<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-Q
<TABLE>
<S> <S>
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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 1-10397
</TABLE>
AMERIQUEST TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0244136
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
6100 HOLLYWOOD BOULEVARD, SUITE 700, HOLLYWOOD, FL 33024
(Address of principal executive office) (Zip Code)
Registrant's telephone number: (954) 967-2397
---------------------
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 report(s), and (2) has been subject to
filing requirements for the past 90 days. Yes [X] No [ ]
At May 6, 1997 there were 66,881,906 shares of the Registrant's Common
Stock outstanding; and 300,000 shares of the Registrant's Series H Cumulative
Convertible Preferred Stock were also outstanding.
================================================================================
<PAGE> 2
PART I.
FINANCIAL INFORMATION
AMERIQUEST TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
ITEM 1. FINANCIAL STATEMENTS
The financial statements included herein have been prepared by AMERIQUEST
TECHNOLOGIES, INC. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
normally included in the financial statements prepared in accordance with
generally accepted accounting principles has been omitted pursuant to such rules
and regulations. However, the Company believes that the financial statements,
including the disclosures herein, are adequate to make the information presented
not misleading. It is suggested that the financial statements be read in
conjunction with the Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 as filed with the Securities and Exchange Commission.
2
<PAGE> 3
AMERIQUEST TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
--------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,920 $ 2,300
Accounts receivable, less allowance for doubtful accounts
of $7,662 and $5,811 as of March 31, 1997 and September
30, 1996, respectively................................. 36,594 56,492
Inventories, net of valuation allowance................... 25,640 38,019
Prepaid and other current assets.......................... 1,302 2,837
--------- ---------
Total current assets.............................. 65,456 99,648
--------- ---------
Property and equipment, net................................. 1,493 6,134
Intangible assets, net of accumulated amortization.......... 0 9,546
Other assets................................................ 1,076 1,044
--------- ---------
Total assets...................................... $ 68,025 $ 116,372
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Lines of credit........................................... 69,096 77,446
Accounts payable.......................................... 29,666 36,152
Other current liabilities................................. 16,034 10,858
--------- ---------
Total current liabilities......................... 114,796 124,456
--------- ---------
Long term obligations....................................... 1,257 3,122
--------- ---------
Total liabilities................................. 116,053 127,578
--------- ---------
STOCKHOLDERS' DEFICIT
Common Stock, $.01 par value, authorized 200,000,000 shares;
issued and outstanding 66,881,906 and 67,047,392 shares as
of March 31, 1997 and September 30, 1996, respectively.... 669 670
Additional paid-in capital.................................. 111,145 111,144
Accumulated deficit......................................... (159,842) (123,020)
--------- ---------
Total stockholders' deficit....................... (48,028) (11,206)
--------- ---------
Total liabilities and stockholders' deficit....... $ 68,025 $ 116,372
========= =========
</TABLE>
3
<PAGE> 4
AMERIQUEST TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------- -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales................................... $ 75,295 $ 108,499 $ 164,624 $ 209,970
Cost of sales............................... 73,518 101,746 155,112 195,534
----------- ----------- ----------- -----------
Gross profit........................... 1,777 6,753 9,512 14,436
Operating Expenses:
Selling, general and administrative....... 12,849 10,478 21,916 20,838
Depreciation and amortization............. 816 743 1,640 1,501
Restructuring, asset impairment and
relocation costs....................... 20,037 0 20,437 3,700
----------- ----------- ----------- -----------
Loss from operations................... (31,925) (4,468) (34,481) (11,603)
Interest expense............................ 1,176 1,246 2,341 2,365
----------- ----------- ----------- -----------
Net loss............................... $ (33,101) $ (5,714) $ (36,822) $ (13,968)
=========== =========== =========== ===========
Net loss per common share and common stock
equivalent................................ $ (0.49) $ (0.20) $ (0.55) $ (0.52)
=========== =========== =========== ===========
Common and common equivalent shares
