1
Exhibit 99(f)
PIONEER-STANDARD ELECTRONICS, INC.
FINANCIAL STATEMENTS AND SCHEDULES
PIONEER-TECHNOLOGIES GROUP, INC.
FINANCIAL STATEMENTS AND SCHEDULES
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BALANCE SHEETS
- - - --------------------------------------------------------------------------------
PIONEER-STANDARD ELECTRONICS, INC.
MARCH 31, 1994 AND 1993
- - - --------------------------------------------------------------------------------------------------------
ASSETS 1994 1993
- - - --------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash $ 5,954,000 $ 1,864,000
Accounts receivable, less allowance for doubtful accounts
(1994-$2,869,000, 1993-$1,713,000) 81,155,000 62,347,000
Merchandise inventory 85,754,000 67,101,000
Prepaid expenses 919,000 773,000
Deferred income taxes 4,391,000 3,471,000
- - - --------------------------------------------------------------------------------------------------------
Total current assets 178,173,000 135,556,000
INVESTMENT AND OTHER ASSETS:
Investment in 50%-owned company 14,463,000 11,462,000
Other assets 1,831,000 1,683,000
PROPERTY AND EQUIPMENT, AT COST:
Land 1,070,000 1,070,000
Buildings 12,706,000 12,076,000
Furniture and equipment 30,165,000 25,557,000
Leasehold improvements 1,876,000 2,091,000
- - - --------------------------------------------------------------------------------------------------------
45,817,000 40,794,000
Less accumulated depreciation and amortization 20,245,000 17,635,000
- - - --------------------------------------------------------------------------------------------------------
Net property and equipment 25,572,000 23,159,000
- - - --------------------------------------------------------------------------------------------------------
$220,039,000 $171,860,000
===================================
========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- - - --------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Notes payable to banks $ 2,000,000 $ 2,500,000
Accounts payable 68,585,000 46,019,000
Income taxes 3,088,000 3,119,000
Accrued salaries, wages and commissions 6,835,000 4,762,000
Other accrued liabilities 9,477,000 8,113,000
Long-term debt due within one year 3,056,000 262,000
- - - --------------------------------------------------------------------------------------------------------
Total current liabilities 93,041,000 64,775,000
LONG-TERM DEBT 22,272,000 21,328,000
DEFERRED INCOME TAXES 1,986,000 1,640,000
SHAREHOLDERS' EQUITY:
Common shares, without par value, $.67 stated value: authorized
20,000,000 shares; outstanding 9,912,906 shares in 1994
and 9,793,374 shares in 1993 6,609,000 6,529,000
Capital in excess of stated value 15,806,000 15,665,000
Retained earnings 80,325,000 61,923,000
- - - --------------------------------------------------------------------------------------------------------
Total shareholders' equity 102,740,000 84,117,000
- - - --------------------------------------------------------------------------------------------------------
$220,039,000 $171,860,000
===================================
<FN>
See accompanying notes.
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STATEMENTS OF INCOME
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PIONEER-STANDARD ELECTRONICS, INC.
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
- - - -----------------------------------------------------------------------------------------------
1994 1993 1992
- - - -----------------------------------------------------------------------------------------------
NET SALES $580,757,000 $430,013,000 $362,386,000
Operating costs and expenses:
Cost of goods sold 465,614,000 336,589,000 284,897,000
Warehouse, selling and administrative expenses 83,754,000 72,363,000 65,096,000
- - - -----------------------------------------------------------------------------------------------
549,368,000 408,952,000 349,993,000
- - - -----------------------------------------------------------------------------------------------
Operating profit 31,389,000 21,061,000 12,393,000
Equity in earnings of 50%-owned company 3,001,000 2,505,000 654,000
Interest expense (2,687,000) (3,581,000) (4,505,000)
- - - -----------------------------------------------------------------------------------------------
Income from operations before
income taxes 31,703,000 19,985,000 8,542,000
Provision for income taxes:
Federal
Current 9,946,000 6,267,000 2,082,000
Deferred (574,000) (811,000) 418,000
- - - -----------------------------------------------------------------------------------------------
9,372,000 5,456,000 2,500,000
State 2,655,000 1,616,000 715,000
- - - -----------------------------------------------------------------------------------------------
12,027,000 7,072,000 3,215,000
- - - -----------------------------------------------------------------------------------------------
NET INCOME $ 19,676,000 $ 12,913,000 $ 5,327,000
===============================================================================================
INCOME PER COMMON SHARE:
Primary $1.95 $1.41 $.65
Fully diluted 1.95 1.33 .63
===============================================================================================
<FN>
See accompanying notes.
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STATEMENTS OF SHAREHOLDERS' EOUITY
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PIONEER-STANDARD ELECTRONICS, INC.
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
- - - ---------------------------------------------------------------------------------------------------------------
Stated value Capital in
of common excess of Retained
shares stated value earnings Total
- - - ---------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1991 $5,458,000 $ 1,849,000 $45,548,000 $ 52,855,000
Net income 5,327,000 5,327,000
Cash dividends ($.107 per share) (875,000) (875,000)
Shares issued upon exercise of stock options 13,000 106,000 119,000
Tax benefit related to exercise of stock
options 29,000 29,000
- - - ---------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1992 5,471,000 1,984,000 50,000,000 57,455,000
Net income 12,913,000 12,9I3,000
Cash dividends ($.11 per share) (990,000) (990,000)
Shares issued upon conversion of debentures 1,026,000 13,280,000 14,306,000
Shares issued upon exercise of stock options 32,000 344,000 376,000
Tax benefit related to exercise of stock
options 57,000 57,000
- - - ---------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1993 6,529,000 15,665,000 61,923,000 84,117,000
Net income 19,676,000 19,676,000
Cash dividends ($.13 per share) (1,274,000) (1,274,000)
Shares issued upon exercise of stock options 95,000 719,000 814,000
Tax benefit related to exercise of stock
options 21,000 21,000
Shares retired (15,000) (599,000) (614,000)
- - - ---------------------------------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1994 $6,609,000 $15,806,000 $80,325,000 $102,740,000
===============================================================================================================
<FN>
See accompanying notes.
