-----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, Tcuip2cZJRRXoXbyH6AQ0KBEyM+plPFsd+q97tn0jltOWCD4kkaZgjIsSicANsqG xU90w+zNpCz+ZAqOthea8w== 0000950152-94-001145.txt : 19941201 0000950152-94-001145.hdr.sgml : 19941201 ACCESSION NUMBER: 0000950152-94-001145 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE 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: 94559140 BUSINESS ADDRESS: STREET 1: 4800 E 131ST ST CITY: CLEVELAND STATE: OH ZIP: 44105 BUSINESS PHONE: 2165873600 10-Q 1 PIONEER-STANDARD 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 September 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 NOVEMBER 8, 1994: 14,910,646. 2 PART I - FINANCIAL INFORMATION PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
September 30, 1994 March 31, 1994 ASSETS (Unaudited) Current assets Cash $ 7,797 $ 5,954 Accounts receivable - net 106,935 81,155 Merchandise inventory 109,417 85,754 Prepaid expenses 1,312 919 Deferred income taxes 4,698 4,391 -------- -------- Total current assets 230,159 178,173 Investment in 50% - owned company 15,319 14,463 Other assets 5,532 1,831 Property and equipment, at cost 48,530 45,817 Accumulated depreciation 21,526 20,245 -------- -------- Net 27,004 25,572 -------- -------- $278,014 $220,039 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable to banks $ 8,500 $ 2,000 Accounts payable 83,173 68,585 Accrued liabilities 19,924 19,400 Long-term debt due within one year 3,013 3,056 -------- -------- Total current liabilities 114,610 93,041 Long-term debt 47,169 22,272 Deferred income taxes 2,054 1,986 Shareholders' equity Common stock, at stated value 6,627 6,609 Capital in excess of stated value 16,305 15,806 Retained earnings 91,145 80,325 Currency translation adjustments 104 - -------- ---------- Total shareholders' equity 114,181 102,740 -------- -------- $278,014 $220,039 ======== ========
2 3 PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Quarter ended Six months ended September 30, September 30, 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $194,423 $137,278 $378,255 $271,787 Costs and expenses: Cost of goods sold 156,990 109,203 305,667 216,352 Warehouse, selling and administrative expense 27,115 20,705 52,437 41,440 ------- ------- -------- -------- Operating profit 10,318 7,370 20,151 13,995 Interest expense 944 683 1,645 1,351 Equity in earnings of 50%-owned company 183 914 856 1,946 ------- ------- -------- -------- Income before income taxes 9,557 7,601 19,362 14,590 Provision for income taxes 3,908 2,811 7,748 5,331 ------- ------- -------- -------- Net income $ 5,649 $ 4,790 $ 11,614 $ 9,259 ======= ======= ======== ======== Average shares outstanding 15,248,432 15,127,404 15,245,004 15,050,295 Shares outstanding at end of period 14,909,046 14,693,998 14,909,046 14,693,998 Earnings per share $.37 $.31 $.76 $.61 Dividends per share $.03 $.02 $.053 $.04
3 4 PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Six months ended September 30, 1994 1993 ---- ---- Cash flows from operating activities: Net income $11,614 $9,259 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,245 2,797 Undistributed earnings of affiliate (856) (1,946) Increase in operating working capital (26,976) (11,863) Increase in other assets (1,451) (67) Deferred taxes (232) 91 ------- ------- Total adjustments (26,270) (10,988) ------- ------- Net cash used in operating activities (14,656) (1,729) Cash flows from investing activities: Acquisition of business (10,068) --- Additions to property and equipment (4,429) (2,746) ------- ------ Net cash used in investing activities (14,497) (2,746) Cash flows from financing activities: Increase in short-term financing 6,500 --- Increase in revolving credit borrowings 30,000 17,000 Decrease of revolving credit borrowings (5,000) (13,000) Decrease in other long-term debt obligations (146) (197) Issuance of common shares under company stock option plan 517 22 Dividends paid (794) (586) ------- ------ Net provided by financing activities 31,077 3,239 Effect of exchange rate changes on cash (81) --- ------- ------ Net increase (decrease) in cash 1,843 (1,236) Cash at beginning of period 5,954 1,864 ------- ------ Cash at end of period $ 7,797 $ 628 ======= ======
