-----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, CIYHFCF9IO6vr6jXGMjlA1IhC4wJ63cjRJjVGjZ6fu6ul5Gltako9z4wwGoG1JDI gjkGYnpxruQHg4xnF90s3Q== 0000950152-95-000127.txt : 19950612 0000950152-95-000127.hdr.sgml : 19950612 ACCESSION NUMBER: 0000950152-95-000127 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950210 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: 95507942 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 December 31, 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 FEBRUARY 8, 1995: 14,913,346. 2 PART I - FINANCIAL INFORMATION PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
December 31, 1994 March 31, 1994 ASSETS (Unaudited) Current assets Cash $ 14,581 $ 5,954 Accounts receivable - net 113,892 81,155 Merchandise inventory 131,405 85,754 Prepaid expenses 1,661 919 Deferred income taxes 5,511 4,391 -------- -------- Total current assets 267,050 178,173 Investment in 50% - owned company 15,329 14,463 Other assets 5,353 1,831 Property and equipment, at cost 51,587 45,817 Accumulated depreciation 23,000 20,245 -------- -------- Net 28,587 25,572 -------- -------- $316,319 $220,039 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable to banks $ 4,500 $ 2,000 Accounts payable 110,088 68,585 Accrued liabilities 20,952 19,400 Long-term debt due within one year 2,970 3,056 -------- -------- Total current liabilities 138,510 93,041 Long-term debt 56,306 22,272 Deferred income taxes 2,038 1,986 Shareholders' equity Common stock, at stated value 6,667 6,609 Capital in excess of stated value 16,323 15,806 Retained earnings 96,829 80,325 Currency translation adjustments (354) - -------- -------- Total shareholders' equity 119,465 102,740 -------- -------- $316,319 $220,039 ======== ======== See accompanying notes.
2 3 PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Quarter ended Nine months ended December 31, December 31, 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $212,433 $149,814 $590,688 $421,601 Costs and expenses: Cost of goods sold 173,841 120,807 479,508 337,159 Warehouse, selling and administrative expense 26,959 20,627 79,396 62,067 ------- ------- -------- -------- Operating profit 11,633 8,380 31,784 22,375 Interest expense 1,041 662 2,686 2,013 Currency transaction loss 131 --- 131 --- Equity in earnings of 50%-owned company 9 404 865 2,350 ------- ------- -------- -------- Income before income taxes 10,470 8,122 29,832 22,712 Provision for income taxes 4,340 3,235 12,088 8,566 ------- ------- -------- -------- Net income $ 6,130 $ 4,887 $ 17,744 $ 14,146 ======= ======= ======== ======== Average shares outstanding 15,262,621 15,150,532 15,252,844 15,084,822 Shares outstanding at end of period 14,913,346 14,721,673 14,913,346 14,721,673 Earnings per share $.40 $.32 $1.16 $.94 Dividends per share $.03 $.023 $.083 $.063 See accompanying notes.
3 4 PIONEER-STANDARD ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Nine months ended December 31, 1994 1993 ---- ---- Cash flows from operating activities: Net income $17,744 $14,146 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 4,749 4,164 Undistributed earnings of affiliate (865) (2,350) Increase in operating working capital (28,594) (22,218) Increase in other assets (1,460) (67) Deferred taxes (1,077) (426) ------- ------- Total adjustments (27,247) (20,897) ------- ------- Net cash used in operating activities (9,503) (6,751) Cash flows from investing activities: Acquisition of business (10,068) --- Additions to property and equipment (7,523) (4,736) ------- ------ Net cash used in investing activities (17,591) (4,736) Cash flows from financing activities: Increase in short-term financing 2,500 2,500 Increase in revolving credit borrowings 42,000 25,000 Decrease of revolving credit borrowings (5,000) (15,000) Decrease in other long-term debt obligations (3,052) (260) Issuance of common shares under company stock option plan 575 176 Dividends paid (1,240) (930) ------- ------ Net cash provided by financing activities 35,783 11,486 Effect of exchange rate changes on cash (62) --- ------- ------ Net increase (decrease) in cash 8,627 (1) Cash at beginning of period 5,954 1,864 ------- ------ Cash at end of period $14,581 $1,863 ======= ====== See accompanying notes.
