UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 0 - 23426
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REPTRON ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
Florida 38-2081116
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State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
14401 McCormick Drive, Tampa, Florida 33626
- -------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 854-2351
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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6,396,696 shares of common stock issued and outstanding as of May 11, 2001.
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REPTRON ELECTRONICS, INC.
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations -- Three months ended
March 31, 2001 and March 31, 2000 3
Consolidated Balance Sheets -- March 31, 2001 and December 31, 2000 4
Consolidated Statement of Shareholders' Equity -- Three months ended
March 31, 2001 and year ended December 31, 2000 5
Consolidated Statements of Cash Flows -- Three months ended
March 31, 2001 and March 31, 2000 6
Notes to Consolidated Financial Statements -- March 31, 2001 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three months ended
March 31,
(Unaudited)
------------------------------
2001 2000
--------------- -------------
Net sales $ 134,230 $ 122,993
Cost of goods sold 112,603 103,294
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Gross profit 21,627 19,699
Selling, general and administrative expenses 18,749 16,574
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Operating income 2,878 3,125
Interest expense, net 3,067 2,359
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Earnings (loss) before income taxes (189) 766
Income tax provision 81 378
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Net earnings (loss) $ (270) $ 388
================ =============
Net earnings (loss) per common share - basic $ (0.04) $ 0.06
================ =============
Weighted average common shares outstanding - basic 6,371,903 6,172,442
=============== =============
Net earnings (loss) per common share - diluted $ (0.04) $ 0.06
================ =============
Weighted average common stock equivalent
shares outstanding - diluted 6,371,903 6,609,057
=============== =============
The accompanying notes are an integral part of these financial statements
3
REPTRON ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
(Unaudited)
March 31, December 31,
2001 2000
------ -----
CURRENT ASSETS
Cash and cash equivalents $ 678 $ 3,049
Accounts receivable - trade, net 85,417 100,311
Inventories, net 119,749 124,695
Prepaid expenses and other current assets 1,964 2,298
Deferred tax benefits 232 62
----------- -------------
Total current assets 208,040 230,415
PROPERTY, PLANT & EQUIPMENT - AT COST, NET 32,838 33,051
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET 31,123 31,473
OTHER ASSETS 2,823 2,528
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TOTAL ASSETS $ 274,824 $ 297,467
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 52,811 $ 65,199
Current portion of long-term obligations 2,476 2,476
Accrued expenses 9,647 11,941
Income taxes payable 216 1,230
----------- -------------
Total current liabilities 65,150 80,846
NOTE PAYABLE TO BANK 74,298 80,270
LONG-TERM OBLIGATIONS, less current portion 81,772 82,576
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,
6,376,757 and 6,359,257 shares, respectively 64 64
Additional paid-in capital 22,961 22,862
Retained earnings 30,579 30,849
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TOTAL SHAREHOLDERS' EQUITY 53,604 53,775
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 274,824 $ 297,467
=========== =============
The accompanying notes are an integral part of these financial statements
4
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
Common Stock
---------------- Additional Total
Shares Par Paid-In Retained Shareholders'
Outstanding Value Capital Earnings Equity
----------- ----- --------- -------- ----------------
Balance at December 31, 1999 6,167,119 $62 $ 21,740 $25,158 $46,960
Exercise of stock options 192,138 2 1,122 - 1,124
Net earnings - - - 5,691 5,691
--------- --- -------- ------- -------
Balance at December 31, 2000 6,359,257 64 22,862 30,849 53,775
Exercise of stock options (Unaudited) 17,500 - 99 - 99
Net (loss) (Unaudited) - - - (270) (270)
--------- --- -------- ------- -------
Balance at March 31, 2001 (Unaudited) 6,376,757 $64 $ 22,961 $30,579 $53,604
========= == ======== ======= =======
The accompanying notes are an integral part of this financial statement
5
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended
March 31,
(Unaudited)
--------------------------
2001 2000
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Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net earnings (loss) $ (270) $ 388
Adjustments to reconcile net earnings (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,623 2,549
Deferred income taxes (170) -
Change in assets and liabilities:
Accounts receivable - trade 14,894 (7,282)
Inventories 4,946 (9,806)
Prepaid expenses and other assets 334 (1,655)
Other assets (480) (91)
Accounts payable - trade (12,388) 1,752
Accrued expenses (2,294) (15)
Income taxes payable (1,014) 147
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Net cash provided by (used in) operating activities 6,181 (14,013)
Cash flows from investing activities:
Purchases of property, plant and equipment (1,875) (2,667)
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Net cash used in investing activities (1,875) (2,667)
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Cash flows from financing activities:
Net proceeds (payments) on notes payable to bank (5,972) 14,323
Proceeds from long-term obligations - 4,000
Payments on long-term obligations (804) (856)
Proceeds from exercise of stock options 99 94
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Net cash provided by (used in) financing activities (6,677) 17,561
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Net increase (decrease) in cash and cash equivalents (2,371) 881
Cash and cash equivalents at beginning of period 3,049 108
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Cash and cash equivalents at end of period $ 678 $ 989
========== ==========
Supplemental cash flow information:
Interest paid $ 4,500 $ 3,321
========== ==========
Income taxes paid $ 1,265 $ 261
========== ==========
The accompanying notes are an integral part of these financial statements
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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(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 March 31, 2001 and for the three months ended March 31, 2001
and March 31, 2000 are unaudited and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for the
interim periods. The results of operations for the three months ended March 31,
2001 are not necessarily indicative of results that may be expected for the year
ending December 31, 2001. 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 2000 Form 10-K.