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 and six-month periods ended September 30, 1994 and 1993. 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 periods 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 and six months ended September 30, 1994 and 1993. The results of operations for the three and six 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 by payment of an aggregate of approximately $13.9 million Cdn. (approximately $10.1 million U.S.) to Westburne in the first six-month period of the current fiscal year. Current assets increased by $52.0 million and current liabilities increased by $21.6 million during the six-month period ended September 30, 1994, resulting in an increase of $30.4 million of working capital. The current ratio was 2.0:1 at September 30, 1994, compared with 1.9:1 at year-end, March 31, 1994. During the first six months of the current year, total interest-bearing debt increased by $31.4 million. The ratio of interest-bearing debt to capitalization was 34% at September 30, 1994 compared with 21% at March 31, 1994. The increase in financing requirements is attributable to the working capital needs arising from increased sales volume and the investment in the Zentronics business described above. The most recent six-month sales are up 22% from the trailing fiscal six-month sales volume. Effective October 28, 1994, the Company amended its Credit Agreement with three banks to increase the credit lines available to the Company. This amendment provides for an increase in borrowings from $35.0 million to $45.0 million and permits an increase in the maximum short-term borrowings outside of the Credit Agreement to be outstanding at any one time from $15.0 million to $20.0 million. As of September 30, 1994, Credit Agreement borrowings were $29.0 million and short-term borrowings outside of the Credit Agreement were $8.5 million. In addition, pursuant to provisions of the Credit Agreement and upon consent of the parties thereto, the maturity date of the facility was extended for one additional year, resulting in a $45.0 million revolving credit facility with a maturity date of January 1, 1998, to be followed by a four-year term loan amortized in equal quarterly installments. Management estimates that capital spending plans relating to ongoing initiatives designed to improve efficiencies through computer enhancement of operating processes, as well as meeting normal expansion needs of the business for the current year, will approximate $10.0 million ($4.4 million was expended in the first six 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. 6 7 RESULTS OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH THE SIX MONTHS ENDED SEPTEMBER 30, 1993 Net sales for the six-month period ended September 30, 1994 of $378.3 million were 39% greater than sales of the prior year six-month period of $271.8 million. The increase in sales reflects continuing strong demand for electronic components and computer systems and, in addition, sales of the newly-acquired Zentronics business accounted for 5% of this increase. During the first six months of 1994, semiconductor products accounted for 38% of the Company's sales compared with 39% in the prior year. Computer systems products accounted for 37% of sales in 1994 and 36% in 1993. Passive and electromechanical products accounted for 22% of sales in 1994 and 23% in 1993. Miscellaneous products accounted for 3% of sales in 1994 and 2% in 1993. The percentage increase in cost of goods sold of 41% resulted in a gross margin of 19.2% in the first six months of the current year compared with 20.4% a year ago. A principal reason for the reduced gross margin in 1994 compared with the prior period is attributable to the incremental 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 $52.4 million increased by 27% as compared with the $41.4 million incurred during the prior year six-month period. This resulted in a ratio of these expenses to sales of 13.9% for the 1994 period compared with 15.2% for the 1993 first six months. The resulting operating profit of $20.2 million in 1994 was 5.3% of sales compared with $14.0 million in 1993 which was 5.1% of sales. Current year results reflect the increase in sales and effective cost containment. The Company's share of net income of the affiliated company, Pioneer Technologies Group, Inc., was $856,000 for the 1994 six-month period compared with $1,946,000 for the same period last year; net sales of the affiliate for the current year period of $185.9 million were 18% less than the sales of the prior year period of $226.0 million. This reduction is attributable to a lower volume of microprocessor sales. Notwithstanding this reduction, a significant portion of the affiliate's sales during the six-month period was still attributable to highly concentrated sales of certain microprocessors in large quantities, the sales volume 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 tax rate for the current six-month period was 41.9% of income before the Company's equity in its affiliate's earnings, compared with 42.2% a year ago; these effective tax rates include .4% and 1.2% for accrued taxes on the unremitted