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 30,1999
( ) 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.
- -----------------------------------------------------------------------------
(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
------- -------
6,147,119 shares of common stock issued and outstanding as of August 10, 1999
- --------- ---------------
REPTRON ELECTRONICS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Statements of Operations --
Three months ended June 30, 1999 and
June 30, 1998 and Six months ended
June 30, 1999 and June 30, 1998 3
Consolidated Balance Sheets --
June 30, 1999 and December 31, 1998 4
Consolidated Statement of
Shareholders' Equity -- Six months ended
June 30, 1999 and year ended December 31, 1998 5
Consolidated Statements of Cash Flows --
Six months ended June 30, 1999 and June
31, 1998 6
Notes to Consolidated Financial
Statements -- June 30, 1999 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security
Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three months ended Six months ended
June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 81,026 $ 73,636 $ 158,411 $ 144,471
Cost of goods sold 70,107 62,854 137,406 122,218
--------- --------- --------- ---------
Gross profit 10,919 10,782 21,005 22,253
Selling, general and administrative expenses 13,609 11,290 26,224 22,023
--------- --------- --------- ---------
Operating earnings (loss) (2,690) (508) (5,219) 230
Interest expense, net 2,025 1,835 4,167 3,697
--------- --------- --------- ---------
Loss before income taxes (4,715) (2,343) (9,386) (3,467)
Income tax benefit (1,811) (878) (3,605) (1,500)
--------- --------- --------- ---------
Loss before extraordinary item (2,904) (1,465) (5,781) (1,967)
Extraordinary gain on extinguishment
of debt, net 8,250 - 8,250 -
--------- --------- --------- ---------
Net earnings (loss) $ 5,346 $ (1,465) $ 2,469 $ (1,967)
========= ========= ========= =========
Net earnings (loss) per common share -
basic and diluted:
Loss before extraordinary item $ (0.47) $ (0.24) $ (0.94) $ (0.32)
Extraordinary gain 1.34 - 1.34 -
--------- --------- --------- ---------
Net earnings (loss) per common share -
basic and diluted $ 0.87 $ (0.24) $ 0.40 $ (0.32)
========= ========= ========= =========
Weighted average common shares
outstanding - basic and diluted 6,147,119 6,090,560 6,147,119 6,089,518
========= ========= ========= =========
</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,
1999 1998
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,096 $ 10,065
Accounts receivable - trade, less allowances
for doubtful accounts of $579 and $483 48,167 49,503
Inventories, net 73,260 69,331
Prepaid expenses and other 1,045 9,296
Deferred tax benefit 995 2,295
------- -------
Total current assets 126,563 140,490
PROPERTY, PLANT & EQUIPMENT - AT COST, NET 36,355 38,273
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET 24,269 25,527
OTHER ASSETS 3,907 5,794
------- -------
$191,094 $210,084
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade 29,461 25,542
Current portion of long-term obligations 3,889 3,866
Accrued expenses 7,501 9,183
Deferred revenue - 70
Income taxes payable 584 -
------- -------
Total current liabilities 41,435 38,661
LONG-TERM OBLIGATIONS, less current portion 105,064 129,297
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,
6,147,119 shares 61 61
Additional paid-in capital 21,676 21,676
Retained earnings 22,858 20,389
------- -------
44,595 42,126
------- -------
$191,094 $210,084
======= =======
</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)
Common Stock Total
----------------- Additional Share-
Shares Par Paid In Retained holders'
Outstanding Value Capital Earnings Equity
----------- ----- ------------ -------- --------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1997 6,088,369 $61 $21,378 $ 33,536 $ 54,975
Exercise of stock
options 58,750 - 298 - 298
Net loss - - - (13,147) (13,147)
--------- -- ------ ------- -------
Balance at
December 31, 1998 6,147,119 61 21,676 20,389 42,126
Net earnings (unaudited) - - - 2,469 2,469
--------- -- ------ ------- -------
Balance at
June 30, 1999 (unaudited) 6,147,119 $61 $21,676 $ 22,858 $ 44,595
========= == ====== ======= ======
</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,
(Unaudited)
------------------
1999 1998
------- -------
Increase (decrease) in cash and cash equivalents:
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 2,469 $ (1,967)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 5,454 4,636
Extraordinary gain (13,750) -
Deferred income taxes 1,300 38
Loss on disposal of assets 5 -
Change in assets and liabilities:
Accounts receivable - trade 1,725 6,556
Inventories (3,552) 4,247
Prepaid expenses and other current assets 8,251 (858)
Other assets (221) (408)
Accounts payable - trade 3,919 (10,840)
Accrued expenses (1,682) 894
Deferred revenue (70) (1,280)
Income taxes payable 584 -
------- -------
Net cash provided by operating
activities 4,432 1,018
------- -------
Cash flows from investing activities:
Net cash paid for acquisitions - (30,335)
Purchases of property, plant and equipment (1,850) (2,363)
Proceeds from the sale of property 97 243
------- -------
Net cash used in investing activities (1,753) (32,455)
------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options - 24
Net proceeds from note payable to bank 11,324 -
Payments on long term obligations (20,972) (9,647)
------- -------
Net cash used in financing activities (9,648) (9,623)
------- -------
Net decrease in cash and cash equivalents (6,969) (41,060)
Cash and cash equivalents at beginning of period 10,065 55,135
------- -------
Cash and cash equivalents at end of period $ 3,096 $ 14,075
======= -======
The accompanying notes are an integral part of these financial statements
6
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Six months ended
June 30,
(Unaudited)
------------------
1999 1998
------- -------
Supplemental cash flow information:
Interest paid $ 4,873 $ 3,429
====== =======
Income taxes paid $ - $ 61
====== =======
</TABLE>
Non-cash investing and financing activities:
No capital leases were entered into during the six month periods ended
June 30, 1998 and June 30, 1999.
Goodwill, related to the 1998 Hibbing acquisition, has been adjusted
approximately $767,000 during the period ended June 30, 1999.
Net capitalized financing costs of approximately $812,000, related to the May
1999 repurchase of convertible subordinated bonds, have been written off
during the period ended June 30, 1999.
The accompanying notes are an integral part of these financial statements
7
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
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, 1999 and for the three
and six months ended June 30, 1999 and June 30, 1998 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, 1999 are not necessarily indicative of results
that may be expected for the year ending December 31, 1999. 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 1998 Form 10-K.
<TABLE>
<CAPTION>
NOTE B -- INVENTORIES
Inventories consist of the following (in thousands):
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Reptron Distribution:
Inventories $38,719 $37,026
K-Byte Manufacturing:
Work in process 11,765 9,043
Raw Materials 22,776 23,262
------ ------
$73,260 $69,331
====== ======
</TABLE>
8
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
JUNE 30, 1999
(Unaudited)
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 throughout United States. Contract Manufacturing
manufactures electronic products, according to customer design, for
a select number of customers throughout the country representing
a diverse range of industries. Inter-segment sales include a margin,
based on market pricing, which is eliminated in consolidation.
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)
------------------ ----------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales
Distribution $44,188 $40,978 $ 83,694 $ 81,298
Contract Manufacturing 36,838 32,658 74,717 63,173
------ ------ ------- -------
$81,026 $73,636 $158,411 $144,471
====== ====== ======= ======
Gross Profit
Distribution $ 7,428 $ 7,669 $ 14,030 $ 15,466
Contract Manufacturing 3,491 3,113 6,975 6,787
------ ------ ------- -------
$10,919 $10,782 $ 21,005 $ 22,253
====== ====== ======= =======
</TABLE>
NOTE D -- EARLY EXTINGUISHMENT OF DEBT
Reptron extinguished $25.0 million of its convertible subordinated
bonds during the second quarter of 1999. The cash paid to extinguish
these bonds was approximately $10.4 million. This transaction
generated an after tax extraordinary gain of approximately $8.25
million. The net capitalized financing costs of approximately $812,000
associated with the extinguished debt was written off during the second
quarter of 1999.
NOTE E - SUBSEQUENT EVENT
On August 9, 1999, Reptron announced that its Board of Directors had
approved a second bond repurchase program, authorizing the expenditure
of up to $10 million to repurchase Reptron's outstanding subordinated
convertible bonds. Reptron expects to use funds advanced under the
existing $50 million credit facility to complete the repurchase.
9
REPTRON ELECTRONICS, INC
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This document contains certain forward-looking statements that
involve a number of risks and uncertainties. Such forward-looking
statements are within the meaning of that term in Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities
Act of 1934, as amended. Factors that could cause actual results to
differ materially include the following: business conditions and
growth in Reptron's industry and in the general economy; competitive
factors; risks due to shifts in market demand; the ability of Reptron
to complete and integrate acquisitions; and the risk factors listed
from time to time in Reptron's reports filed with the Securities and
Exchange Commission as well as assumptions regarding the foregoing.
