1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarter ended June 30, 1995
OR
_____ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Commission File Number 0-14824
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PLEXUS CORP.
(Exact name of registrant as specified in charter)
Wisconsin 39-1344447
(State of Incorporation) (IRS Employer Identification No.)
55 Jewelers Park Drive Neenah, Wisconsin 54957-0156
(Address of principal executive offices) (ZIP Code)
(414) 722-3451
(Registrant's telephone number)
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 reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No____
As of August 8, 1995 there were 6,467,776 shares of Common Stock of the
Company outstanding.
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PLEXUS CORP.
Index to Form 10-Q
Page
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Part I Financial Information
Item 1. Financial Statements
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Condensed Consolidated Balance Sheets....................3
Condensed Consolidated Statements of Operations..........4
Condensed Consolidated Statements
of Cash Flows............................................5
Notes to Condensed Consolidated Financial Statements.....6
Item 2. Management's Discussion and Analysis of
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Financial Condition and Results of Operations .........7-8
Part II
Item 6. Exhibits and Reports on Form 8-K..................9
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Signature.....................................................9
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PLEXUS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share and Per Share Amounts)
June 30, 1995 September 30, 1994
(unaudited)
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ASSETS
Current assets:
Cash $ 1,106 $ 1,081
Accounts receivable, net
of allowance of $130 42,792 43,699
Inventories 60,706 60,047
Deferred income taxes 743 743
Prepaid expenses and other 1,095 3,200
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Total current assets 106,442 108,770
Property, plant and equipment, net 12,167 12,856
Other 364 395
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Total assets $ 118,973 $ 122,021
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 553 $ 550
Accounts payable 31,009 36,891
Customer deposits 5,084 3,501
Accrued liabilities:
Salaries and wages 3,126 2,182
Other 2,301 2,862
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Total current liabilities 42,073 45,986
Long-term debt 37,911 40,691
Deferred income taxes 465 465
Stockholders' equity:
Series A preferred stock, $.01 par value,
$1,000 face value, 7,000 shares
authorized and issued (aggregate
liquidation preference of $7 million) 0 0
Preferred stock $.01 par value,
4,993,000 shares authorized, none issued - -
Common Stock, $.01 par value,
30,000,000 shares authorized,
6,460,498 issued 65 65
Additional paid-in capital 13,829 13,829
Retained earnings 24,630 20,985
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38,524 34,879
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Total liabilities and
stockholders' equity $ 118,973 $ 122,021
========= =========
See notes to condensed consolidated financial statements
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PLEXUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Amounts)
Unaudited
Three-Month Period Ended Nine-Month Period Ended
June 30, June 30,
1995 1994 1995 1994
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Net sales $ 72,354 $ 55,004 $ 207,075 $ 172,271
Cost of sales 66,079 51,360 190,504 160,555
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Gross profit 6,275 3,644 16,571 11,716
Selling and administrative expenses 2,692 2,249 8,049 6,046
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Operating income 3,583 1,395 8,522 5,670
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Other income (expense):
Interest expense (723) (932) (2,180) (2,408)
Other 128 27 524 14
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(595) (905) (1,656) (2,394)
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Income before income taxes 2,988 490 6,866 3,276
Provision for income taxes 1,165 186 2,678 1,245
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Net Income $ 1,823 $ 304 $ 4,188 $ 2,031
================================ ==============================
Net income per common share
primary and fully diluted $ .26 $ .05 $ .59 $ .31
================================ ==============================
Common equivalent
shares outstanding 7,125,298 6,460,498 7,100,791 6,456,636
================================ ==============================
See notes to condensed consolidated financial statements
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PLEXUS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Unaudited
Nine-Month Period Ended
June 30, June 30,
1995 1994
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Cash flows from operating activities:
Net Income $ 4,188 $ 2,031
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,677 1,893
Net (decrease) in working capital
excluding cash and debt (1,843) (10,865)
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4,022 (6,941)
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Cash flows from investing activities:
Additions to property, plant & equipment (988) (3,946)
Other, net 31 66
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(957) (3,880)
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Cash flows from financing activities:
Issuance of common stock - 7,021
Net increase (decrease) in outstanding debt (2,777) 3,878
Dividend Paid-Preferred Stock (263) -
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(3,040) 10,899
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Net increase in cash $ 25 $ 78
==============================
See notes to condensed consolidated financial statements
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PLEXUS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JUNE 30, 1995
NOTE (1) - BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company without audit and pursuant to the rules and regulations
of the Securities and Exchange Commission. In the opinion of the Company, the
financial statements reflect all adjustments, which consist only of normal
recurring adjustments, necessary to present fairly the financial position of
Plexus Corp. at June 30, 1995 and the results of operations for the three-month
periods and the nine-month periods ended June 30, 1995 and 1994 and the cash
flows for the same nine-month periods.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the SEC rules and
regulations dealing with interim financial statements. However, the Company
believes that the disclosures made in the condensed consolidated financial
statements included herein are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's 1994 Annual Report.
