UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[x] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Intelligent Electronics, Inc.
- ----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
_________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________
5) Total fee paid:
_________________________________________________
[x] Fee paid previously with preliminary materials.
[x] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $15,600
2) Form, Schedule or Registration Statement No.: Preliminary Schedule 14A
3) Filing Party: Intelligent Electronics, Inc.
4) Date Filed: May 13, 1997
<PAGE>
INTELLIGENT ELECTRONICS, INC.
411 Eagleview Boulevard
Exton, PA 19341
(610)458-5500
To the Shareholders of Intelligent Electronics, Inc.:
As discussed in the Proxy Statement dated June 20, 1997 (the "Proxy
Statement") for the Annual Meeting (the "Meeting") of Shareholders of
Intelligent Electronics, Inc. (the "Company") to be held on July 16,
1997, the Company was in negotiations for the possible sale of a
substantial portion of the business of XLSource, Inc. ("XLSource"), the
Company's wholly-owned direct computer hardware sales organization. On
July 1, 1997, the Company (and certain of its direct and indirect
subsidiaries, including XLSource) entered into an Asset Purchase Agreement
(the "Purchase Agreement") with GE Capital Information Technology
Solutions Acquisition Corp., a subsidiary of GE Capital Information
Technology Solutions, Inc., providing for such a transaction (the "XL
Transaction").
Enclosed is a Form 8-K (as filed with the Securities and Exchange
Commission) describing and providing information with regard to the
Purchase Agreement. The XL Transaction and the Sale of the Indirect
Business (as defined in the Proxy Statement) are not conditioned on each
other, and it is anticipated that the XL Transaction will be consummated on
or about July 15, 1997 and prior to the consummation of the Sale of the
Indirect Business. As noted in the Proxy Statement, the XL Transaction is
therefore not being submitted to the shareholders for approval at the
Meeting.
In connection with the Purchase Agreement, on July 2, 1997, the
Company and Ingram entered into an amendment to the Acquisition Agreement
(as defined in the Proxy Statement) for the Sale of the Indirect Business,
which is also described in the enclosed Form 8-K, which should be reviewed
in conjunction with the Proxy Statement.
For your convenience, a proxy card is enclosed in the event that you
have not voted, misplaced the previous proxy card or would like to change
your vote.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
DATE AND SIGN YOUR PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED FOR
YOUR CONVENIENCE. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE COMPANY
OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING YOUR PROXY
PROMPTLY. RETURNING THE PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
ON ALL MATTERS BROUGHT BEFORE THE MEETING, BUT WILL HELP ASSURE A QUORUM IF
YOU DO NOT ATTEND.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1997
INTELLIGENT ELECTRONICS, INC.
(Exact name of issuer as specified in charter)
PENNSYLVANIA 0-15991 23-2208404
(State or Other Jurisdiction Commission (I.R.S. Employer
of Incorporation or file number Identification
Organization) Number)
411 Eagleview Boulevard, Exton, Pennsylvania 19341
(Address of principal executive offices)
(610) 458-5500
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
GENERAL
As discussed in the Proxy Statement dated June 20, 1997 (the "Proxy Statement")
for the Annual Meeting of Shareholders of Intelligent Electronics, Inc. (the
"Company") to be held on July 16, 1997, the Company was in negotiations for
the possible sale of a substantial portion of the business of XLSource, Inc.
("XLSource"), the Company's wholly-owned direct computer hardware sales
organization. Together with XLConnect Solutions, Inc. ("XLConnect"), a
professional services organization that is an 80% subsidiary of the Company,
XLSource constitutes the Company's Direct Business.
