<PAGE> 1
================================================================================
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
--OR--
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1995
Commission File Number: 0-16207
ALL AMERICAN SEMICONDUCTOR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-2814714
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
16115 NORTHWEST 52ND AVENUE, MIAMI, FLORIDA 33014
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 621-8282
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. x Yes No
--- ---
As of April 28, 1995, 12,446,791 shares of common stock of All American
Semiconductor, Inc. were outstanding.
================================================================================
<PAGE> 2
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
FORM 10-Q - INDEX
<TABLE>
<CAPTION>
Part Item Page
No. No. Description No.
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I FINANCIAL INFORMATION:
1. Financial Statements
Consolidated Condensed Balance Sheets at March 31, 1995
(Unaudited) and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Condensed Statements of Income for the Quarters
Ended March 31, 1995 and 1994 (Unaudited) . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Condensed Statements of Cash Flows for the
Quarters Ended March 31, 1995 and 1994 (Unaudited) . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Condensed Financial Statements (Unaudited) . . . . . . . . . . . . 4
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 6
II OTHER INFORMATION:
6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
</TABLE>
<PAGE> 3
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31 December 31
ASSETS 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets: (UNAUDITED)
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 172,000 $ 200,000
Accounts receivable, less allowances for
doubtful accounts of $523,000 and $425,000 . . . . . . . . 22,730,000 16,615,000
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 38,452,000 34,971,000
Other current assets . . . . . . . . . . . . . . . . . . . . 1,143,000 1,543,000
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . 62,497,000 53,329,000
Property, plant and equipment - net . . . . . . . . . . . . . . . 2,895,000 2,832,000
Deposits and other assets . . . . . . . . . . . . . . . . . . . . 1,276,000 1,178,000
Excess of cost over fair value of net assets
acquired - net . . . . . . . . . . . . . . . . . . . . . . . 551,000 519,000
----------- -----------
$67,219,000 $57,858,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . $ 691,000 $ 396,000
Accounts payable and accrued expenses . . . . . . . . . . . . 19,794,000 13,007,000
Other current liabilities . . . . . . . . . . . . . . . . . . 145,000 126,000
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . 20,630,000 13,529,000
Long-term debt:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . 22,585,000 20,507,000
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . 6,486,000 6,872,000
----------- -----------
49,701,000 40,908,000
----------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued . . . . . . . . . . . . . . . . . - -
Common stock, $.01 par value, 20,000,000 shares
authorized, 12,446,791 and 12,416,791 shares
issued and outstanding . . . . . . . . . . . . . . . . . . 124,000 124,000
Capital in excess of par value . . . . . . . . . . . . . . . 11,794,000 11,764,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 5,660,000 5,122,000
Less treasury stock, at cost, 19,592 shares . . . . . . . . . (60,000) (60,000)
----------- -----------
17,518,000 16,950,000
----------- -----------
$67,219,000 $57,858,000
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
1
<PAGE> 4
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,286,000 $ 23,413,000
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,418,000) (17,152,000)
------------ ------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,868,000 6,261,000
Selling, general and administrative expenses . . . . . . . . . . . . (7,259,000) (5,136,000)
------------ ------------
INCOME FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . 1,609,000 1,125,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . (665,000) (275,000)
Other expense - net . . . . . . . . . . . . . . . . . . . . . . . . . - (48,000)
------------ ------------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . 944,000 802,000
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . (406,000) (321,000)
------------ ------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 538,000 $ 481,000
============ ============
Earnings per share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .04 $ .04
============ ============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . $ .04 $ .04
============ ============
Average number of common shares outstanding:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,683,546 12,763,797
============ ============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . 12,693,881 12,836,308
============ ============
</TABLE>
See notes to consolidated condensed financial statements
2
<PAGE> 5
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows Used By Operating Activities . . . . . . . . . . . . . $(1,704,000) $(1,043,000)
----------- -----------
Cash Flows From Investing Activities:
Acquisition of property and equipment . . . . . . . . . . . . . . (173,000) (67,000)
Increase in other assets . . . . . . . . . . . . . . . . . . . . (150,000) (145,000)
Purchase of net assets of acquired company . . . . . . . . . . . - (552,000)
----------- -----------
Cash flows used for investing activities . . . . . . . . . . (323,000) (764,000)
----------- -----------
Cash Flows From Financing Activities:
Net proceeds from issuance of equity securities . . . . . . . . . 30,000 532,000
Repayments of notes payable . . . . . . . . . . . . . . . . . . . (169,000) (546,000)
Net borrowings under line of credit agreement . . . . . . . . . . 2,138,000 1,795,000
----------- -----------
Cash flows provided by financing activities . . . . . . . . 1,999,000 1,781,000
----------- -----------
Decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . (28,000) (26,000)
Cash, beginning of period . . . . . . . . . . . . . . . . . . . . 200,000 180,000
----------- -----------
Cash, end of period . . . . . . . . . . . . . . . . . . . . . . . $ 172,000 $ 154,000
=========== ===========
Supplemental Cash Flow Information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ 492,000 $ 275,000
=========== ===========
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000 $ 53,000
=========== ===========
</TABLE>
Supplemental Schedule of Noncash Investing and Financing Activities:
During the first quarter of 1994, the Company acquired substantially all of the
assets of Components Incorporated. The Company paid $599,000 in cash, with the
balance in a promissory note. The Company also assumed substantially all of
the seller's disclosed liabilities.
