###  FORM 10-Q                                        UNITED STATES                              SECURITIES AND EXCHANGE COMMISSION                                    Washington D.C. 20549 {X}     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIESEXCHANGE ACT OF 1934For the Quarterly Period ended March 31, 2001 OR {   }   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from ____________________ to __________________________Commission File Number 0-5896                                                      JACO ELECTRONICS, INC                                                 (Exact name of registrant as specified in its charter)                                  NEW YORK                                                                   11-1978958               (State or other jurisdiction of                                   (I.R.S. Employer Identification No.)                 incorporation or organization                                145 OSERAVENUE, HAUPPAUGE, NEW YORK 11788                                      (Address of principal executive office)                      (Zip Code)Registrant's telephone number, including area code:   (631) 273-5500
Indicated by check markwhether the Registrant (1) has filed all reports required to be filed by Section13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to file suchreport), and (2) has been subject to such filing requirements for the past 90days. 
                                               YES  X                                                  NO 
Number of Shares ofRegistrant’s Common Stock Outstanding as of May 11, 2001 – 5,697,459(Excluding 618,300 Shares of Treasury Stock). 
FORM 10-Q                                                     March 31, 2001Page 2PART I - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTS                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                            CONDENSED CONSOLIDATED BALANCE SHEETS                                         (UNAUDITED)                                                     March 31,          June 30,                                                      2001                2000ASSETSCurrent Assets        Cash                                       $  72,848            $ 617,603        Marketable securities                        726,268              880,954        Accounts receivable - net                 55,112,694           42,179,468        Inventories                               80,699,370           53,415,793        Prepaid expenses and other                 1,784,732              887,804        Deferred income taxes                      2,814,000            1,975,000               Total current assets              141,209,912           99,956,622Property, plant and equipment - net                8,791,603            6,926,734Excess of cost over net assets acquired - net     19,920,692           16,600,432Other assets                                       2,919,902            2,845,305                                                $172,842,109         $126,329,093            See accompanying notes to condensed consolidated financial statements.FORM 10-Q                                                             March 31, 2001Page 3                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                            CONDENSED CONSOLIDATED BALANCE SHEETS                                         (UNAUDITED)                                                                                 March 31,         June 30,                                                                                   2001            2000LIABILITIES & SHAREHOLDERS' EQUITYCurrent Liabilities        Accounts payable and accrued expenses                                  $  50,534,824    $  39,190,011Current maturities of long term debt and         capitalized lease obligations                                             1,002,164          807,444        Income taxes payable                                                         834,815        1,575,319        Total current liabilities                                                 52,371,803       41,572,774Long term debt and capitalized lease obligations                                  65,954,449       40,940,877Deferred income taxes                                                                196,000          225,000Deferred compensation                                                                837,500          800,000SHAREHOLDERS' EQUITY        Preferred stock - authorized, 100,000 shares,         $10 par value; none issued        Common stock - authorized, 20,000,000 and 10,000,000           shares, respectively, $.10 par value; issued 6,315,759         and 6,252,259 shares, respectively, and 5,697,459 and 5,633,959 shares outstanding, respectively                                      631,576          625,226Additional paid-in capital - net                                                  24,437,826       23,906,301Retained earnings                                                                 30,584,224       20,296,761Accumulated other comprehensive income                                                33,246          166,669Treasury stock                                                                    (2,204,515)      (2,204,515)Total shareholders' equity                                                        53,482,357       42,790,442                                                                               $ 172,842,109    $ 126,329,093       See accompanying notes to condensed consolidated financial statementsFORM 10-Q                                                        March 31, 2001Page 4                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                        CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                             FOR THE THREE MONTHS ENDED MARCH 31,                                         (UNAUDITED)                                                                           2001             2000NET SALES                                                                $83,680,954   $51,693,699COST AND EXPENSESCost of goods sold                                                        68,313,422    39,680,844        Gross profit                                                      15,367,532    12,012,855Selling, general and administrative expenses                              11,585,251     8,691,425        Operating profit                                                   3,782,281     3,321,430Interest expense                                                           1,094,788       334,202        Earnings before income taxes                                       2,687,493     2,987,228Income tax provision                                                       1,102,000     1,221,000        NET EARNINGS                                                     $ 1,585,493   $ 1,766,228Net earnings per common share:Basic                                                                    $      0.28   $      0.32Diluted                                                                  $      0.26   $      0.30Weighted average common shares outstanding:        Basic                                                              5,692,537     5,486,463        