-----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, U3oa7TofvvUO9ryuqj0LAirgDYkCuQOCF516fV9xucSmvTg8P+wzUJugo0/sdsxR xtiYDasoeWLXW1S/Ns/ivQ== 0001019056-01-500204.txt : 20010611 0001019056-01-500204.hdr.sgml : 20010611 ACCESSION NUMBER: 0001019056-01-500204 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010608 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-K/A SEC ACT: SEC FILE NUMBER: 000-16207 FILM NUMBER: 1657268 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-K/A 1 file001.txt FORM 10-K/A - AMENDMENT NO. 2 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 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 N.W. 52nd Avenue Miami, Florida 33014 - ----------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (305) 621-8282 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 20, 2001, 4,040,150 shares (including 32,141 held by a wholly-owned subsidiary of the Registrant) of the common stock of ALL AMERICAN SEMICONDUCTOR, INC. were outstanding, and the aggregate market value of the common stock held by non-affiliates was $31,400,000. Documents incorporated by reference: None ================================================================================ We have amended the note disclosure "Revenue Recognition", contained in Note 1 of Notes to Consolidated Financial Statements of All American Semiconductor, Inc. and its subsidiaries (the "Company") to reflect that the Company did implement in 2000 the provisions of Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", and that such implementation had no effect on the Company's financial statements. The Consolidated Financial Statements of the Company as required by Item 8 of Form 10-K and reflecting the foregoing amendment are included with this Form 10-K/A (Amendment No. 2). ------------------------ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 2 to Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. ALL AMERICAN SEMICONDUCTOR, INC. (Registrant) By: /s/ PAUL GOLDBERG ------------------------------------ Paul Goldberg, Chairman of the Board Dated: June 8, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 2 to Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on June 8, 2001. /s/ PAUL GOLDBERG Chairman of the Board, Director - ---------------------------- Paul Goldberg /s/ BRUCE M. GOLDBERG President and Chief Executive Officer, Director - ---------------------------- (Principal Executive Officer) Bruce M. Goldberg /s/ HOWARD L. FLANDERS Executive Vice President and Chief Financial - ---------------------------- Officer, Director Howard L. Flanders (Principal Financial and Accounting Officer) /s/ RICK GORDON Senior Vice President of Sales, Director - ---------------------------- Rick Gordon /s/ ROBIN L. CRANDELL Director - ---------------------------- Robin L. Crandell /s/ LEWIS B. FREEMAN Director - ---------------------------- Lewis B. Freeman /s/ DANIEL M. ROBBIN Director - ---------------------------- Daniel M. Robbin /s/ RICHARD E. SIEGEL Director - ---------------------------- Richard E. Siegel MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The Company's management is responsible for the preparation of the Consolidated Financial Statements in accordance with generally accepted accounting principles and for the integrity of all the financial data included in this Form 10-K. In preparing the Consolidated Financial Statements, management makes informed judgements and estimates of the expected effects of events and transactions that are currently being reported. Management maintains a system of internal controls that is designed to provide reasonable assurance that assets are safeguarded and that transactions are executed and recorded in accordance with management's policies for conducting its business. This system includes policies which require adherence to ethical business standards and compliance with all laws to which the Company is subject. The internal controls process is continuously monitored by direct management review. The Board of Directors, through its Audit Committee, is responsible for determining that management fulfils its responsibility with respect to the Company's Consolidated Financial Statements and the system of internal controls. The Audit Committee, comprised solely of directors who are not officers or employees of the Company, meets quarterly with representatives of management and the Company's independent accountants to review and monitor the financial, accounting, and auditing procedures of the Company in addition to reviewing the Company's financial reports. The Company's independent accountants have full and free access to the Audit Committee. /s/ BRUCE M. GOLDBERG /s/ HOWARD L. FLANDERS - ------------------------------- ------------------------------- Bruce M. Goldberg Howard L. Flanders President, Executive Vice President, Chief Executive Officer Chief Financial Officer INDEPENDENT AUDITORS' REPORT To The Board of Directors All American Semiconductor, Inc. Miami, Florida We have audited the accompanying consolidated balance sheets of All American Semiconductor, Inc. and subsidiaries as of December 31, 2000 and 1999 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the three years in the period ended December 31, 2000. Our audits also included the financial statement schedule listed in Part IV, Item 14(a) of this Form 10-K. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of All American Semiconductor, Inc. and subsidiaries at December 31, 2000 and 1999 and the results of their operations and their cash flows for the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ LAZAR LEVINE & FELIX LLP - ------------------------------ LAZAR LEVINE & FELIX LLP New York, New York March 2, 2001 F-1
