-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mqbYQiB3wXfJxIyvTOG0MnJAS2klTbY8CHGf/BLItJnk6qg58Atmz/VO/kX4ue/a yjtzsimyluolAUCNRVqliw== 0000950152-94-000803.txt : 19940817 0000950152-94-000803.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950152-94-000803 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER STANDARD ELECTRONICS INC CENTRAL INDEX KEY: 0000078749 STANDARD INDUSTRIAL CLASSIFICATION: 5065 IRS NUMBER: 340907152 STATE OF INCORPORATION: OH FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05734 FILM NUMBER: 94543064 BUSINESS ADDRESS: STREET 1: 4800 E 131ST ST CITY: CLEVELAND STATE: OH ZIP: 44105 BUSINESS PHONE: 2165873600 10-Q 1 PIONEER-STANDARD ELECTRONICS, INC. 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) X OF THE SECURITIES EXCHANGE ACT OF 1934 ----- For the quarterly period ended June 30, 1994. ------------- OR ---- 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 05734 ----- Pioneer-Standard Electronics, Inc. ----------------------------------------------------- (Exact name of registrant as specified in its charter) Ohio 34-0907152 - - ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4800 East 131st Street, Cleveland, OH 44105 - - --------------------------------------- ----------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 587-3600 -------------- 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 ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of Common Shares, as of the latest practical date: COMMON SHARES, WITHOUT PAR VALUE, AS OF AUGUST 8, 1994: 14,903,908 (SHARES OUTSTANDING REFLECT EFFECTS OF A THREE-FOR-TWO STOCK SPLIT PAYABLE AUGUST 1, 1994 TO SHAREHOLDERS OF RECORD JULY 6, 1994). 2 PART I - FINANCIAL INFORMATION PIONEER-STANDARD ELECTRONICS, INC. BALANCE SHEETS (Dollars in Thousands)
June 30, 1994 March 31, 1994 ASSETS (Unaudited) Current assets Cash $ 10,413 $ 5,954 Accounts receivable - net 99,855 81,155 Merchandise inventory 110,139 85,754 Prepaid expenses 1,312 919 Deferred income taxes 4,391 4,391 -------- -------- Total current assets 226,110 178,173 Investment in 50% - owned company 15,136 14,463 Other assets 5,581 1,831 Property and equipment, at cost 45,833 45,817 Accumulated depreciation 19,896 20,245 -------- -------- Net 25,937 25,572 -------- -------- $272,764 $220,039 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable to banks $ 9,000 $ 2,000 Accounts payable 87,715 68,585 Accrued liabilities 24,111 19,400 Long-term debt due within one year 3,018 3,056 -------- -------- Total current liabilities 123,844 93,041 Long-term debt 38,208 22,272 Deferred income taxes 2,040 1,986 Shareholders' equity Common stock, at stated value 6,625 6,609 Capital in excess of stated value 16,104 15,806 Retained earnings 85,943 80,325 -------- -------- Total shareholders' equity 108,672 102,740 -------- -------- $272,764 $220,039 ======== ========
2 3 PIONEER-STANDARD ELECTRONICS, INC. STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Quarter ended June 30, 1994 1993 ---- ---- Net sales $183,832 $134,509 Costs and expenses: Cost of goods sold 148,677 107,149 Warehouse, selling and administrative expense 25,322 20,735 ------- ------- Operating profit 9,833 6,625 Interest expense 701 668 Equity in earnings of 50%-owned company 673 1,032 ------- ------- Income before income taxes 9,805 6,989 Provision for income taxes 3,840 2,520 ------- ------- Net income $ 5,965 $ 4,469 ======= ======= Average shares outstanding 15,241,422 14,972,493 Shares outstanding at end of period 14,895,384 14,690,061 Earnings per share $.39 $.30 Dividends per share $.023 $.02 NOTE: All share and per share data have been restated for all periods to reflect the three-for-two stock split effected in the form of a 50% share dividend payable August 1, 1994 to shareholders of record July 6, 1994. Prior to effects of the stock split, average shares outstanding were 10,160,948 and 9,981,622 and shares outstanding at the end of each period were 9,930,256 and 9,793,374 in 1994 and 1993, respectively. Comparable earnings per share were $.59 and $.45 and dividends per share were $.035 and $.03 in 1994 and 1993, respectively.
