SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 1995
SOUTHERN ELECTRONICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-16345 22-2715444
State of (Commission File No.) (I.R.S. Employer
incorporation) Identification No.)
4916 North Royal Atlanta Drive
Tucker, Georgia 30085
(Address of principal executive offices, including zip code)
(770) 491-8962
(Registrant's telephone number, including area code)
Page 1 of 7.
Exhibit Index appears on page 5.
<PAGE>
Item 2. Acquisition or Disposition of Assets
Effective on December 14, 1995, USC Acquisition Corporation,
a Delaware corporation ("USC") and wholly-owned subsidiary of
Southern Electronics Corporation, a Delaware corporation
("Registrant"), acquired substantially all of the assets and
assumed certain liabilities of U. S. Computer of North America,
Inc., a Florida corporation ("US Computer"), in exchange for shares
of the common stock, par value $.01 per share (the "Common Stock"),
of the Registrant, pursuant to an Agreement and Plan of
Reorganization dated December 14, 1995 (the "Agreement"), by and
among USC, US Computer and David Steiner, a resident of the State
of Florida and sole shareholder of US Computer ("Steiner"). US
Computer was engaged in the wholesale distribution of certain
electronic products to customers located principally in Latin
America. The assets transferred to USC consisted primarily of US
Computer's cash, accounts receivable, inventory, furniture,
fixtures and equipment and other tangible and intangible property
(the "Assets") related to its business. USC also agreed to assume
certain accounts payable of US Computer related to its business and
certain other specifically identified liabilities of US Computer
(the "Liabilities").
The aggregate consideration exchanged by USC for the Assets
and Liabilities was 175,000 shares of Common Stock, payable as
follows: (i) 43,750 shares of Common Stock paid at the closing;
(ii) 87,000 shares of Common Stock placed in an escrow account (the
"Short Term Stock Escrow") pursuant to a Short Term Stock Escrow
Agreement executed December 14, 1995, among US Computer, Steiner,
USC and Wachovia National Bank of Georgia, N.A. ("Wachovia"), as
escrow agent (the "Short Term Stock Escrow Agreement"), and (iii)
44,250 shares of Common Stock placed in an escrow account (the
"Supplemental Stock Escrow") pursuant to a Supplemental Stock
Escrow Agreement executed December 14, 1995, among Steiner, USC and
Wachovia (the "Supplemental Stock Escrow Agreement"). The
consideration was determined through arms-length negotiations
between the parties and estimated valuations of the inventory,
assets and liabilities of US Computer. Funding for the transaction
was provided pursuant to a First Amendment to Revolving Credit
Agreement (the "Credit Agreement") among Registrant, USC, Wachovia
and National City Bank, Columbus.
Pursuant to the Agreement and the Short Term Stock Escrow
Agreement, 87,000 shares of Common Stock were placed in the Short
Term Stock Escrow to support the indemnity provided by Steiner and
US Computer in favor of USC under the Agreement and for certain
other matters. Subject to the resolution of any disputes between
US Computer, Steiner and USC with respect to the distribution of
shares of Common Stock from the Short Term Stock Escrow, up to
67,750 shares of Common Stock will be transferred to the
Supplemental Stock Escrow and the balance, if any, will be
distributed to Steiner on or about March 13, 1996.
<PAGE>
Pursuant to the Agreement and the Supplemental Stock Escrow
Agreement, 44,250 shares of Common Stock were placed in the
Supplemental Stock Escrow which, together with any shares of Common
Stock transferred from the Short Term Stock Escrow, will be
distributed to Steiner over a period of three years following the
closing. The shares of Common Stock held in the Supplemental
Stock Escrow will be distributed on or before December 14, 1998.
US Computer and Steiner, jointly and severally on the one
hand, and USC, on the other hand, agreed to indemnify the other
party against certain matters as more fully described in the
Agreement. Registrant agreed to guarantee USC's indemnification
obligations to US Computer and Steiner subject to certain
limitations set forth in the Agreement.
Pursuant to an Employment Agreement executed December 14,
1995, between Steiner and USC, Steiner agreed to join USC as its
Vice President - Hewlett-Packard Company Exports, with
responsibility for sales and marketing of Hewlett-Packard Company
products in Latin America. Steiner and USC also have executed a
Non-Competition Agreement, dated December 14, 1995, under which
Steiner has agreed not to compete with USC, Registrant or their
respective affiliates for a specified period following the closing,
other than as an employee of USC.
In addition to the consideration exchanged by Registrant for
the assets and liabilities of US Computer, 100,000 shares of Common
Stock and $400,000 were paid to the shareholders of Dinorall
Corporation, a Florida corporation (the "Dinorall Shareholders"),
in consideration for an option held by the Dinorall Shareholders to
purchase all of the issued and outstanding common stock of US
Computer. The consideration was determined through arms-length
negotiations between the parties.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired:
In accordance with Item 7(a) of Form 8-K, the following
financial statements of US Computer prepared in accordance with
Regulation S-X are included in this report:
* Report of Deloitte & Touche LLP.