The year-end condensed consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required by
generally accepted accounting principals.
NOTE (2) - INVENTORIES
The major classes of inventories (rounded to thousands) are as follows:
June 30, September 30,
1995 1994
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Assembly Parts $ 34,541 $ 38,156
Work-in-Process 26,080 21,616
Finished Goods 85 275
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$ 60,706 $ 60,047
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NOTE (3) - COMMON EQUIVALENT SHARES OUTSTANDING
The computations of primary and fully diluted net income per common share
for fiscal year 1995 are based upon the weighted average number of common
shares contingently issuable relating to the convertible preferred stock using
the if-converted method, and including additional dilution from outstanding
stock options. In the third quarter and first nine months of fiscal year 1994,
stock options did not impact net income per share as they were either
insignificant or antidilutive, thus the computations were based solely upon the
weighted average number of common shares outstanding during the period.
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PLEXUS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the third fiscal quarter ended June 30, 1995 were $72,354,000
compared to $55,004,000 for the third fiscal quarter ended June 30, 1994, an
increase of $17,350,000 or 31.5%. Net sales for the nine-month period ended
June 30, 1995 increased $34,804,000 to $207,075,000 from $172,271,000 for the
same nine month period ended June 30, 1994. These increases both during the
third fiscal quarter and the nine-months ended June 30, 1995 are mainly due to
sales allocable to component parts used in assemblies (part sales) as
distinguished from sales allocable to services. Sales for the third fiscal
quarter also were positively impacted by several of the Company's new strategic
relationships, which resulted in additional projects coming on line, produced
and shipped.
Cost of goods sold for the third fiscal quarter ended June 30, 1995 increased
$14,719,000 or 28.7% to $66,079,000 from $51,360,000 for the third fiscal
quarter ended June 30, 1994. Cost of goods sold for the nine-month period
ended June 30, 1995 increased $29,949,000 or 18.7% to $190,504,000 from
$160,555,000 for the same nine-month period ended June 30, 1994. These
increases are directly related to manufacturing expenses associated with the
increased level of production that occurred during both the third fiscal
quarter and the nine-months ended June 30, 1995, such as materials, payroll and
payroll overheads.
Gross profit for the third fiscal quarter ended June 30, 1995 increased
$2,631,000 or 72.2% to $6,275,000 from $3,644,000 for the third fiscal quarter
ended June 30, 1995. As a percentage of net sales, gross profit for the third
fiscal quarter ended June 30, 1995 was 8.7% compared to 6.6% for the same
period one year ago. The increase in gross profit dollars and gross profit
margin percentage is due to increased sales revenue along with increase plant
utilization. The same is also true for the gross profit increase of $4,855,000
for the nine-months ended June 30, 1995 from $11,716,000 to $16,571,000.
Selling and administrative expenses for the third fiscal quarter ended June 30,
1995 were $2,692,000 compared to $2,249,000 for the third fiscal quarter ended
June 30, 1994, an increase of $443,000 due to personnel related expenses and
commissions; however, as a percentage of net sales, selling and administrative
expenses decreased to 3.7% compared to 4.1%. For the nine-month period ended
June 30, 1995, selling and administrative expenses increased $2,003,000 to
$8,049,000 from $6,046,000 for the same nine-month period ended June 30, 1994.