3 4 PIONEER-STANDARD ELECTRONICS, INC. STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Three months ended June 30, 1994 1993 ---- ---- Cash flows from operating activities: Net income $ 5,965 $4,469 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,605 1,399 Undistributed earnings of affiliate (673) (1,032) Increase in operating working capital (13,007) (14,332) Increase in other assets (1,590) (1) Deferred taxes 54 2 ------- ------- Total adjustments (13,611) (13,964) ------- ------- Net cash used in operating activities (7,646) (9,495) Cash flows from investing activities: Acquisition of business (9,009) --- Additions to property and equipment (1,751) (1,029) ------- ------ Net cash used in investing activities (10,760) (1,029) Cash flows from financing activities: Increase in short-term financing 7,000 10,000 Increase in revolving credit borrowings 20,000 3,000 Decrease of revolving credit borrowings (4,000) (3,000) Decrease in other long-term debt obligations (102) (135) Issuance of common shares under company stock option plan 314 --- Dividends paid (347) (294) ------- ------ Net provided by financing activities 22,865 9,571 ------- ------ Net increase (decrease) in cash 4,459 (953) Cash at beginning of period 5,954 1,864 ------- ------ Cash at end of period $10,413 $ 911 ======= ======
4 5 NOTES - Pioneer-Standard Electronics, Inc. 1. PER SHARE DATA Net income per common share is computed using the weighted average common shares and common share equivalents outstanding during the quarters. Common share equivalents consist of shares exercisable of stock options computed by using the treasury stock method. 2. STOCK SPLIT On June 23, 1994, the Board of Directors declared a three-for-two stock split effected in the form of a 50% share dividend of the Company's common shares payable August 1, 1994 to shareholders of record July 6, 1994. The share and per share data have been restated for the two quarters presented to reflect the stock split. 3. MANAGEMENT OPINION The information furnished herein reflects all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results of operations for the quarters ended June 30, 1994 and 1993. The results of operations for the three-month periods are not necessarily indicative of results which may be expected for a full year. 5 6 PIONEER-STANDARD ELECTRONICS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION On June 1, 1994, the Company acquired certain of the assets of the Zentronics Division of Westburne Industrial Enterprises Ltd. ("Westburne"), a Canadian corporation and assumed certain of Westburne's liabilities. The transaction was completed by Pioneer Standard Canada Inc., a newly-formed Canadian subsidiary of the Company. The Company paid $12.5 million Cdn. ($9.0 million U.S.) to Westburne on June 1, 1994. Contract terms provide for the balance of the estimated purchase price, $2.1 million Cdn. to be paid to Westburne after September 14, 1994. Current assets increased by $47.9 million and current liabilities increased by $30.8 million during the three-month period ended June 30, 1994, resulting in an increase of $17.1 million of working capital. The current ratio was 1.8:1 at June 30, 1994, compared with 1.9:1 at year-end, March 31, 1994. During the first three months of the current year, total interest-bearing debt increased by $22.9 million. The ratio of interest-bearing debt to capitalization was 32% at June 30, 1994 compared with 21% at March 31, 1994. The increase in capital requirements is attributable to the working capital needs arising from increased sales volume and the investment in Zentronics described above. Current quarter sales of $183.8 million are 37% ahead of last year's first quarter sales and up 16% from the trailing fiscal fourth quarter sales volume. Management estimates that capital spending plans for the current year will approximate $10.0 million ($1.8 million was expended in the first three months of the current year). Under present business conditions, it is anticipated that funds from current operations and available debt facilities will be sufficient to finance both capital spending and working capital needs for the balance of the current fiscal year. THREE MONTHS ENDED JUNE 30, 1994 COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 1993 Net sales for the three-month period ended June 30, 1994 of $183.8 million increased 37% over sales of the prior year three-month period of $134.5 million. The increase in sales reflects continuing strong demand for electronic components and computer and peripheral products, especially microprocessors. Semiconductor products accounted for 38% of the Company's sales during both the first fiscal quarters of 1994 and 1993. Computer systems products comprised 36% of sales in both quarters. Passive and electromechanical products were 23% of the Company's business in 1994 compared with 24% a year earlier. Miscellaneous products accounted for 3% of sales in 1994 and 2% in 1993. 