outstanding (Note 2):
Weighted average shares outstanding....... 66,881,906 28,124,369 66,881,906 27,025,959
=========== =========== =========== ===========
</TABLE>
4
<PAGE> 5
AMERIQUEST TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------ -------------------
1997 1996 1997 1996
-------- ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss............................................... $(33,101) $(5,714) $(36,822) $(13,968)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization........................ 816 743 1,640 1,501
Restructuring, asset impairment and relocation
costs............................................. 20,037 0 20,437 3,700
Provision for losses on accounts receivable.......... 4,864 394 5,278 940
Provision for losses on inventory.................... 3,264 822 3,575 1,575
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable........... 5,179 (5,306) 14,620 (3,112)
(Increase) decrease in inventories................... 8,521 (2,912) 8,804 (9,345)
Increase (decrease) in accounts payable and accrued
expenses.......................................... (4,075) 10,761 (9,160) (2,481)
(Increase) decrease in other......................... 992 (7,588) (31) (4,455)
-------- ------- -------- --------
Net cash provided by (used in) operating
activities................................. 6,497 (8,800) 8,341 (25,645)
-------- ------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures, net of disposals................. (238) 6 (371) (85)
-------- ------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings (repayment) under lines of credit....... (6,772) 9,247 (8,350) 27,014
Other financing activities............................. (0) 236 (0) 240
-------- ------- -------- --------
Net cash used (provided) for financing
activities................................. (6,772) 9,483 (8,350) 27,254
-------- ------- -------- --------
Net increase (decrease) in cash and cash equivalents... (513) 689 (380) 1,524
-------- ------- -------- --------
Cash and cash equivalents at beginning of period....... 2,433 1,045 2,300 210
-------- ------- -------- --------
Cash and cash equivalents at end of period............. $ 1,920 $ 1,734 $ 1,920 $ 1,734
======== ======= ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest on lines of credit:
During the six months ended March 31, 1997 and 1996, the Company paid
interest of $2,144,000 and $2,134,000, respectively.
Income taxes:
During the six months ended March 31, 1997 and 1996, the Company made
no federal income tax payments.
5
<PAGE> 6
AMERIQUEST TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
SIX MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL (DEFICIT)
---------- ------ ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balances at September 30, 1996....................... 67,047,392 $670 $111,144 $(123,020)
Correction of beginning balance (Note 7)............. (165,486) (1) 1
Net loss for the three months ended December 31,
1996............................................... -- -- -- (3,721)
---------- ---- -------- ---------
Balances at December 31, 1996........................ 66,881,906 $669 $111,145 $(126,741)
========== ==== ======== =========
Net loss for the three months ended March 31, 1997... -- -- -- (33,101)
---------- ---- -------- ---------
Balances at March 31, 1997........................... 66,881,906 $669 $111,145 $(159,842)
========== ==== ======== =========
</TABLE>
6
<PAGE> 7
AMERIQUEST TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(1) MANAGEMENT OPINION
In the opinion of management, the consolidated condensed financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position and results of
operations as of and for the periods presented.
(2) LOSS PER SHARE
Loss per common share and common share equivalent is computed on the basis
of the weighted average number of common shares outstanding. No effect is given
to stock options as they are not materially-dilutive.
In February, 1997, the Financial Accounting Standards Board issued FAS No.
128, "Earnings Per Share" effective for fiscal years ending after December 15,
1997. FAS No. 128 simplifies the calculation of earnings per share to measure
the performance of an entity over a reporting period for both basic earnings per
share and diluted earnings per share. FAS No. 128 does not currently have an
impact on the Company's earnings per share as the Company is incurring net
losses.
(3) FISCAL PERIODS
The Company's fiscal year is the 52- or 53-week period ending on the
Saturday nearest to September 30 and its fiscal quarters are the 13- or 14-week
periods ending on the Saturday nearest to December 31, March 31, June 30 or
September 30. For clarity of presentation, the Company has presented year-ends
as if the years ended on September 30; and quarter-ends are presented as if the
quarters ended on December 31, March 31, and June 30. The 1996 and 1997 fiscal
years are 52 weeks, while the quarters presented are 13 weeks in duration.