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STATEMENTS OF CASH FLOWS
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PIONEER-STANDARD ELECTRONICS, INC.
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
============================================================================================================
1994 1993 1992
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,676,000 $ 12,913,000 $ 5,327,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,264,000 4,646,000 4,127,000
Undistributed earnings of affiliate (3,001,000) (2,505,000) (654,000)
(Increase) decrease in operating working capital (11,635,000) 1,532,000 (6,083,000)
(Increase) decrease in other assets (199,000) 140,000 (802,000)
Deferred taxes (574,000) (622,000) 535,000
- - - ------------------------------------------------------------------------------------------------------------
Total adjustments (10,145,000) 3,191,000 (2,877,000)
- - - ------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,531,000 16,104,000 2,450,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (7,626,000) (4,160,000) (5,110,000)
Acquisition of business -- -- (2,125,000)
- - - ------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (7,626,000) (4,160,000) (7,235,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term financing (500,000) -- 2,500,000
Borrowings under revolving credit 25,000,000 8,000,000 22,000,000
Repayment under revolving credit (21,000,000) (17,000,000) (19,000,000)
Purchase of subordinated debt -- (916,000) --
Principal payments under long-term debt obligations (262,000) (1,494,000) (575,000)
Issuance of common shares under stock option plan 200,000 376,000 119,000
Tax benefit related to exercise of stock options 21,000 57,000 29,000
Dividends paid (1,274,000) (990,000) (875,000)
- - - ------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 2,185,000 (11,967,000) 4,198,000
- - - ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 4,090,000 (23,000) (587,000)
CASH AT BEGINNING OF YEAR 1,864,000 1,887,000 2,474,000
- - - ------------------------------------------------------------------------------------------------------------
CASH AT END OF YEAR $ 5,954,000 $ 1,864,000 $ 1,887,000
============================================================================================================
<F/N>
See accompanying notes.
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NOTES TO FINANCIAL STATEMENTS
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PIONEER-STANDARD ELECTRONICS, INC.
1 ACCOUNTING POLICIES
- - - ---------------------------------------------------
The Company is a distributor of electronic com-
ponents and computer products and maintains the
following accounting policies:
CASH EQUIVALENTS--The Company considers highly
liquid instruments with a maturity of ninety days
or less at date of purchase to be cash equivalents.
MERCHANDISE INVENTORY--Inventory is stated at the
lower of cost (first-in, first-out basis) or market.
Reserves for slow-moving and obsolete inventory
at March 31, were $2,540,000 in 1994 and
$2,659,000 in 1993.
AFFILIATED COMPANY--The Company owns 50% of
the outstanding common stock of Pioneer Technol-
ogies Group, Inc. The investment is accounted for
by the equity method.
OTHER ASSETS--Other assets include the excess of
cost over value assigned to net assets of a pur-
chased business, which is being amortized on the
straight-line method over 40 years; cash surrender
value of life insurance; security deposits; and
certain deferred charges.
PROPERTY AND EQUIPMENT--The Company
capitalizes costs associated with software developed
for its own use. Depreciation and amortization is
computed using principally the straight-line
method. Accelerated methods are used for tax
reporting purposes.
INCOME TAXES--Effective April 1, 1993, the Com-
pany adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income
Taxes." This statement requires the use of the
liability method in accounting for income taxes.
Under this method, deferred tax assets and
liabilities are determined based on differences be-
tween financial reporting and tax bases of assets
and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the
differences are expected to reverse. Prior to the
adoption of Statement No. 109, income tax ex-
pense was determined using the deferred method.
Deferred tax expense was based on items of in-
come and expense that were reported in different
years in the financial statements and tax returns
and were measured at the tax rate in effect in the
year the difference originated.
As permitted by Statement No. 109, the Com-
pany has elected not to restate the financial
statements of any prior years. Adoption of this
statement was not material to quarterly or annual
results in the current year.
STOCK SPLIT--On January 26, 1993, the Board of
Directors declared a three-for-two stock split ef-
fected in the form of a 50% share dividend of the
Company's Common Shares payable March 15,
1993 to shareholders of record February 12, 1993.
All share and per share data have been restated for
all periods presented to reflect the stock split.
COMMON SHARES AND NET INCOME PER COMMON
SHARE--Net income per common share is com-
puted using the weighted average common shares
and common share equivalents outstanding during
the year of 10,078,682 in 1994, 9,188,512 in
1993, and 8,204,623 in 1992. Common share
equivalents consists of shares issuable upon exer-
cise of stock options computed by using the
treasury stock method.
Fully diluted net income per common share is
computed on the same basis as above with the
assumption that all of the 9% Subordinated Con-
vertible Debentures were converted into common
shares and that the related interest expense, net of
income taxes, was added to net income. The
number of shares used for this computation was
9,977,669 and 9,915,912 in 1993 and 1992,
respectively.
2 SUBSEQUENT EVENT--ACQUISITION
- - - --------------------------------------------------------
In April, 1994, the Company entered into a pur-
chase agreement with United Westburne Inc. to ac-
quire certain assets and to assume certain liabilities
of Zentronics, the Canadian electronics distribution
division of Westburne, subject to satisfactory com-
pletion of due diligence. The purchase price,
dependent upon values as of the closing scheduled
for June 1, is estimated to be $12,000,000. Zen-
tronics had annual sales of approximately
$71,000,000 (Cdn.) or $54,000,000 (U.S.).
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3 LOAN AGREEMENTS
- - - -------------------------------------------------
Short-Term:
The Company has unsecured short-term lines of
credit aggregating $20,000,000 available for use.
Terms of the Company's revolving credit agree-
ment limit the aggregate borrowings against these
unsecured lines to a maximum of $15,000,000.
The unsecured lines, which may be withdrawn at
the option of the revolving credit lendors, permit
the Company to borrow at varying interest rates.
There were $2,000,000 of borrowings against
these lines at March 31, 1994.