On July 1, 1997, the Company (and certain of its direct and indirect
wholly-owned subsidiaries, including XLSource) and XLConnect entered into
an Asset Purchase Agreement (the "Purchase Agreement") with GE Capital
Information Technology Solutions Acquisition Corp. (the "Buyer"), a
subsidiary of GE Capital Information Technology Solutions, Inc. ("GECITS"),
pursuant to which:
(a) The Company agreed to sell to the Buyer certain assets related to the
Company's direct computer hardware sales business (the "Direct Hardware
Business"), consisting primarily of the inventory, accounts receivable,
customers and customer contracts relating to 20 of the 24 Direct Hardware
Business locations and real property leases and fixed assets related to
six of such 20 locations; and
(b) XLConnect agreed to sell to the Buyer certain specified services
contracts and related assets, consisting principally of accounts receivable
and fixed assets.
The purchase price to be paid by the Buyer in the transactions pursuant to
the Purchase Agreement (the "XL Transaction") is $136,116,000, based on the
net book value of the assets being sold of $93,841,000 as of May 3, 1997,
the end of the Company's last fiscal quarter. The purchase price is subject
to adjustment after closing based on such net book value as of the closing
date. Of the purchase price, $126,116,000 is to be paid in cash at closing,
with $10 million to be paid into escrow for retention for up to 240 days to
fund purchase price adjustments and obligations of the Company and XLConnect
under the Purchase Agreement, including the obligation to repurchase from
the Buyer any transferred accounts receivable which remain uncollected after
120 days. Of the total purchase price to be paid in the XL Transaction,
XLConnect will receive $11,847,000 (based on the net book value of the
assets to be acquired from it of $6,572,000 as of May 3, 1997). The Company
will retain substantially all of the accounts payable of the Direct Hardware
Business being sold to the Buyer. The Company anticipates that it will record
a pre-tax loss of approximately $20 million, net of transaction costs, plus a
tax provision of approximately $7,500,000. The tax provision is due to
differences between the tax bases of the assets being sold and their
amounts for financial reporting purposes (primarily goodwill).
The Purchase Agreement contains customary representations, warranties,
covenants, indemnification provisions and closing conditions (including
customer consents to transferred contracts). In addition: a closing
condition for the Buyer's benefit is that the gross revenues of the business
being transferred are not less than $115,000,000 during the Company's three
fiscal months ended prior to the closing date (which has been met assuming
a July 1997 closing); the Company has agreed to maintain a minimum
consolidated net worth of $80,000,000 and not to make distributions or
dividends to the holders of the Company's Common Stock until the expiration
of the period within which transferred accounts receivable are subject to
repurchase, and to maintain a minimum consolidated net worth of $50,000,000
thereafter as long as it has any obligations under the Purchase Agreement
(and not to merge or engage in a similar transaction with another corporation
unless such obligations are assumed by the successor and the successor's
net worth is not less than $50,000,000); the Company and XLConnect will pay
to the Buyer interest at an annual rate of 6.5% on the average monthly
uncollected balance of the transferred accounts receivable; XLConnect
and the Buyer will enter into an agreement for the provision of product and
services in the geographic areas in which the transferred business is
located; the parties have agreed to one-year restrictions on competition
and hiring of employees; General Electric Capital Information Technology
Solutions - North America, Inc., an affiliate of Buyer ("GECITS-NA"), has
agreed that it will enter into a resale agreement (the "Resale Agreement")
with Ingram Micro Inc. ("Ingram") providing for the purchase by it from
Ingram during a three-year period of its requirements of certain computer
and related products; the Company and XLConnect have agreed to use specified
best efforts to transfer to the Buyer all customer account information
with respect to certain customers and to pay to the Buyer the sum of $1
million for each such account with respect to which such efforts are not
used during the six-month period following the closing; and the Company and
XLConnect have agreed to provide to the Buyer office and storage space, data
information services, and employee and other services for a transitional
period after closing.
It is currently anticipated that the closing under the Purchase Agreement
will occur on or about July 15, 1997. However, there can be no assurance
that the closing will be completed, and each party has the right to
terminate the Purchase Agreement if the closing has not been completed
by August 2, 1997.
