SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED July 30, 1994.
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 0-15991
Intelligent Electronics, Inc.
-----------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2208404
------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
411 Eagleview Boulevard, Exton, PA 19341
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(610) 458-5500
---------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 34,257,119 shares of Common
Stock, par value $0.01 per share were outstanding at September 2, 1994.
<PAGE>
Intelligent Electronics, Inc. and Subsidiaries
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
July 30, 1994 and January 29, 1994 3
Consolidated Statement of Operations
Three and Six Months Ended July 30, 1994
and July 31, 1993 4
Consolidated Statement of Cash Flows
Six Months Ended July 30, 1994
and July 31, 1993 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 13
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION FORM 10-Q
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Consolidated Balance Sheet
(in thousands, except share-related data)
July 30, January 29,
1994 1994
----------- -----------
(unaudited)
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents $146,041 $122,249
Marketable securities available for sale 35,814 61,130
Accounts receivable, net 22,973 9,524
Inventory 329,828 251,044
Prepaid expenses and other current assets 13,290 8,872
Deferred income taxes 7,040 7,840
-------- --------
Total current assets 554,986 460,659
Property and equipment 14,612 11,371
Intangible assets, primarily goodwill, net 69,225 71,585
Investments in affiliates 16,448 30,096
Other assets 7,998 3,300
-------- --------
Total assets $663,269 $577,011
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $413,758 $334,341
Accrued liabilities 19,819 21,025
-------- --------
Total current liabilities 433,577 355,366
-------- --------
Other liabilities 1,504 2,795
Commitments and contingencies -- --
Shareholders' equity:
Common stock $.01 par value per share:
Authorized 100,000,000 shares,
issued and outstanding:
39,467,719 and 39,310,439 shares 394 393
Additional paid-in capital 220,754 219,107
Treasury stock (58,637) (57,181)
Retained earnings 65,732 56,531
Unrealized holding loss on securities and investments (55) --
-------- --------
Total shareholders' equity 228,188 218,850
-------- --------
Total liabilities and shareholders' equity $663,269 $577,011
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries FORM 10-Q
Consolidated Statement of Operations
(in thousands, except per-share data)
(unaudited)
Three months ended Six months ended
------------------ -----------------
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 793,274 $ 613,245 $1,555,588 $1,230,193
Cost of goods sold 755,300 586,436 1,482,147 1,177,599
---------- ---------- ----------- -----------
Gross profit 37,974 26,809 73,441 52,594
---------- ---------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 18,610 12,642 33,858 24,967
Amortization of intangibles, primarily goodwill 1,180 1,180 2,360 2,360
---------- ---------- ----------- -----------
Total operating expenses 19,790 13,822 36,218 27,327
---------- ---------- ----------- -----------
Income from operations 18,184 12,987 37,223 25,267
Other income (expense):
Investment and other income, net 1,214 1,472 2,310 2,610
Interest expense (459) (1) (623) (356)
---------- ---------- ----------- -----------
Income from continuing operations before
provision for income taxes and equity in
earnings (loss) of affiliate 18,939 14,458 38,910 27,521
Provision for income taxes 7,245 5,552 14,817 10,751
---------- ---------- ----------- -----------
Income from continuing operations before
equity in earnings (loss) of affiliate 11,694 8,906 24,093 16,770
Equity in earnings (loss) of affiliate (net of
tax expense/(benefit) of $(5,285), $173,
$(5,053) and $435) (8,999) 288 (8,605) 745
---------- ---------- ----------- -----------
Income from continuing operations 2,695 9,194 15,488 17,515
Discontinued operation:
Loss from discontinued operation (net of
tax benefit of $1,076) -- -- -- (2,468)
Gain on sale of BizMart (net of tax expense
of $2,284) -- -- -- 6,298
---------- ---------- ----------- -----------
Net income $ 2,695 $ 9,194 $ 15,488 $ 21,345
========== ========== =========== ===========
<PAGE>
Income (loss) per common share and share equivalent:
Continuing operations $ 0.08 $ 0.26 $ 0.43 $ 0.48
Discontinued operation -- -- -- (0.06)
Sale of BizMart -- -- -- 0.17
---------- ---------- ----------- -----------
Net income per share $ 0.08 $ 0.26 $ 0.43 $ 0.59
========== ========== =========== ===========
Dividends declared per share $ 0.10 $ 2.08 $ 0.18 $ 2.08
========== ========== =========== ===========
Weighted average number of common shares
and share equivalents outstanding:
Primary and fully diluted 35,850 35,920 35,952 36,386
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE> INTELLIGENT ELECTRONICS, INC. and Subsidiaries FORM 10-Q
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
<CAPTION>
Six months ended
------------------
July 30, July 31,
1994 1993
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 15,488 $ 21,345
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 4,598 4,441
Provision for deferred taxes (4,288) (2,833)
Provision for losses on trade receivables 63 245
Provision for write-down of inventory 564 996
Loss from discontinued operation -- 2,468
Gain on sale of BizMart -- (6,298)
Equity in (earnings) loss of affiliate 13,658 (1,180)
Changes in assets and liabilities, net of effects
from acquisitions and sales:
Accounts receivable (13,512) (8,364)
Inventory (79,348) 587
Other current assets (4,418) (802)
Accounts payable 78,689 (26,032)
Accrued liabilities (1,873) 968
----------- -----------
Net cash provided by (used for) operating activities 9,621 (14,459)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (27,319) (93,150)
Sales and maturities of marketable securities 52,592 22,000
Acquisition of property and equipment, net of disposals (5,297) (2,430)
Proceeds from sale of BizMart -- 275,236
Investment in and loan to affiliates (1,018) --
----------- -----------
Net cash provided by investing activities 18,958 201,656
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Subordinated Debt -- (17,500)
Common stock repurchased (719) (55,375)
Cash dividends paid (5,624) (72,356)
Proceeds from exercise of stock options 1,648 15,861
Proceeds from exercise of warrants -- 570
Reduction in capital lease obligations (92) (58)
----------- -----------
Net cash used for financing activities (4,787) (128,858)
----------- -----------
Net cash provided by continuing operations and sale of BizMart 23,792 58,339
Cash used for discontinued operation -- (5,562)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 23,792 52,777
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 122,249 52,498
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 146,041 $ 105,275
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Intelligent Electronics, Inc.