Long-Term:
Long-term debt at March 31, 1994 and 1993
consists of the following:
- - - -----------------------------------------------------
1994 1993
- - - -----------------------------------------------------
Revolving credit $ 4,000,000 $ --
9.79% Senior Notes 20,000,000 20,000,000
Obligations under capital
leases 1,328,000 1,590,000
--------------------------
25,328,000 21,590,000
--------------------------
Less amounts due within
one year 3,056,000 262,000
--------------------------
$22,272,000 $21,328,000
==========================
Terms of the Company's revolving credit agree-
ment provide for up to an aggregate of $30,000,000
of unsecured borrowings on a revolving credit
basis until January 1, 1997 after which time any
outstanding borrowings are convertible into a four-
year term loan amortized in equal quarterly in-
stallments. The agreement contains a provision
whereby annually, upon consent of the parties, the
maturity date may be extended for one additional
year resulting in a remaining three-year revolving
credit and four-year term loan facility. At the
choice of the Company, interest on borrowings is
payable at a floating prime rate or at other floating
rate options (certificate of deposit, LIBOR, or
banker's acceptance) plus 3/4%. There is a commit-
ment fee of 1/4% on the unborrowed amount.
Annual principal payments of $2,860,000 on the
9.79% Senior Notes will begin November 1, 1994
and continue through November 1, 2000 when the
last payment of $2,840,000 is due. Interest is pay-
able semi-annually.
The terms of both the revolving credit agreement
and Senior Note Purchase Agreement provide for,
among other things, restrictions regarding the pay-
ment of cash dividends, limitations on other bor-
rowings and capital expenditures, minimum work-
ing capital requirements and the maintenance of
certain financial ratios. Unrestricted retained earn-
ings available for dividends at March 31, 1994
under the most restrictive covenants are $5,244,000.
The Company's 9% Subordinated Convertible
Debentures due in 1998, aggregating $15,222,000,
were retired during fiscal 1993. As a result of a
combination of a call to satisfy the sinking fund in-
stallment balance due August 1, 1992, voluntary
conversions of Debentures and redemption of the
Debentures effective September 23, 1992, the
Debentures were retired for issuance of 1,538,451
common shares, plus cash of $916,000.
Aggregate maturities of long-term debt for the
next five fiscal years are: 1995--$3,056,000;
1996--$2,953,000; 1997--$3,121,000;
1998--$3,873,000 and 1999--$3,874,000.
4 LEASE COMMITMENTS
- - - -----------------------------------------------------
The Company is committed under lease agree-
ments, which contain renewal options for periods
up to twenty years, for certain facilities and equip-
ment expiring at various dates to the year 2017.
Amounts for capitalized leases are included in
property and equipment at cost of $3,061,000 at
March 31, 1994 and 1993, less accumulated amor-
tization of $1,706,000 and $1,410,000 at March
31, 1994 and 1993, respectively.
Future minimum lease payments under capital
leases and operating leases at March 31, 1994 are
as follows:
Capital Operating
Leases Leases
- - - -----------------------------------------------------
1995 $335,000 $1,603,000
1996 218,000 1,405,000
1997 132,000 972,000
1998 132,000 723,000
1999 132,000 585,000
Thereafter 2,442,000 58,000
- - - -----------------------------------------------------
Total minimum
lease payments 3,391,000 $5,346,000
==========
Less amount repre-
senting interest 2,063,000
----------
Present value of
minimum lease
payments $1,328,000
==========
Rental expense for operating leases was
$2,166,000, $1,979,000 and $1,940,000 for 1994,
1993 and 1992, respectively.
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5 INCOME TAXES
- - - -------------------------------------------------
As discussed in Note 1, the Company adopted
SFAS No. 109, Accounting for Income Taxes, ef-
fective April 1, 1994.
The following is a reconciliation of the Corn-
pany's effective income tax rate to the statutory
rate:
Liability Deferred
Method Method
- - - ---------------------------------------------------
1994 1993 1992
- - - ---------------------------------------------------
Statutory rate 35.0% 34.0% 34.0%
Equity in undistributed
earnings of 50%-owned
company (2.6) (4.3) (2.6)
Provision for state taxes 5.4 5.3 5.5
Other items .1 .4 .7
-----------------------
Effective rate 37.9% 35.4% 37.6%
=======================
Deferred tax assets and liabilities as of March 31,
1994 are presented below:
Deferred tax assets:
Capitalized inventory costs $1,373,000
Accrued expenses 1,105,000
Allowance for doubtful accounts 1,024,000
Inventory valuation reserve 445,000
Other 444,000
----------
Total deferred tax assets 4,391,000
----------
Deferred tax liabilities:
Depreciation expense 1,310,000
Other 676,000
----------
Total deferred tax liabilities 1,986,000
----------
Net deferred tax assets $2,405,000
==========
The components of the provision for deferred in-
come taxes for 1993 and 1992 are as follows:
- - - --------------------------------------------------------
1993 1992
- - - --------------------------------------------------------
Depreciation and amortization $ 57,000 $ 213,000
Inventory valuation reserve (156,000) 4,000
Allowance for doubtful accounts (166,000) 42,000
Costs capitalized in inventory (235,000) (136,000)
State tax (123,000) 59,000
Excess of fair market value
over cost of assets acquired -- 199,000
Other (188,000) 37,000
----------------------
Deferred tax $(811,000) $ 418,000
======================
6 COMMON SHARE
PURCHASE RIGHTS PLAN
- - - ------------------------------------------------------
The Company maintains a Common Share Pur-
chase Rights Plan whereby, until the occurrence of
certain events, each share of the Company's out-
standing common shares represents ownership of
one right (Right). The Rights may only be exer-
cised if a person or group acquires twenty percent
(20%) or more of the Company's Common Shares,
or announces a tender offer for at least twenty per-
cent (20%) of the Company's Common Shares.
The exercise price of each Right is $26.67 per
Common Share subject to adjustment in certain
events. The Rights trade with the Company's
Common Shares until the Rights become exer-
cisable.