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS December 31 2000 1999 - -------------------------------------------------------------------------------------------- Current assets: Cash .................................................... $ 335,000 $ 173,000 Accounts receivable, less allowances for doubtful accounts of $3,283,000 and $1,987,000 ................. 91,812,000 53,202,000 Inventories ............................................. 146,444,000 85,260,000 Other current assets .................................... 3,745,000 4,637,000 ------------- ------------- Total current assets .................................. 242,336,000 143,272,000 Property, plant and equipment - net ....................... 4,255,000 4,482,000 Deposits and other assets ................................. 2,687,000 2,741,000 Excess of cost over fair value of net assets acquired - net 950,000 1,006,000 ------------- ------------- $ 250,228,000 $ 151,501,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------------------- Current liabilities: Current portion of long-term debt ....................... $ 240,000 $ 273,000 Accounts payable and accrued expenses ................... 81,234,000 51,584,000 Income taxes payable .................................... 968,000 -- Other current liabilities ............................... 304,000 198,000 ------------- ------------- Total current liabilities ............................. 82,746,000 52,055,000 Long-term debt: Notes payable ........................................... 120,643,000 64,298,000 Subordinated debt ....................................... 6,043,000 6,089,000 Other long-term debt .................................... 1,198,000 1,207,000 ------------- ------------- 210,630,000 123,649,000 ------------- ------------- 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, 4,039,620 and 3,973,431 shares issued and outstanding ....................................... 40,000 40,000 Capital in excess of par value .......................... 26,326,000 25,751,000 Retained earnings ....................................... 14,167,000 2,968,000 Treasury stock, at cost, 183,246 and 174,646 shares ..... (935,000) (907,000) ------------- ------------- 39,598,000 27,852,000 ------------- ------------- $ 250,228,000 $ 151,501,000 ============= =============
See notes to consolidated financial statements F-2
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31 2000 1999 1998 - -------------------------------------------------------------------------------------- NET SALES .......................... $ 522,183,000 $ 329,563,000 $ 250,044,000 Cost of sales ...................... (414,292,000) (265,064,000) (194,599,000) ------------- ------------- ------------- Gross profit ....................... 107,891,000 64,499,000 55,445,000 Selling, general and administrative expenses .......... (79,893,000) (56,357,000) (46,880,000) Restructuring and other nonrecurring expenses ............ -- -- (2,860,000) ------------- ------------- ------------- INCOME FROM OPERATIONS ............. 27,998,000 8,142,000 5,705,000 Interest expense ................... (8,642,000) (4,985,000) (4,313,000) ------------- ------------- ------------- INCOME BEFORE INCOME TAXES ......... 19,356,000 3,157,000 1,392,000 Income tax provision ............... (8,157,000) (1,358,000) (561,000) ------------- ------------- ------------- NET INCOME ......................... $ 11,199,000 $ 1,799,000 $ 831,000 ============= ============= ============= EARNINGS PER SHARE: Basic ............................ $ 2.92 $ .46 $ .21 ============= ============= ============= Diluted .......................... $ 2.70 $ .46 $ .21 ============= ============= =============
See notes to consolidated financial statements F-3
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Capital in Total Common Excess of Retained Treasury Shareholders' Shares Stock Par Value Earnings Stock Equity - ---------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1997... 3,972,828 $ 40,000 $ 25,747,000 $ 338,000 $ (451,000) $ 25,674,000 Exercise of stock options.... 603 -- 4,000 -- -- 4,000 Net income................... -- -- -- 831,000 -- 831,000 ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1998... 3,973,431 40,000 25,751,000 1,169,000 (451,000) 26,509,000 Purchase of treasury shares.. -- -- -- -- (456,000) (456,000) Net income................... -- -- -- 1,799,000 -- 1,799,000 ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 1999... 3,973,431 40,000 25,751,000 2,968,000 (907,000) 27,852,000 Exercise of stock options.... 66,189 -- 394,000 -- -- 394,000 Income tax benefit from stock options exercised...... -- -- 181,000 -- -- 181,000 Purchase of treasury shares.. -- -- -- -- (28,000) (28,000) Net income .................. -- -- -- 11,199,000 -- 11,199,000 ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2000... 4,039,620 $ 40,000 $ 26,326,000 $ 14,167,000 $ (935,000) $ 39,598,000 ============ ============ ============ ============ ============ ============
See notes to consolidated financial statements F-4
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31 2000 1999 1998 - ------------------------------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income ........................................... $ 11,199,000 $ 1,799,000 $ 831,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...................... 1,354,000 1,230,000 1,236,000 Loss on disposal of assets ......................... 78,000 -- -- Non-cash interest expense .......................... 381,000 294,000 352,000 Changes in assets and liabilities: Increase in accounts receivable .................. (38,610,000) (15,381,000) (4,924,000) Increase in inventories .......................... (61,184,000) (16,197,000) (1,154,000) Decrease (increase) in other current assets ...... 892,000 (2,063,000) (500,000) Increase in accounts payable and accrued expenses. 29,690,000 10,383,000 2,075,000 Increase (decrease) in other current liabilities.. 1,074,000 (43,000) (317,000) ------------ ------------ ------------ Net cash used for operating activities ......... (55,126,000) (19,978,000) (2,401,000) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ................ (1,058,000) (582,000) (564,000) Decrease (increase) in other assets .................. (442,000) 299,000 (944,000) ------------ ------------ ------------ Net cash used for investing activities ......... (1,500,000) (283,000) (1,508,000) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under line of credit agreement ........ 56,515,000 20,711,000 4,263,000 Increase in notes payable ............................ -- -- 10,000 Repayments of notes payable .......................... (274,000) (294,000) (339,000) Purchase of treasury shares .......................... (28,000) (456,000) -- Net proceeds from issuance of equity securities ...... 575,000 -- 4,000 ------------ ------------ ------------ Net cash provided by financing activities ...... 56,788,000 19,961,000 3,938,000 ------------ ------------ ------------ Increase (decrease) in cash .......................... 162,000 (300,000) 29,000 Cash, beginning of year .............................. 173,000 473,000 444,000 ------------ ------------ ------------ Cash, end of year .................................... $ 335,000 $ 173,000 $ 473,000 ============ ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid ........................................ $ 7,810,000 $ 4,410,000 $ 4,223,000 ============ ============ ============ Income taxes paid .................................... $ 7,369,000 $ 1,399,000 $ 1,756,000 ============ ============ ============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During 1999 the Company entered into a capital lease in the amount of $495,000 for certain programming and telecommunications equipment. See notes to consolidated financial statements F-5 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- 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, microprocessors, microcontrollers and other integrated circuits, as well as passive components, such as capacitors, resistors, inductors and electromechanical products, including cable, switches, connectors, filters and sockets. The Company's products are sold primarily to original equipment manufacturers in a diverse and growing range of industries, including manufacturers of computers and computer-related products; home office and portable equipment; networking; satellite, wireless and other communications products; Internet infrastructure equipment and appliances; automobiles; consumer goods; robotics and industrial equipment; defense and aerospace equipment; and medical instrumentation. The Company also sells products to contract electronics manufacturers or electronics manufacturing services providers who manufacture products for companies in all electronics industry segments. The Company also designs and has manufactured certain board level products including memory modules and flat panel display driver boards, both of which are sold to original equipment manufacturers. The Company's financial statements are prepared in accordance with generally accepted accounting principles ("GAAP"). Those principles considered particularly significant are detailed below. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets, liabilities, revenues and expenses. While actual results may differ from these estimates, management does not expect the variances, if any, to have a material effect on the Consolidated Financial Statements. Basis of Consolidation and Presentation - --------------------------------------- The Consolidated Financial Statements of the Company include the accounts of all subsidiaries, all of which are wholly-owned. All material intercompany balances and transactions have been eliminated in consolidation. The Company has Canadian and Mexican subsidiaries which conduct substantially all of their business in U.S. dollars. All references to shares of common stock, $.01 par value, stock options, warrants, exercise prices per share and per share amounts have been restated to reflect the effect of the Reverse Stock Split (as hereinafter defined). See Note 4 to Notes to Consolidated Financial Statements. Prior years' financial statements have been reclassified to conform with the current year's presentation. Concentration of Credit Risk/Fair Values - ---------------------------------------- Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company, from time to time, maintains cash balances which exceed the federal depository insurance coverage limit. The Company performs periodic reviews of the relative credit rating of its bank to lower its risk. The Company believes that concentration with regards to accounts receivable is limited due to its large customer base. Fair values of cash, accounts receivable, accounts payable and long-term debt reflected in the December 31, 2000 and 1999 Consolidated Balance Sheets approximate carrying value at these dates. 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. F-6 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Inventories - ----------- Inventories are stated at the lower of cost (determined on an average cost basis) or market. Fixed Assets - ------------ Fixed assets are reflected at cost. Depreciation of office furniture and equipment and computer equipment is provided on straight-line and accelerated methods over the estimated useful lives of the respective assets. Amortization of leasehold improvements is provided using the straight-line method over the term of the related lease or the life of the respective asset, whichever is shorter. Maintenance and repairs are charged to expense as incurred; major renewals and betterments are capitalized. Excess of Cost Over Fair Value of Net Assets Acquired (Goodwill) - ---------------------------------------------------------------- The excess of cost over the fair value of net assets acquired is being amortized over periods ranging from 15 years to 40 years using the straight-line method. The Company periodically reviews the value of its excess of cost over the fair value of net assets acquired to determine if an impairment has occurred. As part of this review the Company measures the estimated future operating cash flows of acquired businesses and compares that with the carrying value of excess of cost over the fair value of net assets. Revenue Recognition - ------------------- The Company recognizes revenues at the point of passage of title, which is generally at the time of shipment. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Account Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements", which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. Subsequently, SAB Nos. 101A and 101B were issued delaying the implementation of SAB No. 101 to no later than the fourth quarter of fiscal years beginning after December 15, 1999. The SAB requires companies to report any changes in revenue recognition as a cumulative change in accounting principle at the time of implementation in accordance with Accounting Principles Board ("APB") Opinion 20, "Accounting Changes". The implementation of the provisions of SAB No. 101 in 2000 had no effect on the Company's financial statements. Income Taxes - ------------ The Company has elected to file a consolidated federal income tax return with its subsidiaries. Deferred income taxes are provided on transactions which are reported in the financial statements in different periods than for income tax purposes. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference is expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 8 to Notes to Consolidated Financial Statements. Earnings Per Share - ------------------ Earnings per common share is computed by dividing net income by the weighted average, during each period, of the number of common shares outstanding and for diluted earnings per share also common equivalent shares outstanding. F-7 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The following average shares were used for the computation of basic and diluted earnings per share: Years Ended December 31 2000 1999 1998 - ------------------------------------------------------------------------------- Basic........................... 3,828,978 3,921,138 3,937,021 Diluted......................... 