Notes to Consolidated Financial Statements
(unaudited)
(1) Basis of Presentation
---------------------
The consolidated financial statement information included herein is unaudited
but, in the opinion of management, reflects all adjustments necessary for a
fair statement of the results for the interim periods presented. Such
adjustments are of a normal, recurring nature. These financial statements
should be read in conjunction with the audited financial statements included
in the Company's Annual Report on Form 10-K for the year ended January 29,
1994.
(2) New Accounting Pronouncement
----------------------------
On January 30, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115 ("FAS 115"), Accounting for Certain Investments in Debt and
Equity Securities. FAS 115 requires certain investments in debt and
securities be classified into one of three categories: held-to-maturity,
available-for-sale, or trading. Adoption of this statement did not have a
material effect on the Company's financial position or results of operations;
however, certain amounts in the January 29, 1994 Consolidated Balance Sheet
have been reclassified for comparative purposes.
(3) Discontinued Operation and Sale of BizMart
------------------------------------------
On March 4, 1993, the Company sold BizMart, Inc. ("BizMart") to OfficeMax,
Inc. Accordingly, results of BizMart's operations have been reported
separately as a discontinued operation in the accompanying Consolidated
Statement of Operations. BizMart's operating results for the period from
January 31, 1993 to March 4, 1993 have been excluded from continuing
operations and are summarized as follows (in thousands):
Revenues $ 60,193
Costs and expenses 63,737
-------------
Loss before income taxes (3,544)
Income tax benefit (1,076)
-------------
Loss from discontinued operation $ (2,468)
=============
(4) Investments in Affiliates
-------------------------
The Company has an investment in The Future Now, Inc. ("TFN"), a network
member and publicly-traded company. The Company accounts for this investment
using the equity method. For the quarter ended July 30, 1994, the Company
recognized a loss of $8,999,000 after taxes as its proportionate share of
TFN's net loss. As of July 30, 1994, the carrying value of the TFN common
stock was approximately $15,691,000 and the aggregate market price, based on
TFN's quoted market price, was approximately $19,192,000.
The Company also has an investment in Random Access, Inc. ("RA"), a network
member and publicly-traded company. The Company accounts for this investment
as available-for-sale in accordance with FAS 115, and accordingly, the
carrying value of the RA investment is recorded at fair market value with
either a corresponding credit or debit to shareholder's equity. At July 30,
1994, based on RA's quoted market price, the fair market value of the
Company's investment in RA was approximately $283,000.
(5) Common Stock Dividends
----------------------
On July 28, 1994, the Board of Directors of the Company declared a $0.10 per
share cash dividend to shareholders of record on August 18, 1994, which was
paid on September 1, 1994.
On June 1, 1994, the Company paid the $0.08 per share cash dividend which was
declared on May 4, 1994.
On July 1, 1993, the Board of Directors established a quarterly cash dividend
policy and declared a cash dividend of $0.08 per share to shareholders of
record on August 18, 1993, which was paid on September 1, 1993.
On May 3, 1993, the Board of Directors declared a one-time special cash
dividend of $2.00 per share for shareholders of record on May 17, 1993, which
was distributed on June 1, 1993.
(6) Supplemental Cash Flow Information
----------------------------------
In July 1994, the Company accrued $3,472,000 for the dividend declared on
July 28, 1994 and paid on September 1, 1994 and also accrued $737,000 for
common stock repurchases made during the quarter ended July 30, 1994.
In July 1993, the Company accrued $2,766,000 for the dividend declared on
July 1, 1993 and paid on September 1, 1993.