If the Company is acquired in a merger or other
business combination transaction, each Right will
entitle its holder to purchase, at the Right's then-
exercise price, a number of the acquiring com-
pany's common shares (or other securities) having
a market value at the time of twice the Right's
then-current exercise price. In addition, if a person
or group acquires twenty percent (20%) or more
of the Company's Common Shares or certain
specified transactions occur while a person or
group beneficially owns twenty percent (20%) or
more of such Common Shares, each Right will en-
title its holder (other than such person or members
of such group) to purchase, at the Right's then-
current exercise price, a number of the Company's
Common Shares having a market value of twice
the Right's then-exercise price.
Prior to the acquisition by a person or group of
beneficial ownership of twenty percent (20%) or
more of the Company's Common Shares, the
Rights are redeemable for $.007 per Right at the
option of the Board of Directors. The Rights will
expire May 10, 1999.
7 STOCK OPTIONS
- - - --------------------------------------------------
The Company has stock option plans which pro-
vide for the granting of options to purchase its
Common Shares.
These plans provide for non-qualified or incen-
tive stock options. The options are priced at 100%
of fair market value at date of grant and expire ten
years from date of grant.
No charges are made against income in account-
ing for stock options. Any tax benefits arising
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from the exercise of options are recognized when
realized and credited to capital in excess of stated
value. Transactions involving the stock option
plans are summarized as follows:
- - - ---------------------------------------------------
Number Average Option Price
of Shares Per Share
- - - ---------------------------------------------------
Outstanding at
March 31, 1993 291,075 $ 6.61
Exercised (141,450) $ 5.75
Granted 300,000 $13.75
Forfeited (1,000) $13.75
- - - ----------------------------
Outstanding at
March 31, 1994 448,625 $11.64
============================
Exercisable at
March 31, 1994 122,625 $ 7.25
============================
Available for grant
at March 31, 1994 576,000
============================
8 ESTIMATED FAIR VALUES
OF FINANCIAL INSTRUMENTS
- - - -------------------------------------------------
The carrying amounts and estimated fair values of
the Company's financial instruments are as
follows:
1994
- - - -----------------------------------------------------
Carrying Fair
Amount Value
- - - -----------------------------------------------------
Cash $ 5,954,000 $ 5,954,000
Notes payable to banks 2,000,000 2,000,000
Long-term debt:
9.79% Senior Notes 20,000,000 22,569,000
Revolving credit
borrowings 4,000,000 4,000,000
1993
- - - -----------------------------------------------------
Carrying Fair
Amount Value
- - - -----------------------------------------------------
Cash $ 1,864,000 $ 1,864,000
Notes payable to banks 2,500,000 2,500,000
Long-term debt:
9.79% Senior Notes 20,000,000 23,454,000
The carrying amount of cash, notes payable to
banks and revolving credit borrowings approx-
imates fair value. The fair value of the Senior
Notes is estimated using rates currently available
for securities with similar terms and remaining
maturities.
9 PIONEER TECHNOLOGIES GROUP. INC.
- - - -----------------------------------------------------
Pioneer-Standard Electronics, Inc. owns 50% of
the common stock of Pioneer Technologies Group,
Inc. Included in the Company's retained earnings
are undistributed earnings of Pioneer Technologies
Group, Inc. in the amount of $14,408,000 at
March 31, 1994, $11,407,000 at March 31, 1993
and $8,902,000 at March 31, 1992. In accordance
with accounting principles in effect at the time, the
Company has not provided deferred income taxes
on $11,407,000 of undistributed earnings of
Pioneer Technologies Group, Inc. No dividends
have been paid by Pioneer Technologies Group,
Inc. from date of incorporation in 1964 to March
31, 1994.
Pioneer-Standard Electronics, Inc. may not sell,
assign, give, transfer, exchange, or otherwise
dispose of its share ownership without allowing
Pioneer Technologies Group, Inc. the first option
to purchase the shares at the then current book
value. If Pioneer Technologies Group, Inc. does
not exercise this option, then shareholders
representing the other 50% of the common stock
of Pioneer Technologies Group, Inc. have the right
and option to purchase all the shares at the then
current book value.
In the event of a "change in control," as de-
fined, of Pioneer-Standard Electronics, Inc., or
upon the occurrence of certain events, Pioneer
Technologies Group, Inc. has the right to purchase
all shares of its stock owned by Pioneer-Standard
Electronics, Inc. at the then current book value. If
Pioneer Technologies Group, Inc. does not exer-
cise the right, the remaining shareholders repre-
senting the other 50% of the common shares of
Pioneer Technologies Group, Inc. have the right
and option to purchase all the shares at the then
current book value.
