims for the failure of the parties to successfully negotiate the Agreement
for whatever reason. If such an Agreement is executed and delivered, its terms
shall control the respective rights and obligations of the parties and the
conditions and procedures of closing (hereinafter referred to as "Date of
Closing"). The Agreement may, among other matters, contain the following:
a. The purchase price (the "Purchase Price") for the Assets
shall be $100,000 plus the sum of the net book value
(determined under GAAP and as for financial statement
reporting purposes as of the last business day immediately
proceeding the Date of Closing) of the following:
(i) All Accounts Receivable representing sales made by
the electronic component distribution business as of
the Date of Closing (the "Accounts Receivable
Amount").
(ii) All Inventory of the electronic component
distribution business on hand on the Date of Closing
(the "Inventory Amount").
(iii) The net book value of all furniture and fixtures of
the electronic component distribution business (the
"Furniture and Fixture Amount").
<PAGE> 4
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 4
b. The Purchase Price shall be remitted by Reptron to Western
by wire transfer on the Closing Date. The amount remitted
shall equal $100,000 plus the difference between: (1) the
sum of: (A) the Accounts Receivable Amount, (B) the
Inventory Amount, and (C) the Furniture and Fixture Amount
and, (2) an amount equal to the sum of the Accounts Payable
assumed by Reptron on the Date of Closing.
c. On the Closing Date, Western shall place a portion of the
proceeds from the Purchase Price in an escrow account with a
third-party escrow agent selected by mutual agreement of the
parties, which escrow shall be maintained for a period of
seven months from the Date of Closing (the "Escrow
Account"). The amount deposited in the Escrow Account shall
represent the aggregate value of (i) all Accounts Receivable
of any customer account any portion of which is aged over
ninety days as of the Date of Closing and (ii) all Inventory
on hand on the Closing Date (A) for which Western does not
have in effect a franchise agreement as of the Date of
Closing, (B) which has no price or stock rotation
protection, (C) which is nonreturnable and noncancellable or
(D) which represents Mitsubishi products. (Based solely on
an estimate of these amounts as of the date hereof, the
amount that would be deposited in the Escrow Account would
be $1,700,000; provided, however, that this number is
provided for informational purposes only and the actual
amount to be deposited in the Escrow Account on the Closing
Date will be based on amounts as of the Date of Closing.)
If within 90 days of the Date of Closing, any such Accounts
Receivable have not been collected by Reptron or if within
six months of the Date of Closing any such Inventory has not
been sold by Reptron, Reptron may recover the full value of
such Accounts Receivable or the book value (i.e., escrowed
amount) of such Inventory out of the Escrow Account, so long
as Reptron assigns such Accounts Receivable or Inventory, as
the case may be, to Western.
d. Mechanisms for delivery of the purchase price which reflect
the timing constraints, vis-a-vis closing, in the
determining by way of example the balance due on accounts,
and balance on or various liabilities assumed by Reptron on
the Date of Closing.
<PAGE> 5
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 5
e. Representation and warranties and other covenants (including
conduct of the business between signing and closing)
customary in transactions of this type and acceptable to the
parties. Western shall not be required to make any
representations and warranties regarding the use, fitness or
salability of the Inventory, future performance of the
business of the Assets or collectability of the Accounts
Receivable. Indemnification shall be limited to breaches of
representations and warranties and claims must be made
within one year of the Date of Closing.
f. Conditions precedent to Reptron's obligation to enter into a
definitive agreement or close the transaction, as
appropriate, including, but not limited to the following:
(i) Prior to signing a definitive agreement, Reptron's
satisfaction of the results of its due diligence
review, which shall be completed on or before May 5,
1995. In the event an Agreement is executed, the
due diligence period may be extended as therein
agreed by the parties. Such due diligence
examination shall include examination of all
tangible assets and review of all books and records,
contracts and agreements and other relevant
documents of the electronic component distribution
business by Western.
(ii) Prior to signing a definitive agreement, the
securing by Reptron of a written commitment and/or
contract from Ron Mabry for post-closing employment
by Reptron under acceptable terms and conditions.
(iii) Prior to signing a definitive agreement,
satisfactory conclusion of negotiations between
Reptron and the landlords of the Western sales and
administration offices, including, if applicable,
the costs associated with early termination of the
Saratoga, California lease.
