<PAGE> 1
UNITED STATES
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 July 1, 1995
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 number 0-14643
KENT ELECTRONICS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 74-1763541
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7433 Harwin Drive, Houston, Texas 77036-2015
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 780-7770
Not applicable
- --------------------------------------------------------------------------------
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 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.
At July 27, 1995, 9,828,420 shares of common stock, no par value, are issued
and outstanding.
<PAGE> 2
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 1, April 1,
1995 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (including temporary
investments of $10,805,000 at July 1
and $6,395,000 at April 1).................. $ 5,429,000 $ 4,434,000
Trading securities, net....................... 16,907,000 16,833,000
Accounts receivable, less allowance of
$1,052,000 at July 1 and $979,000 at April 1 34,713,000 33,964,000
Inventories
Materials and purchased products............ 34,661,000 30,080,000
Work in process............................. 3,278,000 3,039,000
------------ ------------
37,939,000 33,119,000
Prepaid expenses and other.................... 2,533,000 2,778,000
------------ ------------
Total current assets...................... 97,521,000 91,128,000
PROPERTY AND EQUIPMENT
Land.......................................... 7,111,000 7,090,000
Buildings..................................... 8,669,000 6,697,000
Furniture, fixtures and equipment............. 27,073,000 26,206,000
Leasehold improvements........................ 1,458,000 1,363,000
------------ ------------
44,311,000 41,356,000
Less accumulated depreciation and amortization (14,402,000) (13,621,000)
------------ ------------
29,909,000 27,735,000
DEFERRED INCOME TAXES............................ 813,000 838,000
OTHER ASSETS..................................... 1,064,000 1,022,000
COST IN EXCESS OF NET ASSETS ACQUIRED,
less accumulated amortization of $1,720,000 at
July 1 and $1,629,000 at April 1.............. 13,076,000 13,167,000
------------ ------------
$142,383,000 $133,890,000
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 3
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 1, April 1,
1995 1995
------------ ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable.............................. $ 17,161,000 $ 15,479,000
Accrued compensation.......................... 3,661,000 4,579,000
Other accrued liabilities..................... 4,010,000 3,057,000
Income taxes.................................. 3,214,000 1,694,000
------------ ------------
Total current liabilities................. 28,046,000 24,809,000
LONG-TERM DEBT.................................... ---- ----
LONG-TERM LIABILITIES............................. 528,000 281,000
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value; authorized
2,000,000 shares; none issued............... ---- ----
Common stock, no par value; authorized
30,000,000 shares; issued and outstanding,
9,812,818 shares at July 1 and 9,804,743
shares at April 1........................... 34,836,000 34,743,000
Additional paid-in capital.................... 25,451,000 25,214,000
Retained earnings............................. 53,522,000 48,843,000
------------ ------------
113,809,000 108,800,000
------------ ------------
$142,383,000 $133,890,000
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
------------------------------------
July 1, July 2,
1995 1994
----------- -----------
<S> <C> <C>
Net sales........................................ $77,585,000 $56,527,000
Cost of sales.................................... 57,612,000 42,003,000
----------- -----------
Gross profit................................ 19,973,000 14,524,000
Selling, general and administrative expenses..... 12,675,000 10,070,000
----------- -----------
Operating profit................................. 7,298,000 4,454,000
Other income (expense)
Interest expense............................ (5,000) (5,000)
Other - net................................. 505,000 155,000
----------- -----------
Earnings before income taxes................ 7,798,000 4,604,000
Income taxes..................................... 3,119,000 1,773,000
----------- -----------
NET EARNINGS................................ $ 4,679,000 $ 2,831,000
=========== ===========
Earnings per share............................... $.45 $.28
==== ====
Weighted average shares.......................... 10,306,200 10,013,400
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------
July 1, July 2,
1995 1994
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings..................................... $ 4,679,000 $2,831,000
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization................ 906,000 911,000
Provision for losses on accounts receivable.. 73,000 50,000
Loss on sale of property, plant and equipment 3,000 --
Stock option expense......................... 237,000 201,000
Provision for unrealized gains on trading
securities................................. (74,000) --
Provision for unrealized losses on short-
term investments........................... -- 135,000
Change in assets and liabilities
(Increase) decrease in accounts receivable. (822,000) 1,673,000
Increase in inventories.................... (4,820,000) (5,412,000)
Decrease in prepaid expenses and other..... 245,000 212,000
Increase in other assets................... (55,000) (18,000)
Decrease in deferred income taxes.......... 25,000 25,000
Increase (decrease) in accounts payable.... 1,682,000 (1,457,000)
Decrease in accrued compensation........... (918,000) (144,000)
Increase in other accrued liabilities...... 953,000 554,000
Increase in income taxes................... 1,520,000 1,100,000
Increase in long-term liabilities.......... 247,000 --
----------- -----------
Total adjustments.................... (798,000) (2,170,000)