The words "believe", "estimate", "expect", "intend", "anticipate",
"plan" and similar expressions and variations thereof identify certain
of such forward-looking statements, which speak only as of the dates on
which they were made. Reptron undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of
new information, future events, or otherwise. Readers are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual
results may differ materially from those indicated in the forward-
looking statements as a result of various factors. Readers are
cautioned not to place undue reliance on these forward-looking
statements.
RESULTS OF OPERATIONS
Net Sales. Total second quarter net sales increased $7.4 million,
or 10.0%, from $73.6 million in the second quarter of 1998 to $81.0
million in the second quarter of 1999. Total net sales for the first
half of 1999 increased $13.9 million, or 9.6% from $144.5 million in
the first half of 1998 to $158.4 million in the first half of 1999.
Reptron Distribution second quarter net sales increased $3.2
million, or 7.8%, from $41.0 million in the second quarter of 1998 to
$44.2 million in the second quarter of 1999. The largest customer
represented approximately 4.4% of Reptron Distribution second quarter,
1999 net sales (2.4% of total Company net sales) and the largest sales
office accounted for approximately 11.4% of Reptron Distribution second
quarter net sales. Sales of semiconductors accounted for 71.7% of
second quarter Reptron Distribution net sales, with the remaining sales
generated from passive components (19.5%) and electromechanical
products (8.8%). Sales generated from the top three Reptron
Distribution vendors accounted for approximately $15.0 million, or
34.0% of Reptron Distribution's 1999 second quarter net sales, as
compared with approximately $10.8 million or 26.4% of Reptron
Distribution's 1998 second quarter net sales.
Reptron Distribution net sales increased $2.4 million, or 2.9%, from
$81.3 million in the first half of 1998 to $83.7 million in the first
half of 1999. The largest Reptron Distribution customer in the first
half of 1999 represented approximately 4.0% of total Reptron
Distribution net sales (2.1% of total Company net sales) and the
largest sales office accounted for 13.4% of total Reptron Distribution
net sales. Sales of semiconductors accounted for 72.0% of first half
Reptron Distribution net sales, with the remaining sales generated from
passive components (20.0%) and electromechanical products (8.0%).
Sales generated from the top three Reptron Distribution vendors
accounted for approximately $26.7 million, or 31.8% of Reptron
Distribution's 1999 first half net sales, as compared with
approximately $21.2 million or 26.1% of Reptron Distribution's 1998
first half net sales.
K-Byte Manufacturing net sales increased $4.1 million, or 12.8%,
from $32.7 million in the second quarter of 1998 to $36.8 million in
the second quarter of 1999. This increase is largely attributable to
the acquisition of Hibbing Electronics Corporation ("Hibbing"), which
was completed in May, 1998. Hibbing's net sales were $16.6 million in
the second quarter of 1999. Hibbing's net sales for second quarter of
1998 included post acquisition sales activity of approximately one
month which amounted to approximately $6.2 million. Net sales
generated within the previously existing K-Byte Manufacturing customer
base decreased by approximately $6.0 million in the second quarter of
1999. The largest K-Byte Manufacturing customer accounted for
approximately 9.2% of second quarter division net sales (4.2% of total
Company net sales). Sales from the Hibbing, Minnesota; Gaylord,
Michigan and Tampa, Florida manufacturing facilities accounted for
approximately 45%, 29%, and 26%, respectively, of K-Byte Manufacturing
second quarter net sales.
10
K-Byte Manufacturing net sales increased $11.5 million, or 18.3%,
from $63.2 million in the first half of 1998 to $74.7 million in the
first half of 1999. Net sales from Hibbing, acquired in May, 1998,
accounted for an increase of approximately $23.4 million, which was
partially offset by a decrease in net sales of approximately $11.9
million from the previously existing K-Byte customer base. The largest
K-Byte customer accounted for approximately 7.6%, of total first half
1999 division net sales (3.6% of total Company net sales). Sales from
the Hibbing, Minnesota; Tampa, Florida and Gaylord, Michigan
manufacturing facilities accounted for approximately 40%, 30% and 30%,
respectively, of total K-Byte Manufacturing sales in the first half of
1999.
Gross Profit. Total second quarter gross profit increased $137,000,
or 1.3%, from $10.8 million in the second quarter of 1998 to $10.9
million in the second quarter of 1999. The gross margin of Reptron
decreased from 14.6% in the second quarter of 1998 to 13.5% in the
second quarter of 1999. Total gross profit decreased $1.3 million, or
5.6%, from $22.3 million in the first half of 1998 to $21.0 million in
the first half of 1999. The gross margin decreased from 15.4% in the
first half of 1998 to 13.3% in the first half of 1999.
Reptron Distribution second quarter gross profit decreased $241,000,
or 3.1%, from $7.7 million in the second quarter of 1998 to $7.4
million in the second quarter of 1999. The gross margin decreased from
18.7% in the second quarter of 1998 to 16.8% in the second quarter of
1999. This decrease in gross margin is due primarily to industry wide
pressures on component pricing and shifts in customer sales mix.
Reptron Distribution's first half gross margin decreased from 19.0% in
the first half of 1998 as compared to 16.8% in the first half of 1999,
for similar reasons.
K-Byte Manufacturing gross profit increased $378,000, or 12.1%, from
$3.1 million in the second quarter of 1998 to $3.5 million in the
second quarter of 1999 and its gross margin remained flat at 9.5% in
the second quarter of 1999 and 1998. K-Byte Manufacturing first half
gross profit increased $188,000 or 2.8% from $6.8 million in 1998 to
$7.0 million in 1999 and its gross margin decreased from 10.7% in the
first half of 1998 to 9.3% in the first half of 1999. This decrease in
gross margin is reflective of absorption of fixed manufacturing
overhead and increased depreciation and amortization expenses at
current sales levels.
Selling, General, and Administrative Expenses. Selling, general,
and administrative expenses increased $2.3 million, or 20.5%, from
$11.3 million in the second quarter of 1998 to $13.6 million in the
second quarter of 1999. This increase is primarily attributed to the
Hibbing operating expenses since the May, 1998 acquisition, the
addition of sales staff and other infrastructure, primarily for Reptron
Distribution, and the increase in variable expenses associated with
increased sales. These expenses, as a percentage of net sales,
increased from 15.3% in the second quarter of 1998 to 16.8% in the
second quarter of 1999 due to the increases described above. First
half selling, general and administrative expenses increased $4.2
million or 19.1% from $22.0 million in the first half of 1998 to $26.2
million in the first half of 1999. First half selling, general and
administrative expenses as a percentage of net sales increased from
15.2% in the first half of 1998 to 16.6% in the first half of 1999, for
similar reasons.
Interest Expense. Net interest expense increased $190,000, or
10.4%, from $1.8 million in the second quarter of 1998 to $2.0 million
in the second quarter of 1999. First half net interest expense
increased $470,000, or 12.7%, from $3.7 million in the first half of
1998 to $4.2 million in the first half of 1999. The increase is
primarily attributed to the decrease in interest income as a result of
a decrease of approximately $28.0 million in the average cash balance
during the first half of 1999 to $6.6 million from $34.6 million during
the first half of 1998. Reptron used approximately $30.0 million in
cash in connection with the May 1998 acquisition of Hibbing.
LIQUIDITY AND CAPITAL RESOURCES
Reptron primarily finances its operations through operating cash
flows, subordinated notes, bank credit lines, capital equipment leases,
and short-term financing through supplier credit lines.
Operating activities for the second quarter of 1999 generated cash
of approximately $7.9 million. This increase in liquidity resulted
primarily from a decrease in prepaid expenses and other current assets
of $6.0 million, an increase accounts payable of $6.4 million, an
increase in accrued expenses of $2.3 million and an increase in income
taxes payable of $584,000. These items were offset by an operating
loss of $2.9 million, an increase in accounts receivable of $1.3
million, and an increase in inventories of $3.6 million.
11
Operating activities for the first half of 1999 generated cash of
approximately $4.4 million. This increase in liquidity resulted
primarily from a decrease in prepaid expenses and other current assets
of $8.3 million, an increase in accounts payable of $3.9 million, a
decrease in accounts receivable of $1.7 million and an increase in
income taxes payable of $584,000. These items were offset by an
operating loss of $5.8 million, an increase in inventories of $3.6
million and a decrease in accrued expenses of $1.7 million.
On May 13, 1999 Reptron expended approximately $10.4 million in
connection with the repurchase of $25.0 million of convertible
subordinated bonds, generating a net after tax extraordinary gain of
approximately $8.25 million.
Capital expenditures totaled approximately $1.8 million in the first
half of 1999. These capital expenditures were primarily for the
acquisition of manufacturing equipment and building improvements. The
cash reserves of Reptron were used to fund these purchases.