After the consummation of the XL Transaction, the Company will continue to
operate its Direct Hardware Business from four locations: Cleveland,
Cincinnati, Indianapolis and Pittsburgh. Revenues of the retained Direct
Hardware Business operations, which will continue to function in a
partnership relationship with XLConnect, were approximately $200,000,000
in the fiscal year ended February 1, 1997 and approximately $50,000,000 in
the fiscal quarter ended May 3, 1997.
As discussed in the Proxy Statement, the Company entered into an agreement
with Ingram on April 29, 1997 (the "RND Agreement") whereby the Company
agreed to sell to Ingram its business (the "Indirect Business") of providing
information technology product, services and solutions to network integrators
and resellers (the "RND Transaction"). Pursuant to the Supply Agreement
(as defined in the Proxy Statement), XLSource agreed to purchase 100% of
its requirements of products available from Ingram up to a minimum of $1.8
billion of purchases over a three-year period, subject to an extension up
to two years under certain circumstances. The Company has guaranteed to
Ingram performance by XLSource of its obligations under the Supply Agreement.
In connection with the Purchase Agreement, on July 2, 1997, the Company and
Ingram entered into an amendment to the RND Agreement (the "RND Amendment")
whereby Ingram agreed to amend the Supply Agreement to provide that certain
of GECITS-NA's product purchases from Ingram which are in excess of
GECITS-NA's current purchases from Ingram will be credited against
XLSource's $1.8 billion purchase commitment under the Supply Agreement.
XLSource and the Company have not been released from any of their
obligations regarding the $1.8 billion commitment, and the Company
will be required to deliver to Ingram a $12,500,000 irrevocable letter of
credit to secure the purchase commitment and other obligations of the
Company under the RND Agreement and the Supply Agreement.
In the RND Amendment, Ingram has agreed to enter into the Resale Agreement
with GECITS-NA. GECITS-NA is not required to purchase any minimum amount
of product from Ingram, and GECITS-NA and Ingram are under no restrictions
with the Company regarding the modification, amendment or termination of
the Resale Agreement. Accordingly, although the Company believes that its
purchases from Ingram and those of GECITS-NA will satisfy XLSource's
purchase obligations under the Supply Agreement, there can be no assurance
in that regard. In the event such purchase obligations are not satisfied,
certain liquidated damages are due to Ingram under the Supply Agreement
(as discussed in the Proxy Statement). Although the Company does not
currently believe that the payment of any such liquidated damages will
have a material adverse effect on the Company, there can be no assurance in
that regard as well.
This Form 8-K should be reviewed in conjunction with the Proxy Statement.
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Balance Sheet as of May 3, 1997, and the
Pro Forma Statements of Operations for the fiscal quarter ended May 3, 1997
and the fiscal year ended February 1, 1997 are presented to give effect to
the RND Transaction and the XL Transaction.
Historical financial data used to prepare the pro forma financial
statements were derived from the auditedconsolidated financial statements
included in the Company's Annual Report on Form 10-K for the fiscal
year ended February 1, 1997 and the unaudited consolidated financial
statements included in the Company'squarterly report on Form 10-Q for the
fiscal quarter ended May 3, 1997. These pro forma financial
statements should be read in conjunction with such historical financial
statements.
The pro forma adjustments reflected herein are based on available
information and certain assumptions thatthe Company's management believes
are reasonable. Pro forma adjustments made in the Pro Forma BalanceSheet
assume that the RND Transaction and the XL Transaction were consummated on
May 3, 1997, and do not reflect the impact of the operating results of the
businesses to be sold pursuant thereto or changes in balance sheet amounts
subsequent to May 3, 1997. The pro forma adjustments to the Pro Forma
Statements of Operations assume that the RND Transaction and the XL
Transaction were consummated on February 3, 1996.
The Pro Forma Balance Sheet and Pro Forma Statements of Operations are
based on assumptions and approximations and, therefore, do not reflect in
precise numerical terms the impact of the transactions on the historical
financial statements. In addition, such pro forma financial statements
should not be used as a basis for forecasting future operations of the
Company.