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 nine-month periods ended December 31, 1994 and 1993. Common share equivalents consist of shares exercisable for 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. ACQUISITION 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 for a purchase price of $13.9 million Cdn. (approximately $10.1 million U.S.). The acquisition does not meet the significant subsidiary tests as defined in Rule 3-05 of Regulation S-X and the impact on the Company's operations was not significant. 4. MANAGEMENT OPINION The information furnished herein reflects all normal and recurring adjustments which are, in the opinion of management, necessary to provide a fair statement of the results of operations for the quarters and nine months ended December 31, 1994 and 1993. The results of operations for the three and nine 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. Current assets increased by $88.9 million and current liabilities increased by $45.5 million during the nine-month period ended December 31, 1994, resulting in an increase of $43.4 million of working capital. The current ratio was 1.9:1 at December 31, 1994 and at year-end, March 31, 1994. During the first nine months of the current year, total interest-bearing debt increased by $36.4 million. The ratio of interest-bearing debt to capitalization was 35% at December 31, 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 nine-month sales are up 26% (excluding Zentronics current year sales) from the trailing fiscal nine-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 allows 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. 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, followed by a four-year term loan amortized in equal quarterly installments. As of December 31, 1994, Credit Agreement borrowings were $41.0 million and short-term borrowings outside of the Credit Agreement were $4.5 million. 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 ($7.5 million was expended in the first nine 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 NINE MONTHS ENDED DECEMBER 31, 1994 COMPARED WITH THE NINE MONTHS ENDED DECEMBER 31, 1993 Net sales for the nine-month period ended December 31, 1994 of $590.7 million were 40% greater than sales of the prior year nine-month period of $421.6 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 7% of this increase. During the first nine months of 1994, semiconductor products accounted for 38% of the Company's sales compared with 41% in the prior year. Computer systems products accounted for 38% of sales in 1994 and 34% in 1993. Passive and electromechanical products accounted for 22% of sales in 1994 and 23% in 1993. Miscellaneous products accounted for 2% of sales in both 1994 and 1993. The percentage increase in cost of goods sold of 42% resulted in a gross margin of 18.8% in the first nine months of the current year compared with 20.0% a year ago. A major factor for the reduced gross margin percent in 1994 compared with the prior period is attributable to the incremental increase in sales volume of microprocessors earning relatively lower gross profit margins which are marketed through an efficient, low-cost sales channel. Warehouse, selling and administrative expenses of $79.4 million increased by 28% as compared with the $62.1 million incurred during the prior year nine-month period. This resulted in a ratio of these expenses to sales of 13.4% for the 1994 period compared with 14.7% for the 1993 first nine months. The resulting operating profit of $31.8 million in 1994 was 5.4% of sales compared with $22.4 million in 1993 which was 5.3% 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 $865,000 for the 1994 nine-month period compared with $2,350,000 for the same period last year; net sales of the affiliate for the current year period of $271.1 million were 18% less than the sales of the prior year period of $329.4 million. The net sales reduction is attributable to a lower volume of microprocessor sales which earn a relatively low gross profit margin. The lower microprocessor sales and increased operating expenses impacted current year profitability. Notwithstanding the reduced sales level for the current nine month period, a significant portion of the affiliate's sales during the nine-month period was 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 nine-month period was 41.7% of income before the Company's equity in its affiliate's earnings, compared with 42.1% a year ago; these effective tax rates include .2% and .8% for deferred 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 nine-month period ending December 31, 1994 of $17.7 million was $3.6 million higher than the $14.1 million earned a year ago. 7 8 THREE MONTHS ENDED DECEMBER 31, 1994 COMPARED WITH THE THREE MONTHS ENDED DECEMBER 31, 1993 Net sales for the three-month period ended December 31, 1994 of $212.4 million increased 42% over sales of the prior year three-month period of $149.8 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 third fiscal quarter compared with 44% in the comparable quarter a year ago. Computer systems products were 39% during the quarter compared with 33% a year ago. Passive and electromechanical products were 21% during both quarters. Miscellaneous products accounted for 2% of sales in both 1994 and 1993. The percentage increase in cost of goods sold of 44% resulted in a gross margin of 18.2% in the third quarter of the current year compared with 19.4% a year ago. A contributing factor for the reduced gross margin percent in 1994 compared with the prior period is attributable to the incremental increase in sales volume of microprocessors earning relatively lower