Filed pursuant to Rule 424(b)(3)
Registration Statement File 33-39398
PROSPECTUS
INTELLIGENT ELECTRONICS, INC.
COMMON STOCK
This Prospectus relates to the offering of 3,093,000 shares
of Common Stock, par value $.01 per share (the "Common Stock") of
Intelligent Electronics, Inc. (the "Company"). Of that amount:
1. 1,935,000 shares of Common Stock are issuable upon the
exercise of options (the "Franchisee Options") granted or available
for grant pursuant to the Company's Amended and Restated Non-Qualified
Stock Option Plan for Franchisees. See "Franchisee Stock Option
Plan."
2. 100,000 shares of Common Stock are issuable upon the
exercise of options and may be resold by the holder thereof (the
"Option Holder"). See "Registering Shareholders."
3. An additional 1,058,000 shares (the "Additional
Shares") of Common Stock may be sold by certain holders of Common
Stock (together with the Option Holder, collectively, the "Registering
Shareholders"). See "Registering Shareholders."
____________________
There is no assurance that any of the securities offered
hereby will be sold.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Common Stock of the Company (the "Common Stock") is
traded on the NASDAQ National Market System ("NASDAQ/NMS") under the
symbol "INEL."
____________________
The date of this Prospectus is February 4, 1994.
<PAGE>
AVAILABLE INFORMATION
Intelligent Electronics, Inc. (the "Company") has filed a
Registration Statement on Form S-3 with the Securities and Exchange
Commission (the "Commission") relating to the shares of Common Stock
offered hereby. This Prospectus does not contain all the information
set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement
and to the exhibits relating thereto for further information with
respect to the Company and the securities offered hereby.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and, in
accordance therewith, files reports and other information with the
Commission. Proxy statements concerning the Company, reports and
other information filed by the Company can be inspected and copied at
the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commissions's regional offices in New York (Seven World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois,
60661). Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Company will furnish, without charge, to any person to
whom a copy of this Prospectus is delivered, upon such person's
written or oral request, a copy of any and all of the documents that
have been incorporated by reference in the Registration Statement and
herein (not including exhibits to such documents, unless such exhibits
are specifically incorporated by reference into such documents). The
Company will also furnish, without a charge, to any such person on
oral or written request, a copy of the Company's most recent Annual
Report to shareholders. Any such request should be directed to the
Secretary, Intelligent Electronics, Inc., 411 Eagleview Boulevard,
Exton, PA 19341 (phone number: (215) 458-5500).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended January 30, 1993.
(b) The Company's Current Report on Form 8-K dated
March 19, 1993.
(c) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended May 1, 1993.
(d) The Company's Current Report on Form 8-K dated
May 4, 1993.
(e) The Company's Form 10-C dated July 8, 1993.
(f) The Company's Current Report on Form 8-K dated
July 12, 1993.
(g) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended July 31, 1993.
(h) The Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended October 30, 1993.
(i) In addition, all documents subsequently filed by
the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the termination of the offering shall be deemed
to be incorporated by reference herein from their respective dates of
filing.
(j) The description of the Common Stock contained in
the Company's Registration Statement on Form 8-A dated June 24, 1987,
including any amendments or reports filed for the purpose of updating
such description.
Any statements contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY
The Company is a leading national delivery system of
technology products and services. The Company's principal executive
offices are located at 411 Eagleview Boulevard, Exton, Pennsylvania
19341, telephone (215) 458-5500. As used herein and unless otherwise
required by the context, the "Company" shall mean Intelligent
Electronics, Inc. and its direct and indirect subsidiaries.
USE OF PROCEEDS
The Company anticipates that the proceeds to be received
upon the exercise by franchisees of Franchisee Options (if and to the
extent exercised) and to be received upon the exercise by the
Registering Shareholders of options (if and to the extent exercised)
will be added to working capital. However, none of the proceeds
anticipated to be received has been allocated to any specific purpose
because of uncertainty as to the amount of any such proceeds and the
timing of their receipt by the Company. The Company will receive no
proceeds from any sales of shares of Common Stock by the Registering
Shareholders.