<PAGE>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Pro Forma Consolidated Balance Sheet
As of May 3, 1997
(in thousands, unaudited)
<TABLE>
<CAPTION>
RND XL
Transaction Transaction
Pro forma Pro forma
Adjustments Pro forma Adjustments Pro forma
As Increase after RND Increase after XL
Reported (Decrease) Transaction (Decrease) Transaction
----------- ----------- ----------- ----------- -----------
Assets
Current assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 37,997 $ (4,297)(a) $ 33,700 $ 39,916 (g) $ 73,616
Escrow receivable - 10,000 (b) 10,000 10,000 (h) 20,000
Accounts receivable, net 139,673 (9,855)(c) 129,818 (87,039)(i) 42,779
Inventory 240,228 (231,285)(c) 8,943 (6,891)(i) 2,052
Prepaid expenses and other current assets 4,240 (633)(c) 3,607 (49)(i) 3,558
Deferred income taxes 11,861 (11,861)(c)(f) 0 0
----------- ----------- ----------- ----------- -----------
Total current assets 433,999 (247,931) 186,068 (44,063) 142,005
Property and equipment 58,409 (43,894)(c) 14,515 (8,128)(i) 6,387
Intangible assets, primarily goodwill, net 90,653 90,653 (45,380)(i) 45,273
Other assets 27,799 (6,993)(c) 20,806 (7,601)(i)(l) 13,205
----------- ----------- ----------- ----------- -----------
Total assets $ 610,860 $ (298,818) $ 312,042 $ (105,172) $ 206,870
=========== =========== =========== =========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 34,135 $ (2,811)(c) $ 31,324 $ (31,200)(j) $ 124
Accounts payable 325,032 (289,705)(c) 35,327 (1,807)(i) 33,520
Accrued liabilities 42,089 (10,479)(d) 31,610 10,021 (k) 41,631
Long-term debt reclassified as current 55,000 (55,000)(e) 0 0
---------- ----------- ----------- ----------- -----------
Total current liabilities 456,256 (357,995) 98,261 (22,986) 75,275
---------- ----------- ----------- ----------- -----------
Long-term debt 8,051 52,112 (e) 60,163 (55,000)(j) 5,163
Other long-term liabilities 12,238 (1,187)(c) 11,051 11,051
Minority interest 10,643 10,643 10,643
Shareholders' equity:
Preferred stock 700 700 700
Common stock 417 417 417
Additional paid-in capital 285,027 285,027 285,027
Treasury stock (67,311) (67,311) (67,311)
Retained earnings (deficit) (95,161) 8,252 (f) (86,909) (27,186)(l) (114,095)
----------- ----------- ----------- ----------- -----------
Total shareholders' equity 123,672 8,252 131,924 (27,186) 104,738
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $610,860 $(298,818) $ 312,042 $ (105,172) $ 206,870
=========== ============ =========== =========== ===========
See accompanying notes to the pro forma financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the quarter ended May 3, 1997
(in thousands, except per-share data)
(unaudited)
Deduct Pro forma Deduct Pro forma
As RND after RND XL after XL
Reported Transaction(m) Transaction Transaction(q) Transaction
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $ 668,256 $ 468,804 $ 199,452 $ 120,155 $ 79,297
Cost of goods sold 635,596 460,997 174,599 110,509 64,090
----------- ----------- ----------- ----------- -----------
Gross profit 32,660 7,807 24,853 9,646 15,207
----------- ----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 44,456 16,877(n) 27,579 10,617(n) 16,962
Amortization of intangibles,
primarily goodwill 1,261 1,261 642 619
----------- ----------- ----------- ----------- -----------
Total operating expenses 45,717 16,877 28,840 11,259 17,581
----------- ----------- ----------- ----------- -----------
Loss from operations (13,057) (9,070) (3,987) (1,613) (2,374)
Other income (expense):
Investment and other income (expense), net 170 104 66 66
Interest expense (3,805) (2,191)(o) (1,614) (1,217)(r) (397)
----------- ----------- ----------- ----------- -----------
Loss before income tax benefit