The Company changed its fiscal year end to September 30 on September 30,
1995.
(4) COMMON STOCK
Assuming the exercise of all warrants and options outstanding on March 31,
1997, AmeriQuest would have approximately 82 million shares of Common Stock
outstanding on that date, of which Computer 2000 would hold approximately 57.9
percent. Warrants for approximately 7 million shares of Common Stock that are
included in the foregoing figure are not exercisable prior to August 1, 1997.
(5) LINES OF CREDIT
At March 31, 1997, the Company's revolving lines of credit with financial
institutions totalled, in the aggregate, $76 million, and floor planning
arrangements with lines of credit totalled, in the aggregate, $20 million.
Available and unused credit lines totalled $27 million at March 31, 1997.
The weighted average interest rate for all borrowings under the above
credit facilities was 6.4% at March 31, 1997 and September 30, 1996.
At March 31, 1997, the terms of the IBM Credit Corporation lending
agreement included certain restrictive covenants which require the maintenance
of specified financial ratios generally related to tangible net worth, working
capital and total debt to tangible net worth. While the Company is in default of
certain covenants, it has received from IBM Credit Corporation a waiver from
compliance with those covenants (dated May 6, 1997).
7
<PAGE> 8
AMERIQUEST TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(6) RESTRUCTURING, ASSET IMPAIRMENT AND RELOCATION COSTS
On April 9, 1997, the Board approved a wide-ranging restructuring plan with
the goal of focusing on the Company's Advanced Systems Group ("ASG"). The
restructuring will result in the sale or closure of several of the Company's
other business operations. The plan will include a substantial reduction in the
number of employees and closure of all warehouse facilities, other than ASG,
which is based in Philadelphia, Pennsylvania. The Company will be closing its
corporate headquarters in Florida and will move a small number of employees to
Philadelphia. The restructuring plan will be implemented throughout fiscal year
1997 and will result in a substantial reduction in sales revenue with the goal
of returning the Company to profitability in future years.
Sales, for the six months ended March 31, 1997, of the businesses to be
closed were $112,973,000.
The components of the restructuring, asset impairment and relocation costs
for the six months ended March 31, 1997 are estimated approximately as follows
(dollars in thousands)
<TABLE>
<S> <C>
Impairment of intangible assets............................. $ 9,000
Abandonment of leasehold improvements and other property and
equipment................................................. 3,500
Lease payments in excess of sublease income................. 3,200
Employee severance costs.................................... 2,400
Relocation costs............................................ 1,000
Other....................................................... 1,337
-------
Total classified as restructuring, asset impairment and
relocation costs...................................... $20,437
=======
Provision for losses on inventory included in cost of
sales..................................................... 3,316
Provision for losses on accounts receivable included in SG&A
expenses.................................................. 3,247
-------
Total restructuring costs for the six months ended March 31,
1997...................................................... $27,000
=======
</TABLE>
As of March 31, 1997, approximately $7,500,000 is accrued for restructuring
and relocation costs and is included in other current liabilities. Most of this
amount, except for future lease payments, will be paid during calendar 1997.
During the quarter ended December 31, 1995, the Company established a
$3,700,000 reserve for discontinuance of a significant lease.
It is important to note that to date ASG has been profitable only on an
operating basis prior to corporate overhead allocations. Therefore management
estimates that a 25%-40% increase in sales would be required in order for ASG to
achieve a break-even level of operations on a stand-alone basis. No assurance
can be given that such a sales increase will occur or that ASG will be
profitable on a stand-alone basis.
As part of the restructuring efforts, the Company is currently reviewing
offers from prospective purchasers to buy CMS Enhancements, Inc., a Company
subsidiary located in Costa Mesa, California.
(7) CORRECTION OF OUTSTANDING SHARES
The number of outstanding shares of Common Stock was corrected to account
for shares that were authorized but never issued in connection with settlement
of debt, and the elimination of duplicate shares erroneously issued upon
exercise of an employee stock option.