Diluted                                                            6,165,278     5,887,331            See accompanying notes to condensed consolidated financial statementsFORM 10-Q                                                        March 31, 2001Page 5                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                        CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS                             FOR THE NINE MONTHS ENDED MARCH 31,                                         (UNAUDITED)                                                                   2001             2000NET SALES                                                      $278,075,434   $138,811,321COST AND EXPENSESCost of goods sold                                              222,013,053    108,994,750        Gross profit                                             56,062,381     29,816,571Selling, general and administrative expenses                     35,471,510     23,918,836        Operating profit                                         20,590,871      5,897,735Interest expense                                                  3,152,849      1,002,958        Earnings before income taxes                             17,438,022      4,894,777Income tax provision                                              7,150,000      2,031,000        NET EARNINGS                                           $ 10,288,022   $  2,863,777Net earnings per common share:        Basic                                                  $       1.82   $       0.52        Diluted                                                $       1.66   $       0.51Weighted average common shares outstanding:        Basic                                                     5,660,295      5,482,328        Diluted                                                   6,209,932      5,652,593            See accompanying notes to condensed consolidated financial statementsFORM 10-Q                                                                                                                              March 31, 2001Page 6                     JACO ELECTRONICS, INC. AND SUBSIDIARIES                        CONSOLIDATED STATEMENT OF CHANGES                             IN SHAREHOLDERS' EQUITY                    FOR THE NINE MONTHS ENDED MARCH 31, 2001                                   (UNAUDITED)                                                                                                       Accumulated                                                                    Additional                            other                                              Total                                                                      paid-in          Retained       comprehensive      Treasury         Deferred       shareholders'                                        Shares       Amount           capital          earnings          income             stock       compensation        equity                                   --------------- -------------- ----------------  ---------------- ---------------- ---------------- ----------------------------------                                   --------------- -------------- ----------------  ---------------- ---------------- ---------------- ----------------------------------Balance at July 1, 2000                 6,252,259      $ 625,226     $ 24,041,301      $ 20,296,761        $ 166,669     $ (2,204,515)      $ (135,000)     $ 42,790,442Net earnings                                                                             10,288,022                                                           10,288,022Unrealized loss on marketable  securities, net of deferred taxes                                                                         (133,423)                                           (133,423)Payment of fractional shares                                                                   (559)                                                                (559)Exercise of stock options                  63,500          6,350          430,275                                                                                436,625Deferred compensation                                                                                                                          101,250           101,250                                   --------------- -------------- ----------------  ---------------- ---------------- ---------------- ----------------------------------Balance at March 31, 2001               6,315,759      $ 631,576     $ 24,471,576      $ 30,584,224         $ 33,246     $ (2,204,515)       $ (33,750)     $ 53,482,357                                   =============== ============== ================  ================ ================ ================ ==================================     See accompanying notes to condensed consolidated financial statements.FORM 10-Q                                                                         March 31, 2001Page 7                     JACO ELECTRONICS, INC. AND SUBSIDIARIES                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                       FOR THE NINE MONTHS ENDED MARCH 31,                                   (UNAUDITED)                                                                                       2001                 2000                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Cash flows from operating activities      Net earnings                                                                    $ 10,288,022         $ 2,863,777Adjustments to reconcile net earnings to net     cash provided by (used in) operating activities          Depreciation  and amortization                                                 2,320,995           1,323,241          Deferred compensation                                                            138,750             138,750          Deferred income tax benefit                                                     (792,000)           (658,000)          Provision for doubtful accounts                                                1,064,401             455,125          Changes in operating assets and liabilities,          Increase in operating assets - net                                           (42,178,132)        (14,863,982)          Increase in operating liabilities – net                                  10,387,116           8,653,932                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------          Net cash used in operating activities                                        (18,770,848)         (2,087,157)                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Cash flows from investing activitiesCapital expenditures                                                                    (1,830,704)           (453,582)Increase in marketable securities                                                          (54,737)            (71,470)Acquisition of operating assets                                                                             (1,212,428)Business acquisitions - deferred payments                                               (3,792,807)Increase in other assets                                                                  (204,848)           (189,938)                