0000950144-95-002303.txt : 19950815
0000950144-95-002303.hdr.sgml : 19950815
ACCESSION NUMBER: 0000950144-95-002303
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950814
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ALL AMERICAN SEMICONDUCTOR INC
CENTRAL INDEX KEY: 0000818074
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065]
IRS NUMBER: 592814714
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-16207
FILM NUMBER: 95562735
BUSINESS ADDRESS:
STREET 1: 16115 N W 52ND AVENUE
CITY: MIAMI
STATE: FL
ZIP: 33014
BUSINESS PHONE: 3056218282
MAIL ADDRESS:
STREET 1: 16115 NW 52ND AVENUE
CITY: MIAMI
STATE: FL
ZIP: 33014
10-Q
1
ALL AMERICAN SEMICONDUCTOR 10-Q 6-30-95
1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
--OR--
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 1995
Commission File Number: 0-16207
ALL AMERICAN SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-2814714
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16115 NORTHWEST 52ND AVENUE, MIAMI, FLORIDA 33014
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 621-8282
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. x Yes No
--- ---
As of August 9, 1995, 17,679,291 shares of common stock of All American
Semiconductor, Inc. were outstanding.
================================================================================
2
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
FORM 10-Q - INDEX
Part Item Page
No. No. Description No.
---------------------------------------------------------------------------------------------------------------
I FINANCIAL INFORMATION:
1. Financial Statements
Consolidated Condensed Balance Sheets at June 30, 1995
(Unaudited) and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Condensed Statements of Income for the Quarters
and Six Months Ended June 30, 1995 and 1994 (Unaudited) . . . . . . . . . . . . . . . . 2
Consolidated Condensed Statements of Cash Flows for the
Six Months Ended June 30, 1995 and 1994 (Unaudited) . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Condensed Financial Statements (Unaudited) . . . . . . . . . . . . 4
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II OTHER INFORMATION:
6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
i
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ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30 December 31
ASSETS 1995 1994
-------------------------------------------------------------------------------------------------------------
(UNAUDITED)
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 205,000 $ 200,000
Accounts receivable, less allowances for doubtful
accounts of $641,000 and $425,000 . . . . . . . . . . . . . . 24,582,000 16,615,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,801,000 34,971,000
Other current assets . . . . . . . . . . . . . . . . . . . . . . 1,008,000 1,543,000
----------------- ---------------
Total current assets . . . . . . . . . . . . . . . . . . . . . 70,596,000 53,329,000
Property, plant and equipment - net . . . . . . . . . . . . . . . . . 3,291,000 2,832,000
Deposits and other assets . . . . . . . . . . . . . . . . . . . . . . 1,180,000 1,178,000
Excess of cost over fair value of net assets
acquired - net . . . . . . . . . . . . . . . . . . . . . . . . 547,000 519,000
----------------- ---------------
$ 75,614,000 $ 57,858,000
================= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . $ 751,000 $ 396,000
Accounts payable and accrued expenses . . . . . . . . . . . . . . 24,195,000 13,007,000
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . 272,000 -
Other current liabilities . . . . . . . . . . . . . . . . . . . . 81,000 126,000
----------------- ---------------
Total current liabilities . . . . . . . . . . . . . . . . . . 25,299,000 13,529,000
Long-term debt:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . 18,085,000 20,507,000
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . 6,530,000 6,872,000
----------------- ---------------
49,914,000 40,908,000
----------------- ---------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued . . . . . . . . . . . . . . . . . . . - -
Common stock, $.01 par value, 20,000,000 shares
authorized, 16,996,791 and 12,416,791 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . . 170,000 124,000
Capital in excess of par value . . . . . . . . . . . . . . . . . 19,122,000 11,764,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 6,468,000 5,122,000
Treasury stock, at cost, 19,592 shares . . . . . . . . . . . . . (60,000) (60,000)
----------------- ---------------
25,700,000 16,950,000
----------------- ---------------
$ 75,614,000 $ 57,858,000
================= ===============
