1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d)
-----
of the Securities Exchange Act of 1934 (Fee required)
For the fiscal year ended MARCH 31, 1994
or Transition Report Pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
Commission File No. 0-5734
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Pioneer-Standard Electronics, Inc.
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(Exact name of Registrant as specified in its charter)
Ohio 34-0907152
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(State or other jurisdiction of (I.R.S. employer iden-
incorporation or organization) tification no.)
4800 East 131st Street, Cleveland, Ohio 44105
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (216) 587-3600
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, without par value
--------------------------------
(Title of class)
Common Share Purchase Rights
----------------------------
(Title of class)
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
----
The aggregate market value of voting shares of the Registrant held by
non-affiliates (which excludes voting shares held by officers and Directors of
the Registrant) was $216,859,018 as of June 1, 1994, computed on the basis of
the last reported sale price per share ($23.75) of such shares on the NASDAQ
National Market System.
The number of Common Shares outstanding as of June 1, 1994 was 9,930,256.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Shareholders to be held on July 26, 1994
are incorporated by reference into Part III of this Form 10-K.
Except as otherwise stated, the information contained in this Annual Report on
Form 10-K is as of March 31, 1994.
The Common Share information contained in this Form 10-K does not reflect a
three-for-two share split effected in the form of a 50% share dividend declared
on June 23, 1994 payable on August 1, 1994 to shareholders of record on July 6,
1994.
PART I
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Item 1. Business
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(a) Pioneer-Standard Electronics, Inc. was organized as an Ohio corporation
in 1963 and maintains its principal office at 4800 East 131st Street,
Cleveland, Ohio 44105 (telephone number (216) 587-3600). The Company first
offered its securities to the public in 1971. In November, 1982, the Company
purchased substantially all of the assets of the Electronics and Military
divisions of The Harvey Group, Inc., a New York corporation. On December 28,
1990, the Company purchased from Lex Electronics, Inc., a New York corporation,
certain assets of Lex's Computer Systems Division. On June 1, 1994,
Pioneer-Standard Canada Inc., a newly-formed Canadian subsidiary of the
Company, purchased from United Westburne Inc., a Canadian corporation, certain
of the assets and assumed certain liabilities of Westburne's Zentronics
Division ("Zentronics"), which the Company believes is one of the largest
distributors of electronic components and computer products in Canada. There
have not been any material changes in the nature of the business done by the
Company since April 1, 1993. Except as otherwise stated, the term "Company" as
used herein shall mean Pioneer-Standard Electronics, Inc.
(b) The Company is engaged in the distribution of industrial and end-user
electronic products, which business comprises only one basic industry segment.
(c) The following is a description of various aspects of the Company's
business:
INDUSTRIAL AND END-USER DISTRIBUTION - The Company distributes a broad range
of electronic components and computer products manufactured by others. These
products are sold to original equipment manufacturers, value-added resellers,
research laboratories, government agencies, and end-users, including
manufacturing
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companies, and service and other non-manufacturing organizations. These
products are classified into three broad categories: semiconductors, computer
products, and passive and electromechanical components. During 1994,
semiconductor products accounted for 41% of the Company's sales compared with
37% in 1993 and 36% in 1992. These products include microprocessors, memory
devices, programmable logic devices, analog and digital integrated circuits and
other semiconductor devices. During fiscal 1994, computer products accounted
for 33% of the Company's sales compared with 39% in 1993 and 42% in 1992.
These products include computers (primarily mini and personal), display
terminals, disk drives, development systems, modems and networking products.
During 1994, passive and electromechanical products accounted for 24% of the
Company's sales, up from 21% in 1993 and 19% in 1992. These products include
capacitors, connectors, resistors, relays, potentiometers, switches, wire and
cable, and power conditioning equipment.
As a part of its distributor operations, the Company provides value-added
services including systems integration, just-in-time kitting operations, memory
and logic device programming and connector assemblies to customer
specifications. Sales amounts for these services are included among the three
broad categories discussed above.
Miscellaneous products accounted for 2% of sales in 1994 and for 3% of sales
in 1993 and 1992.
