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 October 29, 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: 33,111,749 shares of Common
Stock, par value $0.01 per share were outstanding at December 1, 1994.
<PAGE>
Intelligent Electronics, Inc. and Subsidiaries
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet
October 29, 1994 and January 29, 1994 3
Consolidated Statement of Operations
Three and Nine Months Ended October 29, 1994
and October 30, 1993 4
Consolidated Statement of Cash Flows
Nine Months Ended October 29, 1994
and October 30, 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 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 14
<PAGE>
PART I - FINANCIAL INFORMATION FORM 10-Q
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Consolidated Balance Sheet
(in thousands, except share-related data)
<TABLE>
<CAPTION>
October 29, January 29,
1994 1994
----------- -----------
(unaudited)
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 150,173 $ 122,249
Marketable securities available for sale 11,905 61,130
Accounts receivable, net 35,222 9,524
Inventory 462,261 251,044
Prepaid expenses and other current assets 14,220 8,872
Deferred income taxes 15,597 7,840
---------- ----------
Total current assets 689,378 460,659
Property and equipment 16,534 11,371
Intangible assets, primarily goodwill, net 68,045 71,585
Investments in affiliates 16,148 30,096
Other assets 8,907 3,300
---------- ----------
Total assets $ 799,012 $ 577,011
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 558,182 $ 334,341
Accrued liabilities 30,779 21,025
---------- ----------
Total current liabilities 588,961 355,366
---------- ----------
Other liabilities 1,490 2,795
Commitments and contingencies -- --
Shareholders' equity:
Common stock $.01 par value per share:
Authorized 100,000,000 shares,
issued and outstanding:
39,507,549 and 39,310,439 shares 395 393
Additional paid-in capital 221,223 219,107
Treasury stock (72,122) (57,181)
Retained earnings 59,284 56,531
Unrealized holding loss on securities and investments (219) --
---------- ---------
Total shareholders' equity 208,561 218,850
---------- ---------
Total liabilities and shareholders' equity $ 799,012 $ 577,011
========== =========
</TABLE>
See accompanying notes to consolidated financial statements. <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 Nine months ended
------------------------ -------------------------
October 29, October 30, October 29, October 30,
1994 1993 1994 1993
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 831,122 $ 675,902 $ 2,386,710 $ 1,906,095
Cost of goods sold 805,808 645,746 2,287,955 1,823,345
---------- ---------- ----------- -----------
Gross profit 25,314 30,156 98,755 82,750
---------- ---------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 29,274 12,715 63,132 37,682
Amortization of intangibles, primarily goodwill 1,180 1,180 3,540 3,540
---------- ---------- ----------- -----------
Total operating expenses 30,454 13,895 66,672 41,222
---------- ---------- ----------- -----------
Income (loss) from operations (5,140) 16,261 32,083 41,528
Other income (expense):
Investment and other income, net 1,394 1,107 3,704 3,717
Interest expense (225) (104) (848) (460)
---------- ---------- ----------- -----------
Income (loss) from continuing operations before
provision for income taxes and equity in
earnings (loss) of affiliate (3,971) 17,264 34,939 44,785
Provision for income taxes (1,199) 6,698 13,618 17,449
---------- ---------- ----------- -----------
Income (loss) from continuing operations before
equity in earnings (loss) of affiliate (2,772) 10,566 21,321 27,336
Equity in earnings (loss) of affiliate (net of
tax expense/(benefit) of $(145), $171,
$(5,198) and $606) (248) 285 (8,853) 1,030
---------- ---------- ----------- -----------
Income (loss) from continuing operations (3,020) 10,851 12,468 28,366
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 (loss) $ (3,020) $ 10,851 $ 12,468 $ 32,196
========== ========== =========== ===========
<PAGE>
Income (loss) per common share and share equivalent:
Continuing operations $ (0.09) $ 0.30 $ 0.35 $ 0.78
Discontinued operation -- -- -- (0.07)
Sale of BizMart -- -- -- 0.17
---------- ---------- ----------- -----------
Net income (loss) per share $ (0.09) $ 0.30 $ 0.35 $ 0.88
========== ========== =========== ==========
Dividends declared per share $ 0.10 $ 0.08 $ 0.28 $ 2.16
========== ========== =========== ==========
Weighted average number of common shares
and share equivalents outstanding:
Primary and fully diluted 34,936 35,751 35,628 36,469
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries FORM 10-Q
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Nine months ended
-------------------------------
October 29, October 30,
1994 1993
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income $ 12,468 $ 32,196
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 7,204 6,815
Provision for deferred taxes (12,990) (3,307)
Gain on sale of fixed assets -- (58)
Provision for losses on trade receivables 143 290
Provision for write-down of inventory 6,185 1,341
Loss from discontinued operation -- 2,468