4,140,579 3,924,166 3,998,802 Statements of Cash Flows - ------------------------ For purposes of the statements of cash flows, the Company considers all investments purchased with an original maturity of three months or less to be cash. Comprehensive Income - -------------------- In 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income", which prescribes standards for reporting comprehensive income and its components. The Company had no items of other comprehensive income in any period presented and accordingly is not required to report comprehensive income. Segments of an Enterprise and Related Information - ------------------------------------------------- In 1998, the Company adopted Financial Accounting Standards Board Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information", which establishes standards for reporting about operating segments. The Company has determined that no operating segment outside of its core business met the quantitative thresholds for separate reporting. Accordingly, no separate information has been reported. Pensions and Other Postretirement Benefits - ------------------------------------------ In 1998, the Company adopted Financial Accounting Standards Board Statement No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." The effect of the adoption of this statement was not material. Stock Based Compensation - ------------------------ In 2000, the Company adopted Financial Accounting Standards Board Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation", an interpretation of APB No. 25, "Stock Issued to Employees". Interpretation No. 44 clarifies: the application of APB No. 25 for the definition of an employee for purposes of applying APB No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. The effect of the adoption of this interpretation was not material. NOTE 2 - PROPERTY, PLANT AND EQUIPMENT - -------------------------------------- December 31 2000 1999 - ------------------------------------------------------------------------------- Office furniture and equipment ............... $ 3,365,000 $ 4,758,000 Computer equipment ........................... 4,352,000 4,374,000 Leasehold improvements ....................... 2,243,000 2,104,000 ------------ ------------ 9,960,000 11,236,000 Accumulated depreciation and amortization .... (5,705,000) (6,754,000) ------------ ------------ $ 4,255,000 $ 4,482,000 ============ ============ F-8 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ NOTE 3 - STOCK REPURCHASE PROGRAM - --------------------------------- During 1999, the Company's Board of Directors authorized the repurchase of up to $2 million in purchase price of the Company's common stock. The stock repurchases may, at the discretion of the Company's management, be made from time to time at prevailing prices in the open market or through privately negotiated transactions. The Company's management will base its decision on market conditions, the price of the common stock and other factors. Any shares of common stock repurchased will be available for reissuance in connection with the Employees', Officers', Directors' Stock Option Plan, as previously amended and restated (the "Option Plan"), or for other corporate purposes. For the years ended December 31, 2000 and 1999, the Company repurchased 8,600 and 138,586 shares of its common stock at average prices of $3.18 and $3.30 per share, respectively. The aggregate cost of the repurchased shares is reflected as treasury stock on the Consolidated Balance Sheets. The Company presently does not intend to make further stock repurchases at the current market prices. NOTE 4 - REVERSE STOCK SPLIT - ---------------------------- On June 1, 1999, the Company's shareholders approved a one-for-five reverse stock split (the "Reverse Stock Split") of the Company's outstanding shares of common stock. The Reverse Stock Split became effective for trading in the Company's new common stock as of June 2, 1999. Immediately following the Reverse Stock Split, there were 3,973,431 shares of common stock outstanding. The $.01 par value of the common stock remained the same after the Reverse Stock Split. All references to shares of common stock, stock options, warrants, exercise prices per share and per share amounts have been restated to reflect the effect of the Reverse Stock Split. NOTE 5 - STOCK PURCHASE RIGHTS - ------------------------------ In June 2000, the Board of Directors of the Company adopted a Common Stock Purchase Rights Plan (the "Rights Plan") and authorized and approved a dividend distribution of one right (each a "Right" and collectively the "Rights") for each outstanding share of common stock of the Company to shareholders of record at the close of business on June 23, 2000. Each share of common stock of the Company that is issued after June 23, 2000 will also include one Right. Each Right initially entitles the registered holder to purchase from the Company, but only when exercisable under the Rights Plan, one share of common stock at a price of $95.00 per share, subject to certain future adjustments. The Rights will be exercisable only if a person or group acquires 15% or more of the Company's common stock (or 10% of such stock under certain circumstances) or announces a tender offer the consummation of which would result in ownership by a person or group of 15% or more of the common stock (or 10% or such stock under certain circumstances). Upon such occurrence, each Right (other than Rights owned by such person or group) will entitle the holder to purchase from the Company the number of shares of the Company's common stock having a market value equal to twice the exercise price of the Right. If the Company is acquired in a merger or other business combination transaction, or sells more than 50% of its assets or earning power, after a person or group has acquired 15% or more of the Company's outstanding common stock (or 10% of such stock under certain circumstances), each Right (other than Rights owned by such person or group) will entitle its holder to purchase, at the Right's then-current exercise price, a number of the acquiring company's common shares having a market value of twice such price. Following the acquisition by a person or group of 15% or more of the Company's common stock (or 10% of such stock under certain circumstances) and prior to an acquisition of 50% or more of the common stock, the Board of Directors may exchange the Rights (other than Rights owned by such person or group) at an exchange ratio of one share of common stock per Right. F-9 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Prior to the acquisition by a person or group of beneficial ownership of 15% or more of the Company's common stock (or 