See notes to consolidated condensed financial statements
1
4
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
QUARTERS SIX MONTHS
PERIODS ENDED JUNE 30 1995 1994 1995 1994
---------------------------------------------------------------------------------------------------------------------
NET SALES . . . . . . . . . . . . . . . $ 45,489,000 $ 24,261,000 $ 83,775,000 $ 47,674,000
Cost of sales . . . . . . . . . . . . . (35,685,000) (17,825,000) (65,103,000) (34,977,000)
---------------- ----------------- ---------------- -----------------
Gross profit . . . . . . . . . . . . . 9,804,000 6,436,000 18,672,000 12,697,000
Selling, general and
administrative expenses . . . . . . (7,666,000) (5,297,000) (14,925,000) (10,433,000)
---------------- ---------------- ---------------- -----------------
INCOME FROM OPERATIONS . . . . . . . . 2,138,000 1,139,000 3,747,000 2,264,000
Interest expense . . . . . . . . . . . (721,000) (357,000) (1,386,000) (632,000)
Other expense - net . . . . . . . . . . - (9,000) - (57,000)
---------------- ---------------- ---------------- ----------------
Income before income taxes . . . . . . 1,417,000 773,000 2,361,000 1,575,000
Provision for income taxes . . . . . . (609,000) (309,000) (1,015,000) (630,000)
---------------- ---------------- ---------------- ----------------
NET INCOME . . . . . . . . . . . . . . $ 808,000 $ 464,000 $ 1,346,000 $ 945,000
================ ================ ================ ================
Earnings per share:
Primary and fully diluted . . . $ .06 $ .04 $ .10 $ .07
================ ================ ================ ================
Average number of common
shares outstanding:
Primary . . . . . . . . . . . . 14,043,283 13,085,938 13,348,802 12,941,527
================ ================ ================ ================
Fully diluted . . . . . . . . . 14,170,464 13,085,938 13,585,049 12,941,527
================ ================ ================ ================
See notes to consolidated condensed financial statements
2
5
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30 1995 1994
---------------------------------------------------------------------------------------------------------------
Cash Flows Used By Operating Activities . . . . . . . . . . . $ (4,199,000) $ (4,830,000)
---------------- ----------------
Cash Flows From Investing Activities:
Acquisition of property and equipment . . . . . . . . . . . . (689,000) (1,070,000)
Increase in other assets . . . . . . . . . . . . . . . . . . (72,000) (539,000)
Purchase of net assets of acquired company . . . . . . . . . - (599,000)
---------------- ----------------
Cash flows used for investing activities . . . . . . . . (761,000) (2,208,000)
---------------- ----------------
Cash Flows From Financing Activities:
Net proceeds from issuance of equity securities . . . . . . . 7,404,000 548,000
Increase in notes payable . . . . . . . . . . . . . . . . . . 90,000 6,015,000
Repayments of notes payable . . . . . . . . . . . . . . . . . (223,000) (610,000)
Net borrowings (repayments) under line of
credit agreement . . . . . . . . . . . . . . . . . . . . . (2,306,000) 1,055,000
---------------- ---------------
Cash flows provided by financing activities . . . . . . 4,965,000 7,008,000
---------------- ---------------
Increase (decrease) in cash . . . . . . . . . . . . . . . . . 5,000 (30,000)
Cash, beginning of period . . . . . . . . . . . . . . . . . . 200,000 180,000
---------------- ---------------
Cash, end of period . . . . . . . . . . . . . . . . . . . . . $ 205,000 $ 150,000
================ ===============
Supplemental Cash Flow Information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 1,255,000 $ 632,000
================ ===============
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . $ 156,000 $ 708,000
================ ===============
Supplemental Schedule of Noncash Investing and Financing Activities:
During the six months ended June 30, 1994, the Company acquired substantially
all of the assets of Components Incorporated. The Company paid $599,000 in
cash, with the balance in a promissory note. The Company also assumed
substantially all of the seller's disclosed liabilities.
See notes to consolidated condensed financial statements
3
6
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements include all adjustments (consisting of normal recurring
accruals or adjustments only) necessary to present fairly the financial
position at June 30, 1995, and the results of operations and the cash flows for
all periods presented. The results of operations for the interim periods are
not necessarily indicative of the results to be obtained for the entire year.