Gain on sale of BizMart -- (6,298)
Equity in (earnings) loss of affiliate 14,051 (1,636)
Changes in assets and liabilities, net of effects
from acquisitions and sales:
Accounts receivable (25,841) (8,702)
Inventory (217,402) (34,141)
Other current assets (5,348) (4,777)
Accounts payable 223,873 37,908
Accrued liabilities 9,133 4,014
----------- -----------
Net cash provided by operating activities 11,476 26,113
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (31,709) (146,600)
Sales and maturities of marketable securities 80,714 45,950
Acquisition of property and equipment, net of disposals (8,646) (4,126)
Proceeds from sale of BizMart -- 275,236
Investment in and loan to affiliates (1,102) (8,747)
Other (764) (764)
----------- -----------
Net cash provided by investing activities 38,493 160,949
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Subordinated Debt -- (17,500)
Common stock repurchased (14,941) (55,375)
Cash dividends paid (9,094) (75,123)
Proceeds from exercise of stock options 2,118 17,062
Proceeds from exercise of warrants -- 570
Reduction in capital lease obligations (128) (88)
----------- -----------
Net cash used for financing activities (22,045) (130,454)
----------- -----------
Net cash provided by continuing operations and sale of BizMart 27,924 56,608
Cash used for discontinued operation -- (5,562)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 27,924 51,046
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 122,249 52,498
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 150,173 $ 103,544
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Intelligent Electronics, Inc. and Subsidiaries
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 October 29, 1994, the Company recognized
a loss of $248,000 after taxes as its proportionate share of TFN's net loss.
As of October 29, 1994, the carrying value of the TFN common stock was
approximately $15,339,000 and the aggregate market price, based on TFN's quoted
market price, was approximately $20,510,000 (See Note 7).
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 October 29, 1994,
based on RA's quoted market price, the fair market value of the Company's
investment in RA was approximately $284,000.
(5) Common Stock Dividends
----------------------
On October 27, 1994, the Board of Directors of the Company declared a $0.10 per
share cash dividend to shareholders of record on November 15, 1994, which was
paid on December 1, 1994.
On September 1, 1994, the Company paid the $0.10 per share cash dividend which
was declared on July 28, 1994.
On October 27, 1993, the Board of Directors declared a cash dividend of $0.08
per share to shareholders of record on November 17, 1993, which was paid on
December 1, 1993.
On September 1, 1993, the Company paid the cash dividend of $0.08 per share
which was declared on July 1, 1993.
(6) Supplemental Cash Flow Information
----------------------------------
In October 1994, the Company accrued $3,430,000 for the dividend declared on
October 27, 1994 and paid on December 1, 1994.
In October 1993, the Company accrued $2,773,000 for the dividend declared on
October 27, 1993 and paid on December 1, 1993.
Cash payments during the nine-month periods ended October 29, 1994 and October
30, 1993 included interest of $1,019,000 and $618,000, respectively, and income
taxes of $19,910,000 and $13,703,000, respectively.
(7) Subsequent Events
-----------------
On November 1, 1994, the Company executed a letter of intent with TFN, in a
transaction valued at approximately $40 million, to purchase the assets of
certain branch locations in five major-metro cities.
On December 2, 1994, the Board of Directors expanded a previously authorized
7 million share repurchase program to allow the Company to purchase up to an
additional 6.6 million shares of its common stock in open-market transactions.
In December 1994, several purported class action lawsuits were filed in the
United States District Court for the Eastern District of Pennsylvania (Civil
Actions Nos. 94-3753, 94-CV-7410, 94-CV-7388, and 94-CV-7405) and a purported
derivative lawsuit was filed in the Court of Common Pleas of Philadelphia
County (No. 803) against the Company and certain of its directors and officers
alleging violations of certain disclosure and related provisions of the federal
securities laws and alleging breaches of fiduciary duties, including
allegations relating to the Company's practices regarding vendor marketing
funds. In addition, the Company has been contacted by the Philadelphia
office of the Securities and Exchange Commission regarding a preliminary,
informal inquiry, and the plaintiffs in a class action lawsuit filed several
years ago against the Company, certain directors and officers, and the
Company's auditors in the United States District Court for the Eastern
District of Pennsylvania (Civil Action No. 92-CV-1905), have sought to
amend the suit to include allegations similar to those in the new lawsuits,
which seek damages in unspecified amounts as well as other monetary and
equitable relief. The Company believes that all such lawsuits are without
merit and intends to defend these lawsuits vigorously.