and minority interest (16,692) (11,157) (5,535) (2,830) (2,705)
Income tax benefit (4,902) (4,902) 0 0
----------- ----------- ----------- ----------- -----------
Loss before minority interest (11,790) (6,255) (5,535) (2,830) (2,705)
Minority interest (99) (99) (99)
----------- ----------- ----------- ----------- -----------
Net loss (11,889) (6,255) (5,634) (2,830) (2,804)
Preferred stock dividend 225 225 225
----------- ----------- ----------- ----------- -----------
Net loss applicable to common shareholders $ (12,114) $ (6,255) $ (5,859)(p) $ (2,830) $ (3,029)(s)
============ =========== =========== =========== ===========
Loss per share applicable to
common shareholders $ (0.34) $ (0.16) $ (0.08)
============ ============ ===========
Weighted average number of common shares 36,066 36,066 36,066
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Pro Forma Consolidated Statement of Operations
For the year ended February 1, 1997
(in thousands, except per-share data)
(unaudited)
Deduct Pro forma Deduct Pro forma
As RND after RND XL after XL
reported Transaction(m) Transaction Transaction(q) Transaction
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $3,346,557 $2,566,915 $ 779,642 $ 474,275 $ 305,367
Cost of goods sold 3,190,683 2,485,757 704,926 446,935 257,991
----------- ----------- ----------- ----------- -----------
Gross profit 155,874 81,158 74,716 27,340 47,376
----------- ----------- ----------- ----------- -----------
Operating expenses:
Selling, general and administrative expenses 174,230 72,731(n) 101,499 41,491(n) 60,008
Amortization of intangibles,
primarily goodwill 8,311 3,351 4,960 2,397 2,563
Branch closure costs 9,790 9,790 9,790 0
Impairment losses 61,576 61,576 0 0
----------- ----------- ----------- ----------- -----------
Total operating expenses 253,907 137,658 116,249 53,678 62,571
----------- ----------- ----------- ----------- -----------
Loss from operations (98,033) (56,500) (41,533) (26,338) (15,195)
Other income (expense):
Investment and other income (expense), net (451) (651) 200 200
Interest expense (12,018) (3,306)(o) (8,712) (3,437)(r) (5,275)
----------- ----------- ----------- ----------- -----------
Loss before income tax benefit
and minority interest (110,502) (60,457) (50,045) (29,775) (20,270)
Income tax benefit (6,518) (623) (5,895) (2,062) (3,833)
----------- ----------- ----------- ----------- -----------
Loss before minority interest (103,984) (59,834) (44,150) (27,713) (16,437)
Minority interest (70) (70) (70)
----------- ----------- ----------- ----------- -----------
Net loss (104,054) (59,834) (44,220) (27,713) (16,507)
Preferred stock dividend 120 120 120
----------- ----------- ----------- ----------- -----------
Net loss applicable to common shareholders $ (104,174) $ (59,834) $ (44,340)(p) $ (27,713) $ (16,627)(s)
=========== =========== =========== =========== ===========
Loss per share applicable to
common shareholders $ (2.98) $ (1.27) $ (0.48)
=========== =========== ===========
Weighted average number of common shares 34,988 34,988 34,988
</TABLE>
See accompanying notes to the pro forma financial statements.
<PAGE>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Notes to the Pro Forma Consolidated Financial Statements
(unaudited)
Notes to the Pro Forma Consolidated Balance Sheet
(a) Amount is based upon the Estimated Net Liabilities Assumed (as defined
in the Proxy Statement), on May 3, 1997, of $77,297,000 exceeding the
assumed purchase price of $73,000,000 (computed in accordance with
terms of the RND Agreement and reduced as a result of the Revenue
Adjustment, as defined in the Proxy Statement). The purchase price is
also subject to reduction depending on the date of closing.