For a summary of significant accounting policies (which have not changed from
December 31, 1994) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, including the
consolidated financial statements and notes thereto which should be read in
conjunction with these financial statements.
2. PUBLIC OFFERING
On June 15, 1995, the Company completed a public offering of 4,550,000 shares
(exclusive of the over-allotment option) of its common stock at $1.875 per
share. The net proceeds from this offering, after deducting all associated
costs, aggregated $7,374,000. As a result, the Company's common stock and
capital in excess of par value increased by $46,000 and $7,328,000,
respectively. The net proceeds initially have been used to reduce the amount
outstanding under the Company's line of credit pending the use of the line of
credit for continued expansion, including opening new sales offices, inventory
diversification such as the recent addition of a microprocessor supplier, and
general working capital purposes.
3. LONG-TERM DEBT
At June 30, 1995, outstanding borrowings under the Company's existing line of
credit agreement aggregated $17,685,000. Borrowings under the Company's line
of credit agreement are collateralized by accounts receivable, inventories and
equipment and a pledge of the capital stock of the Company's subsidiaries. The
line of credit agreement was amended in March 1995, whereby the facility was
increased to $30 million; provided, however, that such amendment provided that
the Company could borrow in excess of $27 million only after (i) the senior
lender had reviewed and been satisfied, in its sole discretion, with the
Company's audited consolidated financial statements for the year ended December
31, 1994, and (ii) the Company had received additional capitalization of not
less
4
7
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
than $4 million (after all expenses of issuance and sale) from the issuance of
its equity securities. Since the date of such amendment, the Company's senior
lender has reviewed and become satisfied with the consolidated financial
statements for the year ended December 31, 1994 and, as a result of the public
offering (see Note 2 to Notes to Consolidated Condensed Financial Statements),
the Company has satisfied the additional capitalization requirement.
Accordingly, the Company may borrow up to $30 million.
4. ACQUISITIONS
On June 28,1995, the Company entered into a non-binding letter of intent with
two privately-held affiliated electronic component distribution companies and
their principal owners which provides for the purchase of all of the issued and
outstanding capital stock of the two companies. Pursuant to such non-binding
letter of intent, the purchase price would be approximately $8,700,000, payable
approximately $3,700,000 in cash at closing and $5,000,000 in the Company's
common stock. The common stock to be issued would be valued at the higher of
its per share fair market value at closing and $2.25 per share. The Company
could become obligated to pay up to $3,000,000 (in common stock or a
combination of cash and common stock) on or about the second anniversary of
closing if the public trading value of the common stock has not appreciated to
an agreed-upon price per share by such date. The consummation of the
acquisitions is subject to a standard due diligence period, the parties being
able to agree upon, and execute and deliver, a definitive acquisition contract
and related agreements, the consent of the Company's senior lender, approval of
the Company's shareholders and the normal closing conditions to be included in
any definitive acquisition contract. There can be no assurance that the
parties will enter into a definitive acquisition contract or such acquisitions
will be consummated on the same or substantially same terms set forth in the
non-binding letter of intent, or at all.
On September 9, 1994, the Company completed the acquisition of substantially
all of the assets of GCI Corp., a Philadelphia-area distributor of electronic
components. On January 24, 1994, the Company completed the acquisition of
substantially all of the assets of Components Incorporated, a Chicago-based
distributor of electronic components. The operating results of these acquired
companies are included in the consolidated results of operations from the date
of acquisition.
The following unaudited pro forma consolidated income statement data presents
the consolidated results of operations of the Company for the quarter and six
months ended June 30, 1994 as if the acquisitions of the Philadelphia-area and
Chicago-based distributors had occurred at the beginning of the periods
presented:
5
8
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
=========================================================================================================================
Periods Ended June 30, 1994 Quarter Six Months
-------------------------------------------------------------------------------------------------------------------------
Net sales . . . . . . . . . . . . . . . . . . . . . . . . $ 26,397,000 $ 52,452,000
Net income . . . . . . . . . . . . . . . . . . . . . . . 552,000 1,134,000
Primary and fully diluted earnings per share . . . . . . $ .04 $ .09
The above pro forma information does not purport to be indicative of what would
have occurred had the acquisitions been made as of such date or of the results
which may occur in the future.