6 7 The percentage increase in cost of goods sold of 39% resulted in a gross margin of 19.1% in the first quarter of the current year compared with 20.3% a year ago. A principal reason for the reduced gross margin in 1994 is attributable to a change in product mix, particularly with respect to the increase in sales volume of microprocessors earning a relatively low gross profit margin and which are marketed through an efficient low cost sales channel. Warehouse, selling and administrative expenses of $25.3 million increased by 22% over the $20.7 million incurred during the prior year three-month period. This resulted in a ratio of these expenses to sales of 13.8% for the 1994 period compared with 15.4% for the 1993 quarter. The Company's share of net income of the affiliated company, Pioneer Technologies Group, Inc., was $673,000 for the 1994 three-month period compared with $1,032,000 for the same period last year; net sales of the affiliate for the three-month period ended June 30, 1994 of $95.7 million were nominally greater than the sales of the prior year three-month period of $95.3 million. A large portion of the affiliate's sales was primarily attributable to highly concentrated sales of certain microprocessors in large quantities, the sales of which might not be sustainable in future periods and the effect of which could result in a significant impact on net income of the affiliate. The effective combined tax rate for the current year three-month period was 42.0% of income before the Company's equity in its affiliate's earnings in 1994 compared with 42.3% a year ago; this effective tax rate includes .6% and 1.4% for accrued taxes on the unremitted earnings of the affiliate for 1994 and 1993, respectively. Results in the quarter included one month of Zentronics operations, the new Canadian electronics distribution unit acquired on June 1, 1994, which had an immaterial effect on the overall results. Primarily as a result of the factors above, the Company's net income for the three-month period ending June 30, 1994 of $6.0 million was $1.5 million greater than the $4.5 million earned a year ago. 7 8 Pioneer-Standard Electronics, Inc. owns 50% of the outstanding common stock of Pioneer Technologies Group, Inc. The investment is accounted for by the equity method in the Company's financial statements via the balance sheet caption of "Investment in 50%-owned company" and via the statements of income caption of "Equity in earnings of 50%-owned company". PIONEER TECHNOLOGIES GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
June 30, 1994 March 31, 1994 (Unaudited) ASSETS Current assets Cash $ 8 $ 8 Accounts receivable - net 34,711 29,213 Merchandise inventory 52,291 60,690 Prepaid expenses 233 405 Deferred income taxes 2,077 2,077 Shareholder notes receivable 57 52 ------- ------- Total current assets 89,377 92,445 Property and equipment, at cost 10,729 10,401 Accumulated depreciation 5,066 4,746 ------- ------- Net 5,663 5,655 Shareholder notes receivable 231 231 Other assets 295 262 ------- ------- $95,566 $98,593 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $29,845 $44,072 Accrued liabilities 5,590 4,895 ------- ------- Total current liabilities 35,435 48,967 Long-term debt 29,858 20,698 Shareholders' equity Common stock $.10 par value 10 10 Capital in excess of par value 90 90 Retained earnings 30,173 28,828 ------- ------- Total shareholders' equity 30,273 28,928 ------- ------- $95,566 $98,593 ======= =======
8 9 PIONEER TECHNOLOGIES GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Three months ended June 30, 1994 1993 ---- ---- Net sales $95,742 $95,335 Costs and expenses: Cost of goods sold 81,352 81,482 Selling and administrative expense 11,658 10,157 ------- ------- Operating profit 2,732 3,696 Interest expense 452 254 ------- ------- Income before income taxes 2,280 3,442 Provision for income taxes 935 1,377 ------- ------- Net income $ 1,345 $ 2,065 ======= ======= Average shares outstanding 100,000 100,000 Earnings per share $13.45 $20.65 Dividends per share --- ---
9 10 PIONEER TECHNOLOGIES GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Three months ended June 30, 1994 1993 ---- ---- Cash flows from operating activities: Net income $ 1,345 $ 2,065 Adjustments to reconcile net income to net cash provided by operating activities: Items not affecting cash 253 251 Decrease (increase) in operating working capital (10,464) 13,903 Decrease (increase) in other assets (33) 71 ------- ------- Total adjustments (10,244) 14,225 ------- ------- Net cash provided by (used in) operating activities (8,899) 16,290 Cash flows from investing activities: Additions to property and equipment (261) (362) ------ ------- Net cash used in investing activities (261) (362) Cash flows from financing activities: Increase (decrease) in long-term debt 9,160 (15,928) ------- ------- Net cash (used in) provided by financing activities 9,160 (15,928) ------- ------- Net change in cash --- --- Cash at beginning of period 8 7 ------- ------- Cash at end of period $ 8 $ 7 ======= =======
10 11 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (b) FORM 8-K A current report on Form 8-K, dated June 1, 1994, was filed to report that on June 1, 1994 Pioneer-Standard Electronics, Inc. acquired certain assets of the Zentronics Division of Westburne Industrial Enterprises Ltd. ("Westburne"), a Canadian corporation, and assumed certain of Westburne's liabilities pursuant to an Asset Purchase Agreement, a copy of which was filed as an exhibit thereto. The transaction was completed by Pioneer-Standard Canada Inc., a newly-formed Canadian subsidiary of the Company. There were no other reports on Form 8-K during the three-month period ending June 30, 1994. 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. PIONEER-STANDARD ELECTRONICS, INC. Date: August 11, 1994 Preston B. Heller, Jr. --------------- -------------------------- Chairman Date: August 11, 1994 John V. Goodger --------------- -------------------------- Vice President & Treasurer 11 -----END PRIVACY-ENHANCED MESSAGE-----