PIONEER TECHNOLOGIES GROUP, INC. - The Company owns 50% of the outstanding
common stock of Pioneer Technologies Group, Inc. ("Pioneer Technologies"), a
Maryland corporation headquartered in Gaithersburg, Maryland. The business of
Pioneer Technologies is substantially the same as that of the Company. The
companies have an agreement which provides, among other things, that they have
the right to buy each other's products at cost of the product plus handling.
In addition, Pioneer Technologies utilizes the Company's data processing system
for processing order, warehousing, accounting and administrative information,
for which it is charged a monthly fee. For further information as to
transactions between the companies, including certain first right of refusal
agreements concerning the Company's 50% ownership of Pioneer Technologies, see
Note 9 (Pioneer Technologies Group, Inc.) of Notes to Financial Statements of
the Company.
PRODUCTS DISTRIBUTED AND SOURCES OF SUPPLY - The Company (together with
Pioneer Technologies) is the third largest of the approximately 1,500
electronics distributors in the United States in terms of total sales. The
Company currently has approximately 135,000 items produced by over 100
manufacturers in its product file. A majority of the Company's revenues comes
from products sourced by relatively few suppliers. During the 1994 fiscal
year, products purchased from the Company's five largest suppliers accounted
for 72% of total sales volume, with Digital Equipment
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Corporation and Intel Corporation being the largest two suppliers. The loss of
any one of the top five suppliers and/or a combination of certain other
suppliers could have a material adverse effect on the Company's sales and
earnings unless alternative products manufactured by others are available to
the Company. The majority of the products sold by the Company are purchased
pursuant to distributor agreements which generally provide for inventory return
privileges by the Company upon cancellation of a distributor agreement. The
distributor agreements also typically provide protection to the Company for
product obsolescence and price erosion. The Company believes it has good
relationships with its suppliers.
CUSTOMERS - The Company serves over 15,800 customers in many major markets of
the United States. No single customer accounted for more than five percent of
the Company's total sales for the fiscal year ended March 31, 1994.
BACKLOG - The Company historically has not had a significant backlog of
orders, although some shipments may be scheduled for delivery over an extended
period of time. There was not a significant backlog during the last fiscal
year.
COMPETITION - The sale and distribution of industrial electronic components
and computer products are highly competitive, primarily with respect to price
and product availability, but also with respect to service, variety and
availability of products carried, number of locations and promptness of
service. Many of the distributors with whom the Company competes are regional
or local distributors. However, several of the Company's strongest competitors
have national and international distribution businesses. The Company also
experiences competition from manufacturers, including some of the Company's
suppliers, who may sell directly to the industrial and end-user account base.
EMPLOYEES - The Company currently has 1,078 employees, with approximately
1,060 of these persons employed on a full-time basis and the balance on a
part-time basis. The number of employees does not include the employees the
Company obtained through the acquisition of Zentronics. The Company is not a
party to any collective bargaining agreement, has had no strikes or work
stoppages and considers its employee relations to be excellent.
(d) The distribution of the Company's products has been primarily in the
United States. The Company gained a West Coast presence through its March,
1989 acquisition of the assets of Compumech Electronics, Inc. and its December,
1990 acquisition of certain assets of the Lex Computer Systems Division of Lex
Electronics, Inc. In addition, the Company entered the Canadian market through
its June, 1994 acquisition of certain assets of Zentronics. The Company is not
significantly involved in export sales.
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Item 2. Properties
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The Company's major distribution facilities are set forth below:
Owned or Expiration Date
Location Sq. Ft. Leased of Lease (1)
-------- ------- -------- --------------
Chicago, Illinois 11,300 Leased April 14, 1998
Cleveland, Ohio (2) 87,000 Owned
Dallas, Texas 13,500 Leased October 31, 1994
Dayton, Ohio 60,800 Owned
Eden Prairie, Minnesota 12,800 Leased August 31, 1997
Freemont, California 12,000 Leased March 14, 1999
Irvine, California 14,700 Leased February 28, 1997
Lexington, Massachusetts 26,400 Owned
Solon, Ohio 86,300 Leased March 31, 1996
Solon, Ohio 30,000 Leased October 31, 1994
Solon, Ohio (3) 44,700 Leased May 31, 1999
Twinsburg, Ohio (4) 106,000 Owned
Woodbury, New York 35,600 Leased September 30, 1997
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<FN>
(1) The major leases contain renewal options for periods ranging
from one to twenty years.
