Exhibit 99.1
[PIONEER STANDARD LOGO]
FOR IMMEDIATE RELEASE
PIONEER-STANDARD ELECTRONICS REPORTS FOURTH QUARTER
AND FISCAL 2003 RESULTS
- Fourth Quarter Pro-forma $0.07 Net Loss in Line with Previously
Announced Guidance
- Company Expects Improved Sales and Earnings in Fiscal 2004
CLEVELAND, Ohio - May 13, 2003 - Pioneer-Standard Electronics, Inc. (Nasdaq:
PIOS) today announced a net loss of $10.7 million, or $0.39 per share, for its
fourth quarter ended March 31, 2003. This compares with a net loss of $6.3
million, or $0.23 per share, for the fourth quarter last year.
Because of the previously announced sale of the Company's Industrial Electronics
Division ("IED") to Arrow Electronics, Inc., the attached financial statements
have been restated to classify the IED operating results as discontinued
operations. Results for the fourth quarter of 2003 included a pre-tax gain of
approximately $53.5 million from the sale of IED. Offsetting this gain were
pre-tax charges of approximately $31.6 million related to the disposition of IED
and the operating loss of the division prior to the sale. These actions resulted
in a pre-tax gain from discontinued operations of $21.9 million, or $14.2
million net of tax.
In addition, several charges associated with the reorganization of the Company's
ongoing business were recorded in the fourth quarter of fiscal 2003 as discussed
below.
The Company recorded pre-tax restructuring charges of approximately $20.7
million in the fourth quarter of fiscal 2003. These costs are specific to the
impairment of facilities and other assets that were inconsistent with the
Company's strategic plan and are no longer required, and severance costs
incurred in connection with downsizing the corporate structure.
A charge of $14.6 million was also recorded during the fourth quarter to reduce
the carrying value of the Company's investment in Eurodis Electron PLC, a
European distributor of electronic components, to reflect the market value of
Eurodis stock on March 31, 2003, as quoted on the London Stock Exchange. As a
result of the sale of IED, the investment no longer holds strategic value for
Pioneer-Standard, and the adjustment to market value was required.
The Company also recorded a pre-tax loss of $1.2 million related to the
retirement of debt in the fourth quarter of 2003.
Excluding the discontinued operations and the reorganization charges discussed
above, pro-forma net loss for the fourth quarter of 2003 would have been $2.0
million, or $0.07 per share. These results are in line with the Company's
previously issued guidance on March 18, 2003 of a pro-forma net loss of
$0.05-$0.10 per share. On a comparable basis, pro-forma net income would have
been $2.7 million, or $0.10 per share, for the fourth quarter last year. A
reconciliation of the net loss reported for the
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fourth quarter of 2003 and net income reported for the fourth quarter of 2002 to
the above pro-forma amounts is included as an attachment to this press release.
Sales for the quarter were $261.3 million, a decline of 8.5% compared with the
fourth quarter last year. Contributing factors included the decision to
discontinue certain products and customer relationships that did not fit the
Company's long-term strategic plan, as well as depressed corporate capital
spending.
"I am very pleased with the performance of the ongoing business during the
fourth quarter and our ability to meet our guidance in light of the soft market
conditions, our exit from non-strategic businesses, and the divestiture itself,"
said Arthur Rhein, chairman, president and chief executive officer.
Fiscal 2003 Full Year Results
For the fiscal year ended March 31, 2003, the Company reported a net loss of
$42.1 million, or $1.54 per share. This compares with a net loss of $7.0
million, or $0.26 per share, reported last year.
The net loss for 2003 includes a goodwill impairment charge of $34.8 million,
net of tax, or $1.27 per share, which was reported as a cumulative effect of
change in accounting principle, related to the Company's adoption of Statement
of Financial Accounting Standard No. 142, "Goodwill and Other Intangible
Assets."
Excluding discontinued operations, reorganization charges and goodwill
impairment, pro-forma net loss for the years ended March 31, 2003 and 2002 would
have been $3.2 million, or $0.12 per share, and $2.6 million, or $0.10 per
share, respectively. A reconciliation of the net loss reported for the years
ended March 31, 2003 and 2002 to the above pro-forma amounts is included as an
attachment to this press release.
Sales for the fiscal year ended March 31, 2003 were $1.2 billion, which is a
decline of 9.5% compared with the $1.3 billion reported in fiscal 2002,
primarily due to depressed capital spending.
Business Outlook
"As previously stated, I have five very specific goals for Pioneer-Standard,"
Rhein said. "We will grow sales faster than our markets; we will grow profits
faster than sales; we will report operating profit of approximately 2.5% by the
end of fiscal 2004 and 3%-3.5% for the longer term; we will drive our return on
total capital to the 7%-9% range over the next 18 to 24 months, building to a
sustainable 10%-12% long-term; and we will continue to opportunistically reduce
our debt to achieve a debt-to-total-capital ratio of 25%-35%."
