UNITED STATES
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 June 30,1996
( ) 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 - 23426
__________
REPTRON ELECTRONICS, INC.
___________________________________________________________________________
(Exact name of registrant as specified in its charter)
Florida 38-2081116
_____________________________ __________________________________
State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
14401 McCormick Drive
Tampa, Florida 33626
__________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813)854-2351
____________
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
________ _______
6,058,769 shares of common stock issued and outstanding as of July 31, 1996.
_________ ______________
REPTRON ELECTRONICS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Statements of Earnings --
Three months ended June 30, 1996 and
June 30, 1995 and Six months ended
June 30, 1996 and June 30, 1995 3
Consolidated Balance Sheets --
June 30, 1996 and December 31, 1995 4
Consolidated Statement of
Shareholders' Equity -- Six months ended
June 30, 1996 and year ended December 31, 1995 5
Consolidated Statements of Cash Flows --
Six months ended June 30, 1996 and June
31, 1995 6
Notes to Consolidated Financial
Statements -- June 30, 1996 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security
Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share and per share data)
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $66,092 $52,873 $132,642 $95,949
Cost of goods sold 52,893 43,358 107,462 78,263
------_ ------ ------- ------
Gross profit 13,199 9,515 25,180 17,686
Selling, general and administrative expenses 9,016 5,992 17,354 11,214
------ ------ ------- ------
Operating income 4,183 3,523 7,826 6,472
Interest expense 1,008 559 2,118 990
------ ------ ------- ------
Earnings from operations before income taxes 3,175 2,964 5,708 5,482
Income taxes 1,270 1,186 2,283 2,193
------ ------ ------- ------
Net earnings $ 1,905 $ 1,778 $ 3,425 $ 3,289
====== ====== ======= ======
Net earnings per share $ 0.31 $ 0.29 $ 0.55 $ 0.53
====== ====== ======= ======
Weighted average number of shares of Common
Stock and Common Stock equivalents 6,179,415 6,169,090 6,174,076 6,164,956
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<TABLE>
<CAPTION>
REPTRON ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
June 30, December 31,
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10 $ 224
Accounts receivable - trade, less allowances
for doubtful accounts of $180 36,733 41,183
Inventories 49,583 63,461
Prepaid expenses and other assets 1,954 1,893
Deferred tax benefit 124 124
------- -------
Total current assets 88,404 106,885
PROPERTY, PLANT & EQUIPMENT - AT COST 25,833 20,954
EXCESS OF COST OVER NET ASSETS ACQUIRED 4,380 4,385
OTHER ASSETS 954 1,514
------- -------
$119,571 $133,738
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ - $ 1,933
Accounts payable - trade 12,441 24,948
Accrued expenses 2,272 1,828
Income taxes payable 319 -
Current portion of long-term obligations 2,951 2,547
------- -------
Total current liabilities 17,983 31,256
NOTES PAYABLE TO BANKS 45,000 50,200
LONG-TERM OBLIGATIONS, less current portion 11,264 10,430
DEFERRED INCOME TAXES 904 904
SHAREHOLDERS' EQUITY
Preferred Stock - authorized 15,000,000 shares
of $.10 par value; no shares issued - -
Common Stock - authorized 15,000,000 shares
of $.01 par value; issued and outstanding,
6,057,519 and 6,048,519 shares, respectively 61 60
Additional paid-in capital 21,191 21,145
Retained earnings 23,168 19,743
------- -------
44,420 40,948
------- -------
$119,571 $133,738
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<TABLE>
<CAPTION>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
Total
Common Stock Capital Share-
Shares Par In excess of Retained holders'
Outstanding Value Par Value Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 6,043,269 $60 $21,098 $13,257 $34,415
Exercise of stock
options 5,250 - 47 - 47
Net Earnings - - - 6,486 6,486
--------- -- ------ ------- -------
Balance at
December 31, 1995 6,048,519 60 21,145 19,743 40,948
Exercise of stock
options 9,750 1 46 - 47
Net Earnings - - - 3,425 3,425
--------- --_ ------_ ------ ------
Balance at
June 30, 1996 6,058,269 $61 $21,191 $23,168 $44,420
========= == ====== ====== ======
</TABLE>
The accompanying notes are an integral part of this financial statement
5
<TABLE>
<CAPTION>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended
June 30,
1996 1995
------- ------
Increase (decrease) in cash and cash equivalents:
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,425 $ 3,289
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 1,711 908
Change in assets and liabilities:
Accounts receivable - trade 4,450 (2,877)
Inventories 13,878 (5,607)
Prepaid expenses and other assets (60) (23)
Other assets 295 (802)
Accounts payable - trade (12,507) 3,001
Accrued expenses (445) (172)
Income taxes Payable 319 339
------ ------
Net cash provided by (used in) operating
activities 11,956 (1,944)
------ ------
Cash flows from investing activities:
Net cash paid for acquisitions (102) (2,727)
Purchases of property, plant and equipment (6,220) (4,489)
------ ------
Net cash used in investing activities (6,322) (7,216)
------ ------
Cash flows from financing activities:
Proceeds from exercise of stock options 47 46
Net proceeds from (payments on) note payable to bank (7,133) 6,509
Proceeds from long term obligations 2,600 3,966
Payments on long term obligations (1,362) (1,274)
------ ------
Net cash provided by (used in) financing
activities (5,848) 9,247
------ ------
Net increase (decrease) in cash and cash
equivalents (214) 87
Cash and cash equivalents at beginning of period 224 266
------ ------
Cash and cash equivalents at end of period $ 10 $ 353
====== ======
Supplemental cash flow information:
Interest paid $ 1,818 $ 901
====== ======
Income taxes paid $ 1,964 $ 1,854
====== ======
</TABLE>
Non-cash investing and financing activities:
During the six month periods ended June 30, 1996 and 1995, the Company
incurred approximately $372 and $677, respectively, of obligations under
capital leases for the acquisition of equipment.