----------- -----------
Net cash provided by operating
activities......................... $ 3,881,000 $ 661,000
</TABLE>
(Continued)
5
<PAGE> 6
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------------
July 1, July 2,
1995 1994
---------- ---------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................... $(2,986,000) $(1,138,000)
Net purchases of short-term investments........ -- 125,000
Proceeds from sale of property, plant and
equipment.................................... 7,000 --
----------- -----------
Net cash used by investing
activities....................... (2,979,000) (1,013,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term obligations.............. -- --
Issuance of common stock....................... 93,000 135,000
----------- -----------
Net cash provided by financing
activities....................... 93,000 135,000
----------- -----------
NET INCREASE (DECREASE) IN CASH................... 995,000 (217,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.. 4,434,000 11,382,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........ $ 5,429,000 $11,165,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for
Interest..................................... $ -- $ --
Income taxes................................ $ 1,574,000 $ 648,000
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
The consolidated balance sheet as of July 1, 1995, and the related consolidated
statements of earnings and cash flows for the thirteen week periods ended July
1, 1995 and July 2, 1994, have been prepared by the Company without audit. In
the opinion of management, the financial statements include all adjustments
necessary for a fair presentation. All adjustments made were of a normal
recurring nature. Interim results are not necessarily indications of results
for a full year. For further financial information, refer to the audited
financial statements of the Company and notes thereto for the fiscal year ended
April 1, 1995, included in the Company's Form 10-K for that period.
Sales To Major Customers
For the thirteen weeks ended July 1, 1995, sales to two customers represented
12.8% and 12.2% of net sales. One customer represented 10.3% of net sales for
the thirteen weeks ended July 2, 1994.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the thirteen weeks ended July 1, 1995 increased $21,058,000, or
37.3%, when compared to the same period of the prior year. The sales increase
was attributable to increased demand from existing customers and an expanding
customer base.
Gross profit increased $5,449,000, or 37.5%, compared to the corresponding
period a year ago. Gross profit as a percentage of sales for the period was
25.7%, remaining the same as the corresponding period of the previous year.
Although gross margins have stabilized, highly competitive conditions continue
in the electronics and personal computer industries. The increase in gross
profit was primarily due to increased sales.
Selling, general and administrative ("SG&A") expenses increased $2,605,000, or
25.9%, compared to the same period last year. However, as a percentage of
sales, such expenses declined to 16.3% from 17.8% in the prior year period.
The decline as a percentage of sales reflects the Company's continued focus on
cost containment to reduce such expenses as a percentage of sales. The
increase in SG&A expenses was primarily due to the expenses necessary to
support the growth in the Company's existing operations.
Other-net consists principally of interest and dividend income generated by
cash, cash equivalents and trading securities. The increase in interest and
dividend income is due primarily to higher interest rates and a reduction of
unrealized losses on trading securities.
Net earnings increased $1,848,000, or 65.3%, compared to the corresponding
period a year ago. The additional profit from the increased sales and the
Company's continued focus on cost containment were the primary reasons for the
improved profitability.
8
<PAGE> 9
Liquidity and Capital Resources
Working capital at July 1, 1995 was $69,475,000, an increase of $3,156,000 from
April 1, 1995.
Included in the Company's working capital at July 1, 1995 are investments of
$27,712,000. The Company's investment strategy is low-risk and short-term,
keeping the funds readily available to meet capital requirements as they arise
in the normal course of business. The Company's primary investment vehicle is
a managed fund consisting primarily of taxable, high quality corporate debt
instruments, and is compatible with the Company's stated investment strategy.
The Company intends to apply its capital resources to expand its business by
establishing or acquiring similar distribution and manufacturing operations in
geographic areas that are attractive to the Company, by acquiring new
facilities and by enlarging or improving existing facilities. In addition to
the capital required to purchase existing businesses or to fund start-up
operations, the expansion of the Company's operations at both new and existing
locations will require greater levels of capital to finance the purchase of
additional equipment, increased levels of inventory and greater accounts
receivable.
The Company is currently expanding its manufacturing capacity by building a new
facility on a recently purchased 66-acre parcel of land in Sugar Land, Texas.
Facility construction and equipment will require capital expenditures in this
fiscal year, currently estimated at $14 million, of which approximately $2
million has been spent, with the remainder of the project to be completed in
this fiscal year. Management believes that current resources, along with funds
generated from operations, should be sufficient to meet its current capital
requirements and those anticipated this fiscal year. The Company currently
plans to raise additional funds through a registered offering of common stock
primarily for the construction of additional new manufacturing and distribution
facilities.
