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FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 1995.
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
----- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________.
Commission file number 0-5734
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Pioneer-Standard Electronics, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 34S0907152
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4800 East 131st Street, Cleveland, OH 44105
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(Address of principal executive offices) (Zip code)
Registrant's phone number, including area code: (216) 587-3600
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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
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Indicate the number of shares outstanding of each of the issuer's classes of
Common Shares, as of the latest practical date: COMMON SHARES, WITHOUT PAR
VALUE, AS OF AUGUST 1, 1995: 14,953,921.
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PART I - FINANCIAL INFORMATION
PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, 1995
(Unaudited) March 31, 1995
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ASSETS
Current assets
Cash $ 16,454 $ 9,598
Accounts receivable - net 129,518 133,987
Merchandise inventory 147,172 123,008
Prepaid expenses 2,278 1,623
Deferred income taxes 5,708 5,708
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Total current assets 301,130 273,924
Investment in 50% - owned company 17,415 16,963
Other assets 5,636 5,599
Property and equipment, at cost 57,549 55,396
Accumulated depreciation 22,712 24,467
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Net 34,837 30,929
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$ 359,018 $ 327,415
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable to banks $ 3,000 $ 7,000
Accounts payable 113,450 106,905
Accrued liabilities 26,771 25,625
Long-term debt due within
one year 2,894 2,956
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Total current liabilities 146,115 142,486
Long-term debt 77,316 56,318
Deferred income taxes 2,232 2,196
Shareholders' Equity
Common stock, at stated value 6,646 6,630
Capital in excess of stated value 16,702 16,318
Retained earnings 109,940 103,646
Foreign currency translation adjustment 67 (179)
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Retained earnings 133,355 126,415
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$ 359,018 $ 327,415
<FN>
See accompanying notes.
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PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Quarter ended
June 30,
1995 1994
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Net sales $ 224,724 $ 183,832
Cost and expenses:
Cost of goods sold 181,114 148,677
Warehouse, selling and
administrative expense 31,148 25,322
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Operating profit 12,462 9,833
Interest expense 1,449 701
Equity in earnings of
50% -owned company 451 673
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Income before income taxes 11,464 9,805
Provision for income taxes 4,648 3,840
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Net income $ 6,816 $ 5,965
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Average shares outstanding 15,390,234 15,241,422
Shares outstanding at end of period 14,951,821 14,895,384
Earning per share $ .44 $ .39
Dividends per share $ .035 $ .023
<FN>
See accompanying notes.
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PIONEER-STANDARD ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Three months ended
June 30,
1995 1994
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Cash flows from operating activities:
Net income $ 6,816 $ 5,965
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 2,173 1,605
Undistributed earnings of affiliate (451) (673)
Increase in operating working capital (12,491) (13,007)
Increase in other assets 1 (1,590)
Deferred taxes 36 54
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Total adjustments (10,732) (13,611)
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Net cash used in
operating activities (3,916) (7,646)
Cash flows from investing activities:
Acquisition of business --- (9,009)
Additions to property and equipment (6,018) (1,751)
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Net cash used in investing activities (6,018) (10,760)
Cash flows from financing activities:
Increase (decrease) in short-term financing (4,000) 7,000
Increase in revolving credit borrowings 27,000 20,000
Prepayment of revolving credit borrowings (6,000) (4,000)
Decrease in other long-term
debt obligations (64) (102)
Issuance of common shares under company
stock option plan 400 314
Dividends paid (522) (347)
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Net cash provided by financing activities 16,814 22,865
Effect of exchange rate changes on cash (24) ---
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Net increase in cash 6,856 4,459
Cash at beginning of period 9,598 5,954
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Cash at end of period $ 16,454 $ 10,413
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<FN>
See accompanying notes.
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NOTES - Pioneer-Standard Electronics, Inc.
1. PER SHARE DATA
Net income per common share is computed using the weighted average common
shares and common share equivalents outstanding during the quarters. Common
share equivalents consist of shares exercisable for stock options computed by
using the treasury stock method.