earnings of the affiliate for 1994 and 1993. Primarily as a result of the factors noted above, the Company's net income for the six-month period ending September 30, 1994 of $11.6 million was $2.3 million higher than the $9.3 million earned a year ago. 7 8 THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 1993 Net sales for the three-month period ended September 30, 1994 of $194.4 million increased 42% over sales of the prior year three-month period of $137.3 million. The increase in sales reflects continuing strong demand for electronic components and computer and peripheral products, especially for those products tied to the rapidly growing personal computer industry. In addition, sales of the newly-acquired Zentronics business accounted for approximately 9% of this increase. Semiconductor products accounted for 38% of the Company's sales during the second fiscal quarter compared with 40% in the comparable quarter a year ago. Computer systems products were 37% during the quarter compared with 35% a year ago. Passive and electromechanical products were 22% during the quarter compared with 23% a year ago. Miscellaneous products accounted for 3% of sales in 1994 and 2% in 1993. The percentage increase in cost of goods sold of 44% resulted in a gross margin of 19.3% in the second quarter of the current year compared with 20.5% a year ago. A principal reason for the reduced gross margin in 1994 compared with the prior period is attributable to the incremental 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 $27.1 million increased by 31% over the $20.7 million incurred during the prior year three- month period. This resulted in a ratio of these expenses to sales of 13.9% for the 1994 period compared with 15.1% for the 1993 quarter. The Company's share of net income of the affiliated company, Pioneer Technologies Group, Inc., was $183,000 for the 1994 three-month period compared with $914,000 for the same period last year; net sales of the affiliate for the three-month period ended September 30, 1994 of $90.1 million were 31% less than the sales of the prior year three-month period of $130.6 million. This reduction is attributable to a lower volume of microprocessor sales. Notwithstanding this reduction, a significant portion of the affiliate's sales during the quarter was primarily still attributable to highly concentrated sales of certain microprocessors in large quantities, the sales volume 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 41.7% of income before the Company's equity in its affiliate's earnings compared with 42.0% a year ago; these effective tax rates include .2% and 1.0% for accrued taxes on the unremitted earnings of the affiliate for 1994 and 1993, respectively. Primarily as a result of the factors above, the Company's net income for the three-month period ending September 30, 1994 of $5.6 million was $.8 million greater than the $4.8 million earned a year ago. 8 9 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. BALANCE SHEETS (Dollars in Thousands)
September 30, 1994 March 31, 1994 (Unaudited) ASSETS Current assets Cash $ 9 $ 8 Accounts receivable - net 33,246 29,213 Merchandise inventory 51,613 60,690 Prepaid expenses 529 405 Deferred income taxes 2,077 2,077 Shareholder notes receivable 13 52 ------- ------- Total current assets 87,487 92,445 Property and equipment, at cost 10,647 10,401 Accumulated depreciation 5,050 4,746 ------- ------- Net 5,597 5,655 Shareholder notes receivable 231 231 Other assets 445 262 ------- ------- $93,760 $98,593 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $33,185 $44,072 Accrued liabilities 5,739 4,895 ------- ------- Total current liabilities 38,924 48,967 Long-term debt 24,195 20,698 Shareholders' equity Common stock $.10 par value 10 10 Capital in excess of par value 90 90 Retained earnings 30,541 28,828 ------- ------- Total shareholders' equity 30,641 28,928 ------- ------- $93,760 $98,593 ======= =======
9 10 PIONEER TECHNOLOGIES GROUP, INC. STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Quarter ended Six months ended September 30, September 30, 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $90,133 $130,636 $185,875 $225,971 Costs and expenses: Cost of goods sold 78,331 117,341 159,683 198,823 Selling and administrative expense 10,626 9,985 22,284 20,142 ------- ------- ------- ------- Operating profit 1,176 3,310 3,908 7,006 Interest expense 554 264 1,006 518 ------- ------- ------- ------- Income before income taxes 622 3,046 2,902 6,488 Provision for income taxes 255 1,218 1,190 2,595 ------- ------- ------- ------- Net income $ 367 $ 1,828 $ 1,712 $ 3,893 ======= ======= ======= ======= Average shares outstanding 100,000 100,000 100,000 100,000 Earnings per share $3.67 $18.28 $17.12 $38.93 Dividends per share --- --- --- ---
