Kent Electronics Reports Fourth Quarter and Fiscal 1999 Financial
Results
HOUSTON--(BUSINESS WIRE)--May 11, 1999--Kent Electronics Corporation (NYSE:KNT) reported
net sales and earnings for the fourth quarter and fiscal year ended April 3, 1999.
Fourth Quarter/Year End Results
Net sales for the fourth quarter were $177.1 million, a 14% sequential increase over the $155.4
million reported in the third quarter this year and 9% above the $162.4 million reported for last year's
fourth quarter. In line with analysts' estimates, the Company reported net earnings of $0.5 million for
the fourth fiscal quarter, or $0.02 per diluted share, compared to a net loss of $0.9 million, or $0.03
per diluted share, incurred in the third fiscal quarter. In the fourth quarter of fiscal 1998, the
Company reported net earnings of $6.9 million, or $0.25 per diluted share.
Gross profit for the quarter was $26.4 million compared to $23.7 million reported in this year's third
quarter and $34.3 million in the 1998 fiscal fourth quarter. Fourth quarter operating profit was $0.8
million compared to an operating loss of $1.7 million in the 1999 third fiscal quarter and operating
profit of $10.6 million for last year's fiscal fourth quarter.
Commenting on the fourth quarter results, Morrie K. Abramson, Chairman and Chief Executive
Officer, said, "We achieved sequential revenue increases in all of our business units and, as
anticipated, improved utilization rates and operating efficiencies enabled the Company to return to
modest profitability in the fiscal 1999 fourth quarter. Importantly, the contribution of new service
offerings from Kent Datacomm and the expansion of new manufacturing services offered by K
EC continued to increase significantly and provide Kent with
potentially important platforms for future growth."
Larry D. Olson, President and Chief Operating Officer, noted,
"Our new manufacturing services attracted many new customers in fiscal
1999 and represented 53% of K
EC's fourth quarter revenues. Kent Datacomm, which experienced 30% sequential growth in the
fourth quarter, is successfully evolving into a full service network integrator, and our recent
acquisition of SabreData, Inc. brings key resources and infrastructure to this rapidly-growing
business."
Net sales for the fiscal year ended April 3, 1999 were $637.1 million and net earnings were $0.2
million, or $0.01 per diluted share. For fiscal 1998, the Company reported net sales of $659.4 million
and net earnings of $35.4 million, or $1.26 per diluted share.
Outlook
In looking ahead, Mr. Abramson stated, "Fiscal 1999 was clearly a difficult year for Kent as well as
for many of the industries and customers we serve. Fortunately, we believe the Company made the
right investments in people and service offerings to position Kent for a significant turnaround in this
fiscal year."
"We are entering fiscal 2000 with strengthened specialty distribution businesses, a contract
manufacturing operation that has significantly diversified its customer base and a high growth
datacomm services business unit," Mr. Abramson said. "In addition, we are seeing early signs of an
industry upturn which should further enhance our fiscal 2000 performance," Mr. Abramson
concluded.
The forward-looking statements in this press release involve risks and uncertainties which could
cause actual results, performance or trends, including the above-mentioned anticipated
improvement in performance, to differ materially from those expressed in the forward- looking
statement. The Company believes that all forward-looking statements made by it have a reasonable
basis, but there can be no assurance that management's expectations, beliefs or projections as
expressed in the forward-looking statements will actually occur or prove to be correct. In addition to
general industry and economic conditions, factors that could cause actual results to differ materially
from those discussed in the forward-looking statements in this press release, include, but are not
limited to, the risks relating to forward- looking statements discussed in the Company's Annual
Report on Form 10-K for the fiscal year ended March 28, 1998, including, but not limited to, the
risks discussed under the captions "Downward Pressure on Margins," "Cycles in the Electronics
Industry; General Economic Conditions," "Dependence on K
EC Customers;
Uncertainty of Increasing Contract Manufacturing Sales," "Management
of Growth," "Competition," "Risks Associated with Acquisitions" and
"Dependence on Significant Suppliers."