Reptron believes that cash generated from operations, available cash
reserves and available credit facilities will be sufficient for Reptron
to meet its capital expenditures and working capital needs for its
operations as presently conducted. Additionally, Reptron'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 Reptron, Reptron believes that such financing would
likely be available on acceptable terms.
YEAR 2000 STATEMENT
The Year 2000 issue encompasses the required recognition of computer
hardware and software systems and computer controlled devices,
including equipment used in Reptron's manufacturing and distribution
operations, to properly acknowledge the change from Year 1999 to Year
2000. The failure of any hardware and software systems or equipment to
timely and accurately recognize such change could result in partial or
complete systems failure. In the normal course of business, Reptron
relies on products and services from critical vendors, customers and
other third parties whose computer systems must also be Year 2000
compliant in order for Reptron to realize the uninterrupted flow of its
business operations. Reptron is actively taking steps to ensure that
its systems and equipment will be Year 2000 compliant, including
assessing the scope of work, prioritizing, certifying compliance, and
testing compliance. Reptron is also actively assessing the Year 2000
compliance status of its primary vendors, customers and other third
party service providers.
Substantially all of the critical systems and equipment utilized in
Reptron Distribution, Reptron's central corporate operations and K-Byte
Manufacturing, including Hibbing, have been tested for Year 2000
compliance as of June 30, 1999. Those tests have demonstrated the
critical operating systems of Reptron Distribution and Reptron's
central corporate operations to be substantially Year 2000 compliant.
There remains certain test fixture equipment in K-Byte Manufacturing's
operations, which require software modification to reach Year 2000
compliance. It is expected that these test fixtures will be Year 2000
compliant in sufficient so as to not interrupt manufacturing output. Further,
testing to date has supported the representations previously made by
primary third party software providers to K-Byte Manufacturing
regarding their software Year 2000 compatability.
While Reptron is actively seeking assurances of Year 2000 compliance
from each of its key suppliers, customers and other third-parties with
whom Reptron conducts business, this assessment primarily relies upon
such third-parties' representations of Year 2000 compliance. A lack of
response or inadequate or inaccurate information from such third
parties could materially affect Reptron's assessment of Year 2000
readiness. Reptron continues to assess the responses to its inquiries
regarding Year 2000 compatibility received from its key suppliers,
customers and other third parties.
12
To date, the costs incurred by Reptron to address Year 2000 issues
have been immaterial, and Reptron expects that the costs to complete
Year 2000 compliance certification, testing and verification will also
be immaterial. Where appropriate, Reptron will develop contingency
plans in areas it determines that Year 2000 readiness is insufficient.
However, no assurances can be given that Reptron's Year 2000 efforts
and testing procedures are appropriate, adequate, complete or conclusive
as to Year 2000 compliance. In addition, Reptron is unable to fully determine
the effect of a failure of its own systems or those of any third-party with whom
it conducts business, but any significant failures could have a material
adverse effect on Reptron's financial condition, results of operations and cash
flows.
13
REPTRON ELECTRONICS, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security
Holders
The annual Meeting of the Shareholders of Reptron was
held on May 28, 1999. Mr. Michael L. Musto was
elected director of Reptron for a three year term
with 5,660,802 shares voting in favor, zero shares
against and 77,948 shares abstaining. Mr. Paul J.
Plante was elected director of Reptron for a three
year term with 5,659,202 voting in favor, zero shares
against and 79,548 shares abstaining. The number of
shares available under the Reptron Electronics, Inc.
Incentive Stock Option Plan was increased to
2,000,000 with 2,619,410 shares voting in favor,
1,054,776 shares voting against and 58,166 shares
abstaining. The number of shares available under the
Reptron Electronics, Inc. Non-Employee Stock Option
Plan was increased to 350,000 with 2,771,399 shares
voting in favor, 852,749 shares voting against and
58,166 shares abstaining. The accounting firm of
Grant Thornton LLP was appointed as Reptron's
independent auditors with 5,723,850 shares voting in
favor, 14,700 shares voting against and 200 shares
abstaining.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.1 Distribution Agreement between Midcom, Inc. and
Reptron Electronics, Inc. dated June 1, 1999.
b. Reports on Form 8-K
None
14
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: August 13, 1999
-------------------
REPTRON ELECTRONICS, INC.
(Registrant)
By: /s/ Michael Branca
-------------------------
Michael Branca
Chief Financial Officer
(Principal Financial and
Accounting Officer)
15
EXHIBIT 10.1
Midcom, Inc.
And
Reptron Electronics, Inc.
Distribution Agreement
June 1, 1999
TABLE OF CONTENTS
SECTION 1: DISTRIBUTION AGREEMENT
Agreement 2 -13
SECTION 2: CONTACTS
Contacts 14
SECTION 3: PRICING
Price Protection 15
Price Changes 15
Price Protection Claim Form (Example) 16
Quote Procedures 17
Non-Standard Product(s) 17
Debit Price Authorization (DPA) 18
Ship and Debit Claims 19
SECTION 4: REPORTS
Point of Sales Reports 20
Inventory Reports 20
SECTION 5: ORDER ENTRY
General Order Entry Information 21
SECTION 6: SAMPLES
Samples From Factory Inventory 23
Samples From Distributor Inventory 23
SECTION 7: RETURN POLICIES AND PROCEDURES
Return Material Authorizations (RMA) 24
Returns, Obsolete Product(s) 25
Stock Rotation Returns 26
SECTION 8: ADVERTISING
Advertising, Sales Promotions, Co-op Fund 27
SECTION 9: LITERATURE
Literature Requests 28
DISTRIBUTOR AGREEMENT NUMBER _l
THIS AGREEMENT made and entered into as of June l, 1999, by and between
Midcom Inc., a South Dakota corporation, (hereafter referred go as
Midcom) having a place of business at 121 Airport Drive, Watertown, SD
57201 and Reptron Electronics Inc, a corporation in the State of Florida,
having its principal place of business at 14401 McCormick Drive, Tampa,
FL 33626-3046
(hereafter referred to as "Distributor").
NOW, THEREFORE, the parties, in consideration of the mutual promises
contained herein, intending to be legally bound, agree as follows:
1. GENERAL
This Agreement governs all transactions hereafter entered into between
Midcom and Distributor concerning Midcom brand products listed in the
Distributor Price List of Midcom. Such products, if they have been sold
by and through Midcom, are hereinafter referred to as "PRODUCTS(S)."
2. APPOINTMENT
Subject to the terms set forth in this Agreement, Midcom hereby appoints
the Distributor, and the Distributor accepts the appointment by Midcom,
to be a nonexclusive, independent distributor of the MIDCOM PRODUCT(S) .
3. TERRITORY
Distributor shall promote, sell and distribute PRODUCTS(S) to customers
located only in North America (the "TERRITORY") except as may be approved
in advance in writing by Midcom's National Distribution Sales Manager in
a particular instance. Distributor shall not establish any new,
different or additional sales locations for PRODUCTS without the prior
written consent of Midcom. Midcom reserves the right to make sales
directly or indirectly, or to designate others to make sales, to
customers located within the TERRITORY.
4.TERM
This Agreement shall become effective on the date set forth above and
shall remain in effect until terminated as provided in Section 1 0 of the
Agreement.
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5.PURCHASES
Distributor shall order and purchase PRODUCT(S) from Midcom in accordance
with the terms and conditions of the Agreement, and in accordance with
such additional order processing procedures as may be established by
Midcom from time to time. Such procedures may be set forth by Midcom in
written communications, such as bulletins or letters. The terms and
conditions of this Agreement will be deemed incorporated in all orders by
Distributor for PRODUCT(S) and will apply irrespective of (and in lieu o@
any other items which may be contained in any forms or correspondence
submitted by Distributor to Midcom. Midcom's acceptance and
Distributor's submission of such orders is expressly conditioned on the
terms and conditions of the Agreement applying to such orders. The
following terms shall be deemed incorporated in all orders placed by
Distributor:
a. The prices for PRODUCT(S) shall be those set forth on Midcom's
Distributor Price List effective on the date printed on the price list by
Midcom to Distributor.
b. Price Protection: In the event Midcom decreases the price of a
PRODUCT(S) in its Distributor Price List, Distributor may apply for
credit equal to the difference between the actual price paid to Midcom
for each such PRODUCT(S) (less any credits previously issued by Midcom)
and the new lower price for such PRODUCT(S) in the Distributor's
inventory at each location as of the effective date of the price
decrease. On the date of the price decrease a physical count must be
taken by Distributor of the PRODUCT(S) which are being decreased in price
and for which Distributor requests credit. The results of the count must
be submitted by Distributor to Midcom in writing within thirty (30) days
thereafter. Midcom shall have the right to audit Distributor's books and
accounts and to inspect Distributor's inventory to verify the accuracy of
such count and report. Credit will be issued only upon authorization of
the National Distribution Sales Manager, and Distributor will not be
eligible for such credit if Distributor fails to submit in writing the
inventory count within the aforementioned thirty (30) day period or has
failed to submit each of the monthly sales inventory reports specified in
Section 10e hereof or fails to permit Midcom to audit the accuracy of
such reports.