* Balance Sheet as of December 13, 1995.
* Statement of Operations for the period January 1, 1995
through December 13, 1995.
* Statement of Changes in Shareholder Deficiency for the
period January 1, 1995 through December 13, 1995.
* Statement of Cash Flows for the period January 1, 1995
through December 13, 1995.
* Notes to Financial Statements.
<PAGE>
(b) Pro Forma Financial Information.
In accordance with Item 7(b) of Form 8-K, the following
pro forma financial statements of the Registrant are included in
this Report:
* Pro Forma Combined Financial Information.
* Pro Forma Combined Statement of Operations for the 12-
month period ended June 30, 1995.
* Pro Forma Combined Statement of Operations for the 6-
month period ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
behalf of the undersigned hereunto duly authorized.
SOUTHERN ELECTRONICS CORPORATION
Date: February 26, 1996 By: /s/ Larry G. Ayers
Larry G. Ayers
Chief Financial Officer, Vice
President-Finance, Treasurer and
Secretary
<PAGE> F-1
INDEX TO FINANCIAL INFORMATION
Description Page No.
Report of Deloitte & Touche LLP F-2
Balance Sheet as of December 13, 1995 F-3
Statement of Operations for the period January 1, 1995
through December 13, 1995 F-4
Statement of Changes in Shareholder Deficiency for the
period January 1, 1995 through December 13, 1995 F-5
<PAGE>
Statement of Cash Flows for the period January 1, 1995
through December 13, 1995 F-6
Notes to Financial Statements F-7
Pro Forma Combined Financial Information F-10
Pro Forma Combined Statement of Operations for the
12-month period ended June 30, 1995 F-11
Pro Forma Combined Statement of Operations for the
6-month period ended December 31, 1995 F-12
<PAGE> F-2
INDEPENDENT AUDITORS' REPORT
To the Stockholder
U.S. Computer of North America, Inc.
We have audited the balance sheet of U.S. Computer of North
America, Inc. (d/b/a U.S. Computer) (the "Company") as of December
13, 1995 and the related statements of operations, changes in
stockholder deficiency, and cash flows for the period January 1,
1995 through December 13, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Company as of
December 13, 1995 and the results of its operations and its cash
flows for the period January 1, 1995 through December 13, 1995 in
conformity with generally accepted accounting principles.
Atlanta, Georgia
February 12, 1996
<PAGE> F-3 <PAGE>
U.S. COMPUTER OF NORTH AMERICA, INC.
d/b/a U.S. Computer
BALANCE SHEET
DECEMBER 13, 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,313,231
Accounts receivable, less allowance
for doubtful accounts of $500,000 4,163,255
Inventory 972,841
Prepaid expenses and other current assets 20,568
Total current assets 6,469,895
PROPERTY AND EQUIPMENT - Net 117,499
$ 6,587,394
LIABILITIES AND STOCKHOLDER DEFICIENCY
CURRENT LIABILITIES:
Accounts payable $10,790,449
Accrued liabilities 144,658
Obligations under capitalized leases 15,799
Note payable - stockholder 144,509
Total current liabilities 11,095,415
LONG-TERM OBLIGATIONS UNDER CAPITALIZED LEASES 11,501
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER DEFICIENCY:
Common stock, $1 per value; 5,000 shares
authorized; 100 shares issued and outstanding 100
Additional paid-in capital 560,000
Accumulated deficit (5,079,622)
Total stockholder deficiency (4,519,522)
$ 6,587,394
See notes to financial statements.
<PAGE> F-4
<PAGE>
U.S. COMPUTER OF NORTH AMERICA, INC.
d/b/a U.S. Computer
STATEMENT OF OPERATIONS
PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995
NET SALES $53,873,882
COST OF SALES 50,907,386
Gross margin 2,966,496
OPERATING EXPENSES:
Salaries and benefits 936,088
Provision for bad debts 173,340
Other 611,242
Total operating expenses 1,720,670
INCOME FROM OPERATIONS 1,245,826
OTHER (INCOME) EXPENSE:
Interest expense, net 52,706
Other (28,104)
Total other (income) expense 24,602
NET INCOME $ 1,221,224
See notes to financial statements.
<PAGE> F-5
<PAGE>
U.S. COMPUTER OF NORTH AMERICA, INC.
d/b/a U.S. Computer
<TABLE>
STATEMENT OF CHANGES IN STOCKHOLDER DEFICIENCY
PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995
Common Additional
Stock Paid-in Accumulated Stockholder
$1 Par Value Capital Deficit Deficiency
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 $ 100 $ 560,000 $(6,300,846) $(5,740,746)
Net income 1,221,224 1,221,224
BALANCE, DECEMBER 13, 1995 $ 100 $ 560,000 $(5,079,622) $(4,519,522)
See notes to financial statements.