Cash payments during the six-month periods ended July 30, 1994 and July 31,
1993 included interest of $662,000 and $555,000, respectively, and income
taxes of $14,526,000 and $8,269,000, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Introduction
- - ------------
On March 4, 1993, the Company sold BizMart, a national chain of office
products supercenters, to OfficeMax. Accordingly, BizMart is reflected as a
discontinued operation in the accompanying consolidated financial statements.
Unless otherwise specified, amounts and disclosures referred to herein relate
to the Company's continuing operations.
Results of Operations
- - ---------------------
Revenues increased 29% to $793,274,000 for the quarter ended July 30, 1994
compared to $613,245,000 for the quarter ended July 31, 1993. For the six
months ended July 30, 1994, revenues increased to $1,555,588,000 compared to
$1,230,193,000 for the six months ended July 31, 1993. Increased revenues
from existing network integrators, resulting from continued strong business
demand for premium brand name computers and peripherals, and the addition of
new network integrators accounted for these increases.
Gross profit as a percentage of revenues for the quarter ended July 30, 1994
was 4.8% compared to 4.4% for the quarter ended July 31, 1993. For the six
months ended July 30, 1994, gross profit as a percentage of revenues was 4.7%
compared to 4.3% for the same period last year. The increase in gross margin
percent for the quarter and six months ended July 30, 1994 was due to the
higher volume of revenues generated from higher margin advanced technology
products, taking advantage of purchasing opportunities and increased use of
fee-based services, including the new financing programs. The Company does
not expect margins to change materially in the foreseeable future, although
continued competition could adversely affect margins in the future.
Selling, general and administrative expenses increased to $18,610,000 and
$33,858,000 for the quarter and six months ended July 30, 1994, respectively,
from $12,642,000 and $24,967,000, respectively, for the comparable periods
last year. These increases are primarily due to higher costs to service the
larger volume of revenues and the larger network, to support new programs and
to relocate the Company's Eastern distribution operations. As a percentage
of revenue, selling, general and administrative expenses increased in
comparison to the same periods last year as a result of costs to support its
new financing and other programs and relocation.
Other income (expense) decreased from $1,471,000 and $2,254,000 during the
quarter and six months ended July 31, 1993, respectively, to $755,000 and
$1,687,000 for the quarter and six months ended July 30, 1994, respectively.
The changes can be primarily attributable to the use of the Company's
available cash for payments of cash dividends and share repurchases
throughout the prior year.
The Company's effective tax rate decreased to 38.3% and 38.1% for the quarter
and six months ended July 30, 1994, respectively, compared to 38.4% and 39.1%
for the quarter and six months ended July 31, 1993, respectively. Higher
pre-tax earnings, increased tax-exempt investment income and a change in the
Company's effective state tax rate, offset by a rise in the federal statutory
rate, were responsible for these changes.
In the quarter ended July 30, 1994, TFN announced the implementation of a
company-wide restructuring, which included the closing and consolidation of
duplicate facilities. As a result, for the quarter and six months ended
July 30, 1994, the Company recognized a loss of $8,999,000 and $8,605,000 after
taxes as its proportionate share of TFN's net loss compared to income of
$288,000 and $745,000 after taxes for the same periods last year.
Income from continuing operations decreased to $2,695,000 and $15,488,000 for
the quarter and six months ended July 30, 1994, respectively, compared to
$9,194,000 and $17,515,000 for the quarter and six months ended July 31,
1993, respectively, for the reasons stated above.
Liquidity and Capital Resources
- - -------------------------------
The Company has financed its growth to date from stock offerings, bank and
subordinated borrowings, inventory financing and internally generated funds.
The principal uses of its cash have been to fund its accounts receivable and
inventory, make acquisitions, repurchase common stock and pay cash dividends.
During the six months ended July 30, 1994, the Company's operating activities
generated $9,621,000 in cash. At July 30, 1994, the Company had cash, cash
equivalents and marketable securities totaling $181,855,000 ($183,379,000 at
January 29, 1994). Working capital totaled $121,409,000 at July 30, 1994
compared to $105,293,000 at January 29, 1994. The new financing programs
offered by the Company and its expanded selection of inventory have increased
and will continue to increase working capital requirements. The Company also
has a $170,000,000 financing agreement with a finance company. At July 30,
1994, the Company had approximately $94,565,000 outstanding on this facility,
which was included in accounts payable on the Consolidated Balance Sheet.
The Company's $20,000,000 guarantee to an inventory finance company on behalf
of a member of its network remained in place at July 30, 1994.
During the quarter ended July 30, 1994, the Company paid the quarterly
dividend of $0.08 per share which was declared on May 4, 1994. On July 28,
1994, the Company's Board of Directors declared a dividend of $0.10 per share
to shareholders of record on August 18, 1994, which was paid on September 1,
1994. The Company repurchased 101,000 shares of its common stock during the
quarter as part of the previously authorized common stock repurchase program.
As of July 30, 1994, the Company had repurchased 4,297,200 shares of its
common stock at a cost of approximately $58,637,000.
The Company is currently upgrading its management information systems. This
plan is expected to take between twenty-four and thirty months and is
estimated to cost approximately $20,000,000 to $30,000,000.