This increase is mainly due to a departmental expense reclassification of
certain expense items from cost of sales to selling and administrative expenses
during the latter portion of the third fiscal quarter ended June 30, 1994. It
is anticipated that in the quarters ahead selling and administrative expense
will continue to be in the range of 3.5% to 3.7% as a percentage of net sales.
Interest expense for the third fiscal quarter ended June 30, 1995 decreased
$209,000 to $723,000 from $932,000 for the third fiscal quarter ended June 30,
1994, due to decreased borrowings required to support working capital. For the
nine-month period ended June 30, 1995 interest expense decreased $228,000 to
$2,180,000 from $2,408,000 because of increased interest expense incurred
during the first fiscal quarter. With increasing emphasis being placed on
reducing inventory and increasing inventory turns it is anticipated that
interest expense will
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continue to decrease, especially if the interest rate environment continues to
be favorable.
Other income increased $101,000 during the third fiscal quarter ended June 30,
1995 and $510,000 for the first nine months of fiscal 1995 because of increased
billings to customers for carrying charges on inventories that were unused
because of program delays.
Income taxes increased both for the third fiscal quarter and the nine-month
period ended June 30, 1995 due to increases on pre-tax profits.
LIQUIDITY AND CAPITAL RESOURCES
The total debt to equity ratio at June 30, 1995 was 2.09 to 1 compared to 2.50
to 1 at September 30, 1994. This reduction was primarily due to decreased
borrowings under the Company's Revolving Credit Facility and earnings retained
in the Company for the first nine months of the fiscal year.
Working capital increased $1,585,000 from $62.8 million at September 30, 1994.
Both the Accounts receivable decrease of $1.0 million to $42.7 million and
Accounts payable decrease of $5.9 million are due to timing. Inventories
increased $.7 million. The Company has placed major emphasis on reducing
inventories and increasing inventory turns by instituting several new internal
programs during the latter part of the third fiscal quarter. It is increasing
the use of EDI (electronic data interchange) in order to improve the material
replenishment process and prevent the building of buffer stock, aggressive OTD
(on-time delivery) initiative has been implemented with suppliers to prevent
early/late delivery of components, the development of increased system
reporting to better utilize "total" company inventory and requirements of all
its business units, development of improved terms and conditions with suppliers
in regards to returning inventory when requirements have been reduced, and
customers are increasingly requested to prepay or cover carrying charges of
buffer stock for allocated (tight supply) components. Customer deposits
increased $1.6 million due to customers delaying programs.
As shown in the Company's statements of cash flows, cash increased by $25,000
for the first nine months of fiscal year 1995. The net increase reflects $4.0
million in net cash provided by operating activities, offset by $3.0 million
used in financing activities, $1.0 million used in investing activities
(primarily acquisition of equipment). The net cash used in financing
activities resulted from a reduction of debt and the payment of dividends on
preferred stock.
On July 28, 1995 the Company increased its Revolving Credit Facility from
$40,000,000 to $55,000,000. Of the proceeds from this increase $3,500,000 was
used to retire term debt at a higher interest rate than that charged under the
Revolving Credit Facility. The remainder of the increase will be used for
working capital. The Revolving Credit Facility expires July 31, 1998.
The Company believes that its credit facilities, leasing capabilities and
projected cash flow from operations will be sufficient to meet its foreseeable
short-term and long-term capital and liquidity needs.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4 - Amendment No. 11 to the Revolving Credit Agreement
Exhibit 11 - Statement Regarding Computation of Per Share
Earnings
(b) Reports on Form 8-K
--None--
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
8/9/95 /s/ Peter Strandwitz
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Date Peter Strandwitz
Chairman and CEO
8/9/95 /s/ Thomas N. Turriff
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Date Thomas N. Turriff
Vice President - Finance