</TABLE>
<PAGE> F-6
<PAGE>
U.S. COMPUTER OF NORTH AMERICA, INC.
d/b/a U.S. Computer
STATEMENT OF CASH FLOWS
PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995
OPERATING ACTIVITIES:
Net income $ 1,221,224
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 60,000
Provision for bad debts 173,340
Gain on disposals of equipment (8,500)
Changes in assets and liabilities:
Accounts receivables (1,812,035)
Inventory 1,518,879
Prepaids and other assets 22,577
Accounts payable and accrued expenses 771,065
Total adjustments 725,326
Net cash provided by operating activities 1,946,550
INVESTING ACTIVITIES:
Capital expenditures (11,704)
Proceeds from disposals of equipment 15,148
Net cash provided by investing activities 3,444
FINANCING ACTIVITIES:
Repayments to stockholder (231,093)
Repayment on note payable - other (938,326)
Repayments on capitalized lease obligations (19,200)
Net cash used in financial activities (1,188,619)
NET INCREASE IN CASH AND CASH EQUIVALENTS 761,375
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 551,856
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,313,231
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 58,607
See notes to financial statements.
<PAGE> F-7
U.S. COMPUTER OF NORTH AMERICA, INC.
d/b/a U.S. Computer
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 13, 1995
AND THE PERIOD JANUARY 1, 1995 THROUGH DECEMBER 13, 1995
1. NATURE OF BUSINESS AND DISPOSITION
Business Activity - U.S. Computer of North America, Inc. d/b/a
U.S. Computer (the "Company") is engaged in wholesaling and
exporting computer hardware, software, and peripherals, through
facilities located in Miami, Florida, to computer retailers
located primarily in Latin America. The Company normally
operates through distributorship agreements with major
vendors which are renewable generally on an annual basis.
On December 14, 1995, USC Acquisition Corporation, a wholly
owned subsidiary of Southern Electronics Corporation ("SEC"),
acquired substantially all of the assets and assumed certain
liabilities of the Company. The accompanying financial statements
are presented on the historical cost basis and do not include
any adjustments arising from this transaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Revenues from the sale of the Company's
products are recognized at the time of shipment. The Company
generally only accepts returns for damaged products. Actual
returns have not been significant.
Cash and Cash Equivalents - The Company considers all highly
liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
Inventory - Inventory is valued at the lower of first-in,
first-out (FIFO) cost or market.
Property and Equipment - Property and equipment is recorded at
cost. Property and equipment under capital leases is stated at
the present value of minimum lease payments at the inception of
the lease. Depreciation is determined using straight-line and
accelerated methods, at various rates based generally on the
estimated useful lives of the assets ranging from 5 to 6 years.
Amortization of leasehold improvements and property and
equipment under capital leases is computed on a straight-line
basis over the shorter of the estimated useful lives or the term
of the lease.
Income Taxes - The Company is not subject to corporate income
taxes as the corporation has elected, with the shareholder's
consent, to be taxed under S Corporation provisions of the
Internal Revenue Code and, accordingly, no provision has been
made for federal and state income taxes in the accompanying
financial statements. Under this provision, taxable income of
the Company is reflected on the stockholder's personal income
tax return.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
<PAGE> F-8
3. PROPERTY AND EQUIPMENT
Property and equipment at December 13, 1995 consisted of the
following:
Furniture and fixtures $ 28,860
Machinery and equipment 203,903
Leasehold improvements 124,842
Equipment under capitalized lease arrangements 35,458
393,063
Less accumulated depreciation and amortization 275,564
$ 117,499
Depreciation and amortization expense for the period January 1,
1995 through December 13, 1995 was $60,000.
4. LEASES
The Company leases certain equipment under capitalized leases
through 1997. The Company also leases warehouse, office
facilities, and certain equipment under operating leases through
1999.
The following represents the future minimum lease payments under
capitalized and operating leases as of December 13, 1995:
CAPITAL OPERATING
LEASES LEASES
Through December 31, 1995 $ 1,944 $ 1,081
1996 23,227 95,535
1997 5,329 12,975
1998 6,615
1999 891
Total minimum lease payments 30,500 117,097
Less amount representing interest 3,200
Present value of future minimum
lease payments $ 27,300 $ 117,097
Rent expense under operating leases was $99,879 for the period
January 1, 1995 through December 13, 1995.
<PAGE>
5. NOTES PAYABLE
The note payable to stockholder bears interest at prime plus 2%,
is unsecured, and is due on demand. Subsequent to December 13,
1995, the note payable was repaid. Interest expense on the note
for the period January 1, 1995 through December 13, 1995 was
$26,088.
