-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WRofhaqNh+RxEsz1uCff1ZkevfAZcD0iwayAsOu2cJ+q1WhQmDjk6TqrcCyjCfM8 OC4RAoJUaO0voRMdQtz7rA== 0001019056-99-000322.txt : 19990518 0001019056-99-000322.hdr.sgml : 19990518 ACCESSION NUMBER: 0001019056-99-000322 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 000-16207 FILM NUMBER: 99625844 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 FORM 10-Q ================================================================================ 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 MARCH 31, 1999 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 May 13, 1999, 19,866,906 shares (including 160,703 shares held by a wholly-owned subsidiary of the Registrant) of the common stock of All American Semiconductor, Inc. were outstanding. ================================================================================ 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 March 31, 1999 (Unaudited) and December 31, 1998........................................... 1 Consolidated Condensed Statements of Income for the Quarters Ended March 31, 1999 and 1998 (Unaudited)................................... 2 Consolidated Condensed Statements of Cash Flows for the Quarters Ended March 31, 1999 and 1998 (Unaudited).......................... 3 Notes to Consolidated Condensed Financial Statements (Unaudited).............. 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 5 3. Quantitative and Qualitative Disclosures about Market Risk.................... 7 II OTHER INFORMATION: 2. Changes in Securities and Use of Proceeds..................................... 8 6. Exhibits and Reports on Form 8-K.............................................. 8 SIGNATURES.................................................................... 8
i ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31 DECEMBER 31 ASSETS 1999 1998 - -------------------------------------------------------------------------------------------- (UNAUDITED) Current assets: Cash .................................................... $ 323,000 $ 473,000 Accounts receivable, less allowances for doubtful accounts of $1,605,000 and $1,412,000 ................. 42,980,000 37,821,000 Inventories ............................................. 69,232,000 69,063,000 Other current assets .................................... 2,659,000 2,574,000 ------------- ------------- Total current assets .................................. 115,194,000 109,931,000 Property, plant and equipment - net ....................... 4,406,000 4,506,000 Deposits and other assets ................................. 3,464,000 3,458,000 Excess of cost over fair value of net assets acquired - net 1,041,000 1,062,000 ------------- ------------- $ 124,105,000 $ 118,957,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------------------- Current liabilities: Current portion of long-term debt ....................... $ 212,000 $ 269,000 Accounts payable and accrued expenses ................... 40,936,000 41,229,000 Income taxes payable .................................... -- 56,000 Other current liabilities ............................... 227,000 185,000 ------------- ------------- Total current liabilities ............................. 41,375,000 41,739,000 Long-term debt: Notes payable ........................................... 48,641,000 43,306,000 Subordinated debt ....................................... 6,170,000 6,187,000 Other long-term debt .................................... 1,216,000 1,216,000 ------------- ------------- 97,402,000 92,448,000 ------------- ------------- Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued ............................... -- -- Common stock, $.01 par value, 40,000,000 shares authorized, 19,866,906 shares issued and outstanding .. 199,000 199,000 Capital in excess of par value .......................... 25,592,000 25,592,000 Retained earnings ....................................... 1,363,000 1,169,000 Treasury stock, at cost, 180,295 shares ................. (451,000) (451,000) ------------- ------------- 26,703,000 26,509,000 ------------- ------------- $ 124,105,000 $ 118,957,000 ============= =============
See notes to consolidated condensed financial statements 1 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) QUARTERS ENDED MARCH 31 1999 1998 - ------------------------------------------------------------------------------- NET SALES ...................................... $ 70,649,000 $ 63,530,000 Cost of sales .................................. (57,010,000) (49,419,000) ------------ ------------ Gross profit ................................... 13,639,000 14,111,000 Selling, general and administrative expenses ... (12,203,000) (12,104,000) ------------ ------------ INCOME FROM OPERATIONS ......................... 1,436,000 2,007,000 Interest expense ............................... (1,096,000) (1,098,000) ------------ ------------ INCOME BEFORE INCOME TAXES ..................... 340,000 909,000 Income tax provision ........................... (146,000) (391,000) ------------ ------------ NET INCOME ..................................... $ 194,000 $ 518,000 ============ ============ Basic and diluted earnings per share ........... $ .01 $ .03 ===== ===== See notes to consolidated condensed financial statements 2 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) QUARTERS ENDED MARCH 31 1999 1998 - ------------------------------------------------------------------------------- Cash Flows Used For Operating Activities ......... $(5,144,000) $ (669,000) ----------- ----------- Cash Flows From Investing Activities: Acquisition of property and equipment ............ (144,000) (40,000) Increase in other assets ......................... (118,000) (77,000) ----------- ----------- Cash flows used for investing activities ..... (262,000) (117,000) ----------- ----------- Cash Flows From Financing Activities: Net borrowings under line of credit agreement .... 5,335,000 503,000 Repayments of notes payable ...................... (79,000) (60,000) ----------- ----------- Cash flows provided by financing activities .. 5,256,000 443,000 ----------- ----------- Decrease in cash ................................. (150,000) (343,000) Cash, beginning of period ........................ 473,000 444,000 ----------- ----------- Cash, end of period .............................. $ 323,000 $ 101,000 =========== =========== Supplemental Cash Flow Information: Interest paid .................................... $ 830,000 $ 913,000 =========== =========== Income taxes paid ................................ $ 237,000 $ 479,000 =========== =========== See notes to consolidated condensed financial statements 3 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) ================================================================================ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 March 31, 1999, 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, 1998) and additional financial information, see the Company's Annual Report on Form 10-K for the year ended December 31, 1998, including the consolidated financial statements and notes thereto which should be read in conjunction with these financial statements. EARNINGS PER SHARE The following average shares were used for the computation of basic and diluted earnings per share: QUARTERS ENDED MARCH 31 1999 1998 - -------------------------------------------------------------------------------- Basic ............................ 19,686,611 19,683,600 Diluted .......................... 19,686,611 20,146,069 2. LONG-TERM DEBT Outstanding borrowings at March 31, 1999 under the Company's $100 million line of credit facility aggregated $48,598,000. 3. OPTIONS During the quarter ended March 31, 1999, the Company granted an aggregate of 195,000 stock options to 30 individuals pursuant to the Employees', Officers', Directors' Stock Option Plan, as previously amended and restated (the "Stock Option Plan"). These options have an exercise price of $.90 per share (fair market value at date of grant) and vest over a five-year period and are exercisable over a six-year period. During the quarter ended March 31, 1999, 118,000 stock options were canceled at exercise prices ranging from $1.00 to $1.44 per share. 4 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES ================================================================================ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All American Semiconductor, Inc. and its 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, switches, connectors, filters and sockets. These products are sold primarily to original equipment manufacturers ("OEMs") in a diverse and growing range of industries, including manufacturers of computers and computer-related products, networking, satellite and communications products, consumer goods, robotics and industrial equipment, defense and aerospace equipment and medical instrumentation. The Company also sells products to contract electronics manufacturers who manufacture products for companies in all electronics industry segments. Through the Aved Memory Products and Aved Display Technologies divisions of its subsidiary, Aved Industries, Inc., the Company also designs and has manufactured under the label of its subsidiary's divisions, certain board level products including memory modules and flat panel display driver boards. These products are also sold to OEMs. RESULTS OF OPERATIONS Net sales for the first quarter of 1999 reached a new record at $70.6 million, up 11.2% from net sales of $63.5 million for the same period of 1998. The increase in sales reflects increased sales in most territories as the Company has refocused its efforts on internal growth after the negative impact from the failed merger in 1998. Gross profit was $13.6 million for the first quarter of 1999 compared to $14.1 million for the 1998 period. The decrease in gross profit was attributable to the decline in gross profit margins which more than offset the increase in net sales. Gross profit margins as a percentage of net sales were 19.3% for the first three months of 1999 compared to 22.2% for the same period of 1998. The decline in gross profit margins reflects increased competition, a greater number of low margin, large volume transactions during the first quarter of 1999 than in the first quarter of 1998 and continued changes in the Company's product mix. In addition, the Company has experienced lower margins relating to the development of long-term strategic relationships with accounts which have required aggressive pricing programs. Management expects downward pressure on gross profit margins to continue in the future. Selling, general and administrative expenses ("SG&A") was $12.2 million for the first quarter of 1999 compared to $12.1 million for the first quarter of 1998. Despite a reduction in variable expenses associated with the decline in gross profit, SG&A for the 1999 period increased slightly over 1998 primarily as a result of an increase in the Company's infrastructure