(iv) No litigation shall have been commenced or
threatened, the effect of which could restrain or
prevent the carrying out of the transaction
contemplated in the Agreement, or in which an
unfavorable result could have a material
<PAGE> 6
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 6
adverse affect on the electronic component
distribution business of Western.
(v) Compliance by Western with all applicable and
federal and local law.
(vi) Prior to signing a definitive agreement, procurement
of franchise agreements under Reptron's existing
franchise arrangements for the sale of product in
the territories now serviced by Western.
(vii) Reptron shall obtain franchise agreements for the
sale of the product lines currently sold by Western.
(viii) Consents by all governmental agencies and/or
approval and/or consents by third parties which are
necessary or required in order for Reptron to
acquire the Assets and conduct the electronic
component distribution business as currently
conducted by Western.
(ix) All provisions of applicable bulk sales statutes in
each jurisdiction in which applicable shall have
been complied with.
(x) Approval as required by the shareholders of Western.
(xi) Written waiver by NationsBank of applicable
covenants as contained in Reptron's lending
agreements.
g. Conditions precedent to Western's obligation to enter into a
definitive agreement or close the transaction, as
appropriate, including, but not limited to the following:
(i) No litigation shall have been commenced or
threatened, the effect of which could restrain or
prevent the carrying out of the transaction
contemplated in the Agreement, or in which an
unfavorable result could have a material adverse
affect on the electronic component distribution
business of Western.
<PAGE> 7
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 7
(ii) Compliance by Reptron with all applicable and
federal and local law.
(iii) Consents by all governmental agencies and/or
approval and/or consents by third parties which are
necessary or required in order for Reptron to
acquire the Assets and conduct the electronic
component distribution business as currently
conducted by Western.
(iv) Approval as required by the shareholders of Western.
3. Immediately following the execution of this Letter of
Intent, Western shall provide access to its books, records, documents and other
matters as are deemed required to be examined by Reptron so that it may conduct
its due diligence examination as described above. Reptron shall not, for a
period of 2 years following the cessation of the due diligence examination,
disclose the information obtained during that process or, if negotiations
proceed toward an Agreement, further information obtained during those
negotiations. Reptron may however disclose such information to those officers,
employees, directors, attorneys, accountants or financial advisors of Reptron
who need to know such information for purposes of assisting Reptron in
connection with this potential transaction, or as may be required by law upon
advice of counsel. Reptron shall require all of said foregoing persons to whom
such information is disclosed not to disclose any such information to others in
violation of this restriction. This restriction shall not apply to any
information which:
(a) At the time of the disclosure or thereafter is generally
available to or known by the public other than as a result
of an improper disclosure directly or indirectly by Reptron.
(b) Was available to Reptron from a source other than Western or
its officers, employees, agents or attorneys, provided that
such source is or was not
<PAGE> 8
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 8
bound by a confidentiality agreement or obligation with
Western, to which such covenants are known to have existed
by Reptron.
(c) Has been developed by Reptron without violation of the above
restriction.
If an Agreement is not executed by May 5, 1995, Reptron shall, upon the request
of Western, return any and all records and/or copies thereof which had been
provided by Western during this process. In addition, information disclosed to
Reptron by Western in connection with the due diligence process described above
or during negotiations if they commence, other than information received or
made available to Reptron under subparagraph (a), (b) or (c) above, may be used
by Reptron only for the sole purpose of determining whether to enter into
negotiations of a definitive purchase agreement.
4. Immediately following full execution of this Letter of
Intent, the parties shall prepare a mutually acceptable and joint press release
acknowledging the fact that this Letter of Intent has been signed and such
other matters as are mutually deemed appropriate. But for said press release,
such other releases, or communication including discussions with Western's
vendors and employees, all of which being mutually acceptable to each of
Reptron and Western, and requisite filings with federal or state agencies, the
continuing negotiations contemplated herein are to be held in the strictest of
confidence, disclosure of which being limited to only those employees and
representatives of each of Western and Reptron who need to know the existence
of those discussions and this process or as otherwise required by law. Each of
Reptron and Western will direct those individuals to maintain the
confidentiality of these discussions and that process.