2. STOCK SPLIT
On July 25, 1995, the Board of Directors declared a three-for-two stock split
effected in the form of a 50% share dividend of the Company's common shares
payable September 6, 1995 to shareholders of record August 16, 1995. The share
and per share data have not been restated for the two quarters presented to
reflect the stock split.
3. MANAGEMENT OPINION
The information furnished herein reflects all normal and recurring adjustments
which are, in the opinion of management, necessary to provide a fair statement
of the results of operations for the quarters ended June 30, 1995 and 1994.
The results of operations for the three-month periods are not necessarily
indicative of results which may be expected for a full year.
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PIONEER-STANDARD ELECTRONICS, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
FINANCIAL CONDITION
Current assets increased by $27.2 million and current liabilities increased by
$3.6 million during the three-month period ended June 30, 1995, resulting in an
increase of $23.6 million of working capital. The current ratio was 2.1:1 at
June 30, 1995, compared with 1.9:1 at year-end, March 31 1995.
During the first three months of the current year, total interest-bearing debt
increased by $16.9 million. The ratio of interest-bearing debt to
capitalization was 38% at June 30, 1995 compared with 34% at March 31, 1995.
The increase in capital requirements is attributable to the working capital
needs arising from an increased level of business activity. As indicated in
the following narrative, current quarter sales of $224.7 million are 22% ahead
of last year's first quarter sales.
Effective August 3, 1995, the Company amended its Credit Agreement with three
banks to increase the credit lines available to the Company. This amendment
provides for an increase in borrowings from $65.0 million to $100.0 million and
allows for an increase in the maximum short-term borrowings outside of the
Credit Agreement to be outstanding at any one time from $20.0 million to $30.0
million. In addition, the maturity date of the facility was extended to July
31, 1998. As of June 30, 1995, Credit Agreement borrowings were $62.0 million
and short-term borrowings outside of the Credit Agreement were $3.0 million.
Management estimates that capital expenditures for the current year will
approximate $20.0 million ($6.0 million was expended in the first three months
of the current year). Under present business conditions, it is anticipated
that funds from current operations and available debt facilities will be
sufficient to finance both capital spending and working capital needs for the
balance of the current fiscal year.
THREE MONTHS ENDED JUNE 30, 1995 COMPARED WITH
THE THREE MONTHS ENDED JUNE 30, 1994
Net sales for the three-month period ended June 30, 1995 of $224.7 million
increased 22% over sales of the prior year three-month period of $183.8
million. The increase in sales reflects continuing strong demand for
electronic components and computer and peripheral products. Semiconductor
products accounted for 34% of the Company's sales in the current quarter,
compared with 38% a year ago. Computer systems products were 40% of sales in
1995 versus 36% last year. Passive and electromechanical products were 24% of
the Company's business in 1995 compared with 23% a year earlier. Miscellaneous
products accounted for 2% of sales in 1995 and 3% in 1994.
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Cost of goods sold increased 22%, resulting in a gross margin of 19.4% in the
first quarter of the current year compared with 19.1% a year ago.
Warehouse, selling and administrative expenses of $31.1 million increased by
23% over the $25.3 million incurred during the prior year three-month period.
This resulted in a ratio of these expenses to sales of 13.9% for the 1995
period compared with 13.8% for the 1994 quarter.
The Company's share of net income of the affiliated company, Pioneer
Technologies Group, Inc., was $451,000 for the 1995 three-month period compared
with $673,000 for the same period last year; net sales of the affiliate for the
three-month period ended June 30, 1995 of $79.8 million were 17% less than
sales of the prior three-month period of $95.7 million. Lower 1995 net sales
reflected a reduced volume of microprocessor sales which earn a relatively low
gross profit margin. This reduction in sales impacted current year net income.
Notwithstanding lower microprocessor sales volume during the current quarter, a
significant portion of the affiliate's total sales involved highly concentrated
sales of certain microprocessors in large quantities which might not be
sustainable in future periods and the effect of which could result in a
significant impact on the net income of the affiliate.