5. OPTIONS AND WARRANTS
In connection with new employment agreements between the Company and each of
its four executive officers entered into in May 1995, an aggregate of 1,000,000
stock options were granted on June 8, 1995, to such four executive officers
pursuant to the Employees', Officers', Directors' Stock Option Plan, as amended
(the "Option Plan"). These options have an exercise price of $1.875 per share
and are exercisable through June 7, 2005, subject to a vesting schedule. The
granting of these options will be void if the Company does not obtain the
approval of the Company's shareholders to (i) an increase in the number of
shares of common stock reserved for issuance under and other proposed material
amendments to the Option Plan and (ii) an increase in the number of shares of
common stock authorized to be issued by the Company. These proposals will be
voted upon at the Company's annual meeting of shareholders to be held on August
15, 1995.
In connection with the public offering (see Notes 2 and 6 to Notes to
Consolidated Condensed Financial Statements), the Company issued to the
underwriter common stock purchase warrants covering an aggregate of 523,250
shares of common stock (including warrants issued in connection with the
underwriter's exercise of the over-allotment option). These warrants are
exercisable at a price of $2.625 per share for a period of four years
commencing one year from June 8, 1995; provided, however, that the underwriter
has agreed that only in the event and when (if at all) the number of authorized
shares of the Company's common stock is increased to at least 35,000,000 shares
will the holders of such warrants have the right to exercise such warrants.
On March 23, 1995, a warrant to purchase 30,000 shares of common stock at $1.00
per share was exercised. The Company received aggregate proceeds of $30,000.
6
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ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
6. SUBSEQUENT EVENT
On July 13, 1995, the Company issued an additional 682,500 shares of its common
stock as a result of the exercise of an over-allotment option associated with
the public offering described in Note 2 herein. As a result, the Company
received net proceeds of $1,126,000 which increased the Company's common stock
and capital in excess of par value by $7,000 and $1,119,000, respectively.
Accordingly, total shareholders' equity at June 30, 1995 after giving effect to
the over-allotment option exercise would aggregate approximately $26,826,000.
In connection with the exercise of the over-allotment option, the Company
issued to the underwriter additional common stock purchase warrants covering
68,250 shares of common stock.
7
10
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
================================================================================
All American Semiconductor, Inc. and subsidiaries (the "Company") is a national
distributor of electronic components manufactured by others. The Company
distributes a full range of semiconductors (active components), including
transistors, diodes, memory devices and other integrated circuits, as well as
passive components, such as capacitors, resistors, inductors and
electromechanical products, including cable, connectors, filters and sockets.
These components are sold primarily to original equipment manufacturers in a
diverse and growing range of industries, including manufacturers of consumer
goods, satellite and communications products, computers and computer-related
products, robotics and industrial equipment, radar and air traffic control
systems, defense and aerospace equipment and medical instrumentation. Prior to
the end of the second quarter the Company had not derived significant revenues
from the sale of microprocessors. Recently, however, the Company added to its
product offering high-performance processor products for the personal computer
industry, including Nx586 microprocessors and complete motherboards.
The Company and its predecessors have been in operation since 1964 and the
Company was recently recognized as the 21st largest distributor of electronic
components in the United States. The Company has 21 offices nationwide,
including its headquarters and distribution center in Miami, Florida.
Results of Operations
The Company achieved another record-breaking sales quarter by reaching $45.5
million in net sales for the second quarter of 1995. This represented an 87.5%
increase over net sales of $24.3 million for the second quarter of 1994. For
the six months ended June 30, 1995, net sales were $83.8 million, a 75.7%
increase over net sales of $47.7 million for the same period of 1994. These
dramatic increases in sales reflect the general increase in demand for
electronic products, an increase in sales in substantially all territories,
revenues generated by new sales offices and revenues generated by an acquired
company.