10% of such stock under certain circumstances), the Rights are redeemable for $.001 per Right at the option of the Board of Directors. The Rights will expire on June 8, 2010. NOTE 6 - RESTRUCTURING AND OTHER NONRECURRING EXPENSES - ------------------------------------------------------ During 1998, the Company was involved in merger discussions which led to a letter of intent being signed in June 1998. Throughout 1998 the Company was actively involved in the evaluation of and preparations for the integration of operations in connection with the proposed merger. In October 1998, the merger negotiations were terminated. As a result, the Company recorded a nonrecurring charge in 1998, which included expansion costs incurred in anticipation of supporting the proposed combined entity, certain employee-related expenses, professional fees and other merger-related out of pocket costs, all of which aggregated $2,860,000. NOTE 7 - LONG-TERM DEBT - ----------------------- Line of Credit - -------------- In September 2000, the Company's agreement with its consortium of banks was amended whereby the line of credit facility was increased from $100 million to $150 million and the term was extended to May 3, 2004. The line of credit facility, which is based on eligible accounts receivable and inventories as defined in the agreement, currently bears interest, at the Company's option, at the prime rate plus .25% or LIBOR plus 2.25%. On a quarterly basis, the applicable interest rate margins for the prime rate and LIBOR options may be adjusted based upon the Company's debt service coverage ratio for the 12 month period ending on the last day of the immediately preceding calendar quarter and the Company's average excess loan availability for the three month period ending on the last day of the immediately preceding calendar quarter. The applicable interest rate margin for the prime rate option may adjust between 0% to .5% and the applicable interest rate margin for the LIBOR option may adjust between 2.0% to 2.5%. Outstanding borrowings under the credit facility, which are secured by all of the Company's assets including accounts receivable, inventories and equipment, amounted to $120,489,000 at December 31, 2000 compared to $63,974,000 at December 31, 1999. Under the credit facility, the Company is required to comply with certain affirmative and negative covenants as well as to comply with certain financial ratios. These covenants, among other things, place limitations and restrictions on the Company's borrowings, investments and transactions with affiliates and prohibit dividends and stock redemptions. The credit facility requires the Company to maintain certain minimum levels of tangible net worth throughout the term of the agreement and a minimum debt service coverage ratio which is tested on a quarterly basis. Subordinated Debt - ----------------- In June 1994, the Company completed a private placement (the "1994 Private Placement") of 51.5 units, with each unit consisting of a 9% non-convertible subordinated debenture due 2004 in the principal amount of $100,000 issuable at par, together with 1,500 common stock purchase warrants exercisable at $15.75 per share. The 51.5 units issued represent debentures aggregating $5,150,000 together with an aggregate of 77,250 warrants. The debentures are payable in semi-annual installments of interest only commencing December 1, 1994, with the principal amount maturing in full on June 13, 2004. The Company is not required to make any mandatory redemptions or sinking fund payments. The debentures are subordinated to the Company's senior indebtedness including the Company's credit facility and notes issued to the Company's landlord. The 77,250 warrants were valued at $2.50 per warrant as of the date of the 1994 Private Placement and, accordingly, the Company recorded the discount in the aggregate amount of $193,125 as additional paid-in capital. This discount is being amortized over the ten-year term of the debentures and approximately $19,000 was expensed in 2000, 1999 and 1998. All of these warrants expired during 1999. F-10 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ In May 1994, the Company executed a twenty-year promissory note in the amount of $865,000 in favor of the Company's landlord to finance substantially all of the tenant improvements necessary for the Company's Miami facility. This $865,000 note has a repayment schedule with varying monthly payments of principal after the second year. At the same time, the Company entered into another promissory note with the Company's landlord for $150,000 to finance certain personal property for the facility. This $150,000 note is payable interest only for six months and thereafter in 60 equal self-amortizing monthly payments of principal and interest. These notes, which are subordinate to the Company's credit facility, bear interest at 8% per annum and are payable monthly. Certain additional improvements to the Company's Miami corporate facility aggregating approximately $90,300 were financed as of May 1, 1995 by the landlord. This $90,300 obligation is evidenced by a promissory note payable in 240 consecutive, equal self-amortizing monthly installments of principal and interest. This note, which is also subordinate to the Company's credit facility, accrues interest at a fixed rate of 8% per annum. In October 1996, the Company executed a promissory note in the amount of $161,500 with the Company's landlord to finance certain additional improvements to the Company's Miami corporate facility. This note, which is also subordinate to the credit facility, is payable monthly with interest at 8.5% per annum and matures in October 2011. Long-term debt of the Company as of December 31, 2000, other than the Company's credit facility and obligations under capital leases, matures as follows: 2001.......................................................... $ 73,000 2002.......................................................... 86,000 2003.......................................................... 68,000 2004.......................................................... 59,000 2005.......................................................... 64,000 Thereafter.................................................... 