(2) Corporate headquarters.
(3) Systems and Services Division facility.
(4) Corporate Distribution Center.
The Company also has entered into various leases for distribution
facilities of 10,000 square feet or less. The list of properties set forth
above does not include the properties the Company obtained through the
acquisition of Zentronics.
Item 3. Legal Proceedings
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As of March 31, 1994, the Company was not a party to any material
pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Company's security holders
during the last quarter of its fiscal year ended March 31, 1994.
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Executive Officers of the Company(1)
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The name, age and positions of each executive officer of the Company
as of June 1, 1994 are as follows:
Name Age Position
---- --- --------
Preston B. Heller, Jr. 64 Chairman of the Board and Chief
Executive Officer of the Company since
June, 1984.
James L. Bayman 57 President and Chief Operating
Officer of the Company since June, 1984.
Arthur Rhein 48 Senior Vice President of the Company
since April, 1993 and Vice President -
Marketing of the Company from 1986 to
April, 1993. Prior thereto, Vice
President - Northeast Division of the
Company from 1984 to 1986.
John V. Goodger 58 Vice President, Treasurer, and
Assistant Secretary of the Company
since February, 1990. Prior thereto,
Vice President, Treasurer and Assistant
Secretary of Ferro Corporation from
1987 to 1990 and Vice President and
Treasurer of Ferro Corporation from
1984 to 1990.
Janice M. Margheret 39 Senior Vice President of the Company
since April, 1993 and Vice President
and Controller of the Company from July,
1987 to April, 1993. Prior thereto,
Group Controller of the Company from
1983 to 1987.
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William A. Papenbrock 55 Secretary of the Company since 1986.
Mr. Papenbrock is a partner of the
law firm of Calfee, Halter &
Griswold(2).
__________________________
(1) The description of Executive Officers called for in this Item
is included pursuant to Instruction 3 to Section (b) of Item
401 of Regulation S-K.
(2) The law firm of Calfee, Halter & Griswold serves as counsel to
the Company.
There is no relationship by blood, marriage or adoption among the
above-listed officers. Messrs. Heller, Bayman, Rhein, and Goodger and Ms.
Margheret have entered into Amended and Restated Employment Agreements with the
Company, all of which are included as Exhibits hereto. Messrs. Heller, Bayman,
Rhein, and Goodger and Ms. Margheret hold office until terminated as set forth
in their Amended and Restated Employment Agreements. Mr. Papenbrock holds
office until his successor is elected by the Board of Directors.
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PART II
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Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
- - - ------- --------------------------------------------------------------------
The Company's Common Shares, without par value, are traded on the
NASDAQ National Market System. Common Share prices are quoted daily under the
symbol PIOS. The high and low sales prices for the Common Shares, and the cash
dividends paid on the Common Shares, for each quarter of the two most recent
fiscal years and additional information required by this Item is included under
Exhibit 99(c) to this Form 10-K Annual Report.
Cash dividends are payable quarterly, upon authorization of the Board
of Directors. Regular payment dates are the 1st day of August, November,
February and May. The Company maintains a Dividend Reinvestment Plan whereby
cash dividends, and a maximum of an additional $5,000 per month, may be
invested in the Company's Common Shares at no commission cost.
On April 25, 1989, the Company adopted a Common Share Purchase Rights
Plan. For further information about the Common Share Purchase Rights Plan, see
Note 6 (Common Share Purchase Rights Plan) of Notes to Financial Statements of
the Company.
Item 6. Selected Financial Data
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The information required by this Item, is included under Exhibit 99(d)
to this Form 10-K Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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The information required by this Item is included under Exhibit 99(e)
to this Form 10-K Annual Report.
Item 8. Financial Statements and Supplementary Data
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The information required by this Item is included under Exhibit 99(f)
to this Form 10-K Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
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Not applicable.