c. All list prices are subject to change by Midcom and Midcom shall give
30 days prior notice to Distributor of price increases.
d. All prices, unless otherwise specified, shall not include any
applicable federal, state or local sales, use or similar taxes, all of
which shall be the responsibility of Distributor,
e. All orders placed by Distributor for PRODUCT(S) shall be acknowledged
by Midcom and scheduled for a delivery date(s). Midcom will make every
effort to ship to Distributor's request dates, but Midcom will be
responsible only for negotiated ship dates. Orders are firm and non-
cancelable by Distributor
3
once the scheduled delivery date for PRODUCT(S) is within thirty (30)
days, except (1) in the event of Midcom's delaying delivery as set forth
in subsection "h" below; or (2) with respect to those PRODUCT(S) for
which Midcom has given notice of an increase in price after placement of
Distributor's order.
f. All prices are F.O.B. Shipping Point. Midcom shall be deemed to have
delivered all PRODUCT(S) when such are put in the custody of a carrier at
Midcom's shipping dock, at which time all risk of loss and/or damage
shall pass to Distributor. Distributor shall bear all costs of freight,
freight insurance and associated expenses. Within thirty (30) days after
receipt of any PRODUCT(S), Distributor shall notify Midcom in writing of
any damage to or defects in such PRODUCT(S). Failure to do so shall be
deemed conclusive proof that such damage or defects are not attributable
to the fault of Midcom and shall constitute a waiver of all claims
against Midcom arising out of such damage or defects (except for Midcom's
warranty obligations as set forth in Section 8 of this Agreement).
g. Midcom shall invoice Distributor for each shipment, such invoice to
be sent on or after the date of shipment by Midcom. Unless otherwise
stated by Midcom, terms of payment are thirty (30) days net from date of
invoice. Credit, if any, is subject to prior approval by Midcom as to
the amount and terms. Midcom reserves the right, at any time, to require
payment in advance or to modify or revoke credit or credit terms, either
generally or with respect to specific orders. Midcom may at any time, at
Midcom's sole discretion, refuse, vary, change or limit the amount or
duration of credit to be allowed Distributor.
h. Delivery dates given by Midcom for orders for PRODUCT(S) placed by
Distributor shall be considered Midcom's best estimates only and Midcom
reserves the right to apportion PRODUCT(S) among its customers at its
sole discretion. To cancel a purchase order for delay in delivery,
Distributor must first give written notice thereof to Midcom. Midcom
shall have until the end of five (5) full business days after such notice
is actually received by Midcom in which to deliver, after which such
order shall be deemed canceled.
6. INVENTORY
a. Distributor agrees to maintain an adequate inventory of all
PRODUCT(S) to meet the sales forecast for the Territory.
b. PRODUCT(S) may be returned to Midcom only if authorized by Midcom in
writing in advance. If Midcom approves a return, Midcom will first issue
to Distributor a Return Material Authorization (RMA) number. Return
Material Authorization numbers shall appear on the outside of all boxes
being returned. Unauthorized returns or returns without a proper RMA
number shall be returned to Distributor, transportation charges collect.
All PRODUCT(S) returned to Midcom must be properly packed in original
packing tubes, or unbroken reels, and must be shipped freight prepaid and
are subject to Midcom's verification and inspection prior to replacement,
repair or credit.
4
c. Notwithstanding the foregoing, Distributor may return twice per year
(May and November) up to five percent (5%) of the Distributor's purchases
at cost for the immediately preceding six (6) month period provided that
the PRODUCT(S) that the Distributor requests to return are those listed
in Midcom's then most current Distribution Price List. The return must
be accompanied by an offsetting purchase order for other PRODUCT(S) of
equal or greater dollar value subject to review and approval by Midcom.
All requested ship dates on the offsetting purchases order must be
scheduled in equal monthly shipments within ninety (90) days of the
purchase order.
7. PRODUCT(S) DEVELOPMENT
Midcom reserves the right, at its sole discretion, to, at any time, make
modifications, improvements or changes to PRODUCT(S) or to discontinue
the sale or distribution of any PRODUCT(S), without incurring any
liability whatsoever to Distributor or others. Written notification of
discontinuation will be given, and discontinued PRODUCT(S) will be
eligible for return within thirty (30)
days of notification.
8. WARRANTY
Midcom warrants solely to the end-user, that PRODUCT(S) will be free from
defects in material and workmanship under normal use and service for a
period of one (1) year from date of shipment, in new condition, to the
end-user. This warranty is void if the PRODUCT(S) is subject to
accident, misuse, neglect, improper handling, improper installation,
improper repair or is modified or altered. The sole and exclusive
obligation of Midcom under this warranty is the repair or replacement by
Midcom or by its Distributor (at Midcom's option) of such defective
causing the malfunction with new or refurbished parts. If Midcom or its
Distributor does not replace or repair such parts, the end-user's sole
remedy against Midcom shall be to obtain a refund of the price charged by
Midcom's Distributor for such PRODUCT(S) as are proven to be defective.
To obtain service under this warranty, the end-user must bring the
malfunction to the attention of the Midcom Distributor where the
PRODUCT(S) were purchased and return PRODUCT(S) within the twelve (12)
month period and no later than thirty (30) days after the occurrence of
such malfunction, whichever first occurs.
THERE ARE NO OTHER WARRANTIES, WHICH EXTEND BEYOND THE FACE OF THIS
WARRANTY. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR
PURPOSE, ARE HEREBY EXCLUDED. No Midcom Distributor and no person other
than a duly appointed officer of Midcom may extend or modify this
warranty. No such modification or extension is effective unless it is in
writing. Distributor is obligated to make its customers
5
and end-users aware of the terms of Midcom's warranty prior to the sale
of the PRODUCTS) to an end-user. Distributor shall actively participate
in the resolution of customer complaints and shall cooperate with Midcom
in providing warranty service. In particular, Distributor is responsible
for ensuring that PRODUCT(S) returned to Midcom under this warranty (1)
be accompanied by a Return Material Authorization (RMA) issued by Midcom;
(2) be accompanied by Distributor's customer's failure analysis report or
the like; (3) be received by Midcom no later than thirty (30) days
following the date on which such PRODUCT(S) were returned by
Distributor's customer; and (4) otherwise comply with Midcom's
examination of such PRODUCT(S) and shall disclose, to its satisfaction,
that such defects have not been caused by a third party misuse, neglect,
improper handling, improper installation, improper repair, modification
or alteration. Distributor agrees to indemnify and hold Midcom harmless
in any claims arising from any warranty made by Distributor or it's
employees or agents which is in violation of Section 9.
9. TERMINATION
a. This Agreement, or the authorization for any of Distributor's
locations, may be terminated by either party without cause and solely for
the convenience of the terminating party, by giving thirty (30) days
written notice to the other party.
b. Either party may terminate this Agreement forthwith, by giving
written notice to the other party in the event such other party commits a
breach of any of the terms and conditions of this Distributor Agreement,
suffers a change in ownership or control, ceases to function as a going
concern or to conduct its operation in the normal course of affairs,
makes an assignment for the benefit of creditors, files a voluntary
petition under the federal bankruptcy laws or any state law of similar
import, is the subject of any involuntary petition under the federal
bankruptcy laws or any state law of similar import without having the
same dismissed within thirty (30) days of its filing, or makes any bulk
transfer of its assets.
c. In the event this Agreement is terminated by Midcom for the
convenience of Midcom, and without fault of Distributor, Midcom's sole
obligation shall be to repurchase, at Distributor's option, Distributor's
inventory of PRODUCT(S) (but limited to those listed in Midcom's then
most current Distributor Price List and meeting all requirements for
return as specified in Section 7, Return Policies and Procedures, at the
lower of either the actual price paid to Midcom less credits previously
issued by Midcom for such PRODUCT(S) or Midcom's then prevailing prices,
freight cost to be borne by Midcom.
d. In the event authorization for one or more of Distributor's locations
(but not this Agreement) is terminated by Midcom for the convenience of
Midcom, and without fault of Distributor, Midcom sole obligation shall be
to repurchase, at Distributor's option, Distributor's inventory of
PRODUCT(S) (at the actual purchase price paid to Midcom for such
PRODUCT(S) less any credit issued by Midcom) sold by Distributor from and
through such terminated Distributor location(s) during the ninety (90)
days prior to such notice of termination, and
6
further provided that the price Midcom shall pay for the repurchase of
such inventory shall be at the lower of either the actual purchase price
paid to Midcom, less credit issued by Midcom to Distributor for such
PRODUCT(S) or Midcom's then prevailing prices for such, freight costs to
be borne by Midcom. All PRODUCT(S) returned to Midcom must be properly
packed in original packing tubes and unbroken reels and are subject to
Midcom's verification and inspection prior to repurchases.