The effective tax rate for the current year three-month period was 40.5%
compared with 39.2% a year ago.
Primarily as a result of the factors above, the Company's net income for the
three-month period ending June 30, 1995 of $6.8 million was $.8 million greater
than the $6.0 million earned a year ago.
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Pioneer-Standard Electronics, Inc. owns 50% of the outstanding common stock of
Pioneer Technologies Group, Inc. The investment is accounted for by the equity
method in the Company's financial statements via the balance sheet caption of
"Investment in 50%-owned company" and via the statements of income caption of
"Equity in earnings of 50%-owned company".
PIONEER TECHNOLOGIES GROUP, INC.
BALANCE SHEETS
(Dollars in Thousands)
June 30, 1995
(Unaudited) March 31, 1995
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ASSETS
Current assets
Cash $ 10 $ 9
Accounts receivable - net 37,068 36,378
Merchandise inventory 62,668 46,895
Prepaid expenses 300 494
Deferred income taxes 1,075 1,246
Shareholder notes receivable 69 63
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Total current assets 101,190 85,085
Property and equipment, at cost 11,078 10,697
Accumulated depreciation (5,660) (5,289)
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Net 5,418 5,408
Shareholder notes receivable 192 193
Other assets 208 272
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$107,008 $ 90,958
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 36,293 $ 34,711
Accrued liabilities 5,533 4,170
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Total current liabilities 41,826 38,881
Long-term debt 30,352 18,148
Shareholders' Equity
Common stock $.10 par value 10 10
Capital in excess of par value 90 90
Retained earnings 34,730 33,829
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Total shareholders' equity 34,830 33,929
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$107,008 $90,958
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PIONEER TECHNOLOGIES GROUP, INC.
STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands Except Per Share Amounts)
Three months ended
June 30,
1995 1994
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Net Sales $ 79,809 $ 95,742
Costs and expenses:
Cost of goods sold 66,206 81,352
Selling and
administrative expense 11,295 11,658
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Operating profit 2,308 2,732
Interest expense 568 452
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Income before
income taxes 1,740 2,280
Provision for
income taxes 838 935
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Net income $ 902 $ 1,345
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Average shares outstanding 100,000 100,000
Earnings per share $ 9.02 $13.45
Dividends per share -- --
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PIONEER TECHNOLOGIES GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Three months ended
June 30,
1995 1994
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Cash flows from operating activities:
Net income $ 902 $ 1,345
Adjustments to reconcile net income to net cash
used in operating activities:
Items not affecting cash 406 253
Increase in operating working capital (13,330) (10,464)
Decrease (increase) in other assets 235 (33)
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Total adjustments (12,689) (10,244)
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Net cash used in
operating activities (11,787) (8,899)
Cash flows from investing activities:
Additions to property and equipment (416) (261)
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Net cash used in investing activities (416) (261)
Cash flows from financing activities:
Increase in long-term debt 12,204 9,160
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Net cash provided by
financing activities 12,204 9,160
Net change in cash 1 --
Cash at beginning of period 9 8
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Cash at end of period $ 10 $ 8
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PART II - OTHER INFORMATION
ITEM 1. OTHER INFORMATION
Effective August 3, 1995, the Company amended its Credit
Agreement providing for an increase in borrowings from $65.0
million to $100.0 million and permitting for an increase in the
maximum short-term borrowings outside of the Credit Agreement to
be outstanding at any one time from $20.0 million to $30.0
million. See Management's Discussion - Financial Condition
for addition details.
ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Number Description
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10 Consolidated Amendment No. 3 to the Credit Agreement,
dated as of August 3, 1995.
11 Calculation of Primary Earnings Per Share
27 Financial Data Schedule
(b) FORM 8-K There were no reports on Form 8-k filed
during the three-month period ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and 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: August 11, 1995 James L. Bayman
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President and CEO
Date: August 11, 1995 John V. Goodger
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Vice President & Treasurer
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