Gross profit was $9.8 million in the second quarter of 1995, a 52.3% increase
over gross profit of $6.4 million for the same period of 1994. For the first
six months of 1995, gross profit was $18.7 million compared to $12.7 million
for the same period of 1994 representing a 47.1% increase. The increases were
due to the significant growth in sales. Gross profit margins as a percentage
of net sales were 21.6% and 22.3% for the second quarter and first six months
of 1995, compared to 26.5% and 26.6% for the second quarter and first six
months of 1994. The downward trend reflects a decline associated with a
greater number of large volume transactions at reduced margins, the competitive
environment in the electronic distribution marketplace, as well as a change in
the Company's overall sales mix. This downward trend may continue if the
Company maintains its rapid growth in sales. The
8
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ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
================================================================================
Company believes, however, that the effect of declining gross profit margins
should be more than offset by increases in sales and improved operating
efficiencies in the future.
Selling, general and administrative expenses ("SG&A") increased $2.4 million to
$7.7 million for the second quarter of 1995 compared to $5.3 million for the
second quarter of 1994. SG&A for the first half of 1995 was $14.9 million
compared to $10.4 million for the same period of 1994. The increases were
primarily the result of the Company's rapid growth and aggressive expansion. As
sales grew dramatically, selling expenses, including sales commissions and
telephone expenses, also increased. In addition, as a result of the relocation
of the Company's corporate headquarters and distribution facility in May 1994,
the expansion of the computer and communications systems, the opening of new
sales offices and the relocating of existing sales offices occurring during
1994 and 1995, rent (both for realty and personalty), occupancy expenses and
depreciation and amortization costs increased. Furthermore, the Company
expanded its sales personnel, created and staffed an east coast credit
department and increased staffing in almost all corporate departments. As a
result, SG&A for the second quarter and first half of 1995 reflect increased
salaries, payroll taxes and employee benefit costs.
SG&A as a percentage of net sales improved to 16.9% and 17.8% for the second
quarter and six months ended June 30, 1995, respectively, from 21.8% and 21.9%
for the same periods of 1994. The significant improvement in SG&A as a
percentage of sales reflects the anticipated improvement in operating
efficiencies and benefits from economies of scale.
The Company expects to further expand its service capabilities and increase
staffing to support its recently opened programming center as well as its newly
created division to distribute the microprocessor line awarded to the Company
at the end of the second quarter of 1995. Additionally, during the second half
of 1995 the Company expects to open two new sales offices as well as to
complete the evaluation and integration of the potential acquisitions in
connection with the non-binding letter of intent described in Note 4 to Notes
to Consolidated Condensed Financial Statements. As a result of the foregoing,
SG&A, in absolute dollars and as a percentage of sales, may increase in the
near term. While these expansions and increases will have a negative impact on
profitability in the short term, the Company believes that these investments
will enable the Company to obtain a greater competitive advantage which will
improve our performance in the future.
Income from operations increased 87.7% to $2.1 million for the quarter ended
June 30, 1995, up from $1.1 million for the same period of 1994. For the first
six months of 1995, income from operations was $3.7 million, up 65.5% from $2.3
million for the first six months of 1994. These increases were attributable to
the significant increases in sales and
9
12
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
================================================================================
the improved operating efficiencies and benefits from economies of scale which
more than offset the decline in gross profit margins and the additional
expenses associated with the Company's growth and expansion.
Interest expense increased to $721,000 and $1.4 million for the second quarter
and first half of 1995, respectively, as compared to $357,000 and $632,000 for
the same periods of 1994. The increases reflect an increase in both the prime
rate as well as the average borrowings outstanding under the Company's line of
credit required to fund the Company's continued growth. Additionally, interest
expense also increased as a result of the subordinated debt issued during 1994,
debt issued in connection with tenant improvements relating to the Company's
relocation in May 1994 and debt associated with capital leases.