e. In the event this Agreement is terminated by Distributor for the
convenience of Distributor, then Distributor shall, at Distributor's
option, resell to Midcom the Distributor's inventory of Standard
PRODUCT(S), at the lower of either the actual price paid to Midcom (less
any credits previously issued by Midcom) for such PRODUCT(S), or Midcom's
then prevailing prices for such; with freight cost to be borne by
Distributor. A 10% restocking charge shall apply to all returned
PRODUCT(S). The PRODUCT(S) will be returned to Midcom on a schedule
mutually agreed upon by the Distributor and Midcom.
f. Upon termination of this Agreement, Distributor shall within thirty
(30) days of date of termination, pay to Midcom, any balance due to
Midcom.
g. Upon termination of this Agreement neither party shall be liable to
the other for any damages, expenditures, loss of profits or prospective
loss of profits of any kind or nature, sustained or arising out of, or
alleged to have arisen out of such termination. There are no third party
beneficiaries to this Agreement and no customer or end-user of
Distributor shall have any rights against Midcom as a result of the
termination of this Agreement.
h. Midcom will honor all open and valid DPAs until their normal
expiration date, or ninety (90) days following the termination, whichever
is shorter.
10. SALES ACTIVITY
a. Distributor shall diligently pursue sales objectives for PRODUCT(S)
in the Territory, assisting Midcom and its representatives in every
reasonable manner in expanding sales of PRODUCT(S) and number of
customers in the territory.
b. Distributor shall meet with Midcom or its representative as required
for the purpose of mutually developing a sales forecast for PRODUCT(S)
for an agreed upon time. Each pays own costs unless prior arrangements
are made.
c. Distributor shall from time to time make its sales people (inside and
out) available for sales training.
d. Midcom shall maintain a cooperative Merchandising and Promotion
Program. Application for Midcom funds may be made by Distributor
submitting to Midcom in advance a written request describing in detail
its merchandising program and the anticipated costs. Midcom must approve
final copy of any print material. Once given written approval by Midcom,
Midcom and Distributor shall share the cost of such programs, each party
making matching contributions; provided, however, that expenditures by
Midcom will not exceed one percent (1%) of Point of Sales dollars by
Distributor from
7
Midcom in the preceding six (6) month period. Unused funds shall not
accrue.
e. Distributor shall prepare and submit to Midcom all reports required
by Midcom, including but not limited to, monthly Point of Sales report
(NEDA format) and an end of month inventory report of PRODUCT(S) at each
Distributor location. Such Point of Sales and Inventory reports are due
on computer diskette, or acceptable electronics transmission, at Midcom
by the (10th) tenth of the following month.
f. Midcom reserves the right to audit and review Distributor's business
records pertaining to Midcom transactions. Distributor agrees to
maintain complete, current, and adequate records of all purchases of
PRODUCT(S), inventories of PRODUCT(S), sales of PRODUCT(S) as well as
record of all debit memorandums pertaining to the distribution of
PRODUCT(S). Distributor agrees to make available for 'inspection all
supporting documentation for purchases, sales, inventories, debit claims,
as well as claims for cooperative merchandising and promotion. Midcom
will provide written notification to Distributor if the audit and review
requires visual on-site inspection by Midcom or its external audit firm.
11. TRADEMARKS
Distributor hereby acknowledges the validity of the trademarks of Midcom,
and the other marks and trade names now or hereafter affixed to
PRODUCT(S) or used in connection with Midcom's business, and Distributor
agrees that such are exclusively owned solely by Midcom or its parent
corporation and the Distributor shall not contest same.
Distributor agrees not to remove such marks or names from PRODUCT(S), or
alter or deface same. Distributor is hereby granted a non-exclusive
right to use in the Territory in connection with the promotion, sale,
marketing or service of PRODUCT(S) such trademarks or names as Midcom
uses in connection with such PRODUCT(S), and to refer to itself as an
Authorized Midcom Distributor in connection with the promotion, sale,
marketing or service of PRODUCT(S) in the Territory, and all such rights
shall cease immediately upon the termination of this Agreement.
Notwithstanding the foregoing, Distributor shall not use (and is strictly
prohibited from using) any such trademarks or trade names as part of
Distributor's trademark or name or in any manner which Midcom concludes,
in its sole judgment, is unfair, confusing or misleading to the public or
which otherwise adversely reflects upon the good name and reputation of
Midcom or its parent corporation. The parties acknowledge that the
goodwill associated with the marketing of PRODUCT(S) belongs to Midcom
and that Distributor shall have no vested or proprietary rights thereto.
Prior written approval from Midcom is required for use of Midcom logo.
8
12. LIMITATION ON AUTHORITY
Distributor acknowledges that it is an independent Distributor, that
Distributor has not been granted a franchise, nor do the parties intend
to create a franchise, that Distributor is not Midcom's agent, and that
Distributor will not hold itself out as an agent of Midcom. Distributor
shall not commit Midcom to any contractual obligation, make any
warranties or statements ostensibly on behalf of or approved by Midcom
with respect to PRODUCT(S) other than those set forth in Midcom's
warranty,, or engage in any conduct which violates any federal, state, or
local laws or regulations. Distributor agrees to indemnify and hold
Midcom harmless in any claims arising from any warranty made by
Distributor or its' employees or agents.
13. EXCUSE OF PERFORMANCE
Midcom shall not be liable for failure to deliver, delays in delivery, or
failures to perform under this Agreement occasioned, in whole or in part,
by strikes, lockouts, embargoes, wars, or other outbreak of hostilities,
inability to obtain materials or shipping space, machinery breakdown,
delays of carriers or suppliers, government acts and regulations, acts of
God, receipt of orders in excess of Midcom's inventory or then scheduled
delivery capacity, or any unforeseen circumstances or causes beyond
Midcom's control.
14. LIMITATION OF ACTIONS
No action for breach of this Agreement or relating to the sale of the
PRODUCT(S) shall be commenced by distributor more than one (1) year after
the accrual of the cause of action therefore.
15. LIMITATION OF LIABILITY
UNDER NO CIRCUMSTANCES SHALL DISTRIBUTOR, THE END-USER OF THE PRODUCT(S),
OR ANY OTHER PERSON, BE ENTITLED TO RECEIVE FROM MIDCOM ANY DIRECT,
SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES (INCLUDING, BUT
NOT LIMITED TO, DAMAGES FOR ECONOMIC LOSS, LOSS OF REVENUE, PROFIT, LOSS
OF USE OF PRODUCT(S), DOWNTIME COSTS OR LABOR COST, EVEN IF MIDCOM HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), FOR ANY ACT OR FAILURE
TO ACT, INCLUDING NEGLIGENCE HEREUNDER. IN NO EVENT WILL MIDCOM BE
LIABLE FOR ANY CLAIM IN AN AMOUNT GREATER THAN THE PURCHASE PRICE PAID
FOR THE
PRODUCT(S) THAT IS THE SOURCE OF THE CLAIM.
9
16. EXPORT CONTROL
Distributor understands that this Agreement involves PRODUCT(S) and/or
technical data that may be controlled under U.S. Export Administration
Regulations, and may be subject to the approval of the U.S. Department of
Commerce prior to export. Any export of the PRODUCT(S) and/or technical
data directly or indirectly in contravention of the U.S. Export
Administration Regulations is strictly prohibited.
17. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the parties with
respect to its subject matter. There are no other agreements pertaining
to the subject matter hereof, either oral or written. No contrary,
different or additional terms will apply to transactions contemplated by
this Agreement, even if such terms are contained on Distributor's
purchase order forms or on other documents sent to Midcom by the
Distributor. Should any provision of this Agreement be held invalid or
unenforceable, the remaining provisions shall nevertheless be given full
force and effect.
18. POST-EXECUTION MODIFICATION AND WAIVER
Once this Agreement is executed by Midcom and Distributor, this Agreement
may be modified or amended only in writing signed by Distributor and by a
duly authorized officer of Midcom. Either party may waive, in writing, a
provision in this Agreement which is for its benefits. A waiver of any
provision in any one instance shall not be deemed a waiver of any
provision in another instance.
19. OBSOLESCENCE
a. In the event Midcom declares a PROOUCT(S) to be obsolete, Distributor
shall have thirty (30) days from the receipt of written notice of
obsolescence to request an RMA number in accordance with Section 7
hereof. Provided Distributor acts in a timely manner, Midcom will accept
return of obsolete PRODUCT(S) and grant the Distributor a credit based
upon the price contained in Midcom's most recently published price list.
b. All PRODUCT(S) with date codes in excess of twenty-four (24) months
may be considered to be obsolete by Midcom and are not eligible for
return. Midcom will replace obsolete date code parts, if returned in a
timely manner. However, PRODUCT(S) in this category must be replaced
during normal stock rotation cycle per Section 6c.