9
<PAGE> 10
PART II - OTHER INFORMATION
Items 1, 2, 3, and 5 are not applicable and have been omitted.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on June 29, 1995. At such
meeting, Messrs. Max S. Levit and Richard C. Webb were elected to serve as
directors of the Company for the next three years. The other directors of the
Company, Messrs. Morrie K. Abramson, David Siegel and Alvin L. Zimmerman,
continued in their terms as directors after the meeting. In addition,
shareholders adopted stock option plans and agreements for the Company's
Executive Vice President of Sales-Distribution, Executive Vice President of
Operations-Distribution and the Vice President, Secretary and Treasurer. The
appointment of Grant Thornton LLP as the Company's independent public
accountants for the fiscal year ending March 30, 1996 was ratified.
<TABLE>
<CAPTION>
Votes Against
or Withheld Votes Broker
Proposal Votes For Authority Abstained Non-Votes
-------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C>
1. Election of Directors:
Max S. Levit 8,194,624 35,091 0 0
Richard C. Webb 8,208,573 21,142 0 0
2. Adoption of a stock option
plan and agreement for the
Company's Executive Vice
President of Sales-
Distribution. 5,948,519 2,226,975 54,221 0
3. Adoption of a stock option
plan and agreement for the
Company's Executive Vice
President of Operations-
Distribution. 5,945,790 2,231,210 52,715 0
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Votes Against
or Withheld Votes Broker
Proposal Votes For Authority Abstained Non-Votes
-------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C>
4. Adoption of a stock option
plan and agreement for the
Company's Vice President,
Secretary and Treasurer. 5,950,433 2,226,471 52,811 0
5. Ratification of the
appointment of Grant
Thornton LLP as the
Company's independent public
accountants for the fiscal
year ending March 30, 1996. 8,203,009 9,960 16,746 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
11 - Statement re computation of per share earnings.
27 - Financial Data Schedule (filed only in electronic format).
(b) Reports on Form 8-K:
Not applicable.
11
<PAGE> 12
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.
KENT ELECTRONICS CORPORATION
--------------------------------------
(Registrant)
Date: July 28, 1995 By: /s/ Morrie K. Abramson
---------------------- --------------------------------
Morrie K. Abramson
Chairman of the Board, Chief
Executive Officer and President
(Principal Executive Officer)
Date: July 28, 1995 By: /s/ Stephen J. Chapko
---------------------- ---------------------------------
Stephen J. Chapko
Vice President, Treasurer and
Secretary (Principal Financial
Officer and Principal
Accounting Officer)
12
<PAGE> 13
EXHIBIT INDEX
Exhibit numbers are in accordance with the
Exhibit Table in Item 601 of Regulation S-K
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
- ----------- -------------------
<S> <C>
11 Statement re computation
of per share earnings
27 Financial Data Schedule
(filed only in electronic format)
</TABLE>
<PAGE> 1
EXHIBIT 11
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------------------------------------------
July 1, July 2,
1995 1994
----------------------------- ----------------------------
Fully Fully
Primary Diluted Primary Diluted
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net earnings . . . . . . . . . . . . $ 4,679,000 $ 4,679,000 $2,831,000 $2,831,000
=========== =========== ========== ==========
Weighted average number of
common shares outstanding . . . . . 9,807,900 9,807,900 9,692,900 9,692,900
Excess of shares issuable
upon exercise of stock
options over shares
deemed retired utilizing
the treasury stock method . . . . . 498,300 597,700 320,500 360,600
---------- ---------- ---------- ----------
10,306,200 10,405,600 10,013,400 10,053,500
========== ========== ========== ==========
Earnings per share . . . . . . . . . $.45 $.45 $.28 $.28
==== ==== ==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000793024
<NAME> KENT ELECTRONICS CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-30-1996
<PERIOD-END> JUL-01-1995
<CASH> 5,429,000
<SECURITIES> 16,907,000
<RECEIVABLES> 35,765,000
<ALLOWANCES> 1,052,000
<INVENTORY> 37,939,000
<CURRENT-ASSETS> 97,521,000
<PP&E> 44,311,000
<DEPRECIATION> 14,402,000
<TOTAL-ASSETS> 142,383,000
<CURRENT-LIABILITIES> 28,046,000
<BONDS> 0
<COMMON> 34,836,000
0
0
<OTHER-SE> 78,973,000
<TOTAL-LIABILITY-AND-EQUITY> 142,383,000
<SALES> 77,585,000
<TOTAL-REVENUES> 77,585,000
<CGS> 57,612,000
<TOTAL-COSTS> 57,612,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 73,000
<INTEREST-EXPENSE> 5,000
<INCOME-PRETAX> 7,798,000
<INCOME-TAX> 3,119,000
<INCOME-CONTINUING> 4,679,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,679,000
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