NOTE B -- INVENTORIES
Inventories consist of the following (in thousands):
March 31, December 31,
2001 2000
------------- --------------
Electronic Component Distribution:
Inventories $ 80,920 $ 85,943
Electronic Manufacturing Services:
Work in process 10,980 13,101
Raw Materials 27,849 25,651
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$ 119,749 $ 124,695
========= =========
7
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
MARCH 31, 2001
(Unaudited)
NOTE C-- FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Reptron Electronics, Inc. is a leading electronics manufacturing supply chain
services company operating as a national distributor of electronic components, a
contract manufacturer of electronic products and display solution provider.
Reptron's Electronic Component Distribution customers are in diverse industries'
including robotics, telecommunications, computers and computer peripherals,
consumer electronics, healthcare, industrial controls and contract
manufacturing. Reptron's Electronic Manufacturing Services segment manufactures
electronic products according to customer design, primarily for customers in the
telecommunications, healthcare, industrial/instrumentation, banking and office
products industries. As a display solution provider, Reptron Manufacturing
Services provides display design engineering, systems integration and turnkey
manufacturing services.
The following table shows net sales and gross profit by industry segments for
the three months ended March 31, 2001 and March 31, 2000.
Three months ended
March 31,
(in thousands)
--------------------------
2001 2000
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Net Sales
Electronic Component Distribution $ 78,348 $ 71,817
Electronic Manufacturing Services 55,882 51,176
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$ 134,230 $ 122,993
========= ===========
Gross Profit
Electronic Component Distribution $ 14,442 $ 13,262
Electronic Manufacturing Services 7,185 6,437
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$ 21,627 $ 19,699
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NOTE D-- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted net earnings
(loss) per common share:
Three months ended
March 31,
(in thousands)
--------------------------
2001 2000
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Numerator:
Net earnings (loss) (in thousands) $ (270) $ 388
========== ==========
Denominator:
For basic earnings (loss) per share - Weighted average shares 6,371,903 6,172,442
Effect of dilutive securities:
Employee stock options - 436,615
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For diluted earnings (loss) per share 6,371,903 6,609,057
========== ==========
Net earnings (loss) per common share - basic
$ (0.04) $ 0.06
========== ==========
Net earnings (loss) per common share - diluted $ (0.04) $ 0.06
========== ==========
8
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 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 first quarter net sales increased $11.2 million, or 9%
from $123.0 million in the first quarter of 2000 to $134.2 million in the first
quarter of 2001.
Electronic Component Distribution ("ECD") 2001 first quarter net sales
increased $6.5 million, or 9% from $71.8 million for the first quarter of 2000
as compared to $78.3 million in the first quarter of 2001. This increase in
sales resulted primarily from investments in personnel and other infrastructure
which aided growth. Sales of semiconductors, passive components and
electromechanical components accounted for 80%, 11% and 9%, respectively, of ECD
2001 first quarter net sales, and 66%, 27% and 7%, respectively, of the ECD's
2000 first quarter net sales. ECD sales generated from the top four vendors
accounted for approximately $36.0 million, or 45% of the ECD 2001 first quarter
net sales, as compared with approximately $26.0 million or 37% of ECD 2000 first
quarter net sales.
