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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2002

For the transition period from                        to                       

Commission File Number 0 – 23426

REPTRON ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)

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 o

6,417,196 shares of common stock issued and outstanding as of November 13, 2002.

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REPTRON ELECTRONICS, INC.

INDEX

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PART I. FINANCIAL INFORMATION

REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

The accompanying notes are an integral part of these financial statements

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REPTRON ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

The accompanying notes are an integral part of these financial statements

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REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(In thousands, except share data)

The accompanying notes are an integral part of this financial statement

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REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

The accompanying notes are an integral part of these financial statements

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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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 accounting principles generally accepted in the United States of America for complete financial statements. The consolidated financial statements as of September 30, 2002, and for the three and nine months ended September 30, 2002 and September 30, 2001, 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 nine months ended September 30, 2002 are not necessarily indicative of results that may be expected for the year ending December 31, 2002. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes, together with management’s discussion and analysis of financial condition and results of operations, included in the Annual Report on Form 10-K which was filed in April 2002.

NOTE B – OPERATIONAL MATTERS

During the nine months ended September 30, 2002 and 2001 the Company incurred net losses of $16,565,000 and $15,796,000, respectively. The Company’s Electronic Component Distribution segment continues to be impacted by a severe industry downturn. Accordingly, the Company updated its January 1, 2002 valuation of a reporting unit included in this segment. No impairment of goodwill was identified as a result of this valuation. The Company is evaluating further staff, facility and related reductions, as well as other available strategic options for this business segment, which will involve the recognition of associated charges over the implementation period.

As more fully discussed in Note H below, in October 2002, the Company entered into a new working capital credit facility. Management believes that credit facilities currently available will be sufficient to meet the capital expenditures and working capital needs of our operations as presently conducted. However, 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 available credit provided by our lenders and suppliers. In particular, management is considering various alternatives related to the payment of approximately $76.3 million of our 6.75% Convertible Subordinated Notes (“Convertible Notes”), which will become due in August 2004. If the Convertible Notes are not converted into our common stock, we will be required to repay the indebtedness or make other arrangements to refinance the Convertible Notes. If we fail to do so, it will result in a default of the Convertible Notes, which would have a material adverse effect on our business and financial condition. There can be no assurance that such financing will be available in amounts and on acceptable terms.

NOTE C – RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all business combinations completed after June 30, 2001. SFAS 142 is effective for the year beginning January 1, 2002, however, certain provisions of that Statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142. The adoption of these pronouncements did not have a material effect on the Company’s financial position or results of operations.

In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. Management does not believe that adoption of this pronouncement will have a material effect on the Company’s financial position or results of operations.

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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 2002
(Unaudited)

NOTE C – RECENT ACCOUNTING PRONOUNCEMENTS - Continued

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. The provisions of the statement were adopted by the Company as of January 1, 2002. The adoption of this pronouncement did not have a significant impact on Reptron’s financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (Issued 6/02). This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. Management does not believe that adoption of this pronouncement will have a material effect on the Company’s financial position or results of operations.

NOTE D – INVENTORIES

Inventories consist of the following (in thousands):

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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 2002
(Unaudited)

NOTE E – 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. Our Electronic Component Distribution customers are in diverse industries including robotics, telecommunications, computers and computer peripherals, consumer electronics, healthcare, industrial controls and contract manufacturing. Our 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, we provide display design engineering, systems integration and turnkey manufacturing services.

The following table shows net sales and gross profit by industry segments.

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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 2002
(Unaudited)

NOTE F – LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per common share:

For the three-month and nine-month periods ended September 30, 2002 and 2001, all options have been excluded from the computation of diluted earnings per share because their effect on loss per share would be anti-dilutive.

The convertible notes were not included in the computation of diluted earnings per share for all periods because the conversion price of $28.50 exceeded the average market price of the common stock. Therefore, the effect would be anti-dilutive.

NOTE G – INCOME TAXES

During the three month period ended September 30, 2002, the Company incurred losses before income taxes of $4.4 million. As a result, Reptron recognized a deferred tax asset and an offsetting valuation allowance of $1.7 million, resulting in no income tax benefit. Realization of the tax loss carryforwards are contingent upon future taxable earnings in the appropriate jurisdiction. Each carryforward item is reviewed for expected utilization, using a “more likely than not” approach, based on the character of the carryforward item (credit, loss, etc.), the associated taxing jurisdiction (federal or state), the relevant history for the particular item, the applicable expiration dates, and identified actions under the Company’s control in realizing the associated carryforward benefits. The Company assesses the available positive and negative evidence surrounding the recoverability of the deferred tax assets and applies judgment in estimating the amount of valuation allowance necessary under the circumstances. Management continues to assess and evaluate strategies that will enable the carryforward, or a greater portion thereof, to be utilized, and will adjust the valuation allowance appropriately for each item at such time when it is determined that the “more likely than not” criterion is satisfied.

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REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 2002
(Unaudited)

NOTE H – LONG-TERM DEBT

At September 30, 2002, Reptron was not in compliance with the earnings covenant contained in the Company’s credit agreement with its lenders. The Company’s credit facility was refinanced as of October 10, 2002 with new lenders and modified covenants. Accordingly, the note payable has been classified as a non-current obligation. The Credit Agreement provides for a $60 million revolving credit facility (the “Credit Agreement”). Provided various conditions described in the Credit Agreement are met, including the repayment or refinancing of the Company’s bond indenture obligations prior to June 30, 2004 and maintenance of certain financial covenants, the facility is to extend through October 10, 2005. Borrowings under the Credit Agreement are collateralized by substantially all of the assets of Reptron. The Credit Agreement limits the amount of capital expenditures and prohibits the payment of dividends thereby restricting the distribution of retained earnings. The Company is currently in compliance with the covenants in the new Credit Agreement. However, there can be no assurance that the Company will be in compliance in the future with the earnings covenant contained in the Credit Agreement, or be able to obtain waivers of non-compliance from its lenders.

NOTE I – GOODWILL

A third party valuation consultant was engaged to assist the Company in preparing valuations on certain business units of the Company for the purpose of evaluating the impact of the adoption of SFAS 142. Based primarily on a report dated May 13, 2002 from the valuation consultant and the Company’s internal analysis, as of January 1, 2002, there is no impairment of the net goodwill which is associated with acquisitions the Company made in prior periods. Beginning January 1, 2002, amortization of the excess of cost over net assets acquired (goodwill) ceased.

The following table shows a reconciliation of net income adjusted for goodwill amortization and related loss per share information:

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REPTRON ELECTRONICS, INC

         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 our 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 our reports filed with the Securities and Exchange Commission as well as assumptions regarding the foregoing. The