Comparative financial information of Pioneer
Technologies Group, Inc. at March 31, 1994,
1993 and 1992 and for the years then ended is
summarized as follows:
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10
- - - -----------------------------------------------------------------------------------------------------
1994 1993 1992
- - - -----------------------------------------------------------------------------------------------------
Net sales $422,001,000 $284,008,000 $189,908,000
Gross profit 49,409,000 44,854,000 34,217,000
Net income 6,002,000 5,010,000 1,309,000
====================================================
Total current assets $ 92,445,000 $ 74,964,000 $ 63,256,000
Net fixed and other assets 6,148,000 4,077,000 4,403,000
----------------------------------------------------
Total assets $ 98,593,000 $ 79,041,000 $ 67,659,000
====================================================
Total current liabilities $ 48,967,000 $ 24,242,000 $ 24,711,000
Total long-term liabilities 20,698,000 31,873,000 25,032,000
Total shareholders' equity 28,928,000 22,926,000 17,916,000
----------------------------------------------------
Total liabilities and shareholders' equity $ 98,593,000 $ 79,041,000 $ 67,659,000
====================================================
10 OPERATING WORKING CAPITAL CHANGES AND SUPPLEMENTAL INFORMATION
FOR THE STATEMENTS OF CASH FLOWS
- - - -----------------------------------------------------------------
THE COMPONENTS OF THE CHANGES IN OPERATING WORKING CAPITAL WERE:
- - - -------------------------------------------------------------------------------------------------------
1994 1993 1992
- - - -------------------------------------------------------------------------------------------------------
Accounts receivable $(18,808,000) $(12,343,000) $ 780,000
Merchandise inventory (18,653,000) (6,118,000) (4,002,000)
Prepaid expenses (146,000) 12,000 (378,000)
Accounts payable 22,566,000 12,934,000 (334,000)
Income taxes (31,000) 2,778,000 (1,073,000)
Accrued salaries, wages and commissions 2,073,000 1,551,000 100,000
Other accrued liabilities 1,364,000 2,718,000 (1,176,000)
----------------------------------------------------
(Increase) decrease in operating working capital $(11,635,000) 1,532,000 $ (6,083,000)
====================================================
SUPPLEMENTAL CASH FLOW INFORMATION:
- - - -------------------------------------------------------------------------------------------------------
1994 1993 1992
- - - -------------------------------------------------------------------------------------------------------
Cash paid or received during the year for:
Interest paid $ 2,623,000 $ 3,488,000 $ 4,437,000
Income taxes paid 12,659,000 4,768,000 4,053,000
====================================================
Non-cash investing and financing activities:
Common shares issued upon conversion of
subordinated debentures $ -- $ 14,306,000 $ --
Common shares retired 614,000 -- --
====================================================
11 EMPLOYEE RETIREMENT PLAN
- - - -----------------------------------------------------
The Company maintains a defined contribution
profit-sharing and thrift plan which qualifies under
Section 401(k) of the Internal Revenue Code for
all employees meeting certain service require-
ments. The plan allows eligible employees to con-
tribute up to 10% of their compensation, with the
Company matching 50% of up to 4% of compen-
sation. The Company may also make contributions
dependent on profits each year for the benefit of
all eligible employees under the plan. Total profit
sharing and Company matching contributions were
$1,899,000, $1,218,000 and $881,000 for 1994,
1993 and 1992, respectively.
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REPORT OF INDEPENDENT AUDITORS
- - - ------------------------------------------------------------------
The Board of Directors and Shareholders
Pioneer-Standard Electronics, Inc.
We have audited the accompanying balance sheets of
Pioneer-Standard Electronics, Inc. as of March 31,
1994 and 1993 and the related statements of in-
come, shareholders' equity and cash flows for each
of the three years in the period ended March 31,
1994. These financial statements are the respon-
sibility of the Company's management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those stan-
dards require that we plan and perform the audit to
obtain reasonable assurance about whether the
financial statements are free of material misstate-
ment. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in
the financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well
as evaluating the overall financial statement presen-
tation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the
financial position of Pioneer-Standard Electronics,
Inc. at March 31, 1994 and 1993 and the results
of its operations and its cash flows for each of the
three years in the period ended March 31, 1994,
in conformity with generally accepted accounting
principles.
/s/ Ernst & Young
- - - -----------------------------
Cleveland, Ohio
May 4, 1994
11
12
REPORT OF INDEPENDENT AUDITORS
We have audited the financial statements of Pioneer-Standard Electronics, Inc.
as of March 31, 1994 and 1993 and for each of the three years in the period
ended March 31, 1994 and have issued our report thereon dated May 4, 1994
[incorporated by reference elsewhere in this Annual Report (Form 10-K)]. Our
audits also included the financial statement schedules of Pioneer-Standard
Electronics, Inc. as of March 31, 1994 and 1993 and for each of the three years
in the period ended March 31, 1994, listed in item 14(a) of this Annual Report
(Form 10-K). These schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
ERNST & YOUNG
Cleveland, Ohio
May 4, 1994
12
13
PIONEER-STANDARD ELECTRONICS, INC.
SCHEDULE II - AMOUNTS RECEIVABLE
FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN
RELATED PARTIES
Years ended March 31, 1994, 1993 and 1992
Year Ended March 31, 1994
----------------------------------------------------------------------------
Balance at Balance at
Name of Beginning End of
Debtor of Period Addition Deductions Period
- - - ------ --------- -------- ---------- ----------
Walter E. York, Sr., $-0- $190,000(1) $-0- $190,000
Dayton Branch Manager
of the Company
Arthur Rhein $-0- -0- -0- -0-
Senior Vice
President
and Director
of the Company
Year Ended March 31, 1993
----------------------------------------------------------------------------
Balance at Balance at
Name of Beginning End of
Debtor of Period Addition Deductions Period
- - - ------ --------- -------- ---------- ----------
Arthur Rhein $-0- $-0- $-0- $-0-
Senior Vice
President
and Director
of the Company
Year Ended March 31, 1992
----------------------------------------------------------------------------
Balance at Balance at
Name of Beginning End of
Debtor of Period Addition Deductions Period
- - - ------ --------- -------- ---------- ----------
Arthur Rhein $260,000 $-0- $260,000(2) $-0-
Senior Vice
President
and Director
of the Company
<FN>
(1) In connection with Mr. York's relocation to Dayton, Ohio in fiscal
1994, the Company advanced $190,000 to Mr. York, of which $164,830
represented an interest free loan payable upon sale of Mr. York's Indiana
residence and the balance of $25,170 represented an interest free advance.
The loan and advance were repaid in full in fiscal 1995.
(2) In connection with Mr. Rhein's relocation to Cleveland, in fiscal
1991, the Company advanced $260,000 to Mr. Rhein, of which $220,000
represented an interest-free loan payable upon sale of Mr. Rhein's
New York residence and the balance of $40,000 represented an
interest-free advance. The loan and advance were repaid in full in
fiscal 1992.