Kent Electronics is among the largest publicly traded specialty
electronics distributors and network integrators. Kent's contract
manufacturing subsidiary, K
EC Electronics, is among the leading contract manufacturers in the U.S.
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Fourth Quarter Fiscal Year
April 3, March 28, April 3, March 28,
1999 1998 1999 1998
(Unaudited) (Unaudited)
--------- --------- --------- ---------
Net sales $177,083 $162,407 $637,064 $659,400
Cost of sales 150,686 128,071 536,519 512,147
--------- --------- --------- ---------
Gross profit 26,397 34,336 100,545 147,253
Selling, general and
administrative expenses 25,553 23,767 100,992 90,854
--------- --------- --------- ---------
Operating profit (loss) 844 10,569 (447) 56,399
Other income (expense)
Interest expense (2,772) (2,575) (10,495) (5,272)
Other - net 2,804 3,053 11,236 7,040
--------- --------- --------- ---------
Earnings before
income taxes 876 11,047 294 58,167
Income taxes 342 4,129 112 22,741
--------- --------- --------- ---------
Net earnings $ 534 $ 6,918 $ 182 $ 35,426
========= ========= ========= =========
Earnings per common share:
Basic $.02 $.26 $.01 $1.33
==== ==== ==== =====
Diluted $.02 $.25 $.01 $1.26
==== ==== ==== =====
Weighted average shares:
Basic 27,963 27,042 27,674 26,598
========= ========= ========= =========
Diluted 28,228 27,952 28,099 28,097
' ========= ========= ========= =========
KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
April 3, March 28,
1999 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents
(including temporary investments of
$206,919 in 1999 and $174,325 in 1998) $207,942 $179,907
Trading securities, net --- 29,946
Accounts receivable, net 103,364 106,132
Inventories
Materials and purchased products 118,535 112,964
Work in process 6,349 2,128
------- -------
124,884 115,092
Other 17,549 5,754
------- -------
Total current assets 453,739 436,831
PROPERTY AND EQUIPMENT
Land 8,168 8,761
Buildings 43,817 42,766
Equipment, furniture and fixtures 124,194 109,079
Leasehold improvements 2,681 2,657
------- -------
178,860 163,263
Less accumulated depreciation
and amortization (50,496) (36,577)
------- -------
128,364 126,686
DEFERRED INCOME TAXES --- 93
OTHER ASSETS 7,095 12,193
COST IN EXCESS OF NET ASSETS ACQUIRED,
Less accumulated amortization of
$3,320 in 1999 and $2,856 in 1998 15,443 15,907
------- -------
Total assets $604,641 $591,710
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KENT ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
(In thousands, except share data)
April 3, March 28,
1999 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ --- $ ---
Accounts payable 47,149 49,178
Accrued compensation 13,862 11,193
Other accrued liabilities 6,950 7,032
Income taxes --- 2,946
------- ------
Total current liabilities 67,961 70,349
LONG-TERM DEBT, less current maturities 207,000 207,000
DEFERRED INCOME TAXES 8,511 ---
LONG-TERM LIABILITIES --- 1,792
STOCKHOLDERS' EQUITY
Preferred stock, $1 par value per share;
authorized 2,000,000 shares; none issued --- ---
Common stock, no par value; authorized
60,000,000 shares; 28,013,375 shares
issued and 27,963,375 shares outstanding
in 1999 and 27,230,640 shares issued and
27,180,640 shares outstanding in 1998 63,553 55,457
Additional paid-in capital 117,511 117,189
Retained earnings 141,082 140,900
------- -------
322,146 313,546
Less common stock in treasury - at cost,
50,000 shares (977) (977)
------- -------
321,169 312,569
------- -------
Total liabilities and stockholders'
equity $604,641 $591,710
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