5. Western shall not from the date of this letter until May 5,
1995, directly or indirectly, through any director, officer, agent, financial
advisor or otherwise, solicit, initiate, consider, entertain or encourage
submissions of proposals, offers or letters of intent from any person or entity
related to: (1) any acquisition or purchase of all or any portion of the
Assets or (ii) to the extent approval is required by Western, the purchase from
Western, by way of merger or otherwise, of voting shares or instruments through
which voting
<PAGE> 9
Board of Directors
Western Micro Technology, Inc.
April 14, 1995
Page 9
shares may be acquired, other than through employee or director stock options.
Your counter-signature to this letter will acknowledge that the due
diligence period for Reptron's examination of your records will have commenced,
and your agreement to the covenants contained in Paragraphs 3, 4 and 5.
Reptron Electronics, Inc.
/s/ Michael L. Musto
--------------------------------------
By: Michael L. Musto
Its President
AGREED TO AND ACCEPTED BY:
Western Micro Technology, Inc.
/s/ William H. Welling
- ------------------------------
By: William H. Welling
A Director
cc: James L. Kochman
<PAGE> 1
News Release
- --------------------------------------------------------------------------------
Western Micro Technology, Inc.
For Further Information Contact:
Scott Munro, President (408) 725-4767
James W. Dorst, Chief Financial Officer (408) 725-4745
FOR IMMEDIATE RELEASE
WESTERN MICRO TECHNOLOGY, INC. ANNOUNCES IT HAS ENTERED INTO A
LETTER OF INTENT TO SELL ITS ELECTRONIC SEMICONDUCTOR
COMPONENTS DISTRIBUTION BUSINESS TO REPTRON ELECTRONICS, INC.
Saratoga, California, April 17, 1995-----Western Micro Technology, Inc. (Nasdaq
National Market-"WSTM") today announced that it has entered into a letter of
intent to sell its electronic semiconductor components distribution business to
Tampa, Florida-based Reptron Electronics, Inc. (Nasdaq National Market-"REPT").
It is proposed that Reptron acquire Western's semiconductor components related
inventory and certain receivables, furniture and equipment for cash at a price
of approximately net book value. In addition, Reptron will agree to assume
certain of Western's lease obligations.
Reptron Electronics, Inc. is an integrated electronics company operating as a
multi-regional distributor of electronic components and a contract manufacturer
of electronic products.
Western Micro's electronic semiconductor components distribution business
generated approximately $60 million and $16 million in revenues in 1994 and the
first quarter of 1995, respectively, representing approximately 50% and 48% of
Western Micro's total revenues of $119 million for the year and $33.6 million
for the first quarter of 1995, respectively.
Following the proposed sale, Western's business will focus on its computer
systems, peripheral and software business. Currently, Western acts as a
franchised distributor for approximately forty-six manufacturers of computer
systems, peripherals and software, including IBM (AS 400, RS 6000 & PC
Company), Hewlett Packard, AT&T GIS, Oracle and Data General. The business
will operate out of offices in Northern and Southern California, Boston, MA,
New York, NY, Chicago, IL, Raleigh, NC, Atlanta, GA and Seattle, WA.
<PAGE> 2
Western also announced that, upon completion of the acquisition, Ron Mabry is
expected to resign as Western's President and CEO and join Reptron as a Vice
President. Scott Munro will be Western's President following the sale and head
up Western's remaining business, which will consist of computer systems,
peripheral and software. Scott has lead the development and growth of
Western's systems business to date.
"This is a great opportunity for Western," said Scott Munro. "The sale frees
up the management team to focus its efforts entirely on the part of the
business which has achieved the highest rate of growth in the past and which we
believe represents the best opportunity for profitable growth in the future."
The transaction is subject to the completion of due diligence by both parties,
negotiation and execution of a definitive agreement, approval by Western
Micro's shareholders and other customary conditions.
Western Micro Technology, Inc. is a leading value added systems distributor
concentrating on solutions sales and services to VARs, integrators and OEMs.
# # #
<PAGE> 1
News Release
- --------------------------------------------------------------------------------
Western Micro Technology, Inc.
