UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K/A
CURRENT REPORT
Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 20, 2004
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Jaco Electronics, Inc.
(Exact name of registrant as specified in charter)
New York 000-05896 11-1978958
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
145 Oser Avenue, Hauppauge, New York 11788
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (631) 273-5500
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N/A
(Former name or former address, if changed since last report)
Item 9.01. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following pro forma financial statements are furnished in connection with
the sale of substantially all of the assets of Nexus Custom Electronics, Inc. as
described in Item 2.01.
Forward-Looking Statements
Statements contained in the pro forma financial statements that state the
Company's or its management's expectations or predictions of the future are
forward-looking statements intended to be covered by the safe harbor provisions
of the Securities Act of 1933 and the Securities Exchange Act of 1934. The
Company's actual results could differ materially from those contained in such
forward-looking statements. The factors that may affect those results include
those mentioned in the documents that the Company has filed with the Securities
and Exchange Commission. In addition, future events relating to the business of
Nexus that may affect the Company include many of the factors mentioned in those
documents as well as the fact that the operations of Nexus are no longer being
managed by or are within the control of the Company. Accordingly there may be
other factors affecting the operations of Nexus that the Company may be unaware
of.
JACO ELECTRONICS, INC. AND SUBSIDIARIES
The unaudited pro forma condensed consolidated financial statements have been
prepared to illustrate the effect of the sale of assets as of September 20 2004,
of Nexus Custom Electronics, Inc.
The unaudited pro forma condensed consolidated balance sheet at June 30, 2004
is based on the historical consolidated balance sheet of Jaco Electronics, Inc.
("Jaco") as of June 30, 2004 and assumes that the sale of assets occurred on
June 30, 2004.
Under the terms of the agreement, we received $9.25 million of the purchase
consideration in cash at closing (subject to post closing adjustments) plus the
buyer assumed certain liabilities. The balance of the purchase consideration
will be satisfied through a $2.75 million subordinated note issued by the
purchaser. We used the cash proceeds of $9.25 million from this transaction to
pay down our existing credit facility. Additionally, under the terms of the
asset purchase agreement we are entitled to receive additional consideration
equal to 5% of the annual net sales of Nexus in excess of $20 million per year
during each of the six years after the closing date, up to $1,000,000 in the
aggregate. The additional consideration is not included in the pro forma
calculations.
The unaudited pro forma condensed consolidated statements of operations for the
twelve months ended June 30, 2004 is based on the historical consolidated
statements of operations of Jaco Electronics, Inc. for the twelve months ended
June 30, 2004 and reflects the pro forma results as if the sale of assets had
occurred on July 1, 2003.
The pro forma adjustments are based on preliminary assumptions based on the
purchase consideration and are subject to post closing adjustments and the
completion of the calculation of "Net Assets" as defined in the Asset Sales
Agreement. As a result, the final calculation in connection with the sale of
assets may differ from that presented herein.
The unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the actual results that would have been reported if
the sale of assets occurred on the dates indicated nor do they purport to be
indicative of the results which may be obtained in the future. In the opinion of
management all adjustments necessary to present fairly such pro forma condensed
consolidated financial statements have been made.
The pro forma condensed consolidated financial statements should be read in
conjunction with Jaco Electronics, Inc.'s Form 10-K for the fiscal year ended
June 30, 2004.
The following pro forma condensed consolidated balance sheet represents the June
30, 2004 balance sheet adjusted to reflect the sale of assets and assumption of
liabilities of Nexus Custom Electronics, Inc., as if such transaction occurred
June 30, 2004.