13
14
PIONEER-STANDARD ELECTRONICS, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended March 31, 1994, 1993 and 1992
Balance at Charged Deductions - Balance
beginning to costs net write-offs at end of
of period and expenses (Net recoveries) period
---------- ------------ ---------------- ---------
Description
- - - -----------
1994: Allowance for $1,713,000 $1,808,000 $ 652,000 $2,869,000
doubtful accounts
Inventory valuation $2,659,000 $1,995,000 $2,114,000 $2,540,000
reserve
1993:
Allowance for $1,226,000 $1,672,000 $1,185,000 $1,713,000
doubtful accounts
Inventory valuation $2,190,000 $1,738,000 $1,269,000 $2,659,000
reserve
1992:
Allowance for $1,350,000 $ 613,000 $ 737,000 $1,226,000
doubtful accounts
Inventory valuation $2,232,000 $1,351,000 $1,393,000 $2,190,000
reserve
14
15
PIONEER-STANDARD ELECTRONICS, INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
Years ended March 31, 1994, 1993 and 1992
Maximum amount Average Weighted
Weighted outstanding amount average
Balance average at any month outstanding interest
at end of interest end during during the rate during
period rate the period period period
--------- -------- -------------- ----------- -----------
1994 $2,000,000 5.75% $12,500,000 $5,791,667 4.0%
1993 $2,500,000 5.0% $ 5,500,000 $3,166,167 4.1%
1992 $2,500,000 4.8% $ 6,000,000 $3,791,667 5.7%
Notes payable represents the amount of borrowings against unsecured lines of
credit with the Company's banks. The lines, which may by withdrawn at the
option of the banks, permit the Company to borrow at varying interest rates.
The average amount outstanding for each period was computed by averaging the
month-end balances during the year. The weighted average interest rate for
each period was computed by multiplying the month-end balances by the
applicable interest rate and dividing by the total of the month-end balances
outstanding.
15
16
QUARTERLY FINANCIAL DATA
PIONEER-STANDARD ELECTRONICS, INC.
(UNAUDITED)
=======================================================================================
Fiscal Year First Second Third Fourth
Ending March 31 Quarter Quarter Quarter Quarter Year
- - - ---------------------------------------------------------------------------------------
1994
Net sales $134,509,000 $137,278,000 $149,814,000 $159,156,000 $580,757,000
Gross profit 27,360,000 28,075,000 29,007,000 30,701,000 115,143,000
Net income 4,469,000 4,790,000 4,887,000 5,530,000 19,676,000
Income per share:
Primary .45 .47 .48 .55 1.95
- - - ---------------------------------------------------------------------------------------
1993
Net sales $102,315,000 $99,912,000 $109,706,000 $118,080,000 $430,013,000
Gross profit 22,132,000 21,986,000 23,565,000 25,741,000 93,424,000
Net income 3,066,000 2,897,000 3,299,000 3,651,000 12,913,000
Income per share:
Primary .37 .34 .33 .37 1.41
Fully diluted .33 .31 -- -- 1.33
- - - ---------------------------------------------------------------------------------------
16
17
Financial Statements
Pioneer Technologies Group, Inc.
MARCH 31, 1994 AND 1993, AND
YEARS ENDED MARCH 31, 1994, 1993 AND 1992
WITH REPORT OF INDEPENDENT AUDITORS
17
18
Pioneer Technologies Group, Inc.
Financial Statements
March 31, 1994 and 1993, and
years ended March 31, 1994, 1993 and 1992
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
Statements of Income and Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-12
18
19
[Letterhead]
Report of Independent Auditors
The Board of Directors
Pioneer Technologies Group, Inc.
We have audited the accompanying balance sheets of Pioneer Technologies Group,
Inc. as of March 31, 1994 and 1993, and the related statements of income and
retained earnings and cash flows for each of the three years in the period
ended March 31, 1994. Our audits also included the financial statement
schedules of Pioneer Technologies Group, Inc. listed in the Index at Item 14(a).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Pioneer Technologies Group,
Inc. at March 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended March 31, 1994, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
As discussed in Note 8 to the financial statements, in 1994 the Company changed
its method of accounting for income taxes.
Ernst & Young
Washington, D.C.
April 29, 1994
19
20
Pioneer Technologies Group, Inc.
Balance Sheets
MARCH 31
1994 1993
----------------------------
(IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents $ 8 $ 7
Receivables:
Trade accounts, less allowance for doubtful accounts
of $2,682 in 1994 and $2,250 in 1993 (NOTE 3) 28,873 30,404
Other (NOTE 2) 340 501
Total receivables 29,213 30,905
----------------------------
Merchandise inventory, less allowance for inventory
obsolescence of $2,156 in 1994 and $1,463
in 1993 (NOTE 3) 60,690 42,450
Prepaid expenses 405 110
Deferred income taxes (NOTE 8) 2,077 1,443
Shareholder notes receivable (NOTE 2) 52 49
----------------------------
Total current assets 92,445 74,964
Property and equipment, at cost:
Furniture and office equipment 6,786 4,663
Demonstration equipment 965 1,025
Leasehold improvements 2,650 1,638
----------------------------
10,401 7,326
Less accumulated depreciation and amortization 4,746 3,748
----------------------------
Net property and equipment 5,655 3,578
Shareholder notes receivable (NOTE 2) 231 295
Other assets 262 204
----------------------------
$98,593 $79,041
============================
20
21
MARCH 31
1994 1993
------------------------------
(IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade $43,736 $19,819
Affiliate (NOTE 2) 336 395
Accrued employee compensation 2,484 2,014
Other accrued liabilities 1,967 1,716
Income taxes payable 444 298
------------------------------
Total current liabilities 48,967 24,242
Long-term debt (NOTE 3) 20,698 31,873
------------------------------
Total liabilities 69,665 56,115
Commitments and contingencies (NOTE 7)
Shareholders' equity (NOTE 4):
Common stock, $.10 par value; 100,000 shares
authorized, issued and outstanding 10 10
Capital in excess of par value 90 90
Retained earnings 28,828 22,826
------------------------------
Total shareholders' equity 28,928 22,926
------------------------------
$98,593 $79,041
==============================
<FN>
SEE ACCOMPANYING NOTES.
21
22
Pioneer Technologies Group, Inc.