6,968,000 ------------- $ 7,318,000 ============= Obligations under Capital Leases - -------------------------------- The Company is the lessee of programming and telecommunications equipment under a capital lease expiring in 2002. The assets, aggregating $495,000, and liability under this capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The assets are depreciated over their estimated productive lives. As of December 31, 2000, accumulated depreciation of these assets aggregated approximately $106,000. The depreciation of assets under this capital lease is included in depreciation expense. Minimum future lease payments under this capital lease as of December 31, 2000 and for each of the remaining years and in the aggregate are approximately as follows: 2001......................................................... $ 188,000 2002......................................................... 156,000 ------------- Total minimum lease payments................................. 344,000 Less amount representing interest............................ (27,000) ------------- Total obligations under capital leases....................... 317,000 Current portion.............................................. (167,000) ------------- $ 150,000 ============= The interest rate on this capital lease is 8.5% per annum and is imputed based on the lower of the Company's incremental borrowing rate at the inception of the lease or the lessor's implicit rate of return. This capital lease provides for a purchase option. F-11 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ NOTE 8 - INCOME TAXES - --------------------- The tax effects of the temporary differences that give rise to the deferred tax assets and liabilities as of December 31, 2000 and 1999 are as follows: Deferred tax assets: 2000 1999 ---------- ---------- Accounts receivable .................. $1,332,000 $ 738,000 Inventory ............................ 638,000 387,000 Accrued expenses ..................... 887,000 574,000 Postretirement benefits .............. 600,000 541,000 Other ................................ 486,000 546,000 ---------- ---------- 3,943,000 2,786,000 Deferred tax liabilities: Fixed assets ......................... 388,000 368,000 ---------- ---------- Net deferred tax asset ................. $3,555,000 $2,418,000 ========== ========== At December 31, 2000, $2,856,000 of the net deferred tax asset was included in "Other current assets" and $699,000 was included in "Deposits and other assets" in the accompanying Consolidated Balance Sheet. The components of income tax expense are as follows: Years Ended December 31 2000 1999 1998 - ------------------------------------------------------------------------------- Current - ------- Federal ............... $ 7,425,000 $ 466,000 $ 1,210,000 State ................. 1,869,000 90,000 210,000 ----------- ----------- ----------- 9,294,000 556,000 1,420,000 ----------- ----------- ----------- Deferred - -------- Federal ............... (697,000) 698,000 (749,000) State ................. (440,000) 104,000 (110,000) ----------- ----------- ----------- (1,137,000) 802,000 (859,000) ----------- ----------- ----------- $ 8,157,000 $ 1,358,000 $ 561,000 =========== =========== =========== A reconciliation of the difference between the expected income tax rate using the statutory federal tax rate and the Company's effective tax rate is as follows:
Years Ended December 31 2000 1999 1998 - ----------------------------------------------------------------------------------------- U.S. Federal income tax statutory rate.................... 35.0% 34.0% 34.0% State income tax, net of federal income tax benefit....... 5.9 3.3 4.2 Goodwill amortization and other - including non-deductible items.................................... 1.2 5.7 2.1 ----- ----- ----- Effective tax rate........................................ 42.1% 43.0% 40.3% ===== ===== =====
The tax benefit associated with the disqualifying disposition of stock acquired with incentive stock options under the Option Plan reduced taxes payable by $181,000 as of December 31, 2000 and is reflected as a credit to capital in excess of par value in the accompanying Consolidated Balance Sheet. F-12 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ NOTE 9 - CAPITAL STOCK, OPTIONS AND WARRANTS - -------------------------------------------- In December 1995, in connection with certain acquisitions, the Company issued an aggregate of 434,821 shares of common stock, including 32,141 shares, valued at approximately $391,000, which were issued to the Company's wholly-owned subsidiary. In addition, in connection with such acquisitions, certain selling stockholders were granted an aggregate of 10,000 stock options (6,000 stock options of which have since been canceled) to acquire the Company's common stock at an exercise price of $11.565 per share exercisable, subject to a six-year vesting period, through December 29, 2002. In connection with the Company entering into a settlement agreement with certain of the selling stockholders in December 1996, an aggregate of 19,000 shares of the Company's common stock was canceled and certain selling stockholders were granted stock options to purchase an aggregate of 10,000 shares of the Company's common stock at an exercise price of $7.50 per share exercisable through December 30, 2001. At December 31, 2000, 5,000 of these options remained unexercised, 2,500 were exercised and 2,500 were canceled. In July 1995, the Company issued to a consulting firm a warrant to acquire 9,000 shares of the Company's common stock at an exercise price of $12.50 per share exercisable through June 30, 2000, and was subsequently extended through December 31, 2000. The warrant was issued in consideration of such consulting firm entering into a new one-year consulting agreement with the Company covering financial public relations/investor relations services. At December 31, 2000, this warrant was unexercised and expired. In connection with employment agreements between the Company and each of its four executive officers entered into in May 1995, an aggregate of 200,000 stock options were granted on June 8, 1995 to such four executive officers pursuant to the Option Plan. These options have an exercise price of $9.375 per share and are exercisable through June 7, 2005. As a result of the Company reaching certain earnings per share levels during 2000, these options became fully vested. At December 31, 2000 these options remained unexercised. In connection with the public offering in 1995, the Company issued to the underwriter common stock purchase warrants covering an aggregate of 104,650 shares of common stock (including warrants issued in connection with the underwriter's exercise of the over-allotment option). These warrants were exercisable at a price of $13.125 per share for a period of four years commencing June 8, 1996. During 2000, all of these warrants were redeemed by the Company for $13,000. In June 2000, the Company established the 2000 Nonemployee Director Stock Option Plan. The 2000 Nonemployee Director Stock Option Plan provides for awards of options to purchase shares of common stock, $.01 par value per share, of the Company to nonemployee directors of the Company. An aggregate of 75,000 shares of the Company's common stock has been reserved for issuance under the 2000 Nonemployee Director Stock Option Plan. During 2000, the Company granted an aggregate of 4,500 stock options to 3 individuals pursuant to the 2000 Nonemployee Director Stock Option Plan. These options have an exercise price of $10.53 per share (based on fair market value at date of grant) and vest over a two-year period and are exercisable over a ten-year period. The Company has reserved 900,000 shares of common stock for issuance under the Employees', Officers', Directors' Stock Option Plan, as previously amended and restated. F-13 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ A summary of options granted under the option plans and related information for the years ended December 31, 1998, 1999 and 2000 follows:
Weighted Average Options Exercise Price -------- ---------------- Outstanding, December 31, 1997 545,664 $ 7.30 Granted 39,000 7.20 Exercised (603) 5.60 Canceled (17,750) 6.95 -------- Outstanding, December 31, 1998 566,311 7.30 Weighted average fair value of options granted during 1998 1.35 Granted 204,400 3.52 Exercised - -- Canceled (55,863) 6.61 -------- Outstanding, December 31, 1999 714,848 6.29 Weighted average fair value of options granted during 1999 1.15 Granted 137,000 13.00 Exercised (66,189) 5.96 Canceled (35,625) 5.77 -------- Outstanding, December 31, 2000 750,034 7.57 ======== Weighted average fair value of options granted during 2000 4.36 Options exercisable: December 31, 1998 166,416 6.10 December 31, 1999 184,416 5.96 December 31, 2000 386,939 7.51
Exercise prices for options outstanding as of December 31, 2000 ranged from $3.27 to $16.71. The weighted-average remaining contractual life of these options is approximately 5 years. Outstanding options at December 31, 2000 were held by 168 individuals. The Company applies APB 25 and related Interpretations in accounting for the option plans. Accordingly, no compensation cost has been recognized for the option plans. Had compensation cost for the option plans been determined using the fair value based method, as defined in Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation," the Company's net earnings and earnings per share would have been adjusted to the pro forma amounts indicated below: Years Ended December 31 2000 1999 1998 - -------------------------------------------------------------------------------- Net earnings: As reported $11,199,000 $ 1,799,000 $ 831,000 Pro forma 10,853,000 1,665,000 800,000 Basic earnings per share: As reported $2.92 $.46 $.21 Pro forma 2.83 .42 .20 Diluted earnings per share: As reported $2.70 $.46 $.21 Pro forma 2.62 .42 .20 F-14 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 2000, 1999 and 1998, respectively: expected volatility of 47%, 40% and 60%; risk-free interest rate of 6.3%, 5.9% and 5.7%; and expected lives of 5 to 8 years. The effects of applying SFAS 123 in the above pro forma disclosures are not indicative of future amounts as they do not include the effects of awards granted prior to 1995. Additionally, future amounts are likely to be affected by the number of grants awarded since additional awards are generally expected to be made at varying amounts. NOTE 10 - COMMITMENTS/RELATED PARTY TRANSACTIONS - ------------------------------------------------ In May 1994, the Company entered into a new lease with its then existing landlord to lease a 110,800 square foot facility for its corporate headquarters and Miami distribution center. The lease has a term expiring in 2014 (subject to the Company's right to terminate at any time after the fifth year of the term upon twenty-four months prior written notice and the payment of all outstanding debt owed to the landlord). The lease gives the Company three six-year options to renew at the fair market value rental rates. The lease is currently in its seventh year and provides for annual fixed rental payments totaling approximately $307,800 in year seven; and in each year thereafter during the term, the rent shall increase once per year in an amount equal to the annual percentage increase in the consumer price index not to exceed 4% in any one year. The Company also leases approximately 20,000 square feet of space for its west coast distribution and semiconductor programming center located in Fremont, California (near San Jose). In Denver, Colorado the Company leases a 7,600 square foot facility which is dedicated to certain value-added services and a regional distribution center. In Tustin, California the Company leases a 13,900 square foot facility which presently contains all operations for the separate divisions of Aved Display Technologies and Aved Memory Products. In December 2000, the Company leased 26,700 square feet of space in Irvine, California which will house the operations of the Company's newly created Integrated Display Technologies division. The Company also intends to relocate to the Irvine location the operations of Aved Display Technologies when construction of the facility is completed. This will permit the expansion of the operations of Aved Memory Products which will then occupy all of the existing facility in Tustin. During 1998, the Company entered into a new lease for approximately 20,000 square feet of space in San Jose, California to house its expanded west coast corporate offices and the headquarters of the Company's sales and marketing functions, as well as its northern California sales operation. Approximately 8,000 square feet of the space is being used for corporate offices including the office of the President and Chief Executive Officer of the Company and 8,000 square feet of the space is being utilized for the sales operation. The remaining area of approximately 4,000 square feet is presently being sublet. The Company leases space for its other sales offices, which range in size from approximately 1,000 square feet to 8,000 square feet. The leases for these offices expire at various dates and include various escalation clauses and renewal options. F-15 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Approximate minimum future lease payments required under operating leases for office leases as well as equipment leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2000, are as follows: YEAR ENDING DECEMBER 31 - ----------------------- 2001.......................................................... $3,700,000 2002.......................................................... 3,000,000 2003.......................................................... 