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PART III
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Item 10. Directors and Executive Officers of the Registrant
- - - -------- --------------------------------------------------
Information required by this item as to the Directors of the Company
appearing under the caption "Nominees for Election" and "Directors Continuing
in Office" in the Company's Proxy Statement to be used in connection with the
Annual Meeting of Shareholders to be held on July 26, 1994 (the "1994 Proxy
Statement") is incorporated herein by reference. Information required by this
item as to the executive officers of the Company is included in Part I of this
Annual Report on Form 10-K.
Item 11. Executive Compensation
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The information required by this item is incorporated herein by
reference to "Compensation of Executive Officers" in the 1994 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
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The information required by this item is incorporated herein by
reference to "Share Ownership" in the 1994 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
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The information required by this item is incorporated herein by
reference to "Certain Transactions" in the 1994 Proxy Statement.
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PART IV
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Item 14. Exhibits, Financial Statement Schedules, and Reports on
- - - -------- -------------------------------------------------------
Form 8-K
--------
(a) The following financial statements and schedules are filed as part of
this report on Exhibit 99(f) as indicated:
Page in
Exhibit 99(f)
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(1) Financial Statements and Schedules
----------------------------------
Pioneer-Standard Electronics, Inc.
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Report of independent auditors 11
Balance sheet as of March 31, 1994 and 1993 2
For the years ended March 31, 1994, 1993
and 1992:
Statements of income 3
Statements of shareholders' equity 4
Statements of cash flows 5
Notes to financial statements 6
Report of independent auditors 12
Schedules for years ended March 31, 1994,
1993 and 1992:
II - Amounts receivable from related
parties and underwriters, promoters,
and employees other than related
parties 13
VIII - Valuation and qualifying
accounts 14
IX - Short-term borrowings 15
Quarterly Financial Data 16
Pioneer Technologies Group, Inc.
--------------------------------
Report of independent auditors 19
Balance sheet as of March 31, 1994 and 1993 20
For the years ended March 31, 1994, 1993
and 1992:
Statements of income and
retained earnings 22
Statements of cash flows 23
Notes to financial statements 24
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Schedules for years ended March 31, 1994,
1993 and 1992:
VIII - Valuation and qualifying
accounts 31
IX - Short-term borrowings 32
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
(2) Exhibits
--------
See the Index to Exhibits at page E-1 of this Form 10-K.
(b) Reports on Form 8-K
-------------------
No Current Reports on Form 8-K were filed during the quarter ended March 31,
1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PIONEER-STANDARD ELECTRONICS, INC.
Date: June 28, 1994 By: /s/ Preston B. Heller, Jr.
--------------------------
Preston B. Heller, Jr.,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature and Title Date
- - - ------------------- ----
/s/ Preston B. Heller, Jr. Chairman of the )
- - - -------------------------- Board and Chief )
Preston B. Heller, Jr. Executive Officer )
)
/s/ John V. Goodger Vice President, )
- - - -------------------------- Treasurer and )
John V. Goodger Assistant Secretary )
)
/s/ Janice M. Margheret Senior Vice )
- - - -------------------------- President )
Janice M. Margheret )
)
/s/ James L. Bayman Director )
- - - -------------------------- )
James L. Bayman )
)
/s/ Frederick A. Downey Director )
- - - -------------------------- ) June 28, 1994
Frederick A. Downey )
)
/s/ Victor Gelb Director )
- - - -------------------------- )
Victor Gelb )
)
/s/ Gordon E. Heffern Director )
- - - -------------------------- )
Gordon E. Heffern )
)
/s/ Arthur Rhein Director )
- - - -------------------------- )
Arthur Rhein )
)
/s/ Edwin Z. Singer Director )
- - - -------------------------- )
Edwin Z. Singer )
)
/s/ Thomas C. Sullivan Director )
- - - -------------------------- )
Thomas C. Sullivan )
)
/s/ Karl E. Ware Director )
- - - -------------------------- )
Karl E. Ware )
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Pioneer-Standard Electronics, Inc.
Exhibit Index
Sequential
Exhibit No. Description Page No.