Statements of Income and Retained Earnings
(In thousands, except per common share amounts)
YEAR ENDED MARCH 31
1994 1993 1992
------------------------------------------
Net sales $422,001 $284,008 $189,908
Operating costs and expenses:
Cost of goods sold 372,592 239,154 155,691
Selling and administrative 38,256 34,965 29,982
------------------------------------------
410,848 274,119 185,673
------------------------------------------
Operating profit 11,153 9,889 4,235
Interest expense 1,171 1,253 2,063
------------------------------------------
Income before income taxes and other items 9,982 8,636 2,172
Provision for income taxes (NOTE 8) 3,980 3,626 863
------------------------------------------
Net income 6,002 5,010 1,309
Retained earnings, beginning of year 22,826 17,816 16,507
------------------------------------------
Retained earnings, end of year $ 28,828 $ 22,826 $ 17,816
==========================================
Net income per common share $ 60.02 $ 50.10 $ 13.09
==========================================
<FN>
SEE ACCOMPANYING NOTES.
22
23
Pioneer Technologies Group, Inc.
Statements of Cash Flows
YEAR ENDED MARCH 31
1994 1993 1992
------------------------------------------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income $ 6,002 $ 5,010 $ 1,309
Adjustments to reconcile net income to net
cash provided by (used in) operations:
Depreciation and amortization 1,149 985 929
Deferred income taxes (365) (345) (653)
Provision for losses on receivables
and inventory 1,950 2,511 1,427
Decrease (increase) in accounts and
notes receivable 1,192 (7,443) (3,437)
Increase in merchandise inventory (19,629) (9,403) (6,623)
(Increase) decrease in prepaid expenses (295) 250 (288)
Decrease in refundable taxes - - 122
(Increase) decrease in other assets (58) (9) 203
Increase (decrease) in accounts payable 23,858 (1,266) 4,818
Increase in accrued liabilities 721 1,289 899
Decrease (increase) in income taxes payable (123) (201) 790
-----------------------------------------
Net cash provided by (used in) operating activities 14,402 (8,622) (504)
INVESTING ACTIVITIES
Net additions to property and equipment (3,226) (702) (497)
FINANCING ACTIVITIES
Net (payments) borrowings under line of
credit agreements (11,175) 6,841 3,396
-----------------------------------------
Net increase (decrease) in cash and cash equivalents 1 (2,483) 2,395
Cash and cash equivalents at beginning of year 7 2,490 95
-----------------------------------------
Cash and cash equivalents at end of year $ 8 $ 7 $ 2,490
=========================================
<FN>
SEE ACCOMPANYING NOTES.
23
24
Pioneer Technologies Group, Inc.
Notes to Financial Statements
March 31, 1994, 1993 and 1992
(Dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The 1992 financial statements include the accounts of Pioneer Technologies
Group, Inc. (the Company), and its then-wholly owned subsidiaries, Mini
Computer Associates, Inc. (MCA) and The Technology Factory, Inc. (TTF). On
April 1, 1992, TTF and MCA ceased doing business as separate legal entities.
TTF continued business as an operating division of the Company and MCA was
dissolved. All intercompany accounts and transactions were eliminated in prior
years' consolidations.
Certain balance sheet amounts in the 1993 financial statements have been
reclassified to conform to the 1994 presentation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits at financial
institutions and overnight repurchase agreements. Cash disbursements for
interest and income taxes were as follows:
1994 1993 1992
-----------------------------------
Interest $1,171 $1,363 $1,913
Income taxes $4,468 $4,172 $ 596
MERCHANDISE INVENTORY
Inventory is stated at the lower of cost (first-in, first-out) or market.
DEPRECIATION AND AMORTIZATION
Depreciation of furniture, office equipment and computer equipment is
determined by using the straight-line method over estimated useful lives of
seven, five and three years, respectively. Depreciation of demonstration
equipment is determined using accelerated
24
25
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION AND AMORTIZATION (CONTINUED)
methods over an estimated useful life of five years. Amortization of leasehold
improvements is determined using the straight-line method over the life of the
related lease.
INCOME TAXES
Effective April 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under Statement No. 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Prior to the adoption of Statement No.
109, income tax expense was determined using the deferred method. Deferred tax
expense was based on items of income and expense that were reported in
different years in the financial statements and tax returns and were measured
at the tax rate in effect in the year the difference originated.
ALLOWANCE FOR DOUBTFUL ACCOUNTS AND OBSOLETE INVENTORY
The Company estimates losses for doubtful accounts and inventory obsolescence
based on periodic evaluations by management.
The Company sells computer equipment and electronic components to companies in
diversified industries primarily located in the Mid-Atlantic/Southeast and West
regions of the United States. Seventeen percent of net sales in 1994 were to
one customer. Management performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.
Accounts receivable are generally due within thirty days.
2. RELATED PARTY TRANSACTIONS
Pioneer-Standard Electronics, Inc. (Pioneer-Standard) owns 50% of the
outstanding common stock of the Company. The companies have an agreement which
provides, among other things, that they have the right to acquire each other's
products at cost. Such transactions are recorded as intercompany transfers of
inventory. Net transfers of inventory from Pioneer-Standard to the Company
were $2,488 in 1994, $2,539 in 1993,
25
26
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
2. RELATED PARTY TRANSACTIONS (CONTINUED)
and $4,589 in 1992. The Company utilizes Pioneer-Standard's data processing
facilities for processing certain accounting and operating information.
Amounts charged to operations were $1,794 in 1994, $1,794 in 1993 and $1,653 in
1992.
The Company has various notes receivable and advances to certain shareholders,
officers and employees of the Company as follows:
1994 1993
---------------------
Subscription notes receivable from shareholders, payable in ten
consecutive annual installments, with final payment due November
1999, interest at 9% per annum.
$283 $344
Other receivables 177 47
---------------------
$460 $391
=====================
3. LONG-TERM DEBT
The Company has revolving lines of credit from three banks aggregating $45,000
which are secured by accounts receivable and inventory. The expiration date
for the revolving lines of credit is October 31, 1995. Interest is payable
under either short-term fixed or variable rates of interest based on LIBOR, the
prime rate or certificates of deposit rates at the Company's option. The terms
of the revolving lines of credit agreements provide for the maintenance of
certain financial ratios and also effectively restrict the payment of any
retained earnings as dividends.