to support the additional needs and requirements of our customers. Furthermore, in an effort to once again drive expansion and internal growth, the Company opened a new sales office during the second quarter of 1998, opened two additional sales offices during the second quarter of 1999 and increased its management personnel during 1999. Due to these factors, the Company expects that SG&A will increase in future periods. SG&A as a percentage of net sales improved to 17.3% for the quarter ended March 31, 1999, compared to 19.1% for the same period of 1998. The improvement in SG&A as a percentage of sales reflects the increase in net sales. Income from operations was $1.4 million for the first quarter of 1999 compared to $2.0 million for the first quarter of 1998. Net income was $194,000 ($.01 per share) for the quarter ended March 31, 1999, compared to $518,000 ($.03 per share) for the same period of 1998. The decreases in income from operations and net income were primarily attributable to the decrease in gross profit margins discussed above. 5 LIQUIDITY AND CAPITAL RESOURCES Working capital at March 31, 1999 increased to $73.8 million from working capital of $68.2 million at December 31, 1998. The current ratio improved to 2.78:1 at March 31, 1999, compared to 2.63:1 at December 31, 1998. The increases in working capital and in the current ratio were due primarily to an increase in accounts receivable. Accounts receivable levels at March 31, 1999 were $43.0 million, up from accounts receivable of $37.8 million at December 31, 1998, reflecting increased sales for March 1999 over December 1998. At March 31, 1999, outstanding borrowings under the Company's line of credit facility aggregated $48.6 million. The Company expects that its cash flows from operations and additional borrowings available under its credit facility will be sufficient to meet its current financial requirements over the next twelve months. YEAR 2000 ISSUE The Company has evaluated its business information technology (IT) systems as well as its non-IT systems and has surveyed its major vendors. The Company currently believes that its internal systems are in compliance with Year 2000 requirements or, to the extent any further required modifications are necessary, will comply with Year 2000 requirements without material expenditures of funds or internal resources. Based upon the survey of the Company's major suppliers, the Company currently believes that Year 2000 issues of its suppliers should not have a material adverse effect on the Company's business, operations or financial condition. Nevertheless, to the extent the Company's vendors (particularly its major vendors) experience Year 2000 difficulties, the Company may face delays in obtaining or even be unable to obtain certain products and services and therefore may be unable to make shipments to customers resulting in a material adverse effect on the Company's business, operations and financial condition. The Company has not surveyed its customers and on a limited basis has surveyed certain other third parties with which it has a business relationship. As no assessment has been made of any potential impact by customers' non-compliance (such as the ability of customers to electronically interface with the Company), the Company does not have a cost estimate to address any non-compliance by these customers nor can any assurance be given that such non-compliance will not result in a material adverse effect on the Company's business, operations and financial condition. The Company has not undertaken an analysis (nor does it currently intend to analyze) the effect of a worst-case Year 2000 scenario on the Company's business, operations or financial condition and, accordingly, the materiality of such effect (if any) is uncertain and the Company does not have a contingency plan and currently does not intend to create one. FORWARD-LOOKING STATEMENTS This Form 10-Q contains forward-looking statements (within the meaning of Section 21E. of the Securities Exchange Act of 1934, as amended), representing the Company's current expectations and beliefs concerning the Company's future performance and operating results, its products, services, markets and industry, and/or future events relating to or effecting the Company and its business and operations. When used in this Form 10-Q, the words "believes," "estimates," "plans," "expects," "intends," "anticipates," and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements. The actual results or achievements of the Company could differ materially from those indicated by the forward-looking statements because of various risks and uncertainties. Factors that could adversely affect the Company's future results, performance or achievements include, without limitation, the effectiveness of the Company's business and marketing strategies, timing of delivery of products from suppliers, price increases from suppliers that cannot be passed on to the Company's customers at the same rate, the product mix sold by the Company, the Company's development of new customers, existing customer demand as well as the level of demand for products of its 6 customers, utilization by the Company of excess capacity, availability of products from and the establishment and maintenance of relationships with suppliers, price erosion in and price competition for products sold by the Company, the ability of the Company to enter or expand new market areas in a cost effective manner, the ability of the Company to expand