Based on the Company's current level of operations and capital expansion
requirements, management believes that the Company's cash and marketable
securities, internally-generated funds and available financing arrangements
and opportunities will be sufficient to meet the Company's cash requirements
for the foreseeable future.
Inflation and Seasonality
- - -------------------------
The Company believes that inflation has not had a material impact on its
operations or liquidity to date. The Company's financial performance does
not exhibit significant seasonality, although certain computer product lines
have displayed a seasonal pattern with peaks occurring near the end of the
calendar year.
<PAGE>
<TABLE>
<CAPTION>
Intelligent Electronics, Inc. and Subsidiaries
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Shareholders of the Company was held on May 24,
1994. Shareholders voted on the following items:
(a) For the Election of Directors:
Term Votes Votes Broker
Director Expiration For Withheld Non-Votes
--------------------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Robert P. May 1995 29,651,764 446,494 0
Gregory A. Pratt 1996 29,652,034 446,224 0
Arnold S. Hoffman 1997 30,022,218 81,540 0
Roger J. Fritz 1997 30,016,468 81,790 0
John A. Porter 1997 30,018,868 79,390 0
Alex A.C. Wilson 1997 30,012,470 85,788 0
Other directors whose term of office as a director continued after the meeting were as follows:
Barry M. Abelson
William L. Rulon-Miller
Michael R. Shabazian
Richard D. Sanford
Christopher T.G. Fish
James M. Ciccarelli
(b) Appointment of Price Waterhouse as Independent Public Accountants for Fiscal 1994.
The Shareholder vote was as follows: 30,000,601 for; 24,947 against; and 72,710 abstained.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 10.32. Richard D. Sanford Deferred Compensation Agreement
Exhibit 11. Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K.
None
</TABLE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Intelligent Electronics, Inc.
/s/ Edward A. Meltzer
---------------------------------------
Edward A. Meltzer
Vice President, Chief Financial Officer
and Chief Accounting Officer
Date: September 13, 1994
Exhibit 10.32
RICHARD D. SANFORD
DEFERRED COMPENSATION AGREEMENT
-------------------------------
This Deferred Compensation Agreement (the "Agreement") is effective
as of January 30, 1994 and is entered into by Intelligent Electronics, Inc.,
a Pennsylvania corporation having its principal place of business in Exton,
Pennsylvania (the "Company"), for the purposes of providing certain deferred
compensation benefits to Richard D. Sanford (the "Executive").
1. Definitions. For purposes of this Agreement, the following
initially capitalized words and phrases shall have the indicated meanings
unless otherwise clearly apparent from the context:
(a) "Account" means the recordkeeping account established under
the Agreement for the Executive to record the amounts accrued under Section
3 hereof.
(b) "Account Balance" means the sum of the record entries of
the annual accrued benefits and annual interest standing to the credit of the
Account as of any date of determination.
(c) "Board" means the Board of Directors of the Company, as
duly constituted from time to time. The Board may appoint a committee of two
or more members, or a standing committee, who may exercise the powers of the
Board with respect to and as set forth in the Agreement.
(d) "Cause" means a termination of the Executive's employment
or membership on the Board (i) authorized by the Board of Directors on
account of (1) willful gross misconduct, (2) misappropriation of Company
funds, or (3) conviction by a court of final jurisdiction of a crime
involving moral turpitude, fraud or a felony, which (ii) in each case results
in material harm to the Company.
(e) "Change in Control" means the occurrence of any of the
following events: (i) the acquisition in one or more transactions by any
"Person" (as such term is used in sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial Ownership"
(as the term beneficial ownership is used for purposes of Rule 13d-3 under
the 1934 Act) of fifty percent (50%) or more of the combined voting power of
the Company's then outstanding voting securities (the "Voting Securities");
or (ii) approval by shareholders of the Company of a merger, reorganization
or consolidation involving the Company if the shareholders of the Company
immediately before such merger, reorganization or consolidation do not or
will not own directly or indirectly immediately following such merger,
reorganization or consolidation, more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the corporation
resulting from or surviving such merger, reorganization or consolidation in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, reorganization or consolidation; or (iii)
acceptance by shareholders of the Company of shares in a share exchange if
the shareholders of the Company immediately before such share exchange do not
or will not own directly or indirectly immediately following such share
exchange more than fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation resulting from or surviving
such share exchange in substantially the same proportion as the ownership of
the Voting Securities outstanding immediately before such share exchange; or
(iv) a material change in the Company related responsibilities of the
Executive; or (v) a change in the composition of the Board of Directors of
the Company such that the individuals who, as of January 30, 1994,
constituted the Board of Directors (the "Original Directors") cease for any
reason to constitute at least a majority of the members thereof; provided,
however, that a director who was not a director on January 30, 1994 shall be
deemed to be one of the Original Directors if such director was elected by,
or on the recommendation of, at least 50% of the Original Directors (either
actually or by prior operation of this Section 1(e)(v)).
