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 March 31,1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0 - 23426
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REPTRON ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
Florida 38-2081116
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State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
14401 McCormick Drive, Tampa, Florida 33626
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813)854-2351
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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
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6,071,019 shares of common stock issued and outstanding as of May 12, 1997.
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REPTRON ELECTRONICS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Statements of Earnings --
Three months ended March 31, 1997 and
March 31, 1996 3
Consolidated Balance Sheets --
March 31, 1997 and December 31, 1996 4
Consolidated Statement of
Shareholders' Equity -- Three months ended
March 31, 1997 and year ended December 31, 1996 5
Consolidated Statements of Cash Flows --
Three months ended March 31, 1997 and March
31, 1996 6
Notes to Consolidated Financial
Statements -- March 31, 1997 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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
March 31,
------------------
1997 1996
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<S> <C> <C>
Net sales $76,251 $66,551
Cost of goods sold 62,179 54,569
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Gross profit 14,072 11,982
Selling, general and administrative expenses 9,250 8,348
------ ------
Operating income 4,822 3,634
Interest expense 1,228 1,102
------ ------
Earnings before income taxes 3,594 2,532
Income tax provision 1,438 1,013
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NET EARNINGS $ 2,156 $ 1,519
====== ======
Net earnings per common share $ 0.35 $ 0.25
====== ======
Weighted average shares of Common Stock and
Common Stock equivalent shares outstanding 6,206,952 6,168,288
========= =========
</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
March 31, December 31,
1997 1996
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 50 $ 479
Accounts receivable - trade, less allowances
for doubtful accounts of $350 47,360 39,807
Inventories 65,498 58,694
Prepaid expenses and other assets 4,714 2,763
Deferred tax benefit 167 138
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Total current assets 117,789 101,881
PROPERTY, PLANT & EQUIPMENT - AT COST, NET 33,189 30,869
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET 4,444 4,505
OTHER ASSETS 2,048 1,377
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$157,470 $138,632
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 22,359 $ 18,339
Notes payable to banks 2,856 -
Current portion of long-term obligations 2,352 3,560
Accrued expenses 2,028 2,506
Income taxes payable - 246
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Total current liabilities 29,595 24,651
NOTES PAYABLE TO BANKS 60,000 48,550
LONG-TERM OBLIGATIONS, less current portion 15,417 15,235
DEFERRED INCOME TAXES 1,585 1,506
SHAREHOLDERS' EQUITY
Preferred Stock - authorized 15,000,000 shares
of $.10 par value; no shares issued - -
Common Stock - authorized 50,000,000 shares
of $.01 par value; issued and outstanding,
6,071,019 and 6,065,519 shares, respectively 61 61
Additional paid-in capital 21,260 21,233
Retained earnings 29,552 27,396
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50,873 48,690
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$157,470 $138,632
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</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 Additional Share-
Shares Par Paid-In Retained holders'
Outstanding Value Capital Earnings Equity
----------- ----- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 6,048,519 $60 $21,145 $19,743 $40,948
Exercise of stock
options 17,000 1 88 - 89
Net Earnings - - - 7,653 7,653
--------- -- ------ ------ ------
Balance at
December 31, 1996 6,065,519 61 21,233 27,396 48,690
Exercise of stock
options (Unaudited) 5,500 - 27 - 27
Net Earnings
(Unaudited) - - - 2,156 2,156
--------- -- ------ ------ ------
Balance at
March 31, 1997
(Unaudited) 6,071,019 $61 $21,260 $29,552 $50,873
========= == ====== ====== ======
</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)
Three months ended
March 31,
1997 1996
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Increase (decrease) in cash and cash equivalents:
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,156 $ 1,519
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,031 685
Gain on sale of assets (2) -
Deferred income taxes 50 -
Change in assets and liabilities:
Accounts receivable - trade (7,553) 2,932
Inventories (6,804) 6,022
Prepaid expenses and other assets (1,951) (34)
Other assets (788) 397
Accounts payable - trade 4,020 (9,985)
Accrued expenses (478) (449)
Income taxes payable (246) 617
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Net cash provided by (used in)
operating activities (10,565) 1,704
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Cash flows from investing activities:
Net cash paid for acquisitions - (91)
Purchases of property, plant and equipment (3,173) (3,062)
Proceeds from sale of property, plant and equipment 2 -
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Net cash used in investing activities (3,171) (3,153)
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Cash flows from financing activities:
Proceeds from exercise of stock options 27 26
Net proceeds from (payments on) note payable to bank 14,306 (33)
Proceeds from long term obligations - 2,100
Payments on long term obligations (1,026) (684)
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Net cash provided by financing activities 13,307 1,409
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Net decrease in cash and cash equivalents (429) (40)
Cash and cash equivalents at beginning of period 479 224
------ ------
Cash and cash equivalents at end of period $ 50 $ 184
====== ======
Supplemental cash flow information:
Interest paid $ 1,125 $ 1,102
====== ======
Income taxes paid $ 2,425 $ 396
====== ======
</TABLE>
Non-cash investing and financing activities:
During the three month period ended March 31, 1996 the Company incurred
approximately $372 of obligations under capital leases for the acquisition
of equipment. No capital leases were entered into during the period ended
March 31, 1997.