The accompanying notes are an integral part of these financial statements
6
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying 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. The consolidated
financial statements as of June 30, 1996 and for the three and six months
ended June 30, 1996 and June 30, 1995 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The
results of operations for the three and six months ended June 30, 1996 are
not necessarily indicative of results that may be expected for the year
ending December 31, 1996. The consolidated financial statements should be
read in conjunction with the financial statements and notes thereto,
together with management's discussion and analysis of financial condition
and results of operations, included in the 1995 Form 10-K.
<TABLE>
<CAPTION>
NOTE B -- INVENTORIES
Inventories consist of the following (in thousands):
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Reptron Distribution:
Inventories $34,473 $43,647
K-Byte Manufacturing:
Work in process 5,647 7,421
Raw Materials 9,463 12,393
------ ------
$49,583 $63,461
====== ======
</TABLE>
7
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
JUNE 30, 1996
NOTE C -- FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company has two industry segments: Distribution and Contract
Manufacturing. Distribution purchases a wide variety of electronic
components, including semiconductors, passive products and electromechanical
components, for distribution to manufacturers and wholesalers primarily
throughout the midwestern, southeastern, and northeastern U.S. Contract
Manufacturing manufactures electronic products according to customer design,
for customers in various industries, including telecommunications, banking,
and medical services.
The following table shows net sales and gross profit by industry segments:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
(in thousands) (in thousands)
__________________ ________________
1996 1995 1996 1995
____ ____ ____ ____
<S> <C> <C> <C> <C>
Net Sales
Distribution $41,483 $32,868 $ 83,831 $56,989
Contract Manufacturing 24,609 20,005 48,811 38,960
______ ______ ______ ______
$66,092 $52,873 $132,642 $95,949
====== ====== ======= ======
Gross Profit
Distribution $ 8,945 $ 6,323 $ 17,055 $11,373
Contract Manufacturing 4,254 3,192 8,125 6,313
______ ______ _______ ______
$13,199 $ 9,515 $ 25,180 $17,686
====== ====== ======= ======
</TABLE>
NOTE D -- PRO FORMA INFORMATION
The following pro forma summary combines the results of operations of the
Company with the operations of the electronic component distribution business
of Western Micro Technology, Inc. as if the July 26, 1995 acquisition had
occurred at the beginning of the period ended June 30, 1995. This pro forma
summary does not necessarily reflect the results of operations as they would
have been if the Company and the operations of the electronic component
distribution business of Western Micro Technology, Inc. operated as a single
entity during the period.
Six months ended
June 30, 1995
(In thousands, except share data)
Net sales $122,567
Gross profit $ 21,425
Operating income $ 5,914
Net earnings $ 2,709
Net earnings per Common Share $ 0.44
8
REPTRON ELECTRONICS, INC
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales. Total second quarter net sales increased $13.2 million, or
25.0%, from $52.9 million in the second quarter of 1995 to $66.1 million in
the second quarter of 1996. Total net sales for the first half of 1996
increased $36.7 million, or 38.2% from $95.9 million in the first half of
1995 to $132.6 million in the first half of 1996.
Reptron Distribution second quarter net sales increased $8.6 million,
or 26.2%, from $32.9 million in the second quarter of 1995 to $41.5 million
in the second quarter of 1996. Net sales generated from sales offices
acquired as a result of the Western Micro Technology acquisitions, completed
in July, 1995, accounted for approximately $3.4 million of the increase.