REGISTERING SHAREHOLDERS
The following table sets forth as of February 1, 1994
information with respect to the beneficial ownership of the Company's
Common Stock by the Registering Shareholders. Unless otherwise
indicated, the shareholders listed possess sole voting and investment
power with respect to the shares listed.
<TABLE>
Beneficial Ownership
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<CAPTION>
Percentage Percentage
Number of Shares Shares of Shares
Name and of Outstanding Being Outstanding
Address Shares Prior to Offering Registered After Offering
- ------------------------- ------------ ----------------- ---------- --------------
<S> <C> <C> <C> <C>
Richard D. Sanford(a) 3,542,556(b) 10.1% 900,000 7.5%
411 Eagleview Boulevard
Exton, PA 19341
Paul Clarke 1,000 (c) 1,000 (c)
Sassoon House
Shirley & Victoria Street
Nassau, Bahamas
David Sheasby 2,000 (c) 2,000 (c)
Sassoon House
Shirley & Victoria House
Nassau, Bahamas
DHB Associates 100,000(d) (c) 100,000(d) (c)
3000 Two Logan Square
Philadelphia, PA 19103
Massachusetts Mutual Life
Insurance Company(e) 99,200 (c) 99,200 (c)
1295 State Street
Springfield, MA 01111
MassMutual Corporate
Investors(e) 37,200 (c) 37,200 (c)
c/o Massachusetts Mutual
Life Insurance Company
1295 State Street
Springfield, MA 01111
MassMutual Participation
Investors(e) 18,600 (c) 18,600 (c)
c/o Massachusetts Mutual
Life Insurance Company
1295 State Street
Springfield, MA 01111
</TABLE>
(a) Mr. Sanford is the Chairman of the Board and Chief
Executive Officer of the Company.
(b) Includes 20,000 shares purchasable upon the exercise of
stock options granted pursuant to the Amended and Restated Non-
Qualified Stock Option Plan for Employees and Directors.
(c) Less than 1% of the issued and outstanding Common Stock
of the Company.
(d) Consists of 100,000 shares issuable upon exercise of
options.
(e) Massachusetts Mutual Life Insurance Company is the
investment adviser to MassMutual Corporate Investors and
MassMutual Participation Investors.
The Company has been advised by the Registering
Shareholders that they or their pledgees, donees, transferees or
other successors in interest, may sell all, a portion or none of
the securities registered for sale by them hereunder from time to
time. Any such sales may be in one or more transactions in the
over-the-counter market at prices prevailing at the times of such
sales or in private sales of the securities at prices related to
the prevailing market prices or negotiated prices. The sales may
involve (a) a block transaction in which the broker or dealer so
engaged will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction, (b) a purchase by a broker or dealer as principal
and a resale by such broker or dealer for its account pursuant to
this Prospectus, and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. Broker-
dealers may receive compensation in the form of underwriting
discounts, concessions or commissions (which compensation may be
in excess of customary commissions). The Registering
Shareholders and any broker-dealers that participate in the
distribution of the shares may be deemed to be underwriters and
any commissions received by them and any profit on the resale of
shares positioned by them might be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
The Company has been advised by certain of the
Registering Shareholders that they or their pledgees, donees,
transferees or other successors in interest may sell all or a
portion of the securities covered by this Prospectus pursuant to
Rule 144.
There is no assurance that the Registering Shareholders
will sell any or all of their securities offered hereby. The
Company will receive no proceeds from any sales of the securities
by the Registering Shareholders.
FRANCHISEE STOCK OPTION PLAN
The Company's Amended and Restated Non-Qualified Stock
Option Plan for Franchisees (the "Franchisee Plan") provides for
the grant of options to franchisees to purchase an aggregate of
2,000,000 shares of Common Stock, subject to certain anti-
dilution adjustments.
The Franchisee Plan is intended to reward franchisees'
performance and commitment to the Company's franchise systems.