The accompanying notes are an integral part of these financial statements
6
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
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 March 31, 1997 and for the three months ended
March 31, 1997 and March 31, 1996 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 months ended March 31, 1997 are not necessarily indicative of
results that may be expected for the year ending December 31, 1997. 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 1996 Form 10-K. Certain reclassifications have been made
to conform to the 1997 presentation.
<TABLE>
<CAPTION>
NOTE B -- INVENTORIES
Inventories consist of the following (in thousands):
March 31, December 31,
1997 1996
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<S> <C> <C>
Reptron Distribution:
Inventories $36,362 $31,085
K-Byte Manufacturing:
Work in process 11,089 8,833
Raw Materials 18,047 18,776
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$65,498 $58,694
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</TABLE>
7
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MARCH 31, 1997
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 United States. Contract Manufacturing
manufactures electronic products according to customer design, for
customers in various industries, including telecommunications, banking, and
healthcare services.
The following table shows net sales and gross profit by industry segments:
<TABLE>
<CAPTION>
Three months ended
March 31,
(in thousands)
------------------
1997 1996
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<S> <C> <C>
Net Sales
Distribution $47,368 $42,349
Contract Manufacturing 28,883 24,202
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$76,251 $66,551
====== ======
Gross Profit
Distribution $ 8,732 $ 8,111
Contract Manufacturing 5,340 3,871
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$14,072 $11,982
====== ======
</TABLE>
NOTE D -- NEW ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards (FAS) No. 128, "Earnings Per Share", which supersedes
Accounting Principles Board Opinion 15. FAS No. 128 is effective for
financial statements issued for periods ending after December 15, 1997.
The potential effect of applying FAS No. 128 would have increased earnings
per share from $.35 to $.36 during the first quarter of 1997.
8
REPTRON ELECTRONICS, INC
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Net Sales: Total first quarter net sales increased $9.7 million, or
14.6%, from $66.6 million in the first quarter of 1996 to $76.3 million in
the first quarter of 1997.
Reptron Distribution first quarter net sales increased $5.0 million,
or 11.9%, from $42.4 million in the first quarter of 1996 to $47.4 million
in the first quarter of 1997. Sales to the largest customer of the
Company, Tellabs, Inc., accounted for approximately $2.7 million of the
increase in first quarter 1997 net sales. Tellabs, Inc. is a customer of
both Reptron Distribution and K-Byte Manufacturing and represented
approximately 15.4% of Reptron Distribution first quarter 1997 net sales
(10.8% of total Company net sales). Sales from the memory module division
accounted for approximately $760,000 of the increase in first quarter 1997
net sales. The balance of the increase in first quarter 1997 net sales was
generated by the remainder of the Reptron Distribution sales offices. The
highest volume sales office accounted for approximately 21.5% of Reptron
Distribution net sales. Sales of semiconductors accounted for 75.0% of
first quarter Reptron Distribution net sales, with the remaining sales
generated from passive components (19.4%) and electromechanical products
(5.6%).
K-Byte Manufacturing net sales increased $4.7 million, or 19.3%, from
$24.2 million in the first quarter of 1996 to $28.9 million in the first
quarter of 1997. Sales to new customers accounted for a $6.5 million
increase in net sales over the first quarter of 1996. This increase was
partially offset by an intentional $1.4 million decrease in sales volume to
a financially troubled customer. Net sales from the remaining active K-
Byte Manufacturing customers varied based on differing customer
requirements during these time periods. The largest K-Byte Manufacturing
customer accounted for approximately 14.7% of division net sales (5.6% of
total net sales). No other customer represented more than 9.5% of division
net sales. Sales from the Tampa, Florida manufacturing facility accounted
for approximately 58.0% of K-Byte Manufacturing net sales. The Gaylord,
Michigan manufacturing facility generated approximately 38.2% of K-Byte
Manufacturing net sales with the remaining net sales originating from the
Saline, Michigan location.