JACO ELECTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2004
(UNAUDITED)
Historical Pro Forma
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As Reported Adjustments Consolidated
ASSETS
Current Assets
Cash $ 552,655 $ 9,250,000 (B)
(9,250,000) $ 552,655
Marketable securities 770,283 770,283
Accounts receivable - net 35,926,553 35,926,553
Inventories 37,017,390 37,017,390
Prepaid expenses and other 1,513,657 1,513,657
Deferred income taxes 2,725,000 2,725,000
Current assets of discontinued operations 12,910,801 (12,910,801) (A) -
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Total current assets 91,416,339 (12,910,801) 78,505,538
Property, plant and equipment - net 2,003,137 2,003,137
Deferred income taxes 416,000 416,000
Excess of cost over net assets acquired - net 25,416,087 25,416,087
Note receivable - 2,750,000 (B) 2,750,000
Other assets 2,530,269 2,530,269
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Total assets $121,781,832 $(10,160,801) $ 111,621,031
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payables $ 31,533,041 $ 31,533,041
Current maturities of long-term debt and capitalized
lease obligations 37,088,743 $ (9,250,000) (C) 27,838,743
Accrued compensation 1,581,922 1,581,922
Accrued expenses 953,169 400,000 (D) 1,353,169
Income taxes payable - 560,000 (F) 560,000
Current liabilities of discontinued operations 2,800,664 (2,800,664) (A) -
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Total current liabilities 73,957,539 (11,090,664) 62,866,875
Long-term debt and capitalized lease obligations 118,525 118,525
Deferred compensation 1,000,000 1,000,000
SHAREHOLDERS' EQUITY
Common stock 685,523 685,523
Additional paid-in capital 26,735,295 26,735,295
Retained earnings 21,562,396 1,489,863 (E)
(560,000) (F) 22,492,259
Accumulated other comprehensive income 37,120 37,120
Treasury stock (2,314,566) (2,314,566)
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Total shareholders' equity 46,705,768 929,863 47,635,631
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Total liabilities and shareholders' equity $121,781,832 $(10,160,801) $ 111,621,031
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See accompanying notes to pro forma condensed financial statements.
JACO ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2004
(UNAUDITED)
(A) Reflects the assets to be sold and liabilities to be assumed under
the asset purchase agreement relating to the sale of Nexus as if
the transaction had occurred on June 30, 2004.
(B) Reflects cash proceeds received at closing of $9,250,000 as well as a subordinated note receivable from
the buyer of $2,750,000 at closing.
(C) Reflects the required repayment of a portion of the outstanding balance under the Company's credit
facility.
(D) Reflects estimated transaction costs of $400,000.
(E) Reflects the gain on the sale, calculated as follows:
Cash proceeds at closing $9,250,000
Note receivable 2,750,000
Current liabilities of discontinued operations 2,800,664
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Sub-total 14,800,664
Less:
Current assets of discontinued operations 12,910,801
Estimated transaction costs 400,000
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Gain on sale $1,489,863
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(F) Reflects estimated taxes on the gain on sale.
The following pro forma condensed consolidated statement of operations for the
year ended June 30, 2004 represents the results of operations as if the sale of
assets and assumption of liabilities of Nexus Custom Electronics, Inc. had
occurred July 1, 2003.
JACO ELECTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2004
(UNAUDITED)
Historical Pro Forma
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As Reported Adjustments Consolidated
Net sales $ 249,100,345 $ 249,100,345
Cost of goods sold 214,389,155 214,389,155
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Gross profit 34,711,190 - 34,711,190
Selling, general and administrative expenses 35,016,383 35,016,383
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Operating loss (305,193) - (305,193)
Interest expense 1,539,007 (405,000) (B) 1,134,007
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Loss from continuing operations before income taxes (1,844,200) 405,000 (1,439,200)
Income tax benefit (553,131) 121,500 (C) (431,631)
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Loss from continuing operations (1,291,069) 283,500 (1,007,569)
Earnings from discontinued operations, net of taxes 735,498 (735,498) (A) -
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Net loss $ (555,571) $ (451,998) $ (1,007,569)
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Per Share Information
Basic (loss) earnings per common share:
Loss from continuing operations $ (0.22) $(0.17)
Earnings from discontinued operations $ 0.13
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Net loss $ (0.09) $ (0.17)
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Diluted (loss) earnings per common share:
Loss from continuing operations $ (0.22) $ (0.17)
Earnings from discontinued operations $ 0.13
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Net loss $ (0.09) $ (0.17)
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Weighted average common shares outstanding:
Basic and diluted 5,974,844 5,974,844
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See accompanying notes to pro forma condensed financial statements.
JACO ELECTRONICS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2004
(UNAUDITED)
(A) Reflects the elimination of the operating results of Nexus.
(B) Reflects the reduction in interest expense resulting from the repayment of
a portion of outstanding borrowings under the Company's existing credit
facility.
(C) Reflects the tax effect of the pro forma adjustments recorded.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JACO ELECTRONICS, INC.
Date: October 5, 2004 By: /s/ Jeffrey D. Gash
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Jeffrey D. Gash,
Executive Vice President