2,600,000 2004.......................................................... 1,700,000 2005.......................................................... 1,300,000 Thereafter.................................................... 5,300,000 Total rent expense for office leases, including real estate taxes and net of sublease income, amounted to approximately $2,703,000, $2,451,000, and $2,165,000 for the years ended December 31, 2000, 1999 and 1998, respectively. In 1998, the Board of Directors approved a loan to the President and Chief Executive Officer of the Company in the amount of $125,000 in connection with his relocation to Silicon Valley. This loan, which was evidenced by a promissory note and bore interest at 5% per annum, was forgiven effective December 31, 2000. Effective January 1, 1988, the Company established a deferred compensation plan (the "1988 Deferred Compensation Plan") for executive officers and key employees of the Company. The employees eligible to participate in the 1988 Deferred Compensation Plan (the "Participants") are chosen at the sole discretion of the Board of Directors upon a recommendation from the Board of Directors' Compensation Committee. Pursuant to the 1988 Deferred Compensation Plan, commencing on a Participant's retirement date, he or she will receive an annuity for ten years. The amount of the annuity shall be computed at 30% of the Participant's Salary, as defined. Any Participant with less than ten years of service to the Company as of his or her retirement date will only receive a pro rata portion of the annuity. Retirement benefits paid under the 1988 Deferred Compensation Plan will be distributed monthly. The Company paid benefits under this plan of approximately $15,600 during each of 2000, 1999 and 1998, none of which was paid to any executive officer. The maximum benefit payable to a Participant (including each of the executive officers) under the 1988 Deferred Compensation Plan is presently $30,000 per annum. At December 31, 2000, the cash surrender values of insurance policies owned by the Company under the 1988 Deferred Compensation Plan, which provide for the accrued deferred compensation benefits, aggregated approximately $170,000. During 1996, the Company established a second deferred compensation plan (the "Salary Continuation Plan") for executives of the Company. The executives eligible to participate in the Salary Continuation Plan are chosen at the sole discretion of the Board of Directors upon a recommendation from the Board of Directors' Compensation Committee. The Company may make contributions each year in its sole discretion and is under no obligation to make a contribution in any given year. For 2000, 1999, and 1998 the Company committed to contribute $235,000, $115,000, and $192,000 respectively, under this plan. Participants in the plan will vest in their plan benefits over a ten-year period. If the participant's employment is terminated due to death, disability or due to a change in control of management, they will vest 100% in all benefits under the plan. Retirement benefits will be paid, as selected by the participant, based on the sum of the net contributions made and the net investment activity. During 2000, employment agreements with two of the Company's executive officers were amended whereby the term, among other things, was extended through December 31, 2005. In addition, during 2000 the Company entered into new agreements that continue until December 31, 2003 with two other executive officers on similar terms as were contained in their previous employment agreements with the F-16 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ Company. At December 31, 2000, in addition to incentive compensation, these agreements provide for aggregate base salary of approximately $5,366,000 over the remaining term of the agreements. In connection with an employment agreement with an executive officer an unfunded postretirement benefit obligation of $1,171,000 is included in the Consolidated Balance Sheets at December 31, 2000 and 1999. The Company maintains a 401(k) plan (the "401(k) Plan"), which is intended to qualify under Section 401(k) of the Internal Revenue Code. All full-time employees of the Company over the age of 21 are eligible to participate in the 401(k) Plan after completing 90 days of employment. Each eligible employee may elect to contribute to the 401(k) Plan, through payroll deductions, up to 15% of his or her salary, limited to $10,500 in 2000. The Company's 401(k) Plan presently provides for standard matching contributions by the Company in the amount of 25% on the first 6% contributed of each participating employee's salary. The Company expensed $691,000, $599,000, and $521,000 for matching contributions for the years ended December 31, 2000, 1999 and 1998, respectively. NOTE 11 - CONTINGENCIES - ----------------------- From time to time the Company may be named as a defendant in suits for product defects, breach of warranty, breach of implied warranty of merchantability, patent infringement or other actions relating to products which it distributes which are manufactured by others. In those cases, the Company expects that the manufacturer of such products will indemnify the Company, as well as defend such actions on the Company's behalf although there is no guarantee that the manufacturers will do so. In addition, the Company offers a warranty with respect to products manufactured or assembled for Aved Display Technologies and Aved Memory Products for a period of one year against defects in workmanship and materials under normal use and service and in their original, unmodified condition. NOTE 12 - ECONOMIC DEPENDENCY - ----------------------------- For each of the years ended December 31, 2000, 1999 and 1998, purchases from one supplier were in excess of 10% of the Company's total annual purchases and aggregated approximately $104,420,000, $62,950,000 and $39,893,000, respectively. The net outstanding accounts payable to this supplier at December 31, 2000, 1999 and 1998 amounted to approximately $11,286,000, $7,545,000 and $5,832,000, respectively. F-17 ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Additions Additions Balance at Charged to Charged to Beginning of Costs and Other Balance at End Description Period Expenses Accounts Deductions of Period - ---------------------- ------------- ------------ ----------- ----------- --------------- Allowance for Doubtful Accounts 2000 $ 1,987,000 $ 1,899,000 $ -- $ (603,000) $ 3,283,000 1999 $ 1,412,000 $ 824,000 $ -- $ (249,000) $ 1,987,000 1998 $ 1,166,000 $ 791,000 $ -- $ (545,000) $ 1,412,000
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