Pioneer-Standard currently anticipates revenue growth of 3% to 6% in fiscal
2004, which ends March 31, 2004. The Company expects gross margins to
approximate 13%, and operating expenses to be in the range of 10.5% to 11.0% of
sales for the full year. Interest expense will be approximately $10.0 million
for the year, assuming no additional debt reductions. The effective tax rate is
expected to approximate 40% in fiscal 2004. As a result of these expectations,
which do not include anticipated debt reductions in fiscal 2004, the Company is
projecting net income of between $0.15 and $0.20 per share for the full fiscal
year. The Company noted that any future debt reductions will favorably impact
its current earnings outlook.
"We also expect the second half of fiscal 2004 to be substantially stronger than
the first half, much like fiscal 2003's seasonal second-half strength," noted
Rhein. "Although the enterprise computer
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systems business is less cyclical than the electronic components distribution
business, it is typically more seasonal."
The Company expects sales for the first quarter of fiscal 2004, ending June 30,
2003, to be flat to slightly higher than the $273.2 million reported for the
first quarter of fiscal 2003. Gross margins are anticipated to be approximately
13%. Operating expenses are anticipated to be between 11.8% and 12.2% of sales
for the quarter, due to restructuring charges that will be recognized in the
quarter, along with the normal seasonal sales trend. Net income is anticipated
to be between break-even and a loss of $0.05 per share for the quarter ending
June 30, 2003.
Forward-Looking Language
Portions of this release, particularly the statements made by management and
those included in the Business Outlook section, are forward-looking statements
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to important factors
that could cause Pioneer-Standard's actual results to differ materially from
those anticipated by the forward-looking statements. These factors include those
referenced in the Annual Report on Form 10-K or as may be described from time to
time in Pioneer-Standard's subsequent SEC filings.
Pro-Forma Information
In addition to results disclosed in accordance with Generally Accepted
Accounting Principles (GAAP), Pioneer-Standard has disclosed pro-forma, or
non-GAAP, results of operations. These pro-forma results are presented to permit
shareholders and other users of financial information to better assess the
Company's operating performance. This data is provided to complement the results
provided in accordance with GAAP.
Conference Call Information
A conference call to discuss quarterly results is scheduled for 10 a.m. Eastern
Time on Tuesday, May 13, 2003. The conference call will be broadcast live over
the Internet and a replay will be accessible on the investor relations page of
the Company's Web site: www.pioneerstandard.com.
A taped replay of the conference call will be available at Noon ET on Tuesday,
May 13, 2003 through Midnight ET, Wednesday, May 21, 2003 accessible by dialing
877-344-7529 or 412-858-1440 (account #914 for conference call #316105).
About Pioneer-Standard Electronics, Inc.
Pioneer-Standard Electronics, Inc. is one of the foremost distributors and
premier resellers of enterprise computer technology solutions from HP and IBM as
well as other leading manufacturers. The Company has a proven track record of
delivering complex servers, software, storage and services to resellers and
corporate customers across a diverse set of industries. Headquartered in
Cleveland, OH, Pioneer-Standard has sales offices throughout the U.S. and
Canada. For more information, visit the Company's website at
www.pioneerstandard.com.
For more information contact: Steven M. Billick
Executive Vice President, Treasurer and CFO
Pioneer-Standard Electronics, Inc.
440-720-8680
# #
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PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
March 31 March 31
---------------------------- ----------------------------
(In Thousands, Except Per Share Data) 2003 2002 2003 2002
------------ ------------ ------------ ------------
Net Sales $ 261,339 $ 285,548 $ 1,171,631 $ 1,294,322
Cost of goods sold 226,874 244,698 1,022,378 1,123,839
------------ ------------ ------------ ------------
Gross margin 34,465 40,850 149,253 170,483
Warehouse, selling and administrative
expenses 32,794 34,021 135,899 154,682
Restructuring charges 20,697 473 20,697 473
------------ ------------ ------------ ------------
Operating Income (Loss) (19,026) 6,356 (7,343) 15,328
Other (Income) Expense
Other income, net (496) (1,175) (966) (873)
Investment impairment 14,600 - 14,600 -
Interest expense, net 2,656 2,111 9,343 11,257
Loss on retirement of debt 1,164 - 1,164 -
------------ ------------ ------------ ------------
Income (Loss) Before Income Taxes (36,950) 5,420 (31,484) 4,944