8
<PAGE> 9
AMERIQUEST TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(8) SUBSEQUENT EVENT
In May, 1997, Computer 2000 Inc. invested $30,000,000 in the Company for
which it received 300,000 shares of Series H Cumulative Convertible Preferred
Stock. The proceeds received were used to partially pay down the Company's
outstanding bank lines of credit. All of the Company's bank lines of credit are
guaranteed by Computer 2000 AG. These convertible preferred shares carry a 7%
per annum cumulative dividend right, payable at the choice of AmeriQuest in
either shares or cash (or a combination thereof) until June 30, 1998. Thereafter
such dividends must be paid in cash. Subject to stockholder approval, the shares
shall be convertible into Common Stock at a conversion price of $0.715 per share
of Common Stock.
(9) NEGATIVE TANGIBLE NET WORTH AND ADDITIONAL CAPITAL REQUIRED
Even after the infusion of the $30.0 million as referenced above, there
would still be a negative tangible net worth of approximately $(18.0) million,
on a pro forma basis as of March 31, 1997. Absent the infusion of additional
equity the Company will continue to be burdened by significant interest expenses
that will require high levels of operating income to generate the cash necessary
to service such obligations and achieve a break-even level of operations.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY
On April 9, 1997 the Board approved a wide-ranging restructuring plan
encompassing head-count reductions and facility closures over the next several
months with the goal of focusing on and strengthening the activities of its
Advanced Systems Group ("ASG"), which has the highest gross margins of its
distribution businesses. The Company announced that projected losses for the
year ending September 30, 1997 could be in the range of approximately
$45,000,000, partly as the result of estimated charges in the amount of
$25,000,000 related to the planned restructuring, and $2,000,000 of
restructuring costs and provisions earlier included in operating results
predating the authorization of the restructuring (please reference note 6 on
page 8). The restructuring measures are necessitated by the fact that revenues
for the quarter ended March 31, 1997 were substantially below expectations,
primarily due to the inability of the Company to compete effectively in the
standard distribution of computer products. Management also continues the
investigation of other possible dispositions.
The AmeriQuest Board of Directors also approved a Stock Purchase Agreement
pursuant to which AmeriQuest issued 300,000 shares of its Series H Cumulative
Convertible Preferred Stock on May 6, 1997 to Computer 2000 Inc. in
consideration of the payment by Computer 2000 Inc. of $30,000,000. This infusion
fulfilled a previously announced commitment from Computer 2000 AG to make such
an investment.
The following table sets forth certain items in the Consolidated Condensed
Statements of Income as a percent of net sales.
<TABLE>
<CAPTION>
PERCENT OF SALES
-----------------------------
THREE MONTHS SIX MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
------------- -------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net sales................................................... 100.0 100.0 100.0 100.0
Cost of sales............................................... 97.6 93.8 94.2 93.1
Gross profit................................................ 2.4 6.2 5.8 6.9
Selling, general and administrative......................... 17.1 9.7 13.3 9.9
Depreciation and amortization............................... 1.1 0.7 1.0 0.7
Restructuring, asset impairment and relocation cost......... 26.6 0.0 12.4 1.7
Interest and other expense, net............................. 1.6 1.1 1.4 1.1
(Loss) from operations...................................... (44.0) (5.3) (22.4) (6.7)
</TABLE>
In November 1996, the Company completed its move of corporate headquarters
from California to Florida.
Results of Operations for the Quarter Ended March 31, 1997
Sales decreased by 15.7% from $89,329,000 for the quarter ended December
31, 1996 to $75,295,000 for the quarter ended March 31, 1997, reflecting a
continuing deterioration in sales performance.
Sales for the quarter ended March 31, 1997 declined 30.6% from $108,499,000
for the quarter ended March 31, 1996 due to the highly competitive market
situation of the Company in the distribution and export segments. In addition,
the Company began an effort to concentrate sales on a smaller more select group
of vendors, thereby limiting incremental but low margin revenues from ancillary
vendors.