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------         Net cash used in investing activities                                          (5,883,096)         (1,927,418)                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Cash flows from financing activities       Borrowings under line of credit                                                 254,637,255          45,247,667Payments under line of credit                                                         (230,291,235)        (41,208,947)Principal payments under equipment financingand term loans                                                                            (672,897)           (609,705)Payment of fractional shares                                                                  (559)Proceeds from exercise of stock options                                                    436,625              90,600                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Net cash provided by financing activities                                               24,109,189           3,519,615                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------NET DECREASE IN CASH                                                                      (544,755)           (494,960)                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Cash at beginning of period                                                                617,603             922,247                                                                                 ------------------   -----------------                                                                                 ------------------   -----------------Cash at end of period                                                                     $ 72,848           $ 427,287                                                                                 ==================   =================                                                                                 ==================   =================Supplemental schedule of non-cash financing and    investing activities:Accrued acquisition costs                                                                $ 217,193Equipment acquired under capital lease obligations & note payable                   $ 1,535,169           $ 126,229     See accompanying notes to condensed consolidated financial statements.FORM 10-Q                                                        March 31, 2001Page 8                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                         (UNAUDITED)NOTE A - BASIS OF PRESENTATION
1) The accompanyingcondensed consolidated financial statements reflect all adjustments, consistingonly of normal recurring accrual adjustments, which are in the opinion ofmanagement, necessary for a fair presentation of the consolidated financialposition and the results of operations at and for the periods presented. Suchfinancial statements do not include all the information or footnotes necessaryfor a complete presentation. Therefore, they should be read in conjunction withthe Company’s audited consolidated statements for the year ended June 30,2000 and the notes thereto included in the Company’s annual report on Form10-K. The results of operations for the interim periods are not necessarilyindicative of the results for the entire year. 

2) The Company has a$70,000,000 term loan and revolving line of credit facility with its banks,which is based principally on eligible accounts receivables and inventories asdefined in the loan agreement. The agreement was amended to (i) increase theamount available under the revolving line of credit to $70,000,000 (ii) extendthe maturity date to September 14, 2002, (iii) change the interest rate to arate based on the average 30-day LIBOR plus 1-3/4% through the quarter endedSeptember 30, 2000, at such time the rate converted to the average 30-day LIBORplus 1% to 2-1/4% depending on the Company’s performance for theimmediately preceding four fiscal quarters measured by a certain financialratio, and (iv) change the requirements of certain financial covenants. Theapplicable interest rate may be adjusted quarterly and borrowings under thisfacility are collateralized by substantially all of the assets of the Company. 

3) For interim financialreporting purposes, the Company uses the gross profit method for computinginventories, which consists of goods held for resale. 

4) On June 6, 2000, theCompany acquired all of the issued and outstanding shares of common stock, nopar value, of Interface Electronics Corp. (“Interface”), a distributorof electronic parts, components and equipment, located in Massachusetts. Thepurchase price was $15,400,000 payable in cash at the closing, (June 6, 2000)plus a deferred payment of $3,960,000 provided that certain conditions, asdefined in the purchase agreement, were met. As of March 31, 2001, $3,760,000 ofthe deferred payment has been paid. The remaining $200,000 has been provided forin the accompanying balance sheet. On the second anniversary of the closing datea deferred payment of up to $2,640,000 shall be paid provided that certainconditions, as defined in the purchase agreement, are met. When the remainingcontingency is resolved, the Company shall record the current fair value of theconsideration paid as additional goodwill which will be amortized over theremaining life of the asset 

        Theacquisition has been accounted for as a purchase and the operations of Interfacehave been included in the Company’s Statement of Earnings since the date ofacquisition, June 6, 2000. Included in other assets are the costs of theidentifiable intangible assets acquired, principally an employment agreement anda franchise agreement which are being amortized on a straight-line basis overfive and fifteen years, respectively. The excess of the purchase price andrelated expenses over the net tangible and identifiable intangible assetsacquired amounted to approximately $17,008,000 and is being amortized on astraight-line basis over twenty years. 
                                       5FORM 10-Q                                                        March 31, 2001Page 9        Summarized below are the unaudited pro forma results of operations of the Company asif Interface has been acquired at the beginning of the fiscal periods presented:                                              Three Months Ended          Nine Months Ended                                                   March 31,                  March 31,                                                     2000                       2000           Net sales                              $65,688,578            $171,906,301           Net earnings                             1,707,706                 797,122           Net earnings per common share:           Basic                                        $0.31                   $0.15           Diluted                                      $0.29                   $0.14
        Thepro forma financial information presented above for the three and nine monthsended March 31, 2000 is not necessarily indicative of either the results ofoperations that would have occurred had the acquisition taken place at thebeginning of the periods presented or of future operating results of thecombined companies. 