For Further Information Contact:
Ron Mabry, Chairman and CEO (408) 725-1660
James W. Dorst, Chief Financial Officer (408) 725-4745
FOR IMMEDIATE RELEASE
WESTERN MICRO TECHNOLOGY REPORTS FIRST
QUARTER LOSS, STRONG SYSTEMS SALES AND
PENDING RESTRUCTURING
Saratoga, California, April 24, 1995--Western Micro Technology, Inc., (Nasdaq
National Market - "WSTM") reported revenues from continuing operations of
$33,497,000 for their first quarter, ending March 31, 1995, compared with
$30,083,000 for the corresponding quarter a year earlier, an increase of 11%.
The net loss for the quarter was $751,000, equivalent to ($0.20) per share,
compared with a net income of $47,000, or $0.01 per share for the corresponding
quarter a year ago. The net loss for the quarter ended March 31, 1995 included
no amounts attributable to discontinued operations, whereas the net income for
the corresponding prior year quarter included income from discontinued
operations of the North Carolina Testing Division, net of tax, of $167,000.
Commenting on the quarterly results, Mr. Ron Mabry, Western Micro's President,
Chairman and CEO said, "Our Systems Division sales and margins continue to
trend upward. However, the loss of our profitable Test Lab Division business
late last year and the ongoing margin erosion and the loss of suppliers in our
Semiconductor Components Division resulted in Western Micro's unsatisfactory
performance as compared with the same period a year ago."
On Monday, April 17, 1995, the Company announced that it had entered into a
letter of intent to sell the net assets of its Semiconductor Components
Division to Reptron Electronics (Nasdaq National Market - "REPT") at an amount
approximating book value in which Reptron will also assume certain branch lease
liabilities. The transaction is subject to the negotiation of a
<PAGE> 2
definitive agreement, due diligence, approval by the Company's Shareholders and
other customary conditions. It is anticipated that, if the transaction is
consummated with Reptron, the attendant restructuring of the Company will
result in a one-time charge in the quarter ending June 30, 1995, the amount of
which cannot presently be determined. Although no assurances can be given as
to the final outcome of negotiations, management expects that, subsequent to
such closing, Western Micro's balance sheet will be free of short-term debt,
maintain minimal long-term debt, and benefit from an improvement in its
liquidity and cash position. It is further anticipated that Mr. Mabry will
join Reptron in a senior management capacity and that Mr. Scott Munro,
currently the President of the Company's Reseller Division and Senior Vice
President of Sales Operations, will be named President and CEO of Western Micro
Technology, Inc.
"This transaction will allow Western Micro to focus its management efforts on a
growing segment of its current business in a rapidly expanding industry," said
Mr. Munro. "With product offerings from IBM, Hewlett-Packard and AT&T, a
commitment to value-added business, and a stronger balance sheet going forward,
we believe that Western Micro Technology will be well positioned for the
future."
Western Micro Technology is a full-line distributor of electronic semiconductor
components as well as a value added systems distributor concentrating on
solutions sales and services to VARs, integrators and OEMs. Western Micro
posted sales of $119 million in its most recent fiscal year. Western Micro
Technology, Inc. is headquartered in Saratoga, California, with branches in
Saratoga, San Diego, Agoura Hills and Irvine, CA; Beaverton, OR; Bellevue, WA;
Burlington, MA; Marlton, NJ; Raleigh, NC; and Burr Ridge, IL.
<PAGE> 3
WESTERN MICRO TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
UNAUDITED
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-----------------------------
1995 1994
<S> <C> <C>
Net sales $ 33,497 $ 30,083
Cost of goods sold 29,454 26,394
-----------------------------
Gross profit 4,043 3,689
-----------------------------
Gross profit as % of sales 12.07% 12.26%
Selling, general and administrative 4,550 3,621
-----------------------------
Operating income (loss) (507) 68
-----------------------------
Interest expense (net) 275 158
Other income (expense) 31 (3)
-----------------------------
Loss from operations before income tax (751) (93)
-----------------------------
Provision for (benefit from) income taxes -- 27
Loss from continuing operations (751) (120)
Discontinued operations, net of taxes:
Income from discontinued operations -- 167
Net income (loss) $ (751) $ 47
=============================
Net income (loss) per common share:
Continuing operations $ (0.20) $ (0.03)
Discontinued operations $ -- $ 0.04
-----------------------------
Net income (loss) per common share $ (0.20) $ 0.01
=============================
Outstanding shares of common stock 3,759 3,467
=============================
</TABLE>
