THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-16345
SOUTHERN ELECTRONICS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2715444
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4916 North Royal Atlanta Drive, Tucker, Georgia 30085
(Address of principal executive offices) (Zip code)
(404) 491-8962
(Registrant's telephone number, including area code)
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
At November 6, 1995, there were 6,993,402 shares of Common Stock, $.01 par
value, outstanding.
SOUTHERN ELECTRONICS CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements:
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Earnings 3
Condensed Consolidated Statements of Stockholders'
Equity 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 9
Item 2 - Changes in Securities 9
Item 3 - Default Upon Senior Securities 9
Item 4 - Submission of Matters to a Vote of Security
Holders 9
Item 5 - Other Information 9
Item 6 - Exhibits and Reports on Form 8-K 9
<PAGE>
ITEM 1: FINANCIAL STATEMENTS
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, June 30,
ASSETS 1995 1995
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 202,000 $ 790,000
Trade accounts receivable, net 29,486,000 26,459,000
Inventories 54,244,000 53,688,000
Deferred income taxes 910,000 910,000
Prepaid income taxes - 479,000
Other current assets 534,000 271,000
TOTAL CURRENT ASSETS 85,376,000 82,597,000
PROPERTY AND EQUIPMENT, net 4,481,000 4,452,000
INTANGIBLES 323,000 326,000
$90,180,000 $87,375,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $35,811,000 $37,922,000
Accrued liabilities 3,459,000 3,320,000
Income taxes payable 349,000 -
TOTAL CURRENT LIABILITIES 39,619,000 41,242,000
REVOLVING BANK DEBT 14,895,000 11,500,000
STOCKHOLDERS' EQUITY:
Preferred Stock
129,500 shares authorized, none issued
Common stock, $.01 par value; 10,000,000 shares
authorized and 7,118,992 shares
issued 71,000 71,000
Additional paid-in capital 10,566,000 10,579,000
Retained earnings 26,650,000 25,640,000
Treasury stock, at cost, 125,590 (1,390,000) (1,390,000)
Prepaid compensation - stock awards (231,000) (267,000)
35,666,000 34,633,000
$90,180,000 $87,375,000<PAGE>
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
September 30,
1995 1994
NET SALES $109,993,000 $90,642,000
COST OF SALES, Including buying
and occupancy expenses 103,385,000 83,943,000
6,608,000 6,699,000
OTHER COSTS AND EXPENSES (INCOME):
Selling, general, and administrative 4,707,000 4,585,000
Interest expense 271,000 73,000
4,978,000 4,658,000
EARNINGS BEFORE INCOME TAXES 1,630,000 2,041,000
INCOME TAXE $ 620,000 775,000
NET EARNINGS $ 1,010,000 $ 1,266,000
NET EARNINGS PER COMMON SHARE $.14 $.18
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 7,122,000 7,104,000
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
Common Stock Additional Prepaid
Par Paid-In Retained Treasury Stock Compensation
Shares Value Capital Earnings Shares At Cost Stock Awards
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, June 30, 1995 7,121,492 $71,000 $10,579,000 $25,640,000 125,590 $(1,390,000) $ (267,000)
Stock awards cancelled (2,500) (13,000) 13,000
Amortization of stock awards 23,000
Net earnings 1,010,000
BALANCE, September 30, 1995 7,118,992 $71,000 $10,566,000 $26,650,000 125,590 $(1,390,000) $ (231,000)
</TABLE>
See notes to condensed consolidated financial statements.
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
1995 1994
OPERATING ACTIVITIES:
Net earnings $ 1,010,000 $ 1,266,000
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities
Depreciation and amortization 197,000 129,000
Compensation - stock awards 23,000 -
Changes in assets and liabilities (4,990,000) (12,652,000)
Net cash provided by (used in)
operating activities (3,760,000) (11,257,000)
INVESTING ACTIVITIES:
Purchases of equipment (223,000) (134,000)
FINANCING ACTIVITIES:
Borrowings under line of credit, net 3,395,000 12,425,000
Purchase of treasury stock - (122,000)
Net cash provided by
financing activities 3,395,000 12,303,000
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (588,000) 912,000
CASH AND CASH EQUIVALENTS, beginning of period 790,000 741,000
CASH AND CASH EQUIVALENTS, end of period $ 202,000 $ 1,653,000
SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months
Ended September 30, 1995 and 1994
(Unaudited)
A. Interim Financial Statements:
The accompanying condensed consolidated financial statements of Southern
Electronics Corporation and subsidiary (the "Company") have been prepared
without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the three
months ended September 30, 1995 are not necessarily indicative of the
operating results for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission for the year ended June 30, 1995.