5) On February 25, 2000,the Company purchased the operating assets of PGI, Industries, Inc.,(“PGI”) an exporter of electronic components, located in Ronkonkoma,New York. The purchase price was $1,200,000 paid in cash, plus a deferredpayment of $100,000 payable over the next two years based on certain conditions,as defined in the purchase agreement. As of March 31, 2001, $32,807 of thedeferred payment has been paid and an additional $17,193 has been provided forin the accompanying balance sheet. When the remaining contingency is resolved,the Company shall record the current fair value of the consideration issued asadditional costs of the acquired enterprise. These additional costs shall beamortized over the remaining life of the asset. The acquisition has beenaccounted for as a purchase and the operations of PGI have been included in theCompany’s Statement of Earnings since the date of acquisition, February 25,2000. The excess of the purchase price over the fair value of the assetsacquired, approximately $260,000, is being amortized on a straight-line basisover twenty years. Pro forma results reflecting this acquisition have not beenpresented, as they do not differ materially from the results presented herein. 
6)      Total comprehensive income and its components for the three and nine months endedMarch 31, 2001 and 2000 are as follows:                                            Three Months Ended             Nine Months Ended                                                March 31,                      March 31,                                         ---------------------------   ---------------------------                                           2001           2000            2001            2000                                        -----------    ------------    ------------    -----------Net income                               1,585,493       1,766,228      10,288,022      2,863,777Unrealized (loss) gain  on marketable securities                (96,588)           4,587       (209,423)       (49,224)Deferred Tax benefit (expense)              35,000         (2,000)          76,000         18,000                                        -----------    ------------    ------------    -----------Comprehensive income                     1,523,905       1,768,815      10,154,599      2,832,553                                         ===========    ============    ============    ===========        Accumulated other comprehensive income is comprised of unrealized gains and losses onmarketable securities, net of the related tax effect.FORM 10-Q                                                        March 31, 2001Page 10
7) On June 26, 2000, theCompany announced a 3-for-2 stock split which was in the form of a 50% commonstock dividend payable on July 24, 2000 to shareholders of record on July 10,2000. All references to the number of weighted average common shares outstandingand earnings per share have been restated to reflect the 3-for-2 stock split. 
8)      The number of shares used in the Company's basic and diluted earnings per share    computations are as follows:                                            Three Months Ended             Nine Months Ended                                                March 31,                      March 31,                                            ---------------------------  ---------------------------                                           2001           2000            2001            2000                                        -----------    ------------    ------------    -----------Weighted average common shares  outstanding net of treasury shares,  for basic earnings per share           5,692,537       5,486,463       5,660,295      5,482,328Common stock equivalents for  stock options                            472,741         400,868         549,637        170,265                                        -----------    ------------    ------------    -----------Weighted average common shares  outstanding for diluted earnings per   6,165,278       5,887,331       6,209,932      5,652,593share                                        ===========    ============    ============    ===========
        Excludedfrom the calculation of earnings per share are options to purchase 45,000 sharesof the Company’s common stock for the three and nine months ended March 31,2001 as compared to 78,000 shares for the three and nine months ended March 31,2000, as their inclusion would have been antidilutive. 

9) The Company has tworeportable segments: electronics parts distribution and contract manufacturing.The Company’s primary business activity is conducted with small and mediumsize manufacturers, located in North America, that produce electronic equipmentused in a variety of industries. Information pertaining to the Company’soperations in different geographic areas for the three months and nine monthsended March 31, 2001 and 2000 is not considered material to the financialstatements. 