10 11 PIONEER TECHNOLOGIES GROUP, INC. STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Six months ended September 30, 1994 1993 ---- ---- Cash flows from operating activities: Net income $ 1,712 $ 3,893 Adjustments to reconcile net income to net cash provided by operating activities: Items not affecting cash 670 535 Decrease (increase) in operating working capital (5,084) 18,311 Decrease (increase) in other assets (182) 53 ------- ------- Total adjustments (4,596) 18,899 ------- ------- Net cash provided by (used in) operating activities (2,884) 22,792 Cash flows from investing activities: Additions to property and equipment (612) (919) ------ ------- Net cash used in investing activities (612) (919) Cash flows from financing activities: Increase (decrease) in long-term debt 3,497 (21,873) ------- ------- Net cash provided by (used in) financing activities 3,497 (21,873) ------- ------- Net increase in cash 1 --- Cash at beginning of period 8 7 ------- ------- Cash at end of period $ 9 $ 7 ======= =======
11 12 PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Shareholders held on July 27, 1993 (the "Annual Meeting"), the shareholders voted to amend the Company's Amended Articles of Incorporation to increase the number of authorized Common Shares of the Company from 20,000,000 to 40,000,000 Common Shares. The proposal was passed by a vote of 7,237,942 shares for, 1,265,042 shares against, 17,764 shares abstained and there were no broker non-votes. At the Annual Meeting, shareholders also voted to elect Preston B. Heller, Jr., Arthur Rhein and Thomas C. Sullivan to additional three-year terms as Directors of the Company. Following is a summary of the voting:
Preston B. Arthur Thomas C. Votes Heller, Jr. Rhein Sullivan ----- -------------- ---------- ------------- For 8,156,269 8,158,792 8,157,819 Withheld 364,479 361,956 362,929 Broker Non-Votes 0 0 0
ITEM 5. OTHER INFORMATION Effective October 28, 1994, the Company amended its Credit Agreement providing for an increase in borrowings from $35.0 million to $45.0 million and permitting for an increase in the maximum short-term borrowings outside of the Credit Agreement to be outstanding at any one time from $15.0 million to $20.0 million. See Management's Discussion - Financial Condition for addition details. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description ------ ----------- 10 Consolidated Amendment No. 1 to the Credit Agreement, dated as of October 28, 1994, together with an Amended and Restated Promissory Note 11 Calculation of Primary Earnings Per Share 27 Financial Data Schedule (b) FORM 8-K There were no reports on Form 8-K filed during the three-month period ended September 30, 1994. 12 13 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: November 10, 1994 Preston B. Heller, Jr. ------------------- ----------------------------------------------- Chairman of the Board and Chief Executive Officer Date: November 10, 1994 John V. Goodger ------------------- ----------------------------------------------- Vice President, Treasurer and Assistant Secretary 13 EX-10 2 PIONEER-STANDARD 10-Q EXHIBIT 10 1 Exhibit 10 CONSOLIDATED AMENDMENT NO. 1 TO CREDIT AGREEMENT This Consolidated Amendment No. 1 to Credit Agreement (this "Amendment"), dated as of October 28, 1994, is entered into by and among Pioneer-Standard Electronics, Inc. (Borrower), National City Bank, Society National Bank (successor in interest to Ameritrust Company National Association) and Star Bank, N.A. (together "banks") and National City Bank in its capacity as agent of the banks ("NCB-Agent") for the purposes of the Credit Agreement referred to below and the related writings. WITNESSETH: WHEREAS, the parties have entered into a Credit Agreement dated January 23, 1992, as amended by a certain Amendment Agreement dated as of June 30, 1993 (the "First Amendment") and a certain Second Amendment Agreement dated as of May 27, 1994 (the "Second Amendment") (as amended, the "Credit Agreement"; all terms used in the Credit Agreement being used herein with the same meaning), which sets forth the terms and conditions upon which Borrower may obtain (a) "subject loans" on a revolving basis until the "conversion date" (originally January 1, 1995 but previously extended until January 1, 1997), as that term is defined in the Credit Agreement, and on an amortizing basis thereafter and (b) "subject BAs"; and WHEREAS, the parties desire to amend certain provisions of the Credit Agreement to (a) increase the aggregate amount of the subject commitments from thirty-five million dollars ($35,000,000) to forty-five million