Sales from locations that existed prior to the 1995 acquisition increased
approximately $700,000, or 2.1%, from the second quarter of 1995. Reptron
Distribution has historically generated a significant portion of its revenue
from the sale of memory components (DRAM and SRAM). Selling prices of these
components have decreased by approximately 80% from the second quarter of
1995 to the second quarter of 1996. This price degradation has had a
significant impact on year to year sales comparisons. In addition, a
significant Reptron Distribution customer's need for additional services
have necessitated them being served by the K-Byte Manufacturing division in
1996. Second quarter, 1996 sales to this customer
totaled approximately $2.1 million and were recorded by K-Byte
Manufacturing. In December, 1995, the Company created a division for
selling memory modules to a different market niche and customer base than
was previously serviced by Reptron Distribution. Net sales from this memory
module division accounted for approximately $4.4 million of the increase in
second quarter, 1996 sales. The largest customer represented approximately
11.3% of Reptron Distribution second quarter, 1996 net sales (7.1% of total
Company net sales) and the largest sales office accounted for approximately
17.3% of Reptron Distribution net sales. Sales of semiconductors accounted
for 73.7% of second quarter Reptron Distribution net sales, with the
remaining sales generated from passive components (21.5%) and
electromechanical products (4.8%).
Reptron Distribution net sales increased $26.8 million, or 47.1%, from
$57.0 million in the first half of 1995 to $83.8 million in the first half
of 1996. Net sales generated from the sales offices acquired as a result of
the Cronin Electronics, Inc. and Western Micro Technology acquisitions,
completed during 1995, accounted for approximately $13.5 million of the
increase. Sales from locations that existed prior to the 1995 acquisitions
increased approximately $5.5 million, or 10.1%. Finally, net sales
generated from the new memory module division, formed in December of 1995,
accounted for approximately $7.7 million of the increase. The largest
Reptron Distribution customer in the first half of 1996 represented
approximately 11.1% of total Reptron Distribution net sales (7.0% of total
Company net sales) and the largest sales office accounted for 17.0% of total
Reptron Distribution net sales.
9
K-Byte Manufacturing net sales increased $4.6 million, or 23.0%, from
$20.0 million in the second quarter of 1995 to $24.6 million in the second
quarter of 1996. This sales increase was primarily driven by the previously
established K-Byte customer base and not by new customers. Additionally, as
discussed above, a significant Reptron Distribution customer began being
served K-Byte Manufacturing in 1996 and second quarter sales to this
customer totaled approximately $2.1 million. The largest K-Byte
Manufacturing customer accounted for approximately 14.8% of second quarter
division net sales (5.5% of total net sales). Sales from the Tampa, Florida
manufacturing facility accounted for approximately 66.3% of K-Byte
Manufacturing second quarter net sales. The Gaylord, Michigan manufacturing
facility generated approximately 31.7% of K-Byte Manufacturing second
quarter net sales with the remaining sales originating from the Saline,
Michigan location.
K-Byte Manufacturing net sales increased $9.8 million, or 25.3%, from
$39.0 million in the first half of 1995 to $48.8 million in the first half
of 1996. Sales to three new customers accounted for approximately $5.4
million of the increase with the remainder of the increase generated from
the previously established customer base. The largest three K-Byte
customers accounted for approximately 13.7%, 10.5% and 10.4%, respectively,
of total division net sales (5.0%, 3.9% and 3.8%, respectively, of total
Company net sales). Sales from the Tampa, Florida, Gaylord, Michigan and
Saline, Michigan manufacturing facilities accounted for approximately 66.9%,
30.4% and 2.7%, respectively, of total K-Byte Manufacturing sales in the
first half of 1996.
Gross Profit. Total second quarter gross profit increased $3.7
million, or 38.7%, from $9.5 million in the second quarter of 1995 to $13.2
million in the second quarter of 1996. The gross profit percentage of the
Company increased from 18.0% in the second quarter of 1995 to 20.0% in the
second quarter of 1996. Total gross profit increased $7.5 million, or
42.4%, from $17.7 million in the first half of 1995 to $25.2 million in the
first half of 1996. The gross profit percentage increased from 18.4% in the
first half of 1995 to 19.0% in the first half of 1996.
Reptron Distribution second quarter gross profit increased $2.6
million, or 41.5%, from $6.3 million in the second quarter of 1995 to $8.9
million in the second quarter of 1996. The gross profit percentage
increased from 19.2% in the second quarter of 1995 to 21.6% in the second
quarter of 1996. This increase in gross profit percentage was generated
despite the negative impact of lower margin sales generated by the memory
module division, formed in December, 1995. Sales in this niche are
generally characterized by high volumes, lower gross profit margins and
lower selling and administrative expenses than other electronic component
sales generated by Reptron Distribution. The increase in second quarter,
1996 gross profit margins was primarily the result of an increase in the
percentage of sales that were generated from Reptron Distribution's value-
added services. Value-added sales generally carry higher gross profit
percentages than traditional electronic component sales. Reptron
Distribution's gross profit percentage increased from 20.0% in the first
half of 1995 to 20.3% in the first half of 1996 for similar reasons.