         The Company's chief operating decision maker utilizes net sales and net earningsinformation in assessing performance and making overall operating decisions and resourceallocations.  The accounting policies of the operating segments are the same as thosedescribed in the summary of significant accounting policies included in the Company's annualreport to shareholders.  Information about the Company's segments is as follows:FORM 10-Q                                                        March 31, 2001Page 11                                                                        Three Months Ended                       Nine Months Ended                                                                             March 31,                                 March 31,                                                                        2001          2000                      2001           2000                                                                          (in thousands)                           (in thousands)Net sales from external customers   Electronics components distribution                             $ 76,060           $ 47,510           $257,483           $128,948   Contract manufacturing                                             7,621              4,184             20,592              9,863                                                                   $ 83,681           $ 51,694           $278,075           $138,811Intersegment net sales   Electronics components distribution                             $    402           $     86           $    784           $    217   Contract manufacturing                                             _____              _____              _____              _____                                                                   $    402           $     86           $    784           $    217Operating profit   Electronics components distribution                             $  3,415           $  3,118           $ 19,386           $  5,404   Contract manufacturing                                               367                203              1,205                494                                                                   $  3,782           $  3,321           $ 20,591           $  5,898Interest expense   Electronics components distribution                             $    925           $    215           $  2,692           $    627   Contract manufacturing                                               170                119                461                376                                                                   $  1,095           $    334           $  3,153           $  1,003Income tax provision   Electronics components distribution                             $  1,021           $  1,186           $  6,845           $  1,982   Contract manufacturing                                                81                 35                305                 49                                                                   $  1,102           $  1,221           $  7,150                                                                                                                               2,031Identifiable assets   Electronics components distribution                             $153,252           $ 77,262           $153,252           $ 77,262   Contract manufacturing                                            19,590             10,940             19,590             10,940                                                                   $172,842           $ 88,202           $172,842           $ 88,202Capital expenditures   Electronics components distribution                             $    543           $    120           $  1,072           $    249   Contract manufacturing                                               113                759                205                                                                                                                            --------                                                                   $    543           $    233           $  1,831           $    454Depreciation and amortization   Electronics components distribution                             $    579           $    279           $  1,655           $    850   Contract manufacturing                                               256                167                666                473                                                                   $    835           $    446           $  2,321           $  1,323FORM 10-Q                                                        March 31, 2001Page 12                           JACO ELECTRONICS, INC. AND SUBSIDIARIES                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                             CONDITION AND RESULTS OF OPERATIONSSafe Harbor Statement under the Private Securities Litigation Reform Act of 1995:        Except  for  the  historical   information,   this  filing  includes   forward-looking
statements that involverisks and uncertainties, including, but not limited to, general industry andeconomic conditions, the impact of competitive products, product demand andmarket acceptance risks, fluctuations in operating results, delays indevelopment of highly-complex products, the ability of the Company to continueto expand its operations, the level of costs incurred in connection with theCompany’s expansion efforts and the financial strength of theCompany’s customers and suppliers and other risks detailed from time totime in the Company’s Securities and Exchange Commission filings. Theforward-looking statements in this filing involve risks and uncertainties whichcould cause actual results, performance or trends, including margins, SG&Aexpenses as a percentage of revenues and earnings per diluted share, to differmaterially from those expressed in the forward-looking statements. The Companybelieves that all forward-looking statements made by it have a reasonable basis,but there can be no assurance that management’s expectations, beliefs orprojections as expressed in the forward-looking statements will actually occuror prove to be correct. Actual results may differ materially from suchinformation set forth herein. 
GENERAL
        Jacois a distributor of electronic components, provider of contract manufacturingand value-added services. Products distributed by Jaco include semiconductors,capacitors, resistors, electromechanical devices, flat panel displays andmonitors, and power supplies used in the assembly and manufacturing ofelectronic equipment. 

        TheCompany’s customers are primarily small and medium sized manufacturers. Thetrend for these customers has been to shift certain manufacturing functions tothird parties (outsourcing). The Company intends to seek to capitalize on thistrend toward outsourcing by increasing sales of products enhanced by value-addedservices. Value-added services currently provided by Jaco consist of automatedinventory management services, kitting (e.g. supplying sets of specifiedquantities of products to a customer that are prepackaged for ease of feedingthe customer’s production lines), and contract manufacturing through NexusCustom Electronics, Inc., a wholly owned subsidiary of the Company. The Companyis also expanding in the flat panel display value-added market, which includesfull system integration, kitting and the implementation of touch technologies. 