dollars ($45,000,000) and (b) extend the term of the subject commitments from January 1, 1997 until January 1, 1998; and WHEREAS, in light of the fact that certain previous amendments set forth in the First Amendment and/or the Second Amendment have been affected by later amendments and/or will be affected by this Amendment and for ease of reference, the parties also desire to restate and consolidate in this Amendment all amendments to the Credit Agreement that are effective on and as of the date hereof; NOW, THEREFORE, in consideration of the premises above and the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: SECTION 1 - AMENDMENTS TO CREDIT AGREEMENT ------------------------------ A. Subsections 2A.01 and 2A.02 of the Credit Agreement are hereby amended in their entirety to read as follows: 2A.01 AMOUNTS -- The aggregate amount of the subject commitments shall be forty-five million dollars ($45,000,000), but that amount may be reduced from time to time pursuant to subsection 2A.03 or 2A.04 and the subject commitments may be terminated pursuant to section 14 2 5B. The amount of each bank's subject commitment (subject to such reduction or termination), and the proportion (expressed as a percentage) that it bears to all of the subject commitments, is set forth opposite the bank's name below, to-wit: $22,500,000 50% National City Bank 13,500,000 30% Society National Bank 9,000,000 20% Star Bank, N.A. ------------ ---- $45,000,000 100%
2A.02 TERM -- Each subject commitment shall commence as of the date of this Agreement and shall remain in effect on a revolving basis until January 1, 1998 (the "conversion date") and thereafter on an amortizing basis until its expiration on the last amortizing date, EXCEPT that a later conversion date may be established from time to time pursuant to subsection 2A.06 and EXCEPT that the subject commitments shall end in any event upon any earlier reduction thereof to zero pursuant to subsection 2A.03 or 2A.04 or any earlier termination pursuant to section 5B. B. Subsections 3B.01, 3B.02, 3B.03, 3B.04 and 3B.05 of the Credit Agreement are hereby amended in their entirety to read as follows: 3B.01 NET WORTH -- Borrower will not suffer or permit the sum of the consolidated net worth of the companies at any time to be less than the then required minimum amount. The required minimum amount shall be eighty-nine million dollars ($89,000,000) EXCEPT that the required minimum amount shall be permanently increased. (a) On June 30, 1994 and on each quarterly date thereafter by an amount equal to the sum of fifty percent (50%) of the consolidated net income of the companies, if any, for the quarter-annual period then ending plus (b) upon each issuance or other sale by Borrower of any of its equity securities by an amount equal to the net proceeds (after costs and expenses) thereof. 3B.02 LEVERAGE -- Borrower will not suffer or permit the total liabilities of the companies at any time to exceed an amount equal to two hundred twenty-five percent (225%) of the sum of the net worth of the companies, all as determined on a consolidated basis. 3B.03 WORKING CAPITAL -- Borrower will not suffer or permit the companies' aggregate working capital at any time to fall below sixty million dollars ($60,000,000). 3B.04 CURRENT RATIO -- Borrower will not suffer or permit the current assets of the companies at any time to fall below an amount equal to one and seven-tenths (1.7) times the amount of their current liabilities, all as determined on a consolidated basis. 3B.05 FIXED CHARGE COVERAGE -- Borrower will not suffer or permit the aggregate of (a) the aggregate net income of the companies (EXCEPT Borrower's equity in any income or loss of PTGI) plus (b) the aggregate interest expense of the companies plus 15 3 (c) the aggregate federal, state and local income taxes of the companies plus (d) the aggregate operating lease expense of the companies for any four-quarter period to be less than an amount equal to one hundred eighty percent (180%) of the sum of (a) the aggregate interest expense of the companies plus (b) the aggregate operating lease expense of the companies for that four-quarter period, all as determined on a consolidated basis. C. Subsection 3D.01 of the Credit Agreement is hereby amended by replacing the period at the end thereof with the word "or" and by adding to the end thereof the following new clause (iii): (iii) Borrower's investment in Pioneer-Standard Canada Inc. (exclusive of retained earnings of Pioneer-Standard Canada Inc.) so long as the aggregate amount of such investments does not exceed ten million eight hundred thousand dollars ($10,800,000). D. Subsection 3D.02 of the Credit Agreement is hereby