(f) "Payment Commencement Date" means the date certain on which
payment of deferred compensation pursuant hereto shall commence or shall be
made in accordance with Paragraph 3.
(g) "Plan Year" means the fiscal year of the Agreement which is
the 52, 53 week period ending on the Saturday nearest January 31st. The
first Plan Year begins January 30, 1994.
(h) "Year of Service" means each Plan Year during which the
Executive performs service as an employee or director of the Company during
each of the twelve months during the Plan Year. Partial Years of Service for
benefit accrual and vesting purposes shall be determined on the basis of one-
twelfth of a Year of Service for each month of service as an employee or
director of the Company.
2. Eligibility for Benefits. The Executive shall be eligible to
receive benefits under this Agreement as set forth in Section 3.
3. Amount of Deferred Compensation.
(a) Amount of Benefit. There shall be established for the
Executive an Account under the Agreement. The benefit payable to the
Executive under this Agreement shall be equal to his Account Balance. For
each of the first five Plan Years there shall be credited to the Executive's
Account (1) a record entry in an amount equal to $716,715 for the current
Year of Service (credited on the last day of the Plan Year and prorated for
partial Years of Service), plus (2) seven percent (7%) simple interest
compounded annually for the first five Plan Years; and interest, compounded
annually equal to the composite prime rate as reported in the Wall Street
Journal as of the last day of each Plan Year for Plan Years commencing with
the sixth Plan Year. All amounts credited under clause (1) and (2) above
shall be fully vested when credited but shall not be payable except as set
forth below.
(b) Payment of Benefit. Except as set forth below, benefit
payments shall commence to be paid to the Executive in five annual
installments as of the first day of the sixth Plan Year and shall be in an
amount equal to the amount required to amortize the benefit in substantially
equal installments over the remaining period. For purposes hereof, it shall
be assumed that interest is accrued each year on the unpaid Account Balance
at the rate in effect for the last Plan Year for the remaining term of the
Agreement.
(c) Death, Disability, Termination Without Cause or Change in
Control. Notwithstanding subsection (b), if the Executive dies, becomes
disabled or is terminated by the Board of Directors without Cause prior to
completing five Years of Service, or in the event of a Change in Control, the
benefit payable under subsection (a) shall be determined as though the
Executive had completed five Years of Service, and shall be payable
immediately. For purposes of determining the Account Balance, the interest
factor used for the prior Plan Year shall be applied to all future accrual
periods.
(d) Optional Forms. Notwithstanding anything else in this
Agreement to the contrary, the Board has the discretion to pay benefits
described in this Section in one lump sum payment or in annual installments
over a shorter period than five years. The Board may consult with the
Executive in determining the timing and form of benefit payments; provided,
however, that the Board shall have the final and binding determination as to
any decision it shall make.
4. Death, Disability, Termination Without Cause or Change in
Control After Payment Commencement Date. If the Executive dies, becomes
disabled or is terminated by the Board of Directors without Cause, or in the
event of a Change in Control, after the Executive's Payment Commencement Date
but before distribution of the entire Account Balance has been completed, the
remaining designated payments shall be paid to the Executive or the
representative of the Executive's estate (as the case may be) in one lump sum
payment.
5. Non-Assignable. The deferred compensation payable under this
Agreement shall not be subject to alienation, assignment, garnishment,
execution or levy of any kind, and any attempt to cause any compensation to
be so subjected shall not be recognized.
6. Expenses. All expenses incurred, or taxes paid by the Company
and attributable to a deferred compensation account, shall be borne by the
Company and shall not reduce the amount credited to such account.
7. Termination and Modification. This Agreement may not be amended
in any way or may not be terminated, in whole or in part, at any time,
without the written consent of the Executive.
8. Parties. The terms of this Agreement shall be binding upon the
Company and its successors or assigns and the Executive participating herein
and his beneficiaries, heirs, executors and administrators.
9. Liability of Company. Subject to its obligation to pay the
amount credited to the Account Balance of the Executive at the time distri-
bution is required under Section 3, neither the Company nor any person acting
on behalf of the Company shall be liable for any act performed or the failure
to perform any act with respect to the Agreement, except in the event that
there has been a judicial determination by a court of final jurisdiction of
willful misconduct on the part of the Company or such person.
10. Notices. Notices, elections or designations by the Executive to
the Company hereunder shall be in writing and sent by certified mail, return
receipt requested, to the Company to the attention of the chief financial
officer of the Company.
11. Benefits Payable From General Assets. Amounts payable hereunder
shall be paid exclusively from the general assets of the Company, and no
person entitled to payment hereunder shall have any claim, right, security
interest or other interest in any fund, trust, account, insurance contract or
asset of the Company which may be looked to for such payment, other than the
right of an unsecured general creditor against the Company, in respect of the
deferred compensation account of the Executive established hereunder. It is
the intention that the arrangements for the payment of deferred compensation
made pursuant to this Agreement be unfunded for tax purposes and for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as
amended.