FORM 10-Q                                                        March 31, 2001Page 13Results of Operations
The following table setsforth certain items in the Company’s statements of operations as apercentage of net sales for the periods shown: 
                                       Three Months Ended             Nine Months Ended                                           March 31,                      March 31,                                    ------------------------       -----------------------                                      2001           2000            2001           2000                                    --------       --------        --------       --------                                    --------Net sales                                   100.0%      100.0%          100.0%         100.0%Cost of goods sold                      81.7           76.8            79.8           78.6                                    --------       --------        --------       --------                                    --------Gross profit                            18.3           23.2            20.2           21.4Selling, general and administrative expenses                13.8           16.8            12.8           17.2                                    --------       --------        --------       --------                                    --------Operating profit                         4.5            6.4             7.4            4.2Interest expense                         1.3            0.6             1.1            0.7                                    --------       --------        --------       --------                                    --------Earnings before income taxes             3.2            5.8             6.3            3.5Income tax provision                     1.3            2.4             2.6            1.4                                    --------       --------        --------       --------NET EARNINGS                            1.9%           3.4%            3.7%           2.1%COMPARISON OF THE THREE AND NINE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000
        Netsales for the three and nine months ended March 31, 2001 were $83.7 million and$278.1 million, respectively, compared to $51.7 million and $138.8 million forthe three and nine months ended March 31, 2000, respectively, representingincreases of 61.9% and 100.3%. The Company’s increases in net sales werethe result of strong demand for components that had existed during the earlierperiods of the fiscal year and the additional sales from the acquisition ofInterface. During the current quarter, demand for electronic componentssignificantly decreased. A general economic downturn has resulted in largesupplies of excess inventory. The Company’s sales for the current quarterwere impacted. 
         Gross profit margins as a percentage of net sales were 18.3% and 20.2% for the threeand nine months ended March 31, 2001, respectively, compared to 23.2% and 21.4% for thethree and nine months ended March 31, 2000, respectively. Gross profit margin decreased asthe result of a change in product mix toward active components, which historically realizeslightly lower margins, compared to capacitors and resistors. Additionally, the excesssupply throughout the electronic components industry has resulted in products selling forlower margins than the comparable three and nine months periods last year.
        Selling,general and administrative (“SG&A”) expenses were $11.6 millionand $35.5 million for the three and nine months ended March 31, 2001,respectively, compared to $8.7 million and $23.9 million for the three and ninemonths ended March 31, 2000, respectively. This represents an increase of $2.9million, or 33.3% and $11.6 million, or 48.3% for the three and nine monthsended March 31, 2001, respectively, compared to the same periods for Fiscal2000. The increase in spending is primarily 
FORM 10-Q                                                       March 31, 2001Page 14
attributable to expensesnecessary to support the growth in sales. These expenses include additionalsales and marketing personnel, investments in the Company’s infrastructure,variable costs associated with the increase in net sales and the additionalcosts associated with the acquisition of Interface. As a result of the softdemand for electronic components, the Company has reduced staffing levels andlimited discretionary spending. As a percentage of net sales, SG&A decreasedto 13.8% and 12.8% for the three and nine months ended March 31, 2001,respectively, compared to 16.8% and 17.2% for the comparable periods duringFiscal 2000. The decreases reflect operating efficiencies associated with thehigher level of net sales. 

        Operatingprofit for the three and nine months ended March 31, 2001 were $3.8 million and$20.6 million, respectively, compared to $3.3 million and $5.9 million for thethree and nine months ended March 31, 2000, respectively. This represents anincrease of $0.5 million, or 13.9% and $14.7 million, or 249.1%, when comparingFiscal 2001 and Fiscal 2000. The increases were the result of the increases innet sales and the Company’s ability to achieve operating efficienciesreflected in lower SG&A as a percentage of net sales. The current quarterwas only up slightly due to the decrease in gross profit margins. 

        Interestexpense increased to $1.1 million and $3.2 million for the three and nine monthsended March 31, 2001, respectively, compared to $0.3 million and $1.0 million,respectively, for the same periods during Fiscal 2000. The increases wereprimarily due to the additional borrowings of approximately $19 million paid todate to acquire Interface, and the additional borrowings required to support theincreases in accounts receivable and inventory necessary to support the growthin net sales. 

        Netearnings for the three and nine months ended March 31, 2001 were $1.6 million,or 1.9%, and $10.3 million, or 3.7%, respectively, compared to $1.8 million, or3.4%, and $2.9 million, or 2.1%, respectively, for the comparable periods duringFiscal 2000. The increase in net earnings for the nine months was attributableto the increase in net sales as a result of strong demand for electroniccomponents and the acquisition of Interface. The three months net earnings weredown slightly, as a result of the decrease in gross profit margins due to thechange in product mix and the slowing of the economy. 