B. Earnings Per Common Share:
Earnings per common share have been calculated based on the weighted
average number of common shares and common share equivalents outstanding
during each period.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended September 30, 1995 Compared to Three Months Ended
September 30, 1994
Net sales for the first quarter ended September 30, 1995 increased 21.4%
compared to the first quarter ended September 30, 1994. This growth resulted
primarily from the increase in sales to value-added resellers (VARS) and dealers
served by the Company. Sales of microcomputers and computer peripheral products
represented approximately 91.2% of the Company's business for the first quarter
ended September 30, 1995 as compared to approximately 90.8% for the first
quarter ended September 30, 1994. Sales of cellular telephone products
accounted for approximately 8.8% of the business for the first quarter
ended September 30, 1995 as compared to 9.2% for the year-earlier period.
Gross profit as a percentage of net sales was 6.0% for the first quarter as
compared to 7.4% for the same period in the prior year. This decrease is
primarily attributable to more competitive pricing during the quarter ended
September 30, 1995 as compared to the quarter ended September 30, 1994.
Selling, general, and administrative expenses as a percentage of net sales
decreased to 4.3% for the first quarter ended September 30, 1995 compared with
5.1% for the quarter ended September 30, 1994. This decrease is due primarily
to greater revenue coverage of expenses and the Company's efforts to contain
expense increases.
Income tax expense was recorded at an effective annual rate of 38.0% for the
first quarters ended September 30, 1995 and September 30, 1994.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - (continued)
Financial Condition, Liquidity, and Capital Resources
The Company and its wholly-owned operating subsidiary, Southern Electronics
Distributors, Inc. ("SED"), are parties to a revolving credit loan agreement
(the "Revolving Credit Agreement") with National City Bank, Columbus, Ohio, and
Wachovia Bank of Georgia, N.A. which provides for an unsecured line of credit of
$30,000,000. This agreement was entered into on June 29, 1995. The Company may
borrow at the prime rate offered by Wachovia Bank of Georgia, N.A., 8.75% at
June 30, 1995, or the Company may fix the interest rate for periods of 30 to 180
days under various interest rate options. The Revolving Credit Agreement
requires a commitment fee of 1/4% of the unused commitment.
The Revolving Credit Agreement requires maintenance of certain minimum working
capital and other financial ratios and has certain dividend restrictions. This
agreement expires on August 31, 1997. At September 30, 1995, the Company had
borrowings of $14,895,000 and irrevocable standby letters of credit of
$1,050,000 outstanding under the Revolving Credit Agreement.
The Company's liquidity requirements arise primarily from the funding of working
capital needs, including inventories and trade accounts receivable. The Company
funded its increases in accounts receivable and inventories with internally
generated funds and, at times, borrowings under its Revolving Credit Agreement.
Management believes that the Revolving Credit Agreement, together with vendor
lines of credit and internally generated funds, will be sufficient to satisfy
its working capital needs during fiscal 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits.
Exhibit
Number Description
27 Financial Data Schedule
b) Reports on Form 8-K
None
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.
SOUTHERN ELECTRONICS CORPORATION
(Registrant)
November 14, 1995 /s/ Gerald Diamond
Gerald Diamond
Chief Executive Officer
Chairman of the Board
(Principal Executive Officer)
November 14, 1995 /s/ Larry G. Ayers
Larry G. Ayers
Vice President-Finance and
Treasurer
(Principal Accounting Officer)
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SOUTHERN
ELECTRONICS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AS OF AND FOR THE PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1995
<CASH> 202,000
<SECURITIES> 0
<RECEIVABLES> 29,486,000
<ALLOWANCES> 0
<INVENTORY> 54,244,000
<CURRENT-ASSETS> 85,376,000
<PP&E> 4,481,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 90,180,000
<CURRENT-LIABILITIES> 39,619,000
<BONDS> 0
<COMMON> 71,000
0
0
<OTHER-SE> 35,595,000
<TOTAL-LIABILITY-AND-EQUITY> 90,180,000
<SALES> 109,993,000
<TOTAL-REVENUES> 109,993,000
<CGS> 103,385,000
<TOTAL-COSTS> 103,385,000
<OTHER-EXPENSES> 4,707,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 271,000
<INCOME-PRETAX> 1,630,000
<INCOME-TAX> 620,000
<INCOME-CONTINUING> 1,010,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,010,000
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