Gross Profit: Total first quarter gross profit increased $2.1
million, or 17.4%, from $12.0 million in the first quarter of 1996 to $14.1
million in the first quarter of 1997. The gross profit percentage of the
Company increased from 18.0% in the first quarter of 1996 to 18.5% in the
first quarter of 1997.
Reptron Distribution first quarter gross profit increased $621,000, or
7.7%, from $8.1 million in the first quarter of 1996 to $8.7 million in the
first quarter of 1997. The gross profit percentage decreased from 19.2% in
the first quarter of 1996 to 18.4% in the first quarter of 1997. First
quarter, 1997 sales of a specific ASIC component to the Company's largest
customer resulted in lowering the first quarter, 1997 gross profit
percentage. Additionally, the increase in sales from the memory module
division as a percentage of total Reptron Distribution net sales, from 7.8%
in the first quarter of 1996 to 8.5% in the first quarter of 1997,
contributed to the decrease in first quarter, 1997 gross profit percentage.
K-Byte Manufacturing gross profit increased $1.4 million, or 38.0%,
from $3.9 million in the first quarter of 1996 to $5.3 million in the first
quarter of 1997 and its gross profit percentage increased from 16.0% in the
first quarter of 1996 to 18.5% in the first quarter of 1997. This increase
is primarily attributable to the efficiencies of fixed overhead costs being
spread over a larger revenue base and a favorable mix of business in the
first quarter of 1997.
Selling, General, and Administrative Expense: Selling, general, and
administrative expenses increased $900,000, or 10.8%, from $8.3 million in
the first quarter of 1996 to $9.2 million in the first quarter of 1997.
These expenses, as a percentage of net sales, decreased from 12.5% in the
first quarter of 1996 to 12.1% in the first quarter of 1997.
9
Interest Expense: Interest expense increased $126,000, or 11.4%, from
$1.1 million in the first quarter of 1996 to $1.2 million in the first
quarter of 1997 as a result of higher levels of average outstanding debt.
The Company's current assets have increased to support the 14.6% increase
in net sales. The increases in current assets were financed through the
bank credit line.
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 first quarter of 1997 used cash of
approximately $10.6 million. This resulted primarily from an increase in
accounts receivable of $7.6 million and an increase in inventories of $6.8
million. These items were offset by a $4.0 million increase in accounts
payable. The Company's accounts receivable collections averaged 52.5 days
as of March 31, 1997. Reptron Distribution averaged 5.2 inventory turns in
the first quarter, 1997 while K-Byte Manufacturing averaged 3.9 inventory
turns during this period. K-Byte Manufacturing's inventory turns have been
negatively impacted by the complex process associated with integrating ten
new customers, representing over 290 different circuit board assemblies
into the Tampa manufacturing plant.
Capital expenditures totaled approximately $3.2 million in the first
quarter of 1997. These capital expenditures were primarily for the
acquisition of manufacturing equipment. These capital expenditures were
funded through the bank credit line.
The Company believes that 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.
10
REPTRON ELECTRONICS, INC.
PART II. OTHER INFORMATION
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 March 31, 1997.
11
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:/s/ Paul J. Plante
-------------------------------
Paul J. Plante, Chief Operating
Officer and Chief Financial
Officer (Principal Financial
and Accounting Officer)
12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF EARNINGS AND THE CONSOLIDATED BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000918765
<NAME>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 47360
<ALLOWANCES> 350
<INVENTORY> 65498
<CURRENT-ASSETS> 117789
<PP&E> 33189
<DEPRECIATION> 0
<TOTAL-ASSETS> 157470
<CURRENT-LIABILITIES> 29595
<BONDS> 75417
0
0
<COMMON> 61
<OTHER-SE> 50812
<TOTAL-LIABILITY-AND-EQUITY> 157470
<SALES> 76251
<TOTAL-REVENUES> 76251
<CGS> 62179
<TOTAL-COSTS> 71429
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1228
<INCOME-PRETAX> 3594
<INCOME-TAX> 1438
<INCOME-CONTINUING> 2156
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<CHANGES> 0
<NET-INCOME> 2156
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