Cost of sales increased to 97.6% of sales for the quarter ended March 31,
1997 compared to 93.8% of sales in the same quarter for the prior year primarily
as a result of increases in provisions related to inventory losses. Gross profit
decreased to $1,777,000 from $6,753,000 for the quarters ended March 31, 1997
and March 31, 1996, respectively.
10
<PAGE> 11
Selling, general and administrative expenses of $12,849,000 increased by
$2,371,000 for the quarter ended March 31, 1997 compared to the expenditure of
$10,478,000 for the same quarter of the prior year, primarily as a result of
additional provisions related to the closing of the standard and export
distribution businesses.
Depreciation and amortization of $817,000 for the quarter ended March 31,
1997 increased from $743,000 in the quarter ended March 31, 1996 primarily as a
result of increased expenditures for information systems.
During the quarter ended March 31, 1997, the Company recorded an
anticipated net restructuring provision of approximately $11,000,000 for the
restructuring of the Company's sales and administrative staffing and planned
closing of rented facilities. As a result of the planned closing of the
distribution division, the Company also recorded a reserve of $9,000,000 to
reflect the impairment of the goodwill associated with the acquisition of Ross
White Enterprises Inc., d/b/a National Computer Distributors ("NCD"), in
November, 1994.
Interest expense of $1,176,000 decreased in the quarter ended March 31,
1997 compared to $1,246,000 for the quarter ended March 31, 1996, primarily as a
result of decreased inventory and improved vendor payment patterns.
Results of Operations for the Six Months Ended March 31, 1997
Sales decreased by 22% to $164,624,000 for the six months ended March 31,
1997 compared to $209,970,000 for the six months ended March 31, 1996 due to the
highly competitive market situation of the Company in the distribution and
export businesses. In addition, the Company began an effort to concentrate sales
on a smaller and more select group of vendors, thereby limiting incremental
revenues from ancillary vendors.
Cost of sales increased to 94.2% of sales for the six months ended March
31, 1997 compared to 93.1% of sales in the same period for the prior year
primarily as a result of increases in provisions for inventory losses. As a
result, gross profit decreased to $9,512,000 from $14,436,000 for the six months
ended March 31, 1997 and March 31, 1996, respectively.
As a result of restructuring costs, selling, general and administrative
expenses of $21,916,000 increased by $1,078,000 for the six months ended March
31, 1997, compared to $20,838,000 for six months of the prior year.
Depreciation and amortization of $1,640,000 increased from $1,501,000, for
the six months ended March 31, 1997 and March 31, 1996, respectively.
During the six months ended March 31, 1997, the Company recorded
$11,400,000 in provisions for the restructuring of the Company's operations, and
increased provisions for losses on accounts receivable and inventory. The
Company also established a reserve of $9,000,000 to reflect impairment off the
goodwill associated with the acquisition of NCD in November, 1994. During the
preceeding six months ended March 31, 1996, the Company established a $3,700,000
reserve for discontinuance of a significant lease.
Interest expense of $2,341,000 increased slightly compared to $2,365,000,
for the six months ended March 31, 1997 and March 31, 1996, respectively.
No income tax benefit was recorded on net operating losses either at March
31, 1997 or March 31, 1996 as valuation allowances were provided, because it is
not more likely than not, as defined in SFAS 109, that deferred tax benefits
will be realized through operations. The valuation allowances recorded against
deferred tax assets are based on management's estimates related to the Company's
ability to realize these benefits. Appropriate adjustments will be made to the
valuation allowances if circumstances warrant in future periods. Such
adjustments may have a significant impact on the Company's financial statements.