4. COMMON STOCK
Under a stock purchase agreement among Pioneer-Standard and the Other
Shareholders of the Company, as defined in the agreement, the Other
Shareholders have the first right and option to purchase any shares offered for
sale by other members of that group at book value. If the Other Shareholders
do not exercise this option, the Company is obligated to purchase the shares at
book value. Should the Company acquire any shares, Pioneer-Standard is
required to sell a like number of shares to the Company at book value.
Pioneer-Standard may not sell, assign, give, transfer, exchange or otherwise
dispose of its share ownership without allowing the Company the first option to
purchase the shares at
26
27
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
4. COMMON STOCK (CONTINUED)
book value. If the Company does not exercise this option, the Other
Shareholders have the option to purchase all the shares at book value.
In the event of a change in control, as defined, of Pioneer-Standard, or upon
the occurrence of certain events, the Company has the right to purchase all
shares of its stock owned by Pioneer-Standard at the current book value. If
the Company does not exercise the right, the Other Shareholders have the right
and option to purchase all the shares at the current book value.
5. PROFIT-SHARING PLAN
The Company has a qualified defined contribution profit-sharing plan covering
all full-time employees. Company contributions to the plan are a combination
of mandatory matching of employee contributions (up to a maximum of 2% of the
first 4% contributed by the employee) and an amount awarded solely at the
discretion of the Company's Board of Directors. Contributions to the plan were
$567 in 1994, $468 in 1993 and $238 in 1992, of which $268 in 1994, $219 in
1993 and $18 in 1992 were discretionary.
6. BONUSES
Certain executives of the Company receive bonuses ranging from 1/2% to 2% of
income before income taxes. Bonuses for certain other members of management
are based on agreements approved by the President. Total bonus expense was
$1,464 in 1994, $1,239 in 1993 and $916 in 1992.
7. COMMITMENTS AND CONTINGENCIES
The Company leases warehouse, office space and equipment under noncancellable
operating leases. The minimum future rental commitments (excluding renewal
options) under lease agreements aggregate $1,919 in 1995, $1,807 in 1996,
$1,626 in 1997, $1,453 in 1998, $1,463 in 1999 and $394 thereafter. The Company
is liable under certain leases for increases in rental payments based on the
annual increase in the consumer price index and in the lessors' operating
expenses. Rental expense was $2,165 in 1994, $2,296 in 1993 and $2,167 in
1992.
27
28
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES
Effective April 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement No. 109, "Accounting for Income Taxes." As permitted under the new
rules, prior years' financial statements have not been restated. The effect of
adopting Statement No 109 was not material.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of March 31, 1994 are
as follows:
Deferred tax assets:
Allowance for doubtful accounts $1,017
Inventory 766
Accrued liabilities 300
Other 114
------
Total deferred tax assets 2,197
Valuation allowance -
------
Deferred tax assets, net 2,197
Deferred tax liabilities:
Tax over book depreciation 120
------
Net deferred tax assets $2,077
======
28
29
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES (CONTINUED)
Significant components of the provision for income taxes are as follows for the
years ended March 31:
LIABILITY
METHOD DEFERRED METHOD
----------------------------------------
1994 1993 1992
----------------------------------------
Current:
Federal $3,476 $3,286 $1,241
State 869 685 275
----------------------------------------
4,345 3,971 1,516
----------------------------------------
Deferred:
Federal (292) (279) (535)
State (73) (66) (118)
----------------------------------------
(365) (345) (653)
----------------------------------------
$3,980 $3,626 $ 863
========================================
The components of the provision for deferred income taxes for the years ended
March 31, 1993 and 1992 are as follows:
1993 1992
---------------------
Allowance for doubtful accounts $(428) $(139)
Allowance for inventory
valuation 213 (265)
Capitalized inventory costs (112) (180)
Depreciation and amortization (46) (94)
Other 28 25
---------------------
$(345) $(653)
=====================
29
30
Pioneer Technologies Group, Inc.
Notes to Financial Statements (continued)
(Dollars in thousands)
8. INCOME TAXES (CONTINUED)
The difference between the provision for income taxes and the amount determined
by applying the federal statutory rate follows:
LIABILITY
METHOD DEFERRED METHOD
------------------------------------
1994 1993 1992
------------------------------------
Federal statutory $3,394 $2,936 $738
State taxes, net of federal benefit 525 409 102
Nondeductible entertainment
expenses 48 34 23
Other 13 247 -
------------------------------------
Effective income tax $3,980 $3,626 $863
====================================
30
31
PIONEER TECHNOLOGIES GROUP, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years ended March 31, 1994, 1993 and 1992
Balance at Charged to Deductions - net Balance
beginning costs and write-offs at end of
Description of period expenses (Net recoveries) period
----------- ----------- ---------- ---------------- ---------
1994:
Allowance for
doubtful accounts $2,250,000 $ 561,000 $129,000 $2,682,000
Inventory valuation
reserve $1,463,000 $1,389,000 $696,000 $2,156,000
1993:
Allowance for
doubtful accounts $ 886,000 $1,356,000 $ (8,000) $2,250,000
Inventory valuation
reserve $1,060,000 $1,154,000 $751,000 $1,463,000
1992:
Allowance for
doubtful accounts $ 627,000 $ 441,000 $182,000 $ 886,000
Inventory valuation
reserve $ 376,000 $1,021,000 $337,000 $1,060,000
31
32
PIONEER TECHNOLOGIES GROUP, INC.
SCHEDULE IX - SHORT-TERM BORROWINGS
Years ended March 31, 1994, 1993 and 1992
Maximum amount Average Weighted
Weighted outstanding amount average
Balance average at any month outstanding interest
at end of interest end during during the rate during
period rate the period period period
--------- -------- -------------- ----------- -----------
1994 $ - -% $ - $ - -%
1993 $ - -% $ - $ - -%
1992 $ - -% $9,175,000 $3,679,000 10%
The average amount outstanding for each period was computed by averaging the
month-end balances during the year. The weighted average interest rate for
each period was computed by multiplying the month-end balances by the
applicable rate and dividing by the total of the month-end balance outstanding.
32