10
20. INDEMNIFICATION
a. Midcom agrees to and shall, at its option, either negotiate a
settlement of, or defend all claims, suits, or proceedings brought
against Distributor based upon any claim that the PRODUCT(S) purchased
hereunder constitute any infringement of any U.S. patent, trademark,
copyright or mask work now or hereafter granted, provided Midcom is
notified promptly in writing and is given complete authority and
information required for the defense or settlement of same; and Midcom
shall pay all judgments, decrees, compromises, costs and expenses arising
from any charge of infringement against Distributor or its subsidiaries,
or their customers, but Midcom shall not be liable for compromises
incurred or made by Distributor without Midcom's prior written consent or
for claims arising from PRODUCTS that have been damaged, altered by
someone other than Midcom or PRODUCTS, that are obsolete or over 24
months old. Distributor may be represented in such suit or proceedings by
counsel of its choice at its own expense.
b. If a claim of infringement of a patent, trademark, copyright or mask
work or other recognized proprietary right or misuse or misappropriation
of trade secrets has occurred, or in Midcom's opinion is likely to occur,
Distributor agrees to permit Midcom, at Midcom's sole option and expense,
either to procure for Distributor and its customers the right to continue
using the PRODUCT(S) or to replace or modify the same so that they become
noninfringing while remaining substantially equivalent in form, fit and
function, or in the event such replacement, modification or removal is
impractical, Midcom shall accept the return of such infringing PRODUCT(S)
and refund the purchase price or the published price, whichever is lower.
c. Notwithstanding the foregoing, Midcom shall have no obligation with
respect to claims of infringement based upon use of the PRODUCT(S) in
combination with PRODUCT(S) not made by or for Midcom, or with respect to
any claims arising out of compliance with Distributor's unique design or
specifications furnished to Midcom by Distributor. The foregoing states
the entire liability of Midcom for all loss or damage whatsoever to
Distributor arising from infringement of patents, trademarks, copyrights
or mask works of others.
21. MISCELLANEOUS
a. Notwithstanding anything to the contrary that is contained herein or
may be implied herefrom, Midcom reserves the right to adjust prices to
compensate for increases in tariffs or similar charges or for other
governmental actions resulting in curtailment, prevention, taxation or
other burdening of imports.
b. This agreement shall be governed, construed and enforced in
accordance with the laws of State of South Dakota.
11
c. Any disputes arising out of this Agreement shall be subject to final
and binding arbitration. The arbitration will be conducted by one
arbitrator who is a member of the American Arbitration Association (AA)
or of Judicial Arbitration and Mediation Services (JAMS) and will be
governed by the Model Employment Arbitration rules of AAA. The
arbitration shall be held in Watertown, SD. The arbitrator shall have
all authority to determine the arbitrability of any claim and enter a
final and binding judgment at the conclusion of any proceeding in respect
of the arbitration. Any final judgment may only be appealed on the
grounds of improper bias or improper conduct of the arbitrator.
Notwithstanding any rule of AAA to the contrary, the parties will be
entitled to conduct discovery (i.e. investigation of facts through
depositions and other means) which shall be governed by the Code of civil
Procedure section 1283,05. The arbitrator shall have all power and
authority to enter orders relating to such discovery as are allowed under
the Code. The arbitrator will apply South Dakota substantive law in all
respects. The party prevailing in the resolution of any such claim will
be entitled, in addition to such other relief as may be granted, to an
award of all actual attorneys fees and costs incurred in pursuit of the
claim, without regard to any statute, schedule, or rule of court
purported to restrict such award, Any dispute which cannot be so resolved
or which is not subject to such resolution shall be subject to the
exclusive jurisdiction of the South Dakota State Courts of Codington
County, South Dakota (or, if there is exclusive federal jurisdiction, the
United States District court for South Dakota), and the parties agree and
submit to the personal and exclusive jurisdiction and venue of these
courts.
d. Should any provision of this Agreement be held invalid or
unenforceable, the remaining provisions shall nevertheless be given full
force and effect. In any judicial proceeding related to or arising out
of or in connection with this Agreement, or the conduct of the parties
with respect to the goods covered by this Agreement, or the breach of
this Agreement or of any law applicable to the conduct of the parties,
the matter shall be tried and determined by a judge alone, without a
jury.
e. After termination, this Agreement shall continue to govern the rights
and duties of the parties as to transactions made hereunder.
f. Wherever in this Agreement the consent or authorization of Midcom by
a Midcom employee of specific corporate position is required, only such
person or a Midcom employee of higher corporate position may bind Midcom.
This Agreement shall be executed in duplicate, each copy being considered
an original, but both taken together shall constitute but one Agreement.
g. All notices required to be given hereunder shall be in writing and
may be sent by mail to the other party at its office address indicated on
the first page hereof, or as such party may later change by notice in
writing. Notices sent by mail shall be deemed given when deposited in
the mail and notices given by other means shall be deemed given when
received by the party to whom such notice is addressed.
h. A mutual agreement not to hire Midcom/Reptron personnel unless
approved in advance.
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i. Subsection headings used in this Agreement are for convenience only
and shall not be deemed to effect in any way the interpretation or
meaning of the provisions of this Agreement.
Wherefore, the parties hereto have executed this agreement on the day and
year first written above.
DISTRIBUTOR:
Reptron Electronics Inc. Midcom, Inc.
By: /s/ Jack Killoren 5/6/99 By: /s/ Julie LeVake 5/25/99
------------------------- -------------------------
Jack Killoren Date Julie LeVake Date
TITLE: V.P. of Passive and TITLE: V.P. Worldwide Sales
Electromechanical and Marketing
By: /s/ Brian Thompson 5/6/99
---------------------------
TITLE: Director of Passive and
Electromechanical
CONTACTS
Availability/Stock Checks Midcom Distribution Sales Support
Cross Reference Information Local Representative
Expedites Midcom Distribution Sales Support
General Information Policy and Procedure Manual or
Midcom Distribution Sales Support
Literature Request Midcom MarCom
Order Entry Midcom Distribution Sales Support
Price Protection Inquiries National Distribution Sales
Manager
Price Quotes Local Representative
RMAs Midcom Distribution Sales Support
Sample Requests Local Representative
Ship and Debit (DPA) Local Representative
if there is not a local Midcom Representative contact Midcom
Distribution Sales Support
14
PRICING
PRICE PROTECTION:
Midcom will protect the Distributor in the event of a price decrease. A
price protection claim form will be attached to the Distributor Price
List. This claim form indicates Midcom part numbers that have decreased
in cost since Midcom's previous price list. Each Distributor location
should complete this form and have inventory quantities verified by the
local Midcom representative.
This claim form and corresponding debit memo should be forwarded to
Midcom in Watertown, SD, Attention: Credit Department, for processing. AU
claims must be received within thirty (30) days of the Price List or
Addendum issue date. Claims submitted after thirty (30) days will not be
honored
All orders on Midcom's computerized information system will ship at the
distributor cost in effect at the time of shipment per the distributor
price list.
Only standard items listed in the current Distributor Price List are
price protectable. No price protection claim form will be honored unless
the Distributor has submitted a monthly inventory report with all
information required by Midcom,
PRICE CHANGES:
Midcom may change any price without prior notification. Notification of
changed prices will appear in the Distributor Price List, or addendum.
In the event of a price increase, the increased price shall become
effective 30 days from notification, and at that time all backlog at
Midcom will be changed to reflect the new increased cost.
Distributors may request special pricing via Debit Price Authorization
(DPA) for existing customer orders at the time of the price increase.
15
DISTRIBUTOR COST
PRICE PROTECTION CLAIM
PRICE CHANGES JULY 1, 19_
(EXAMPLE)
DISTRIBUTOR COST INVENTORY TOTAL PRICE
PART NUMBER PREV. 07/01/96 DIFF. 07/01/XX PROTECTION CLAIM
123 - ABC 0.xx 0.xx 0.04 Quantity $
456 - DEF 0.xx 0.xx 0.04 Quantity $
789 - GHI 0.xx 0.xx 0.04 Quantity $
TOTAL PRICE PROTECTION CLAIM
Claims will not be honored unless verified below:
Distributor Name:
Location (City & State):
Distributor Product Manager:
Please send completed form to: Distribution Sales Support
Midcom, Inc.
121 Airport Drive
Watertown, SD 57201
Attn: Accounting
ALL PRICE PROTECTION CLAIMS MUST BE RECEIVED AT MIDCOM, SOUTH DAKOTA
OFFICE WITHIN THIRTY (30) DAYS FROM THE DATE OF DISTRIBUTOR PRICE LIST.