12. Investment to Facilitate Payment of Benefits. Although the
Company is not obligated to invest in any specific asset or fund or purchase
any insurance contract to provide the means for the payment of any
liabilities under this Agreement, the Company may, in its sole discretion,
elect to do so. In the event the Company elects to purchase an insurance
contract or contracts on the life of the Executive as a means for the payment
of any liabilities under this Agreement, the Executive shall cooperate in the
securing of such insurance contract or contracts by furnishing all
information and taking all actions as the Company and the insurance carrier
may require, including without limitation, providing the results and reports
of previous Company and other insurance carrier physical examinations and
taking such additional physical examinations as may be requested. The
Company shall be the sole owner of any such insurance contract or contracts
or fund or asset, with all incidents of ownership therein, including without
limitation the right to cash and loan values, dividends, death benefits and
the right to terminate any such contract or contracts or to dispose of any
such fund or asset. The Executive shall have no interest whatsoever in any
such contract or contracts or fund or asset and shall exercise none of the
incidents of ownership thereof.
13. Payment to Enforce Agreement Provisions. The Company shall
reimburse Executive fully for any and all costs reasonably incurred by him in
connection with the enforcement of the provisions of this Agreement.
14. No Contract for Continued Services. This Agreement shall not be
construed as creating any contract for continued services between the Company
and the Executive, and nothing herein contained shall give the Executive the
right to be retained as an employee of the Company.
15. Withholding Tax. The Company shall have the right to deduct
from all payments hereunder any federal or state taxes required by law to be
withheld with respect to such payments.
16. Governing Law. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the Commonwealth of
Pennsylvania.
17. Trust. Provided the Executive has not received an immediate
lump sum payment in accordance with Section 3(c) or 3(d), the Company shall,
no later than the first day of the sixth Plan Year, enter into a Trust
Agreement in the form of Exhibit A attached hereto.
IN WITNESS WHEREOF, Intelligent Electronics, Inc. has entered into
this Agreement under seal as of January 30, 1994.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Edward A. Meltzer
----------------------------------
Edward A. Meltzer
Vice President and
Chief Financial Officer
<PAGE>
TRUST UNDER THE RICHARD D. SANFORD
DEFERRED COMPENSATION AGREEMENT
----------------------------------
This Agreement made this ____ day of ____________, _____ by and
between Intelligent Electronics, Inc. (the "Company") and __________________
(the "Trustee");
WHEREAS, Company has adopted the Richard D. Sanford Deferred
Compensation Agreement (the "Agreement"), attached hereto as Appendix I; and
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Agreement with respect to the individual participating in such
Agreement; and
WHEREAS, Company wishes to establish a trust (hereinafter called the
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to the participant and his
beneficiaries in such manner and at such times as specified in the Agreement;
and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Agreement as an unfunded plan maintained for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees for purposes of Title I of the Employee Retirement Income Security
Act of 1974, as amended; and
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Agreement;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. ESTABLISHMENT OF TRUST.
(a) Company hereby deposits with Trustee in trust cash, cash
equivalents, or any other assets or property acceptable to Richard D. Sanford
with a value equal to $4,121,640, which shall become the principal of the
Trust to be held, administered and disposed of by Trustee as provided in this
Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter
l, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of the Agreement participant and
general creditors as herein set forth. The Agreement participant and his
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Agreement
and this Trust Agreement shall be merely unsecured contractual rights of the
Agreement participant and his beneficiaries against Company. Any assets held
by the Trust will be subject to the claims of Company's general creditors
under federal and state law in the event of Insolvency, as defined in Section
3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor the
Agreement participant or beneficiary shall have any right to compel such
additional deposits.
Section 2. PAYMENTS TO THE AGREEMENT PARTICIPANT AND HIS
BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of the Agreement
participant (and his beneficiaries) that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available
under the Agreement), and the time of commencement of payment of such
amounts. Except as otherwise provided herein, Trustee shall make payments to
the Agreement participant and his beneficiaries in accordance with such
Payment Schedule. The Trustee shall make provision for the reporting and
withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
Agreement and shall pay amounts withheld to the appropriate taxing
authorities or determine that such amounts have been reported, withheld and
paid by Company.
(b) The entitlement of the Agreement participant or his beneficiaries
to benefits under the Agreement shall be determined by the Company or such
party as it shall designate under the Agreement, and any claim for such
benefits shall be considered and reviewed subject to any procedures set out
in the Agreement.
(c) Company may make payment of benefits directly to the Agreement
participant or his beneficiaries as they become due under the terms of the
Agreement. Company shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to the participant or
his beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in
accordance with the terms of the Agreement, Company shall make the balance of
each such payment as it falls due. Trustee shall notify Company where
principal and earnings are not sufficient.
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to the Agreement
participant and his beneficiaries if the Company is Insolvent. Company shall
he considered "Insolvent" for purposes of this Trust Agreement if (i) Company
is unable to pay its debts as they become due, or (ii) Company is subject to
a pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of Company under federal and state law
as set forth below.
<PAGE>
(i) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of Company's
Insolvency. If a person claiming to be a creditor of Company alleges in
writing to Trustee that Company has become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such determination, Trustee shall
discontinue payment of benefits to the Agreement participant or his
beneficiaries.