The Franchisee Plan is administered by the Board of Directors and
the Franchisee Stock Option Committee of which Mr. Shabazian is a
member, which committee generally consists of Company employees
with responsibilities in the area of center support services. In
granting options to franchisees, the Board and the Committee
consider factors such as level of franchisee purchases,
compliance with the franchise agreement, compliance with
financial obligations and other factors as the Board and the
Committee in their discretion consider relevant.
The Franchisee Plan provides that the exercise price of
the Common Stock issuable pursuant to the options must be at
least equal to the fair market value of the shares on the date of
the grant. Unless provided otherwise in the option agreement and
except as to the options outstanding as of February 1, 1990, 20%
of the options become exercisable one year from the date of grant
and an additional 20% of the options become exercisable on each
subsequent anniversary of the date of grant until the option is
fully exercisable at the end of the fifth year. Options expire
six years from the date of grant (five years in the case of
options outstanding as of February 1, 1990, which also become
exercisable in whole or in part one year from the date of grant).
No option may be exercised unless the shares covered by the
option are subject to an effective registration statement under
the Securities Act of 1933, and unless the franchise agreement
between the operator and the Company is in effect and the
operator is in compliance with all terms and conditions of the
agreement. If the franchise agreement between the Company and a
franchisee is terminated, options held by the franchisee are
terminated, unless they are transferred to entities controlled by
the franchisee, under certain circumstances. Except as discussed
above, options are not transferable, otherwise than to the
franchisee's legatees or personal representatives or distributees
within one year after death, but not later than six years after
the date of grant, to the extent that the option was exercisable
at the date of death and to the extent of the installment which
next becomes exercisable.
Options are exercised by the written notice of the
optionee. The price for the shares purchased must be paid in
cash, or its equivalent acceptable to the Company, at the time of
exercise.
As of February 1, 1994 options to purchase 145,155
shares were outstanding under the Franchisee Plan at exercise
prices ranging from $5.81 to $14.75 per share.
The Board may terminate or modify the Franchisee Plan
at any time, provided that it may not (i) extend the maximum
period during which any option may be exercised; (ii) reduce the
option price below the par value of the Common Stock or cause an
anti-dilution adjustment to occur; or (iii) modify the
requirement that the shares subject to the options be registered
at the time of exercise of the options.
Tax Treatment of Franchisee Options
- -----------------------------------
For federal income tax purposes, an optionee will not
recognize taxable income upon the grant of the option under the
Franchisee Plan. It is anticipated that upon exercise of an
option, the optionee will generally recognize taxable ordinary
income in an amount equal to the difference between the exercise
price of the shares purchased and the fair market value of the
shares on the date of exercise, and the Company will generally be
allowed a tax deduction equal to the amount of ordinary income
recognized by the optionee. Upon disposition of shares acquired
upon exercise of an option, the optionee will recognize long-term
or short-term capital gain or loss, depending upon the length of
time the optionee held the shares prior to disposition, equal to
the difference between the amount realized on disposition and the
optionee's basis in the shares (which basis ordinarily is the
fair market value of the shares on the date of exercise).
LEGAL OPINIONS
The validity of the Common Stock offered hereby has
been passed upon by Braemer Abelson & Hitchner, Philadelphia, PA
a law firm which served as counsel for the Company until it
ceased operations on April 30, 1992. Barry M. Abelson, a
Director of the Company, was a shareholder of Braemer Abelson &
Hitchner and is currently a partner at the law firm of Pepper,
Hamilton & Scheetz, Philadelphia, PA. As of the date of this
Prospectus, Mr. Abelson owns 35,400 shares of Common Stock and
holds options to purchase 60,000 shares of Common Stock.
EXPERTS
The financial statements of the Company incorporated
into this Prospectus by reference to the Annual Report on Form
10-K for the fiscal year ended January 30, 1993 have been so
incorporated in reliance on the report of Price Waterhouse,
independent accountants, given on the authority of said firm as
experts in auditing and accounting.