gross profit margins which are marketed through an efficient low cost sales channel. Warehouse, selling and administrative expenses of $27.0 million increased by 31% over the $20.6 million incurred during the prior year three-month period. This resulted in a ratio of these expenses to sales of 12.7% for the 1994 period compared with 13.8% for the 1993 quarter. The Company's share of net income of the affiliated company, Pioneer Technologies Group, Inc., was $9,000 for the 1994 three-month period compared with $404,000 for the same period last year; net sales of the affiliate for the three-month period ended December 31, 1994 of $85.2 million were 18% less than the sales of the prior year three-month period of $103.4 million. This net reduction is attributable to a lower volume of microprocessor sales which earn a relatively low gross profit margin. The lower microprocessor sales and increased operating expenses impacted current year profitability. Notwithstanding the reduced sales level for the current three-month period, a significant portion of the affiliate's sales during the quarter was 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 41.5% of income before the Company's equity in its affiliate's earnings compared with 41.9% a year ago; these effective tax rates include .7% for deferred taxes on the unremitted earnings of the affiliate for 1993 and only a nominal amount in 1994. Primarily as a result of the factors above, the Company's net income for the three-month period ending December 31, 1994 of $6.1 million was $1.2 million greater than the $4.9 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)
December 31, 1994 March 31, 1994 (Unaudited) ASSETS Current assets Cash $ 9 $ 8 Accounts receivable - net 32,467 29,213 Merchandise inventory 52,224 60,690 Prepaid expenses 528 405 Deferred income taxes 2,136 2,077 Shareholder notes receivable 19 52 ------- ------- Total current assets 87,383 92,445 Property and equipment, at cost 10,953 10,401 Accumulated depreciation 5,416 4,746 ------- ------- Net 5,537 5,655 Shareholder notes receivable 231 231 Other assets 268 262 ------- ------- $93,419 $98,593 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $25,802 $44,072 Accrued liabilities 4,953 4,895 ------- ------- Total current liabilities 30,755 48,967 Long-term debt 32,006 20,698 Shareholders' equity Common stock $.10 par value 10 10 Capital in excess of par value 90 90 Retained earnings 30,558 28,828 ------- ------- Total shareholders' equity 30,658 28,928 ------- ------- $93,419 $98,593 ======= =======
9 10 PIONEER TECHNOLOGIES GROUP, INC. STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands Except Per Share Amounts)
Quarter ended Nine months ended December 31, December 31, 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $85,238 $103,437 $271,113 $329,408 Costs and expenses: Cost of goods sold 73,612 91,944 233,295 290,767 Selling and administrative expense 11,038 9,819 33,322 29,961 ------- ------- ------- ------- Operating profit 588 1,674 4,496 8,680 Interest expense 560 307 1,566 825 ------- ------- ------- ------- Income before income taxes 28 1,367 2,930 7,855 Provision for income taxes 10 559 1,200 3,154 ------- ------- ------- ------- Net income $ 18 $ 808 $ 1,730 $ 4,701 ======= ======= ======= ======= Average shares outstanding 100,000 100,000 100,000 100,000 Earnings per share $.018 $8.08 $17.30 $47.01 Dividends per share --- --- --- ---
10 11 PIONEER TECHNOLOGIES GROUP, INC. STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Nine months ended December 31, 1994 1993 ---- ---- Cash flows from operating activities: Net income $ 1,730 $ 4,701 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Items not affecting cash 1,045 834 Decrease (increase) in operating working capital (13,149) 6,782 Increase in other assets (6) (40) ------- ------- Total adjustments (12,110) 7,576 ------- ------- Net cash provided by (used in) operating activities (10,380) 12,277 Cash flows from investing activities: Additions to property and equipment (927) (1,728) ------ ------- Net cash used in investing activities (927) (1,728) Cash flows from financing activities: Increase (decrease) in long-term debt 11,308 (10,548) ------- ------- Net cash provided by (used in) financing activities 11,308 (10,548) ------- ------- Net increase in cash 1 1 Cash at beginning of period 8 7 ------- ------- Cash at end of period $ 9 $ 8 ======= =======
11 12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS Number Description ------ ----------- 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 December 31, 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: February 9, 1995 /s/ Preston B. Heller, Jr. ------------------ ------------------------------------ Chairman of the Board and Chief Executive Officer Date: February 9, 1995 /s/ John V. Goodger ------------------ ------------------------------------ Vice President, Treasurer and Assistant Secretary 12 EX-11 2 PIONEER STANDARD EX-11 1 Exhibit 11 CALCULATION OF PRIMARY EARNINGS PER SHARE (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three months ended Nine months ended December 31, December 31, 1994 1993 1994 1993 ---- ---- ---- ---- Weighted average common shares and common share equivalents outstanding 15,262,621 15,150,532 15,252,844 15,084,822 Net income $6,130 $4,887 $17,744 $14,146 Earnings per share $.40 $.32 $1.16 $.94
13 EX-27 3 ART. 5 FINANCIAL DATA SCHEDULE FOR 3RD QTR 10-Q
5 1,000 9-MOS MAR-31-1995 DEC-31-1994 14,581 0 118,331 4,439 131,405 267,050 51,587 23,000 316,319 138,510 56,306 6,667 0 0 112,798 316,319 590,688 590,688 479,508 479,508 79,396 0 2,686 29,832 12,088 17,744 0 0 0 17,744 1.16 0
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