Provision (benefit) for income taxes (13,805) 1,518 (11,739) 1,618
Distributions on mandatorily
redeemable convertible trust
preferred securities, net of tax 1,715 1,511 6,315 6,237
------------ ------------ ------------ ------------
Income (Loss) from Continuing Operations $ (24,860) $ 2,391 $ (26,060) $ (2,911)
Income (Loss) from Discontinued
Operations, net of tax 14,210 (8,668) 18,777 (4,136)
------------ ------------ ------------ ------------
Loss before Cumulative Effect of Change in
Accounting Principle $ (10,650) $ (6,277) $ (7,283) $ (7,047)
Cumulative Effect of Change in
Accounting Principle, net of tax - - (34,795) -
------------ ------------ ------------ ------------
Net Loss $ (10,650) $ (6,277) $ (42,078) $ (7,047)
============ ============ ============ ============
PER SHARE DATA:
BASIC:
Income (Loss) from Continuing Operations $ (0.91) $ 0.09 $ (0.96) $ (0.11)
Income (Loss) from Discontinued Operations 0.52 (0.32) 0.69 (0.15)
------------ ------------ ------------ ------------
Loss before Cumulative Effect of Change in
Accounting Principle $ (0.39) $ (0.23) $ (0.27) $ (0.26)
------------ ------------ ------------ ------------
Cumulative Effect of Change in Accounting
Principle - - (1.27) -
------------ ------------ ------------ ------------
Net Loss $ (0.39) $ (0.23) $ (1.54) $ (0.26)
============ ============ ============ ============
DILUTED:
Income (Loss) from Continuing Operations $ (0.91) $ 0.09 $ (0.96) $ (0.11)
Income (Loss) from Discontinued Operations 0.52 (0.32) 0.69 (0.15)
------------ ------------ ------------ ------------
Loss before Cumulative Effect of Change in
Accounting Principle $ (0.39) $ (0.23) $ (0.27) $ (0.26)
------------ ------------ ------------ ------------
Cumulative Effect of Change in Accounting
Principle - - (1.27) -
------------ ------------ ------------ ------------
Net Loss $ (0.39) $ (0.23) $ (1.54) $ (0.26)
============ ============ ============ ============
DIVIDENDS PER SHARE $ .03 $ .03 $ .12 $ .12
Weighted Average Shares Outstanding:
Basic 27,355,569 27,106,933 27,291,683 27,040,171
Diluted(A) 27,355,569 27,816,419(A) 27,291,683 27,040,171
(A) Including common shares issuable upon conversion of Trust Preferred
securities would have had an anti-dilutive effect, therefore diluted shares
only include common stock equivalents.
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PIONEER-STANDARD ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands, except per share data)
Three Months Ended Year Ended
March 31 March 31
---------------------- --------------------
2003 2002 2003 2002
---------- -------- -------- --------
Net Loss, as reported $ (10,650) $ (6,277) $ (42,078) $ (7,047)
(Income) Loss from Discontinued
Operations, net of tax (14,210) 8,668 (18,777) 4,136
Reorganization Charges:
Restructuring Charge, net of tax 12,965 341 12,979 318
Investment Impairment, net of tax 9,145 - 9,156 -
Loss on Retirement of Debt, net of tax 729 - 731 -
---------- -------- -------- --------
Total Reorganization Charges 22,839 341 22,866 318
Cumulative Effect of Change in
Accounting Principle, net of tax - - 34,795 -
---------- -------- -------- --------
Pro-Forma Net Income (Loss), as adjusted $ (2,021) $ 2,732 $ (3,194) $ (2,593)
========== ======== ======== ========
Net Loss per share, as reported $ (0.39) $ (0.23) $ (1.54) $ (0.26)
(Income) Loss from Discontinued
Operations, net of tax (0.52) 0.32 (0.69) 0.15
Restructuring Charge, net of tax 0.47 0.01 0.48 0.01
Investment Impairment, net of tax 0.34 - 0.33 -
Loss on Retirement of Debt, net of tax 0.03 - 0.03 -
Cumulative Effect of Change in
Accounting Principle, net of tax - - 1.27 -
---------- -------- -------- --------
Pro-Forma Net Income (Loss) per share, as adjusted $ (0.07) $ 0.10 $ (0.12) $ (0.10)
========== ======== ======== ========
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PIONEER-STANDARD ELECTRONICS, INC.
CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31 March 31
(Dollars In Thousands) 2003 2002
-------- --------
ASSETS
Current Assets
Cash and cash equivalents $318,543 $ 21,400
Accounts receivable, net 170,708 207,744
Inventories, net 48,285 74,145
Other 6,981 8,389
Assets of discontinued operations 43,367 385,512
-------- --------
Total current assets 587,884 697,190
Intangible Assets, net and Other 147,762 156,462
Property & Equipment, net 38,237 63,285
-------- --------
Total Assets $773,883 $916,937
======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $139,185 $137,244
Other 18,901 25,054
Liabilities of discontinued operations 26,127 74,286
-------- --------
Total current liabilities 184,213 236,584
Long-Term Debt 130,995 179,000
Other Long-Term Liabilities 16,450 16,981
Mandatorily Redeemable Convertible Trust
Preferred Securities 143,675 143,675
Shareholders' Equity 298,550 340,697
-------- --------
Total Liabilities and Shareholders' Equity $773,883 $916,937
======== ========
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