11
<PAGE> 12
VARIABILITY OF QUARTERLY RESULTS
Historically, the Company has experienced variability in its net sales and
operating margins on a quarterly basis and expects these patterns to continue in
the future. Management believes that the factors influencing quarterly
variability include: (i) the overall growth and seasonal fluctuations in market
demand in the microcomputer industry; (ii) shifts in short-term demand for the
Company's products resulting, in part, from the introduction of new products or
updates of existing products; and (iii) the fact that virtually all sales in a
given quarter result from orders booked in that quarter. Due to the factors
noted above, as well as the fact that the Company participates in a highly
dynamic industry, the Company's revenues and earnings may be subject to material
volatility, particularly on a quarterly basis. In addition the decision to close
the standard distribution and export businesses could involve unforeseeable
expenses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had $1,920,000 in cash and had borrowed
$69,096,000 against its existing lines of credit. The Company generated
$6,497,000 and $1,844,000 of cash from operating activities in the three months
ended March 31, 1997 and December 31, 1996, respectively. Operating activities
during the remainder of the fiscal year are expected to generate additional cash
from the collection of trade receivables related to the decision to close the
standard distribution and export businesses, net of cash requirements to fund
operating losses.
As part of the restructuring, the Company recorded significant non-cash
charges that reflect recognition of the impairment of goodwill and the estimated
likelihood of impairment of assets related to the decision to close the standard
distribution and export businesses. Cash expenditures related to the
restructuring charges are expected to be incurred over the next several
quarterly periods.
The Company maintains bank lines of credit guaranteed by Computer 2000 AG
with financial institutions which totalled $76.0 million at March 31, 1997 and
mature on June 30, 1997. Computer 2000 AG has committed to continue the
guarantee of the Company's bank lines through September 30, 1997. The Company
also maintains a $20 million line of credit with IBM Credit Corporation
("IBMCC") which is secured by substantially all of the Company's assets.
Borrowings under the IBMCC line of credit at March 31, 1997 totalled $5.3
million. Available and unused credit lines totalled $27 million at March 31,
1997. The amount guaranteed by Computer 2000 was subsequently reduced to $66.0
million.
The Company received a capital infusion of $30.0 million in May, 1997 in
the form of a purchase by Computer 2000 Inc. of 300,000 shares of Series H
Cumulative Convertible Preferred Stock. The proceeds were used to partially pay
down the Company's outstanding bank lines of credit. All of the Company's bank
lines of credit are guaranteed by Computer 2000 AG. Available and unused credit
lines at May 6, 1997 totalled approximately $49.0 million.
Management believes that the capital infusion from Computer 2000 AG and the
continued line of credit guarantees will be adequate for the Company to meet its
financial obligations on a timely basis during fiscal 1997. No assurance can be
given that the lines of credit guaranteed by Computer 2000 AG will be extended
or that the Company will be able to obtain replacement financing from other
independent financing sources.
The comments above contain forward looking statements that involve a number
of risks and uncertainties. Among other factors that could cause actual results
to differ materially are general business and economic conditions, the rate of
growth in the computer industry, competitive factors and pricing pressures,
changes in product mix, inventory risks due to shifts in market demand, and the
effect of the decision to close the standard distribution and export businesses
on the Company's vendor and customer relationships.
12
<PAGE> 13
AMERIQUEST TECHNOLOGIES, INC.
MARCH 31, 1997
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report.
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months ended March
31, 1997.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
AmeriQuest Technologies, Inc.
/s/ MICHAEL DRESSEN
--------------------------------------
Michael Dressen
Chief Executive Officer
May 7, 1997
/s/ HOLGER HEIMS
--------------------------------------
Holger Heims
Executive Vice President and
Chief Financial Officer
May 7, 1997
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERIQUEST TECHNOLOGIES, INC., AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,920
<SECURITIES> 0
<RECEIVABLES> 36,594
<ALLOWANCES> 0
<INVENTORY> 25,640
<CURRENT-ASSETS> 65,456
<PP&E> 1,493
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,025
<CURRENT-LIABILITIES> 114,796
<BONDS> 0
0
0
<COMMON> 669
<OTHER-SE> 111,145
<TOTAL-LIABILITY-AND-EQUITY> 68,025
<SALES> 164,624
<TOTAL-REVENUES> 164,624
<CGS> 155,112
<TOTAL-COSTS> 155,112
<OTHER-EXPENSES> 43,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,341
<INCOME-PRETAX> (36,822)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,822)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,822)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> (0.55)
</TABLE>