(ii) Unless Trustee has actual knowledge of Company's Insolvency,
or has received notice from Company or a person claiming to be a creditor
alleging that Company is Insolvent, Trustee shall have no duty to inquire
whether Company is Insolvent. Trustee may in all events rely on such
evidence concerning Company's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a determination
concerning Company's solvency.
(iii) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to the Agreement participant or
his beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in any
way diminish any rights of the Agreement participant or his beneficiaries to
pursue their rights as general creditors of Company with respect to benefits
due under the Agreement or otherwise.
(iv) Trustee shall resume the payment of benefits to the
Agreement participant or his beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(v) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments due to
the Agreement participant or his beneficiaries under the terms of the
Agreement for the period of such discontinuance, less the aggregate amount of
any payments made to the Agreement participant or his beneficiaries by
Company in lieu of the payments provided for hereunder during any such period
of discontinuance.
Section 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before all payment
of benefits have been made to the Agreement participant and his beneficiaries
pursuant to the terms of the Agreement.
Section 5. INVESTMENT AUTHORITY.
(a) Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by Company. All rights associated with
assets of the Trust shall be exercised by Trustee or the person designated by
Trustee, and shall in no event be exercisable by or rest with the Agreement
participant.
(b) Notwithstanding Section 5(a), voting rights with respect to Trust
assets will be exercised by Company and dividend rights with respect to Trust
assets will rest with Company.
Section 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
Section 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 90 days following the close of each Plan Year
(as defined in the Agreement) and within 60 days after the removal or
resignation of Trustee, Trustee shall deliver to Company a written account of
its administration of the Trust during such year or during the period from
the close of the last preceding year to the date of such removal or
resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year as of the date of such removal or resignation,
as the case may be.
Section 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant
to a direction, request or approval given by Company which is contemplated
by, and in conformity with, the terms of the Agreement or this Trust and is
given in writing by Company. In the event of a dispute between Company and
a party, Trustee may apply to a court of competent jurisdiction to resolve
the dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses and liabilities
in a reasonably timely manner, Trustee may obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be counsel
for Company generally) with respect to any of its duties or obligations
hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
<PAGE>
(f) However, notwithstanding the provisions of Section 8(e) above,
Trustee may loan to Company the proceeds of any borrowing against an
insurance policy held as an asset of the Trust.
(g) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustees fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
Section 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company,
which shall be effective 60 days after receipt of such notice unless Company
and Trustee agree otherwise.
(b) Trustee may be removed by Company on 30 days notice or upon
shorter notice accepted by Trustee.
(c) If Trustee resigns, Trustee shall select a successor trustee in
accordance with the provisions of Section 11 hereof prior to the effective
date of Trustee's resignation or removal.
(d) Upon resignation or removal of Trustee and appointment of a
successor trustee, all assets shall subsequently be transferred to the
successor Trustee. The transfer shall be completed within 60 days after
receipt of notice of resignation, removal or transfer, unless Company extends
the time limit.
(e) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b) of this Section. If no such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All
expenses of Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
Section 11. APPOINTMENT OF SUCCESSOR.
If Trustee resigns or is removed pursuant to the provisions of Section
10(d) hereof and selects a successor Trustee, Trustee may appoint any third
party such as a bank trust department or other party that may be granted
corporate trustee powers under state law. The appointment of a successor
Trustee shall be effective when accepted in writing by the new Trustee.
The new Trustee shall have all the rights and powers of the former Trustee
including ownership rights in Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by the successor Trustee to
evidence the transfer.
Section 12. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Agreement or shall make the
Trust revocable after it has become irrevocable in accordance with Section
1(b) hereof.
(b) The Trust shall not terminate until the date on which the
Agreement participant and his beneficiaries are no longer entitled to
benefits pursuant to the terms of the Agreement. Upon termination of the
Trust any assets remaining in the Trust shall be returned to Company.
(c) Upon written approval of the participant or his beneficiaries
entitled to payment of benefits pursuant to the terms of the Agreement,
Company may terminate this Trust prior to the time all benefit payments under
the Agreement have been made. All assets in the Trust at termination shall
be returned to Company.
Section 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to the Agreement participant and his
beneficiaries under this Trust Agreement may not be anticipated, assigned
(either at law or in equity), alienated, pledged, encumbered or subjected to
attachment, garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
Section 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be the first day of
the Plan Year (as defined in the Agreement) starting in 1999.
INTELLIGENT ELECTRONICS, INC.