<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, Inc. 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 23% to $831,122,000 for the quarter ended October 29, 1994
compared to $675,902,000 for the quarter ended October 30, 1993. For the nine
months ended October 29, 1994, revenues increased to $2,386,710,000 compared to
$1,906,095,000 for the nine months ended October 30, 1993. These increases are
primarily attributable to continued demand from existing and new network
integrators for premium brand name products and advanced technology products,
which the Company believes was partially offset by the loss of potential sales
due to operating inefficiencies resulting from the systems issues discussed
below.
Gross profit as a percentage of revenues for the quarter ended October 29, 1994
was 3.0% compared to 4.5% for the quarter ended October 30, 1993. For the nine
months ended October 29, 1994, gross profit as a percentage of revenues was 4.1%
compared to 4.3% for the same period last year. The decline in gross margins
was primarily due to operating inefficiencies and an inventory related write-off
of approximately $5 million, resulting from management information systems
stresses and outages during the quarter ended October 29, 1994, and to
intensified competitive pricing pressures as certain manufacturers expanded
their distribution channels. The third quarter systems stresses and outages
were caused by the cumulative effect of operating out of multiple warehouses,
the addition of new vendors and SKU's and the expansion of on-line services
to the Company's customer network. This resulted in reduced customer service
levels and unfavorably impacted gross margins as the Company reduced prices
to customers, incurred additional freight costs to expedite shipments and did
not take full advantage of vendor volume purchasing and other opportunities.
The Company has offset some of this margin decline through increased revenues
generated from higher margin advanced technology products and fee-based
services. Although the Company does not expect the inventory related write-off
to recur, it believes that the other factors impacting gross margin during the
quarter ended October 29, 1994 are likely to continue for the foreseeable
future.
Selling, general and administrative expenses increased to $29,274,000 and
$63,132,000 for the quarter and nine months ended October 29, 1994,
respectively, from $12,715,000 and $37,682,000, respectively, for the
comparable periods last year. During the quarter ended October 29, 1994,
approximately $9 million of costs were incurred in connection with the
elimination of certain peripheral ventures ($4 million) and the
implementation of IE2000 ($5 million), including costs associated with reducing
payroll, closing and consolidating facilities, relocating personnel and
consultant fees for services rendered to date. IE2000 is a project designed to
transform the Company to a process-driven operating model. The Company expects
future annualized cost savings of approximately $10 million as a result of
these actions. The systems stresses and outages and related inefficiencies
also resulted in higher operating costs. The foregoing costs, together with
costs to service the higher volume of revenues and to support new programs,
including commission expenses for a new financing program were the primary
reasons for the increase. For the nine months ended October 29, 1994,
increases include the items stated above. The Company expects recurring
costs associated with the transformation project and operating inefficiencies
through the middle of Fiscal 1995.
In connection with the eliminated peripheral ventures, revenues for the quarters
and nine-month periods ended October 29, 1994 and October 30, 1993 were less
than 1% of consolidated revenues; operating income (loss) was approximately
$(1,600,000) and $(3,500,000) for the quarter and nine months ended October 29,
1994, respectively, and $(300,000) and $(500,000) for the quarter and nine
months ended October 30, 1993, respectively. These eliminations consist of
the closing of the Company's cable television programming operation and
its direct fulfillment agreement with a third-party and the sale of
substantially all of the Company's wireless telecommunications operation,
all of which have been substantially completed in the fourth quarter.
The approximately $9 million incurred in the quarter ended October 29, 1994
in connection with the elimination of the peripheral ventures and the
implementation of IE2000 included costs accrued in the quarter and recorded as
selling, general and administrative expenses in the aggregate of approximately
$2,800,000 relating to the elimination (including the loss on contractual
obligations, employee severance costs, remaining lease commitments for
unused space, net of estimated sublease revenue, and the write-down of
certain assets), and approximately $600,000 relating to a reduction in the
Company's workforce. Twenty-nine positions are being eliminated primarily in
the sales and marketing areas of the Company.