amended by replacing the period at the end thereof with the word "or" and by adding to the end thereof the following new clause (v): (v) any advance or loan to, or guaranty of the obligations of, Pioneer-Standard Canada Inc., so long as the aggregate amount of all such advances, loans and guaranties does not exceed eighteen million five hundred thousand dollars ($18,500,000) at any one time. E. Subsection 3D.03(ii)(A) of the Credit Agreement is hereby amended by deleting the reference to "fifteen million dollars ($15,000,000)" and substituting in lieu thereof a reference to "twenty million dollars ($20,000,000)". F. The following new definition is hereby added to section 9 of the Credit Agreement: COMPANY refers to Borrower or to a subsidiary of Borrower, as the case may be: SECTION II - CONDITIONS PRECEDENT -------------------- It is a condition precedent to the effectiveness of this Amendment that, prior to or on the date hereof, the following items hall have been delivred to NCB-Agent (in form and substance acceptable to NCB-Agent): (A) an Amended and Restated Promissory Note ("Amended Note") in favor of each bank, in the form of EXHIBIT A to this Amendment, with all blanks appropriately completed, duly executed by Borrower: (B) an Acknowledgment of Receipt of a copy of, and Consent and Agreement to the terms of, this Amendment and the Amended Notes by Pioneer-Standard Canada Inc. with respect to a certain Continuing Guaranty of Payment executed and delivered to NCB-Agent by such entity and dated May 27, 1994; 16 4 (C) a Certificate, dated as of the date hereof, of the secretary of Borrower certifying (1) that Borrower's Articles of Incorporation and Code of Regulations have not been amended since the execution of the Credit Agreement (or certifying that true, correct and complete copies of any amendments are attached), (2) that copies of resolutions of the Board of Directors of Borrower are attached with respect to the approval of this Amendment and of the matters contemplated hereby and authorizing the execution, delivery and performance by Borrower of this Amendment and each other document to be delivered pursuant hereto and (3) as to the incumbency and signatures of the officers of Borrower signing this Amendment and each other document to be delivered pursuant hereto; and (D) Such other documents as NCB-Agent may request to implement this Amendment and the transactions contemplated hereby. If NCB-Agent or banks shall consummate the transactions contemplated hereby prior to the fulfillment of any of the conditions precedent set forth above, the consummation of such transactions shall constitute only an extension of time for the fulfillment of such conditions and not a waiver thereof. Upon receipt of the properly completed and executed Amended Notes, banks agree to return to Borrower the previously executed notes respecting the subject loans and the same shall be marked "Replaced" or "Substituted" or with words of like import. SECTION III - AGREEMENTS CONCERNING PIONEER-STANDARD CANADA INC. -------------------------------------------------- Borrower agrees to cause is subsidiary, Pioneer-Standard Canada Inc., to comply with all the provisions of Sections 3A, 3B, 3C and 3D of the Credit Agreement and agrees that all references to financial information in section 3A shall be deemed to be references to financial information of Borrower and its subsidiaries on a consolidating and consolidated basis; PROVIDED, that Pioneer-Standard Canada Inc. shall not be required to comply with the provisions of subsection 3D.06 (captioned "DIVIDENDS"). SECTION IV - REPRESENTATIONS AND WARRANTIES ------------------------------ Borrower hereby represents and warrants to each of the other parties to this Amendment that (A) none of the representations and warranties made in subsections 4B.01 through 4B.08 of the Credit Agreement has ceased to be true and complete in any material respect as of the date hereof; and (B) as of the date hereof no "default under this Agreement" has occurred that is continuing. SECTION V - ACKNOWLEDGMENTS CONCERNING OUTSTANDING LOANS -------------------------------------------- Borrower acknowledges and agrees that, as of the date hereof, all of Borrower's outstanding loan obligations to banks are owed without any offset, deduction, defense or counterclaim of any nature whatsoever. SECTION VI - REFERENCES ---------- On or after the effective date of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", or words of like import referred to the Credit Agreement, and in the subject notes or other related writings to the "Credit Agreement", "thereof", or words of like import 17 5 referring to the Credit Agreement shall mean and refer to the Credit Agreement as amended hereby. The Credit Agreement, as amended by this Amendment, is and shall continue to be in full force and effect and is hereby ratified and confirmed in all respects. To the extent any amendment set forth in the First Amendment or the Second Amendment is omitted from this Amendment, the same shall be deemed eliminated as between Borrower and the other parties hereto as of the date hereof. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of NCB-Agent or banks under the Credit Agreement or constitute a waiver of any provision of the Credit Agreement except as specifically set forth herein. From and after the date of this Amendment references in the Credit Agreement to EXHIBIT B shall be deemed to be references to the form of the Amended Note attached hereto as EXHIBIT A. SECTION VII - COUNTERPARTS AND GOVERNING LAW ------------------------------ This Amendment may be executed in any number of counterparts, each counterpart to be executed by one or more of the parties but, when taken together, all counterparts shall constitute one agreement. This Amendment, and the respective rights and obligations of the parties hereto shall be construed in accordance with and governed by Ohio law. IT WITNESS WHEREOF, the Borrower, NCB-Agent and the banks have caused this Amendment to be executed by their authorized officers as of the date and year first above written. National City Bank, Agent Pioneer-Standard Electronics, Inc. By: Janice E. Focke By: John V. Goodger Printed Name: Janice E. Focke Printed Name: John V. Goodger Title: Vice President Title: V.P., Treasurer National City Bank Star Bank, N.A. By: Janice E. Focke By: John D. Barrett Printed Name: Janice E. Focke Printed Name: John D. Barrett Title: Vice President Title: Vice President Society National Bank By: Michael J. Jackson Printed Name: Michael J. Jackson Title: Vice President
18 6 AMENDED AND RESTATED PROMISSORY NOTE $_______________________ Cleveland, Ohio _______________, 1994 FOR VALUE RECEIVED, the undersigned, Pioneer-Standard Electronics, Inc. (Borrower), an Ohio corporation, promises to pay to the order of _________________________, at the main office of National City Bank (NCB), Cleveland, Ohio, the principal sum of ________________________________ DOLLARS (or, if less, the aggregate unpaid principal balance from time to time shown on the reverse side), together with interest computed in the manner provided in the Credit Agreement referred to below, which principal and interest is payable in accordance with provisions in the Credit Agreement. This note is issued pursuant to an Agreement dated January 23, 1992, as amended from time to time (as amended, the "Credit Agreement") by and among Borrower, three banks and NCB (as agent of the banks for the purposes of the Credit Agreement) which establishes "subject commitments" (one by each bank) aggregating forty-five million dollars ($45,000,000) pursuant to which Borrower may obtain subject loans from the banks upon certain terms and conditions. This note is issued in substitution for that certain $_________________ Note dated ____________, 19__ (the "Old Note"). This Note is not intended as a novation of the obligations of Borrower under the Old Note but rather is merely a restatement of the obligations thereunder after giving effect to the most recent amendment to the Credit Agreement. Reference is made to the Credit Agreement for the definitions of certain terms, for provisions governing the making of subject loans, the acceleration of the maturity thereof, rights of prepayment, and for other provisions to which this note is subject. Any endorsement by the payee on the reverse side of this note (or any allonge thereto) shall be presumptive evidence of the data so endorsed. Address: Pioneer-Standard Electronics Inc. 4800 East 131st Street Cleveland, Ohio 44105 By: _______________________ Printed Name: _______________________ Title: _______________________ EXHIBIT A 19 EX-11 3 PIONEER-STANDARD 10-Q EXHIBIT 11 1 Exhibit 11 CALCULATION OF PRIMARY EARNINGS PER SHARE (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended September 30, September 30, 1994 1993 1994 1993 ---- ---- ---- ---- Weighted average common shares and common share equivalents outstanding 15,248,432 15,127,404 15,245,004 15,050,295 Net income $5,649 $4,790 $11,614 $9,259 Earnings per share $.37 $.31 $.76 $.61
20 EX-27 4 PIONEER-STANDARD 10-Q EXHIBIT 27
5 1,000 6-MOS MAR-31-1994 SEP-30-1994 7,797 0 111,178 4,243 109,417 230,159 48,530 21,526 278,014 114,610 47,169 6,627 0 0 107,554 278,014 378,255 378,255 305,667 305,667 52,437 0 1,645 19,362 7,748 11,614 0 0 0 11,614 .76 0
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