<PAGE> F-9
At December 31, 1994, the Company had a note payable with an
outstanding balance of $938,326 which represented an amount due
to a relative of the Company's stockholder. The note bore
interest at prime plus 2% or 10%, whichever was greater, was
unsecured, and was due on demand. During 1995, the note payable
was satisfied in full. Interest expense on this note for the
period January 1, 1995 through December 13, 1995 was $23,242.
6. SIGNIFICANT VENDOR
During the period January 1, 1995 through December 13, 1995,
approximately 98% of the Company's product purchases were from
one vendor. Accounts payable to such vendor at December 13,
1995 was approximately $10,662,000. Substantially all accounts
receivable and inventory are pledged as collateral against
accounts payable to this vendor.
<PAGE> F-10
PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined statements of operations
for the Company for the year ended June 30, 1995 and six months ended
December 31, 1995, give effect to the December 14, 1995 acquisition
of U.S. Computer as if such acquisition had occurred on July 1,
1994. The pro forma combined financial information is derived from
and should be read in conjunction with the historical financial
statements of U.S. Computer and the related notes thereto appearing
elsewhere in this Current Report, and the Company's Annual Report
on Form 10-K for the year ended June 30, 1995 and Quarterly Report
on Form 10-Q for the quarter ended December 31, 1995 previously
filed with the Securities and Exchange Commission. The pro forma
information is not necessarily indicative of the results that would
have been reported had such acquisition occurred at the pro forma
date specified, nor is it necessarily indicative of the Company's
future results.
<PAGE> F-11
<PAGE>
<TABLE>
SOUTHERN ELECTRONICS CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
(In Thousands, Except Per Share Data)
Pro
Southern Forma Pro Forma
Electronics U.S. Computer Adjustments Combined
<S> <C> <C> <C> <C>
NET SALES $ 398,753 $ 50,666 $ 449,419
COST OF GOODS SOLD 370,548 48,051 418,599
GROSS PROFIT 28,205 2,615 30,820
OPERATING EXPENSES:
Selling, general, and administrative 18,640 5,470 $ (198) 1 23,912
Special charge 452
Amortization of intangibles 12 250 2 262
TOTAL OPERATING EXPENSES 19,104 5,470 52 24,626
INCOME (LOSS) FROM OPERATIONS 9,101 (2,855) (52) 6,194
NET INTEREST EXPENSE 688 179 867
INCOME (LOSS) BEFORE TAXES 8,413 (3,034) (52) 5,327
INCOME TAXES 3,191 (1,091) 3 2,100
NET INCOME (LOSS) $ 5,222 $ (3,034) $ 1,039 $ 3,227
INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.74 $ 0.44
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 7,069 7,344
<PAGE>
1 Reflects the elimination of salaries and benefits paid to employees
of U. S. Computer who will be terminated and not replaced.
2 Adjusts for the amortization of intangible assets, consisting of
goodwill and a noncompete agreement, with useful lives of 30 and
5 years, respectively.
3 Adjusts income tax expense to reflect the pro forma effect
on income tax expense resulting from the acquisition of U.S.
Computer (an S Corporation for income tax purposes).
<PAGE> F-12
<PAGE>
</TABLE>
<TABLE>
SOUTHERN ELECTRONICS CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1995
(In Thousands, Except Per Share Data)
Pro
Southern Forma Pro Forma
Electronics U.S. Computer Adjustments Combined
<S> <C> <C> <C> <C>
NET SALES $ 211,858 $ 25,929 $ 237,787
COST OF GOODS SOLD 198,391 24,638 223,029
GROSS PROFIT 13,467 1,291 14,758
OPERATING EXPENSES:
Selling, general, and administrative 9,202 735 $(108) 1 9,829
Amortization of intangibles 19 114 2 133
TOTAL OPERATING EXPENSES 9.221 735 6 9,962
INCOME (LOSS) FROM OPERATIONS 4,246 556 (6) 4,796
NET INTEREST EXPENSE 423 11 434
INCOME (LOSS) BEFORE TAXES 3,823 545 (6) 4,362
INCOME TAXES 1,459 261 3 1,720
NET INCOME (LOSS) $ 2,364 $ 545 $(267) $ 2,642
NET INCOME PER COMMON
AND COMMON
EQUIVALENT SHARE $ 0.33 $ 0.36
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 7,103 7,378
1 Reflects the elimination of salaries and benefits paid to employees of U.S.
Computer who were be terminated and not replaced.
2 Adjusts for the amortization of intangible assets, consisting of goodwill and
a noncompete agreement, with useful lives of 30 and 5 years, respectively.
3 Adjusts income tax expense to reflect the pro forma effect on income tax expense
resulting from the acquisition of U.S. Computer (an S Corporation for income tax
purposes).
</TABLE>