Other income (expense) increased from $1,003,000 to $1,169,000 during the
quarter ended October 29, 1994, and decreased from $3,257,000 to $2,856,000
for the nine months ended October 29, 1994. The changes for the quarter
and nine months ended October 29, 1994 can be primarily attributable
to the higher return on the Company's investments and a gain on the sale
of an investment in the current quarter, offset by less investable cash
as a result of the use of the Company's available cash for payments of cash
dividends and share repurchases since February 1993.
The Company's effective tax rate for the quarter ended October 29, 1994
decreased to 30.2% from 38.8% for the quarter ended October 30, 1993. This
decrease is primarily due to the effect of non-deductible goodwill on
the taxable income for the current quarter.
For the quarter and nine months ended October 29, 1994, the Company recognized
a loss of $248,000 and $8,853,000 after taxes as its proportionate share of
TFN's net loss, compared to income of $285,000 and $1,030,000 after taxes
for the same periods last year.
Income (loss) from continuing operations decreased to $(3,020,000) and
$12,468,000 for the quarter and nine months ended October 29, 1994,
respectively, compared to $10,851,000 and $28,366,000 for the quarter and
nine months ended October 30, 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 nine months ended October 29, 1994, the Company's operating
activities generated $11,476,000 in cash. At October 29, 1994, the Company had
cash and cash equivalents of $150,173,000 ($122,249,000 at January 29, 1994)
and marketable securities available for sale of $11,905,000 ($61,130,000 at
January 29, 1994). Working capital totaled $100,417,000 at October 29, 1994
compared to $105,293,000 at January 29, 1994. New financing programs offered
by the Company and its expanded selection and higher levels of inventory have
increased working capital requirements, although the Company is in the process
of balancing and lowering its inventory by reducing purchases and returning
product to certain vendors. The Company also has a $170,000,000 financing
agreement with a finance company. At October 29, 1994, the Company had
approximately $71,031,000 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 October 29, 1994.
During the quarter ended October 29, 1994, the Company paid the quarterly
dividend of $0.10 per share which was declared on July 28, 1994. On
October 27, 1994, the Company's Board of Directors declared a dividend of
$0.10 per share to shareholders of record on November 15, 1994, which was paid
on December 1, 1994. The Company repurchased 914,000 shares of its common stock
during the quarter as part of the previously authorized 7 million share
repurchase program. As of October 29, 1994, the Company had repurchased
5,211,200 shares of its common stock at a cost of approximately $72,122,000.
On December 1, 1994, the Board of Directors authorized an expansion of the
share repurchase program to allow the Company to purchase up to an additional
6.6 million shares of its common stock.
On November 1, 1994, the Company executed a letter of intent with TFN, in a
transaction valued at approximately $40 million, to purchase the assets of
certain branch locations in five major-metro cities.
The Company is currently upgrading its management information systems as part of
IE2000. This upgrading is expected to be completed by the end of Fiscal 1996
and is estimated to cost approximately $20,000,000 to $30,000,000, including
costs to date of approximately $1,500,000.
Based on the Company's current level of operations, the anticipated purchase of
certain of TFN's assets 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>
Intelligent Electronics, Inc. and Subsidiaries
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11. Statement re: Computation of Per Share Earnings
(b) Reports on Form 8-K.