CLAIMS RECEIVED AFTER THIRTY (30) DAYS WILL NOT BE HONORED.
16
QUOTE PROCEDURES:
DISTRIBUTOR QUOTE PROCEDURE.
The following information will be required on all requests for quote:
1. End Customer
2. Part Number and Quantity
3. Customer Required Delivery Schedule
4. Competition and Target Prices
5. Distributor/Midcom Stock Status
It is the Distributor's responsibility to provide as much market and
competitive information as possible. A thorough qualification of
customer requirements will greatly enhance our ability to service our
Distributors in a timely fashion.
NON-STANDARD PRODUCT(S):
Non-Standard PRODUCT(S) are defined as those PRODUCT(S) not recommended
for stocking or new designs (Class D), or custom parts listed in the
Distributor Price List. Some Non-Standard PRODUCT(S) may be listed in
the Distributor Price List. Items not found in the Price List will be
handled on a case-by-ease basis, Non-Standard PRODUCT(S) are all non-
cancelable/nonreturnable. Non-standard PRODUCT(S) are subject to quoted
minimums. Quotations and sale of such items are at the sole discretion
of Midcom. NonStandard orders will be limited to a single shipment.
Requests for scheduled orders will be handled on a case-by-case basis
through Watertown,
QUOTE LOGILOST BUSINESS REPORT.
Quote requests should be sent to your local Midcom representative. They
in turn will submit this information to Midcom. Based upon review of the
above information, a Distributor cost may be established that best meets
the competitive input, and a quote number will be assigned.
Note: Price quotes are valid for thirty (30) days unless otherwise
stated.
STOCK CHECKS:
Stock checks may be obtained by calling the Midcom Distribution Sales
Coordinator.
17
DEBIT PRICE AUTHORIZATION (DPA):
DPAs are only issued on standard PRODUCT(S) listed in the current
Distributor Price List.
All orders booked based on a special Distributor cost (lower than
standard book cost) must have a Debit Price Authorization (DPA) number
assigned. DPA numbers should be obtained at the time the customer places
the order with the Distributor, Distributors should request DPAs from
their local Midcom representative. Midcom, Watertown has sole authority
for issuance and approval of DPAS.
The following information will be confirmed at the time the DPA number is
assigned:
1. Midcom Part Number
2. End Customer and Location
3. End Customer Purchase Order Number
4. Part Number(s) and Quantity Booked
5. Delivery Schedule to End Customer
6. Special Cost Issued and Resale to Customer
7. Gross Profit Percent Amount
The minimum line item dollar amount on DPAs is $50.00
When the Distributor receives the confirming DPA copy, it should be
inspected closely. Any discrepancies between the confirming DPA and what
was quoted verbally must be reported within 48 hours to the sales
coordinator at Midcom .
The difference between the book cost and the DPA special cost will be the
amount of the Distributor's debit memo claim. The debit memo must
reference the DPA number and must include a copy of the Distributor's
invoice to their customer. Midcom reserves the right to reject a
Distributor's debit if any of items 1-7 above differ from those on the
Distributor's DPA and accompanying invoices. In the event of a price
increase/decrease, the new Distributor cost will be considered valid as
of the effective date of the Price List or Addendum change.
Midcom, Inc. reserves the right to limit the time of validity on special
pricing authorized on DPAS. A six (6) month maximum is in effect on all
DPAS, unless otherwise stated at the time of issuance. Add-ons,
increases and reschedules must be re-negotiated prior to shipment.
Debits will not be honored without prior authorization.
Note: ALL DPA REQUESTS ARE SUBJECT TO APPROVAL FROM
MIDCOM.
18
DEBIT MEMOS PROCESSING FOR SHIP & DEBIT CLAIMS:
Debit memos submitted for ship and debit claims must reference the DPA
number. Debit memos should be issued after each scheduled shipment to
the end customer has taken place and submitted to Midcom no later than
thirty (30) days from the date of shipment. Any claims submitted after
thirty (30) days will not be honored.
The following information and documentation must accompany all debit
memos against DPA ship and debit claims:
1. DPA Number
2. Itemization of Debit Claims:
Part Number
Quantity Shipped
Standard Cost
Special Cost
3. Proof of Shipment to End Customer Must Include:
End Customer Name
Date of Shipment
Part Number and Quantity Shipped
Resale to the Customer
End Customer Invoice Number
All debit memos must total a minimum of $50.00 in value per line item.
Midcom has the right to bill the Distributor back on any DPA credit if
the DPA expires and the entire quantity did not ship. All bill-backs on
DPA discrepancies must be resolved within sixty (60) days.
Mail all debit memos to: Midcom, Inc.
121 Airport Drive
Watertown, SD 57201
Attn: Credit Department
19
REPORTS
POINT OF SALES INFORMATION:
Every Distributor must submit the POINT OF SALES (POS) monthly, by the
tenth (10th ) day of each month. These reports are due in the Midcom,
Watertown, SD office, Attention: Distribution Sales.
The following information is required for each line item on the Point of
Sales Report:
1. Complete Midcom Part Number
2. Quantity (per each)
3. Unit Cost
4. Unit Price (resale)
5. Customer Name
6. "Ship To" City, State and Zip Code
7. Branch Location
8. Ship/invoice Date
Data must clearly identify Distributor name/branch and date covered.
Due to the confidential nature of POS information it is understood Midcom
will not reveal or share this information with any other distributor
during or after period of authorization.
INVENTORY INFORMATION:
Every Distributor must submit the Midcom inventory for the calendar month
end at all locations by the tenth (1 0th) of each month. These reports
should be sent to Midcom, Watertown, SD, Attention: Distribution Sales.
The following information is required on the inventory data:
1. Complete Midcom Part Number
2. Quantity (per each)
3. Cost
4. Extension of Cost
5. Location of Inventory
Distributors failing to submit this data
are subject to termination per our contractual Agreement.
20
Distributors must maintain an adequate inventory of all PRODUCT(S) to
meet the sales forecast for the territory.
21
ORDER ENTRY
1. New orders must be submitted by Fax, Mail or EMAIL. No verbal orders
will be accepted.
2. Orders should be sent to the Midcom Sales Coordinator.
3. Minimum order requirements are $500.00. (Purchase orders for tape and
reel products will be accepted only in multiples of reel quantities. Part
types cannot be mixed on a reel.)
4. All requests for changes to orders must be received in writing for
approval.
5. Midcom's standard terms of sale are Net 30.
6. No cancellations and/or reschedules can be made to a standard order
thirty (30) days, or less, before the Midcom scheduled promise ship date
without Midcom, Watertown, SD approval.
If a device is removed from the Standard Distributor Price List,
the Distributor has thirty (30) days from the date it was removed
to cancel that device from any open purchase orders.
7. Orders/Change Orders must include the following information as
applicable:
a. Distributor Name/Location
b. Bill To and Ship To Address
c. Ship via Method: If Federal Express, we must have the
Distributor's Federal Express account number on the order or on
file.
d. Purchase Order Number
e. Complete Midcom Part Number
f. Midcom's Distributor Book Cost: If other than book cost, it must
be so stated along with quote number, if applicable.
g. Distributor Request Date
h. Negotiated Ship Date: If a negotiated ship date is not supplied by
the Distributor, Midcom will fill in the field with the current
lead time for PRODUCT(S).
22
8. All orders quoted as "NON-CANCELABLEINON-RETURNABLE' Must state this
on the purchase order, referencing a Midcom quote number if applicable.
All PRODUCT(S) quoted or designated as non-standard in the Distributor
Price List are non-cancelable, non-returnable, and non-reschedulable once
placed on order with Midcom. If a written request has been made to pull
in a schedule, Midcom will pull in the shipment if availability permits.
Non-Standard PRODUCT(S) is not eligible for price protections, even if
the nonstandard pricing changes in the Distributor Price List. Also,
DPAs will not be authorized for non-standard PRODUCT(S).
23
SAMPLES
SAMPLES FROM FACTORY INVENTORY:
All samples should be fulfilled from the Distributor's inventory. If the
Distributor does not have the PRODUCT(S) in their inventory, the
PRODUCT(S) should be purchased, then sampled from the Distributor's
shelf. The only exception should be the following:
New PRODUCT(S) Introduction PRODUCT(S) with long lead times.
(Distributor should, however, also place a stocking order on these
devices.)
All sample requests must be approved through the local Midcom factory
representative sales office.
To facilitate processing of sample requests, it is necessary that each
Midcom sample request be submitted with accurate and complete
information,
All areas of the Sample Request form must be completed in full, or the
Sample Request cannot be processed.