(b) Reflects the escrow amount due to the Company upon settlement of any
purchase price adjustments and the Company's indemnity obligations.
(c) Represents the elimination of assets and liabilities as a result of the
RND Transaction.
(d) Includes the elimination of accrued liabilities ($12,479,000) and the
accrual of transaction costs approximating $2,000,000 as a result of
the RND Transaction.
(e) Represents the reclassification of the Company's long-term debt
reclassified as current to long-term debt ($55,000,000) as a result of
the RND Transaction, less the assumption of the Indirect Business'
long-term debt of $2,888,000 by Ingram.
(f) Represents a pre-tax gain of $13,754,000, net of transaction costs,
less taxes of $5,502,000, based on a purchase price of $73,000,000.
The Pro Forma Balance Sheet assumes that the RND Transaction was
consummated on May 3, 1997, and therefore does not give effect to the
Indirect Business' operating results subsequent to that date.
(g) Represents a purchase price of $136,116,000 based on the Balance Sheet
as of May 3, 1997, less the escrow requirement of $10,000,000 and the
repayment of the Company's outstanding debt totaling $86,200,000.
(h) Reflects the amount to be deposited in escrow pursuant to the Purchase
Agreement.
(i) Represents the elimination of assets and liabilities as a result of the
XL Transaction.
(j) Represents the repayment of the Company's outstanding debt.
(k) Includes the accrual of transaction costs approximating $2,000,000,
future lease obligations and other various accruals relative to the XL
Transaction.
(l) Represents a pre-tax loss of approximately $19,700,000, net of
transaction costs, plus taxes of approximately $7,500,000. The Pro
Forma Balance Sheet assumes that the XL Transaction was consummated on
May 3, 1997, and therefore does not give effect to the operating
results, subsequent to that date, of the businesses to be sold pursuant
thereto.
<PAGE>
INTELLIGENT ELECTRONICS, INC. and Subsidiaries
Notes to the Pro Forma Consolidated Financial Statements
(unaudited)
Notes to the Pro Forma Consolidated Statements of Operations
(m) Represents the elimination of revenues and expenses related to the
operations of the Indirect Business.
(n) Excludes allocated corporate general and administrative expenses.
(o) Represents the elimination of interest expense incurred by the Indirect
Business.
(p) The accompanying Pro Forma Statements of Operations do not include any
non-recurring effects directly attributable to the RND Transaction.
The Company will provide a reserve for all expected costs associated
with the RND Transaction. Such costs are expected to include
professional fees paid to attorneys, accountants and advisors, printing
charges and filing fees. The amount of such costs is estimated to total
approximately $2,000,000 and is included as a reduction in the after-
tax gain reflected in retained earnings on the Pro Forma Consolidated
Balance Sheet (see Note f to the Notes to the Pro Forma Consolidated
Balance Sheet).
(q) Represents the elimination of revenues and expenses related to the
businesses to be sold pursuant to the XL Transaction.
(r) Represents the elimination of interest expense incurred with respect to
the businesses to be sold pursuant to the XL Transaction.
(s) The accompanying Pro Forma Statements of Operations do not include any
non-recurring effects directly attributable to the XL Transaction. The
Company will provide a reserve for all expected costs associated with
the XL Transaction. Such costs are expected to include professional
fees to attorneys, accountants and advisors, printing charges and
filing fees. The amount of such costs is estimated to total
approximately $2,000,000 and is included as an increase in the after-
tax loss reflected in retained earnings on the Pro Forma Consolidated
Balance Sheet (see Note l to the Notes to the Pro Forma Consolidated
Balance Sheet).
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INTELLIGENT ELECTRONICS, INC.
By: /s/ Thomas J. Coffey
------------------------------
Dated: July 7, 1997 Thomas J. Coffey
Senior Vice President and
Chief Financial Officer