- - - ----------- ----------- ----------
3.(a) Amended Articles of Incorporation of
Pioneer-Standard Electronics, Inc., which
is incorporated herein by reference from
the Company's Annual Report on Form 10-K
for the year ended March 31, 1982. N/A
(b) Amended Code of Regulations, as amended,
which is incorporated herein by reference
from the Company's Annual Report on
Form 10-K for the year ended March 31,
1988. N/A
4.(a) Credit Agreement dated as of January 23,
1992 by and among the Company and three
banks, which is incorporated herein by
reference from the Company's Annual
Report on Form 10-K for the year ended
March 31, 1992. N/A
(b) Amendment Agreement, dated as of June 30, 1993,
by and among the Company, National City Bank,
Society National Bank (successor in interest
to Ameritrust Company National Association)
and Star Bank, N.A. 16
(c) Second Amendment Agreement, dated as of
May 27, 1994, by and among the Company,
National City Bank, Society National Bank
(successor in interest to Ameritrust Company
National Association) and Star Bank, N.A. and
National City Bank, as Agent. 17
(d) Rights Agreement dated as of April 25, 1989
by and between the Company and AmeriTrust
Company National Association, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for
the year ended March 31, 1989. N/A
(e) Note Purchase Agreement dated as of October
31, 1990 by and between the Company and
Teachers Insurance and Annuity Association
of America, which is incorporated herein
by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended
December 31, 1990. N/A
(f) Amendment No. 1 to Note Purchase Agreement
dated as of November 1, 1991 by and between
the Company and Teachers Insurance and
Annuity Association of America, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for
the year ended March 31, 1993. N/A
E-1
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Sequential
Exhibit No. Description Page No.
- - - ----------- ----------- ----------
10.(a) Amended and Restated Employment Agreement
effective as of April 1, 1993 by and between
the Company and Preston B. Heller, Jr., which
is incorporated herein by reference from the
Company's Annual Report on Form 10-K for the
year ended March 31, 1993. N/A
(b) Amended and Restated Employment Agreement
effective as of April 1, 1993 by and between
the Company and James L. Bayman, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for the
year ended March 31, 1993. N/A
(c) Amended and Restated Employment Agreement
effective as of April 1, 1993 by and
between the Company and Janice M. Margheret,
which is incorporated herein by reference
from the Company's Annual Report on Form 10-K
for the year ended March 31, 1993. N/A
(d) Amended and Restated Employment Agreement
effective as of April 1, 1993 by and between
the Company and Arthur Rhein, which is
incorporated herein by reference from the
Company's Annual Report on Form 10-K for the
year ended March 31, 1993. N/A
(e) Amended and Restated Employment Agreement
effective as of April 1, 1994 by and between
the Company and John V. Goodger. 22
(f) Stock Purchase Agreement dated July 24, 1986
among Pioneer-Standard Electronics, Inc.
and the other shareholders of
Pioneer Technologies Group, Inc., which
is incorporated herein by reference from
the Company's Current Report on Form 8-K
dated July 24, 1986. N/A
(g) 1982 Incentive Stock Option Plan, as amended,
which is incorporated by reference from the
Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1988. N/A
(h) Amended and Restated 1991 Stock Option Plan. 37
(i) Asset Purchase Agreement dated April 22, 1994
between Pioneer-Standard Electronics, Inc. and
Westburne Industrial Enterprises Ltd., which
is incorporated herein by reference from the
Company's Current Report on Form 8-K dated
June 1, 1994. N/A
11. Statement regarding computation of per share
earnings. 43
21. Subsidiaries of the Registrant. 44
24. Consents of Ernst & Young, Independent Auditors. 45
E-2
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Sequential
Exhibit No. Description Page No.
- - - ----------- ----------- ----------
99.(a) Certificate of Insurance Policy effective
November 1, 1993 between Chubb Group of
Insurance Companies and Pioneer-Standard
Electronics, Inc. 47
99.(b) Forms of Amended and Restated Indemnification
Agreement entered into by and between the
Company and each of its Directors and
Executive Officers. 48
99.(c) Dividend Information and Price Range of
Common Shares 52
99.(d) Selected Financial Data 53
99.(e) Management's Discussion and Analysis of
Financial Condition and Results of Operations. 54
99.(f) Financial Statements and Schedules listed
under Item 14(a) 61
431/15154HZF.458
E-3