K-Byte Manufacturing gross profit increased $1.1 million, or 33.3%,
from $3.2 million in the second quarter of 1995 to $4.3 million in the
second quarter of 1996 and its gross profit percentage increased from 16.0%
in the second quarter of 1995 to 17.3% in the second quarter of 1996. Price
reductions for many types of electronic components used by K-Byte
Manufacturing have helped to improve gross profit margins. Additionally,
the increase in net sales has resulted in higher fixed overhead cost
absorption allowing for higher gross profit margins. Finally, the mix of
business in the second quarter of 1996 was favorable, resulting in higher
gross profit margins. K-Byte Manufacturing gross profit percentage
increased from 16.2% in the first half of 1995 to 16.6% in the first half of
1996 for similar reasons.
10
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased $3.0 million, or 50.5%, from $6.0 million
in the second quarter of 1995 to $9.0 million in the second quarter of 1996.
These expenses, as a percentage of net sales, increased from 11.3% in the
second quarter of 1995 to 13.6% in the second quarter of 1996. The Western
Micro Technology acquisition, completed in 1995, accounted for approximately
$1.0 million of the increase. The remainder of the increase resulted from
higher variable costs associated with the increase in net sales. First half
selling, general and administrative expenses as a percentage of net sales
increased from 11.7% in the first half of 1995 to 13.1% in the first half of
1996, for similar reasons.
Interest Expense. Interest expense increased $440,000, or 80.3%, from
$560,000 in the second quarter of 1995 to $1.0 million in the second quarter
of 1996 primarily as a result of higher levels of debt incurred. Borrowings
under the bank credit line increased from $23.0 million on June 30, 1995 to
$45.0 million on June 30, 1996. The Cronin Electronics, Inc. and Western
Micro Technology acquisitions resulted in cash expenditures totaling
approximately $12.6 million during 1995 and were financed through the bank
credit line. Additionally, the Company's current assets have increased
substantially to support the 25.0% increase in net sales. The increases in
current assets were financed through the bank credit line. First half
interest expense increased $1.1 million, or 114%, from $990,000 in the first
half of 1995 to $2.1 million in the first half of 1996 , for similar
reasons.
LIQUIDITY AND CAPITAL RESOURCES
The Company primarily finances its operations through bank credit
lines, capital equipment leases, and short-term financing through supplier
credit lines.
Operating activities for the second quarter of 1996 generated cash of
approximately $10.3 million. This increase resulted primarily from net
earnings of $1.9 million, decrease in accounts receivable of $1.5 million,
decrease in inventories of $7.9 million, an increase in accrued expenses of
$900,000. These items were offset by a $2.5 million decrease in accounts
payable and a $300,000 decrease in income taxes payable.
Operating activities for the first half of 1996 generated cash of
approximately $12.0 million. This increase resulted primarily from net
earnings of $3.4 million, decrease in accounts receivable of $4.5 million,
decrease in inventories of approximately $13.9 million, an increase in
accrued expenses of $440,000 and an increase in income taxes payable of
$320,000. These items were offset by a $12.5 million decrease in accounts
payable.
Capital expenditures totaled approximately $6.2 million in the first
half of 1996. These capital expenditures were primarily for the acquisition
of manufacturing equipment and costs associated with the construction of the
new plant/warehouse in Tampa, Florida. These capital expenditures were
funded primarily through variable rate demand notes as provided by the bank
credit line. Additionally, the Company financed approximately $372,000 of
capital expenditures through capital leases.
The Company believes that cash generated from operations and available
credit facilities will be sufficient for the Company to meet its capital
expenditures and working capital needs for its operations as presently
conducted. Additionally, the Company's future liquidity and cash
requirements will depend on a wide range of factors, including the level of
business in existing operations, expansion of facilities, and possible
acquisitions. While there can be no assurance that such financing will be
available in amounts and on terms acceptable to the Company, the Company
believes that such financing will be available on acceptable terms.
11
REPTRON ELECTRONICS, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The annual Meeting of the Shareholders of the Company was held
on April 26, 1996. Messrs. Michael L. Musto and Paul J. Plante were
elected directors of the Company for three year terms. Mr. Musto was
elected with 4,695,395 shares voting in favor, zero shares against, and
100 shares abstaining. Mr. Plante was elected with 4,695,395 shares
voting in favor, zero shares against, and 100 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended June 30, 1996.
12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated:_______________________________
REPTRON ELECTRONICS, INC.
_________________________
(Registrant)
By:______________________
Paul J. Plante, Vice President-
Finance and Chief Financial
Officer (Principal Financial and
Accounting Officer)
13