SAMPLES FROM DISTRIBUTOR INVENTORY:
Distributors may sample PRODUCT(S) from their inventory. Debit memos for
these samples must be submitted quarterly to Midcom, Watertown. Midcom
requires a report by part number verifying that sample shipments were
made and to whom. All claims must be received within thirty (30) days of
the calendar quarter end and are subject to the following provisions:
1 . Any claim submitted beyond thirty (30) days can be denied. All
claims must have appropriate paperwork attached.
2. Credit will only be issued from items listed in the current standard
Distributor Price List at time of shipment.
3. All debit memos must reflect the Distributor pricing in effect at
time of shipment.
4. Sample order debits must be accumulated until they total a minimum of
$25.00 in value.
5. Samples in excess of five (5) pieces or $50.00 should be approved by
Midcom, Watertown.
24
RETURN POLICIES AND PROCEDURES
RETURN MATERIAL AUTHORIZATION (RMAs):
1. No PRODUCT(S) will be accepted for return unless a Return Material
Authorization (RMA) number has been issued by Midcom.
2. All RMA requests must be in writing either by Letter or Fax sent to
the Distribution Sales Department at Midcom, Watertown, South Dakota..
RMA requests must include the following:
a. Part Number
b. Quantity
c. Purchase Order Number
d. Midcom Sales Order Number (if known)
e. Current Distributor Book Cost
f. Reason for Return
g. If Defective/Failed, see Item 14 on Page 7-2
h. Date Code(s) of the PRODUCT(S)
Note: Line Item Minimum is $50.00 For all RMAs
3. Material received without prior issuance of RMA number will be
returned to sender at their sole cost and no credit will be issued.
4. All returned material must be shipped via surface method (UPS
whenever possible). No freight collect shipments will be accepted unless
prior authorization is given.
5. The Distributor has thirty (30) days after receiving PRODUCT(S) from
Midcom to request an RMA if PRODUCT(S) is damaged or a mis-shipment.
6. All returned material must be sent directly to Midcom, Watertown,
freight prepaid, unless otherwise indicated by Midcom.
7. If more than one carton is being returned on the same RMA, all
cartons must be marked "Box 1 of 3," "Box 2 of 3," etc., to prevent
accidental refusal if the shipment is split by the carrier.
8. RMA numbers must be clearly marked on the outside of each carton and
referenced on all related correspondence. All shipments must contain
either a packing list or debit memo itemizing part numbers, quantities
shipped and referencing original purchase order number and RMA number.
25
9. ALL RETURNED MATERIAL MUST BE PACKAGED IN THE SAME MANNER AS
ORIGINALLY SHIPPED BY MIDCOM. ANY RETURNED SHIPMENTS NOT PACKAGED
PROPERLY WILL BE RETURNED AT DISTRIBUTORS COST WITHOUT CREDIT ISSUED.
10. TAPE AND REEL PRODUCT(S) MUST BE RETURNED IN THE SAME REEL
QUANTITIES AS ORIGINALLY PURCHASED AND IN THE ORIGINAL MIDCOM PACKAGING.
11. RMAs are ONLY valid for thirty (30) days after issuance and only for
those items authorized by Midcom. If the Distributor omits any item(s),
or returns a lesser quantity from an authorized RMA shipment, the RMA
will be considered complete upon receipt of those PRODUCT(S), To return
the balance of the items/quantity originally authorized, it will be
necessary to obtain a new RMA number. RMA numbers may be used only once.
All PRODUCT(S) authorized for return on an RMA should be returned as one
shipment.
12. All defective units will be subject to inspection verification and
approval by Midcom prior to issuing an RMA. Failure analysis information
must be provided . Distributor may also be requested to send samples on a
separate RMA to Midcom, Watertown, for evaluation, prior to obtaining RMA
approval,
13. RMA requests for other reasons, such as over-shipments, wrong parts
shipped, etc., must be sent to the Distribution Sales Coordinator at
Midcom, Watertown, within thirty (30) days.
RETURNS - OBSOLETE PRODUCT(S)
When Midcom removes PRODUCT(S) from the Distributor Price List, the
Distributor must request an RMA within 30 days. Requests received after
thirty (30) days will not be honored. Credit will be granted from the
most recently published Price List, Addendum or actual purchase price,
whichever is lower.
The RMA request for obsolete PRODUCT(S) should include the following:
a. Part Number(s)
b. Quantity
C. Cost
d. Date Code(s) of the PRODUCT(S)
Although these items have been deleted from the Distributor Price List,
PRODUCT(S) returned must be unused in their original Midcom packaging.
26
STOCK ROTATION RETURNS:
1 . Distributors are entitled to rotate slow-moving or excess inventory
twice a year in the months of May and November. The dollar amount they
will be eligible to rotate will be five percent (5%) of their total
purchases at cost in the most previous six (6) month period.
2. Upon notification from Midcom, the Distributor should submit a list
of PRODUCT(S) requested for return up to, but not greater than, the
eligible dollar amount. The stock rotation request must also be
accompanied by an offsetting purchase order for standard Midcom
PRODUCT(S) of at least equal value. The offsetting purchase order must
be at least equal 'in dollar value to the stock rotation. All requested
ship dates must be scheduled equally over the next three (3) month
period.
3. Stock rotations are intended for unused PRODUCT(S) only. Any
PRODUCT(S) returned showing visible signs of handling or abuse will be
returned and no credit issued.
4. PRODUCT(S) with date codes beyond 24 months will not be eligible for
return.
5. Credit will be issued from the most recently published Price List,
Addendum, or actual purchase price, whichever is lower.
6. Requests should be sent to Midcom, Watertown, to the attention of the
Distribution Sales Coordinator.
7. After one year upon receipt of initial stocking package, distributor
is entitled to 100% rotation privilege of initial stocking package
suggested by Midcom. This rotation is in addition to regular stock
rotation.
27
ADVERTISING
ADVERTISINGICO-OP AUTHORIZATION PROCEDURE:
The following procedures must be followed to obtain cooperative funding
for advertising, promotions and general merchandising of Midcom
PRODUCT(S).
1. Complete the appropriate Distributor Co-op Authorization Form:
a. For co-op advertising requests, this form should be sent to the
National Distribution Sales Coordinator at Midcom, Watertown, SD, along
with a copy of the proposed ad for approval.
b. For promotions, seminars, special events, etc., this form should
be filled out in conjunction with the local Midcom representative and
sent to the National Distribution Sales Manager at Midcom, San Diego.
c. Co-op forms may be obtained from the local Midcom representative.
d. All forms must be submitted at least thirty (30) days prior to
the planned activity.
2. Written approval from Midcom will be given to the Regional Sales
Manager and PRODUCT(S) Manager and will also be mailed or faxed to
requester in writing within two (2) weeks after receipt. The written
approval will include a Debit Authorization number. Do not proceed
without this authorization number.
Upon completion of promotion, seminar, advertisement, etc., the
Distributor will
submit a debit memo along with a copy of the written approval with the
authorization number, as well as documentation of billing and expense
receipts to show how the final dollar amounts were established. The
Distributor has thirty
(30) days following the event to debit Midcom in Watertown, SD. NO
REQUESTS WILL BE HONORED AFTER THE FACT.
28
LITERATURE
LITERATURE REQUESTS:
All Distributor requests for literature should be sent via Fax, Mail or
Email to Midcom using a Midcom request form.
The following information must be included on this form:
a. Distributor Name
b. Location (complete address)
c. Person to Whom Literature Should Be Directed
d. Date Requested
e. Date Required
f. Quantity Required
If the literature requested is not in stock, the request will be placed
in back order and filled as soon as the material becomes available.
For large literature requests for any trade shows, mass mailings, co-op
advertisements, etc., please notify the Midcom Marcom Department in
writing at least thirty (30) days in advance. Any literature that is in
short supply may be allocated against the request without the full
quantity being supplied.
29
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 3096 3096
<SECURITIES> 0 0
<RECEIVABLES> 48167 48167
<ALLOWANCES> 579 579
<INVENTORY> 73260 73260
<CURRENT-ASSETS> 126563 126563
<PP&E> 36355 36355
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 191094 191094
<CURRENT-LIABILITIES> 41435 41435
<BONDS> 105064 105064
0 0
0 0
<COMMON> 61 61
<OTHER-SE> 44534 44534
<TOTAL-LIABILITY-AND-EQUITY> 191094 191094
<SALES> 158411 81026
<TOTAL-REVENUES> 158411 81026
<CGS> 137406 70107
<TOTAL-COSTS> 163630 83716
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4167 2025
<INCOME-PRETAX> (9386) (4715)
<INCOME-TAX> (3605) (1811)
<INCOME-CONTINUING> (5781) (2904)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 8250 8250
<CHANGES> 0 0
<NET-INCOME> 2469 5346
<EPS-BASIC> 0.40 0.87
<EPS-DILUTED> 0.40 0.87
</TABLE>