Electronic Manufacturing Services ("EMS") net sales increased $4.7
million, or 9%, from $51.2 million in the first quarter of 2000 to $55.9 million
in the first quarter of 2001. EMS transacted business with approximately 80
customers in the first quarter of 2001. The largest three customers represented
approximately 15%, 10% and 7%, respectively, of first quarter 2001 net sales
(6%, 4% and 3%, respectively of total Company first quarter net sales) as
compared to 14%, 8%, and 5%, respectively, of first quarter 2000 net sales (6%,
3% and 2% respectively, of total Company first quarter 2000 net sales). Sales by
industry segment were: semiconductor equipment 22%; medical equipment 22%;
industrial/instrumentation 20%; telecommunications 16%; banking 13%; and all
other 7%.
Gross Profit. Total 2001 first quarter gross profit increased $1.9
million, or 10%, from $19.7 million in the first quarter of 2000 to $21.6
million in the first quarter of 2001. The gross profit percentage of the Company
was 16.1% in the first quarter of 2001 and 16.0% in the first quarter of 2000.
ECD gross profit increased $1.1 million, or 9%, from $13.3 million in
the first quarter of 2000 to $14.4 million in the first quarter of 2001. The
gross margin was 18.4% in the first quarter of 2001 and 18.5% in the first
quarter of 2000. The gross profit in dollars increased proportionally to the
growth in ECD sales.
9
EMS gross profit increased $0.8 million, or 12%, from $6.4 million in
the first quarter of 2000 to $7.2 million in the first quarter of 2001. Gross
margin was 12.9% in the first quarter of 2001 and 12.6% in the first quarter of
2000. This increase in gross margin is primarily attributable to fixed factory
overhead absorption at higher sales levels.
Selling, General, and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased $2.1 million, or 13%, from $16.6
million in the first quarter of 2000 to $18.7 million in the first quarter of
2001. The increase in SG&A expense is primarily attributable to increased sales
personnel at existing branch offices, the opening of seven new branch offices
and the start-up costs of opening a new distribution center in Reno, Nevada.
Interest Expense. Net interest expense increased $0.7 million, or 30%,
from $2.4 million in the first quarter of 2000 to $3.1 million in the first
quarter of 2001. The increase in net interest expense resulted primarily from an
increase in average outstanding debt of $33.4 million from $128.5 million during
the first quarter of 2000 to $161.9 million during the first quarter of 2001. In
addition, the overall average interest rate increased from 7.3% during the first
quarter of 2000 to 7.6% during the first quarter of 2001.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Reptron primarily finances its operations through subordinated notes,
bank credit lines, operating cash flows, capital equipment leases, and
short-term financing through supplier credit lines.
Net cash provided by or used in operating activities has historically
been driven by net income (loss) levels combined with fluctuations in inventory,
accounts receivable and accounts payable. Operating activities for the first
quarter of 2001 provided cash of approximately $6 million. This increase in cash
flow resulted primarily from decreases in accounts receivable of $15 million and
inventories of $5 million. These items were partially offset by decreases in
accounts payable of $12 million, accrued expenses of $2 million, and income
taxes payable of $1 million. Days sales in accounts receivable as of March 31,
2001 were approximately 63 days. Annualized inventory turns for the first
quarter of 2001 were approximately 3.7 times.
Capital expenditures totaled approximately $2 million in the first
quarter of 2001. These capital expenditures were primarily for the acquisition
of manufacturing equipment and building improvements. These purchases were
funded by the working capital credit facility.
Reptron believes that available credit facilities will be sufficient to
meet the capital expenditures and working capital needs of operations as they
are presently conducted. However, future cash flow 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
acceptable terms, Reptron believes that such financing would likely be available
on acceptable terms.
Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
While Reptron had no holdings of derivative financial or commodity
instruments at March 31, 2001, Reptron is exposed to financial market risks,
including changes in interest rates. Approximately half of Reptron's borrowings
bear a fixed interest rate. Borrowings under Reptron's credit agreement with a
bank bears interest at a variable rate based on the prime rate and the London
Interbank Offered Rate.
10
REPTRON ELECTRONICS, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended March 31, 2001.
11
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 11, 2001
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REPTRON ELECTRONICS, INC.
(Registrant)
By: /s/ Michael Branca
--------------------------------
Michael Branca, Chief Financial Officer
(Principal Financial and Accounting Officer)
12