LIQUIDITY AND CAPITAL RESOURCES         Our agreement with our banks, as amended on September 28, 2000 and January 29, 2001,expires on September 14, 2002. The agreement provides us with a $70 million term loan andrevolving line of credit facility based principally on eligible accounts receivable andinventories as defined in the agreement.  The interest rate of the credit facility was basedon the average 30-day LIBOR rate plus 1.75% through the quarter ended September 30, 2000. Atsuch time, the rate converted to the average 30-day LIBOR rate plus 1.0%-2.25% depending onour performance for the immediately preceding four fiscal quarters measured by a certainfinancial ratio, and may be adjusted quarterly. The outstanding balance on the revolvingline of credit facility was $64.1 million at March 31, 2001. Borrowings under this facilityare collateralized by substantially all of our assets. The agreement contains provisions formaintenance of certain financial ratios, all of which we were in compliance with at March31, 2001, and prohibits the payment of cash dividends.
        Forthe nine months ended March 31, 2001, our cash used in operating activities wasapproximately $18.8 million, as compared to net cash used in operatingactivities of $2.1 million for the same period last fiscal year. The increase innet cash used is primarily attributable to an increase in accounts receivableand inventory. This was partially offset by an increase in accounts payable andaccrued expenses and net earnings for the nine months ended March 31, 2001. Theincrease in accounts receivable was the result of the increase in net sales forthe three months ended March 31, 2001, as compared to the same period last year.The Company increased its inventory levels to support its sales growth. Net cashused in investing activities increased to $5.9 million for the nine months endedMarch 31, 2001, as compared to $1.9 million for the nine months ended March 31,2000. The increase is primarily attributable to a deferred payment related tothe Interface acquisition. Net cash provided by financing activities was $24.1million for the nine months ended March 31, 2001 as compared to net cashprovided by financing activities of $3.5 million for the comparable period lastfiscal year. The increase is primarily attributable to the increase in netborrowings under the line of credit of approximately $20.3 million required tofund the increases in inventory and accounts receivable. 
 FORM 10-Q                                                       March 31, 2001 Page 15         Our cash expenditures may vary significantly from current levels, based on a numberof factors, including, but not limited to future acquisitions, if any.                For the nine months ended March 31, 2001 and March 31, 2000, our inventoryturnover was 4.4x and 3.8x, respectively. The average days outstanding of our accountsreceivable at March 31, 2001 were 48 days, as compared to 52 days at March 31, 2000.
        Webelieve that cash flow from operations and funds available under our creditfacility will be sufficient to fund our capital needs for at least the nexttwelve months. 
Inflation
        Inflationhas not had a significant impact on the Company’s operations during thelast three fiscal years. 
Quantitative and Qualitative Disclosure about Market Risk.
        Weare exposed to interest rate changes with respect to our credit facility whichbears interest at the higher of the prime rate or the federal funds rate plus0.5%, or at our option, at a rate equal to the average 30-day LIBOR rate plus1.0% to 2.25% depending on our performance for the immediately preceding fourfiscal quarters measured by a certain financial ratio, and may be adjustedquarterly. At April 30, 2001, $61.1 million was outstanding under the creditfacility. Changes in the LIBOR interest rate during the fiscal year will have apositive or negative effect on our interest expense. Each 1.0% fluctuation inthe LIBOR interest rate will increase or decrease interest expense for us byapproximately $0.6 million based on outstanding borrowings at April 30, 2001. 
               The impact of interest rate fluctuations on other floating rate debt is notmaterial.FORM 10-Q                                                         March 31, 2001Page 16PART II - OTHER INFORMATIONItem 1.        Legal Proceedings                      Nothing to ReportItem 2.        Changes in Securities and Use of Proceeds                      Nothing to ReportItem 3.        Defaults Upon Senior Securities                      Nothing to ReportItem 4.        Submission of Matters to a Vote of Security Holders                      Nothing to ReportItem 5. Other Information                       Nothing to ReportItem 6.       Exhibits and Reports on Form 8-Ka)      Exhibits: Noneb)      Reports on Form 8-K:  None                                      S I G N A T U R E        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized.                                                   JACO ELECTRONICS, INC.                                                           (Registrant)                                            BY: /s/  Jeffrey D. Gash                                                   Jeffrey D. Gash, Vice President/Finance                                                   (Principal Financial Officer)DATED:  May 14, 2001