None
<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: December 13, 1994
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries Exhibit 11
Primary Income Per Share Calculation Page 1 of 2
Three months ended Nine months ended
------------------------------------------------ ------------------------------------------------
October 29, 1994 October 30, 1993 October 29, 1994 October 30, 1993
------------------------------------------------ ------------------------------------------------
$ Per Share $ Per Share $ Per Share $ Per Share
---------- --------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Continuing operations (3,020,000) ($0.09) 10,851,000 $0.30 12,468,000 $0.35 28,366,000 $0.79
Discontinued operation -- -- -- -- -- -- (2,468,000) (0.07)
Sale of BizMart -- -- -- -- -- -- 6,298,000 0.17
---------- --------- ---------- --------- ---------- --------- ---------- ---------
Net income (loss) (3,020,000) ($0.09) 10,851,000 $0.30 12,468,000 $0.35 32,196,000 $0.89
========== ========= ========== ========= ========== ========= ========== =========
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 34,935,718 35,592,014 35,627,893 36,053,766
========== ========== ========== ==========
Computation of Common Shares, Common Share Equivalents
& Other Dilutive Securities
Three months ended Nine months ended
------------------------------------------------- --------------------------------------------
October 29, 1994 October 30, 1993 October 29, 1994 October 30, 1993
------------------------ ------------------------ ----------------------- --------------------
End of Weighted End of Weighted End of Weighted End of Weighted
Period Average Period Average Period Average Period Average
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Common shares outstanding 39,507,549 34,445,198 38,858,804 34,614,059 39,507,549 34,930,260 38,858,804 35,074,167
Common share equivalents:
Options 3,452,475 3,348,997 2,668,070 2,680,022 3,452,475 3,197,282 2,668,070 3,264,775
Assumed repurchased @ average price (2,858,477) (1,702,067) (2,499,649) (2,341,478)
Warrants 0 0 0 0 0 0 0 75,164
Assumed repurchased @ average price 0 0 0 (18,862)
---------- ---------- ---------- ---------
Weighted average common share equivalents 490,520 977,955 697,633 979,599
---------- ---------- ---------- ---------
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 34,935,718 35,592,014 35,627,893 36,053,766
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries Exhibit 11
Fully Diluted Income Per Share Calculation Page 2 of 2
Three months ended Nine Months Ended
------------------------------------------------ ------------------------------------------------
October 29, 1994(1) October 30, 1993 October 29, 1994(1) October 30, 1993
------------------------------------------------ ------------------------------------------------
$ Per Share $ Per Share $ Per Share $ Per Share
---------- --------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Continuing operations (3,020,000) ($0.09) 10,851,000 $0.30 12,468,000 $0.35 28,366,000 $0.78
Discontinued operation -- -- -- -- -- -- (2,468,000) (0.07)
Sale of BizMart -- -- -- -- -- -- 6,298,000 0.17
---------- -------- ---------- -------- ---------- --------- ---------- ---------
Net income (loss) (3,020,000) ($0.09) 10,851,000 $0.30 12,468,000 $0.35 32,196,000 $0.88
========== ======== ========== ======== ========== ========= ========== =========
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 34,935,718 35,751,096 35,627,893 36,468,955
========== ========== ========== ==========
Computation of Common Shares, Common Share Equivalents
& Other Dilutive Securities
Three months ended Nine months ended
--------------------------------------------- ------------------------------------------------
October 29, 1994(1) October 30, 1993 October 29, 1994(1) October 30, 1993
---------------------- --------------------- ----------------------- ------------------------
End of Weighted End of Weighted End of Weighted End of Weighted
Period Average Period Average Period Average Period Average
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Common shares outstanding 39,507,549 34,445,198 38,858,804 34,614,059 39,507,549 34,930,260 38,858,804 35,074,167
Common share equivalents:
Options 3,452,475 3,348,997 2,668,070 2,680,022 3,452,475 3,197,282 2,668,070 3,264,774
Assumed repurchased @ ending price (2,858,477) (1,542,985) (2,499,649) (1,928,829)
Warrants 0 0 0 0 0 0 0 75,165
Assumed repurchased @ ending price 0 0 0 (16,322)
---------- ---------- ---------- -----------
Weighted average common share equivalents 490,520 1,137,037 697,633 1,394,788
---------- ---------- ---------- -----------
Weighted average common shares
outstanding, common share equivalents
& other dilutive securities 34,935,718 35,751,096 35,627,893 36,468,955
========== ========== ========== ==========
(1) For the three and nine months ended October 29, 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> 9-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> OCT-29-1994
<CASH> 150,173
<SECURITIES> 11,905
<RECEIVABLES> 35,340
<ALLOWANCES> 118
<INVENTORY> 462,261
<CURRENT-ASSETS> 689,378
<PP&E> 33,326
<DEPRECIATION> 16,792
<TOTAL-ASSETS> 799,012
<CURRENT-LIABILITIES> 588,961
<BONDS> 0
<COMMON> 395
0
0
<OTHER-SE> 208,166
<TOTAL-LIABILITY-AND-EQUITY> 208,561
<SALES> 2,386,710
<TOTAL-REVENUES> 2,386,710
<CGS> 2,287,955
<TOTAL-COSTS> 2,287,955
<OTHER-EXPENSES> 66,529
<LOSS-PROVISION> 143
<INTEREST-EXPENSE> 848
<INCOME-PRETAX> 34,939
<INCOME-TAX> 13,618
<INCOME-CONTINUING> 12,468
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,468
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