By:______________________________
Title:
____________________________
Trustee
____________________________
Trustee
<TABLE>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries Exhibit 11
Primary Income Per Share Calculation Page 1 of 2
<CAPTION>
Three months ended Six months ended
---------------------------------------------- -----------------------------------------------
July 30, 1994 July 31, 1993 July 30, 1994 July 31, 1993
---------------------------------------------- -----------------------------------------------
$ Per Share $ Per Share $ Per Share $ Per Share
---------- --------- --------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Continuing operations 2,695,000 $0.08 9,194,000 $0.26 15,488,000 $0.43 17,515,000 $0.48
Discontinued operation -- -- -- -- -- -- (2,468,000) (0.06)
Sale of BizMart -- -- -- -- -- -- 6,298,000 0.17
---------- --------- --------- --------- ---------- --------- ---------- ----------
Net income (loss) 2,695,000 $0.08 9,194,000 $0.26 15,488,000 $0.43 21,345,000 $0.59
========== ========= ========== ========= ========== ========= ========== ==========
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 35,849,715 35,815,645 35,951,865 36,257,439
========== ========== ========== ==========
Computation of Common Shares, Common Share Equivalents
& Other Dilutive Securities
Three months ended Six months ended
----------------------------------------------- -----------------------------------------------
July 30, 1994 July 31, 1993 July 30, 1994 July 31, 1993
---------------------- ---------------------- --------------------- ----------------------
End of Weighted End of Weighted End of Weighted End of Weighted
Period Average Period Average Period Average Period Average
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common shares outstanding 39,467,719 35,215,154 38,741,834 35,109,604 39,467,719 35,172,791 38,741,834 35,304,221
Common share equivalents:
Options 3,208,565 3,220,141 2,687,510 2,719,884 3,208,565 3,118,105 2,687,510 3,616,950
Assumed repurchased @ average price (2,585,580) (2,083,207) (2,339,031) (2,698,152)
Warrants 0 0 0 105,495 0 0 0 52,747
Assumed repurchased @ average price 0 (36,131) 0 (18,327)
---------- ---------- ----------- ----------
Weighted average common share equivalents 634,561 706,041 779,074 953,218
---------- ---------- ----------- ----------
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 35,849,715 35,815,645 35,951,865 36,257,439
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries Exhibit 11
Fully Diluted Income Per Share Calculation Page 2 of 2
Three months ended Six months ended
---------------------------------------------- ---------------------------------------------
July 30, 1994(1) July 31, 1993 July 30, 1994(1) July 31, 1993
---------------------------------------------- ---------------------------------------------
$ Per Share $ Per Share $ Per Share $ Per Share
----------- --------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Continuing operations 2,695,000 $0.08 9,194,000 $0.26 15,488,000 $0.43 17,515,000 $0.48
Discontinued operation -- -- -- -- -- -- (2,468,000) (0.06)
Sale of BizMart -- -- -- -- -- -- 6,298,000 0.17
---------- --------- ---------- --------- ---------- --------- ---------- ---------
Net income (loss) 2,695,000 $0.08 9,194,000 $0.26 15,488,000 $0.43 21,345,000 $0.59
========== ========= ========== ========= ========== ========= ========== =========
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 35,849,715 35,919,837 35,951,865 36,386,351
========== ========== ========== ==========
Computation of Common Shares, Common Share Equivalents
& Other Dilutive Securities
Three months ended Six months ended
----------------------------------------------- -----------------------------------------------
July 30, 1994(1) July 31, 1993 July 30, 1994(1) July 31, 1993
---------------------- ---------------------- ---------------------- ----------------------
End of Weighted End of Weighted End of Weighted End of Weighted
Period Average Period Average Period Average Period Average
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common shares outstanding 39,467,719 35,215,154 38,741,834 35,109,604 39,467,719 35,172,791 38,741,834 35,304,221
Common share equivalents:
Options 3,208,565 3,220,141 2,687,510 2,719,884 3,208,565 3,118,105 2,687,510 3,616,950
Assumed repurchased @ ending price (2,585,580) (1,982,817) (2,339,031) (2,569,008)
Warrants 0 0 0 105,495 0 0 0 52,747
Assumed repurchased @ ending price 0 (32,329) 0 (18,559)
---------- ---------- ---------- ----------
Weighted average common share equivalents 634,561 810,233 779,074 1,082,130
---------- ---------- ---------- ----------
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 35,849,715 35,919,837 35,951,865 36,386,351
========== ========== ========== ==========
(1) For the three and six months ended July 30, 1994, the average market price for both periods exceeded the ending market price.
As such, fully diluted earnings per share was antidilutive.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JUL-30-1994
<CASH> 146041
<SECURITIES> 35814
<RECEIVABLES> 23148
<ALLOWANCES> 175
<INVENTORY> 329828
<CURRENT-ASSETS> 554986
<PP&E> 31710
<DEPRECIATION> 17098
<TOTAL-ASSETS> 663269
<CURRENT-LIABILITIES> 433577
<BONDS> 0
<COMMON> 394
0
0
<OTHER-SE> 227794
<TOTAL-LIABILITY-AND-EQUITY> 663269
<SALES> 1555588
<TOTAL-REVENUES> 1555588
<CGS> 1482147
<TOTAL-COSTS> 1482147
<OTHER-EXPENSES> 36155
<LOSS-PROVISION> 63
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38910
<INCOME-TAX> 14817
<INCOME-CONTINUING> 15488
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15488
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