Net income increased 74.1% to $808,000 for the second quarter of 1995 compared
to $464,000 for the second quarter of 1994. This represents a record level of
quarterly earnings for the Company, exceeding its previous record by 50%. For
the six months ended June 30, 1995, net income increased 42.4% to $1.3 million
compared to $945,000 for the same period of 1994. Earnings per share for the
quarter ended June 30, 1995 increased 50% to $.06 compared to $.04 for the
second quarter of 1994. For the first six months, earnings per share were $.10
in 1995 compared to $.07 in 1994. The increases in net income for the 1995
periods resulted primarily from the significant increase in sales as well as
from the increased operating efficiencies and benefits from economies of scale
discussed above.
Liquidity and Capital Resources
Working capital at June 30, 1995 increased to approximately $45.3 million, from
working capital of $39.8 million at December 31, 1994. The current ratio was
2.79:1 at June 30, 1995, as compared to 3.94:1 at December 31, 1994. Accounts
receivable levels at June 30, 1995 were $24.6 million, up from accounts
receivable of $16.6 million at December 31, 1994, reflecting the record level
of sales for the second quarter of 1995. Inventory increased to $44.8 million
at June 30, 1995, from $35.0 million at December 31, 1994. The increase in
inventory was primarily to support recent increases in sales, budgeted future
growth as well as an initial stocking package relating to the recent addition
of microprocessor and motherboard products. Accounts payable and accrued
expenses increased to $24.2 million at June 30, 1995, from $13.0 million at
December 31, 1994, primarily as a result of the increase in inventory during
the second quarter of 1995.
In June 1995, the Company completed a public offering of 4,550,000 shares of
its common stock. The net proceeds from this offering, after deducting all
associated costs, aggregated approximately $7.4 million. In addition, in July
1995, subsequent to the balance sheet
10
13
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
================================================================================
date, the Company sold an additional 682,500 shares of its common stock as a
result of the exercise by the underwriter of its over-allotment option. This
resulted in additional net proceeds of approximately $1.1 million to the
Company. The aggregate net proceeds initially have been used to reduce the
amount outstanding under the Company's line of credit, pending the use of the
line of credit for continued growth and expansion, including opening new sales
offices, inventory diversification such as the recent addition of
microprocessor and motherboard products, and general working capital purposes.
See Notes 2 and 6 to Notes to Consolidated Condensed Financial Statements.
In March 1995, the Company's line of credit agreement was amended and, as a
result of the completion of the public offering described above and in Note 2
to Notes to Consolidated Condensed Financial Statements, the Company may borrow
up to $30 million under such credit facility. See Note 3 to Notes to
Consolidated Condensed Financial Statements. At June 30, 1995, outstanding
borrowings under this facility, which are collateralized by accounts
receivable, inventories and equipment and a pledge of the capital stock of the
Company's subsidiaries, amounted to $17.7 million. The decrease in outstanding
borrowings over December 31, 1994 reflects the temporary utilization of the
proceeds from the public offering, which more than offset an increase in
borrowings associated with the increase in working capital to support the
significant growth of the Company.
The Company expects that its cash flows from operations and additional
borrowings available under the line of credit agreement will be sufficient to
meet its current financial requirements over the next twelve months, however,
the Company continues to explore available financing alternatives to fund its
long-term growth.
11
14
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
================================================================================
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K
during the quarter ended June 30, 1995.
12
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
All American Semiconductor, Inc.
---------------------------------------------
(Registrant)
Date: August 11, 1995 /s/ Bruce M. Goldberg
---------------------------------------------
Bruce M. Goldberg, President and
Chief Operating Officer
(Duly Authorized Officer)
Date: August 11, 1995 /s/ Howard L. Flanders
------------------------------------------
Howard L. Flanders, Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
16
EXHIBIT INDEX
-------------
27.1 Financial Data Schedule (for SEC use only)
EX-27
2
FINANCIAL DATA SCHEDULE
5
1,000
6-MOS
DEC-31-1995
JUN-30-1995
205
0
25,223
641
44,801
70,596
5,295
2,004
75,614
25,299
24,615
170
0
0
25,530
75,614
83,775
83,775
65,103
65,103
14,708
217
1,386
2,361
1,015
1,346
0
0
0
1,346
.10
.10