its product offerings and to continue to enhance its service capabilities and the timing and cost thereof, the ability of the Company to open new branches in a timely and cost-effective manner, the availability of acquisition opportunities and the associated costs, management of growth and expenses, the Company's ability to collect accounts receivable, price decreases on inventory that is not price protected, gross profit margins, including decreasing margins relating to the Company being required to have aggressive pricing programs, increased competition from third party logistics companies and e-brokers through the use of the Internet as well as from its traditional competitors, availability and terms of financing to fund capital needs, the continued enhancement of telecommunication, computer and information systems and the cost thereof, the achievement by the Company and its vendors and customers and other third parties with which the Company has a business relationship of Year 2000 compliance in a timely and cost efficient manner, the continued and anticipated growth of the electronics industry and electronic components distribution industry, the impact on certain of the Company's suppliers and customers of economic or financial turbulence in off-shore economies and/or financial markets, change in government tariffs or duties, currency fluctuations, a change in interest rates, the state of the general economy, the success of the Company in avoiding the delisting of its common stock from The Nasdaq Stock Market, and the other risks and factors detailed in this Form 10-Q, in the Company's other filings with the Securities and Exchange Commission and in its press releases. These risks and uncertainties are beyond the ability of the Company to control. In many cases, the Company cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's Credit Facility bears interest based on interest rates tied to the prime or LIBOR rate, either of which may fluctuate over time based on economic conditions. As a result, the Company is subject to market risk for changes in interest rates and could be subjected to increased or decreased interest payments if market interest rates fluctuate. If market interest rates increase, the impact may have a material adverse effect on the Company's financial results. 7 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ================================================================================ ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (c) SALES OF UNREGISTERED SECURITIES The Company has not issued or sold any unregistered securities during the quarter ended March 31, 1999, except that, pursuant to the Company's Employees', Officers', Directors' Stock Option Plan, as previously amended and restated, the Company granted stock options to 30 individuals during the quarter ended March 31, 1999, to purchase 195,000 shares of the Company's common stock at an exercise price of $.90 per share. The stock options vest over a five-year period and are exercisable over a six-year period. All of the stock options were granted by the Company in reliance upon the exemption from registration available under Section 4(2) of the Securities Act of 1933, as amended. See Note 3 to Notes to Consolidated Condensed Financial Statements (Unaudited). ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 11.1 Statement Re: Computation of Per Share Earnings (Unaudited). 27.1 Financial Data Schedule. (b) REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the quarter ended March 31, 1999. ------------------------ 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: May 17, 1999 /s/ PAUL GOLDBERG ---------------------------------------------------- Paul Goldberg, Chairman of the Board (Duly Authorized Officer) Date: May 17, 1999 /s/ HOWARD L. FLANDERS ---------------------------------------------------- Howard L. Flanders, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 8 EX-11.1 2 EXHIBIT 11.1 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES EXHIBIT 11.1 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (UNAUDITED) QUARTERS ENDED MARCH 31 1999 1998 - -------------------------------------------------------------------------------- BASIC EARNINGS PER SHARE: Net Income ................................ $ 194,000 $ 518,000 ============ =========== Weighted Average Shares Outstanding ....... 19,686,611 19,683,600 ============ =========== Basic Earnings Per Share .................. $ .01 $ .03 ======= ======= DILUTED EARNINGS PER SHARE: Net Income ................................ $ 194,000 $ 518,000 ============ =========== Weighted Average and Dilutive Shares: Weighted average shares outstanding ..... 19,686,611 19,683,600 Dilutive shares ......................... -- 462,469 ------------ ----------- 19,686,611 20,146,069 ============ =========== Diluted Earnings Per Share ................ $ .01 $ .03 ======= ======= EX-27.1 3 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information from the Registrant's consolidated condensed financial statements as of and for the three months ended March 31, 1999, and is qualified in its entirety by reference to such consolidated financial statements. 0000818074 ALL AMERICAN SEMICONDUCTOR, INC. 1,000 USD 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 323 0 44,585 1,605 69,232 115,194 10,264 5,858 124,105 41,375 56,027 0 0 199 26,504 124,105 70,649 70,649 57,010 57,010 12,032 171 1,096 340 146 194 0 0 0 194 .01 .01
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