See notes to consolidated condensed financial statements
3
<PAGE> 6
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements include all adjustments (consisting of normal recurring
accruals or adjustments only) necessary to present fairly the financial
position at March 31, 1995, and the results of operations and the cash flows
for all periods presented. The results of operations for the interim periods
are not necessarily indicative of the results to be obtained for the entire
year.
For a summary of significant accounting policies (which have not changed from
December 31, 1994) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, including the
consolidated financial statements and notes thereto which should be read in
conjunction with these financial statements.
2. LONG-TERM DEBT
At March 31, 1995, outstanding borrowings under the Company's existing line of
credit aggregated $22,129,000. Borrowings under the Company's line of credit
agreement are collateralized by accounts receivable, inventories and equipment
and a pledge of the capital stock of the Company's subsidiaries. The line of
credit agreement was amended in March 1995, whereby the facility was increased
to $30 million; provided, however, that the Company may borrow in excess of $27
million only after (i) the senior lender has reviewed and been satisfied, in
its sole discretion, with the Company's audited consolidated financial
statements for the year ended December 31, 1994, and (ii) the Company has
received additional capitalization of not less than $4 million (after all
expenses of issuance and sale) from the issuance of its equity securities.
3. ACQUISITIONS
On September 9, 1994, the Company completed the acquisition of substantially
all of the assets of GCI Corp., a Philadelphia-area distributor of electronic
components. On January 24, 1994, the Company completed the acquisition of
substantially all of the assets of Components Incorporated, a Chicago-based
distributor of electronic components. The operating results of these acquired
companies are included in the consolidated results of operations from the date
of acquisition.
4
<PAGE> 7
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
The following unaudited pro forma consolidated income statement data presents
the consolidated results of operations of the Company for the quarter ended
March 31, 1994 as if the acquisitions of the Philadelphia-area and
Chicago-based distributors had occurred at the beginning of the period
presented:
<TABLE>
<CAPTION>
Quarter Ended March 31 1994
- -------------------------------------------------------------------------------------------------------
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,055,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582,000
Earnings per share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .05
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .05
</TABLE>
The above pro forma information does not purport to be indicative of what would
have occurred had the acquisitions been made as of such date or of the results
which may occur in the future.
4. WARRANT EXERCISE
On March 23, 1995, a warrant to purchase 30,000 shares of Common Stock at $1.00
per share was exercised. The Company received aggregate proceeds of $30,000.
5. SUBSEQUENT EVENT
On April 17, 1995, subsequent to the balance sheet date, the Company filed a
registration statement with the Securities and Exchange Commission offering for
sale 4,550,000 of its shares of Common Stock (excluding the over-allotment
option covering an additional 682,500 shares) on a firm commitment basis. The
Company currently anticipates that such offering will come to market in May
1995. There is no assurance, however, that such underwriting will be
successfully completed.
5
<PAGE> 8
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
All American Semiconductor, Inc. and subsidiaries (the "Company") is a national
distributor of electronic components manufactured by others. The Company
distributes a full range of semiconductors (active components), including
transistors, diodes, memory devices and other integrated circuits, as well as
passive components, such as capacitors, resistors, inductors and
electromechanical products, including cable, connectors, filters and sockets.
These components are sold primarily to original equipment manufacturers in a
diverse and growing range of industries, including manufacturers of consumer
goods, satellite and communications products, computers and computer-related
products, robotics and industrial equipment, radar and air traffic control
systems, defense and aerospace equipment and medical instrumentation. The
Company and its predecessors have been in operation since 1964 and the Company
was recently recognized as the 21st largest distributor of electronic
components in the United States. The Company has 21 offices nationwide,
including its headquarters and warehouse facility in Miami, Florida.
Results of Operations
Net sales for the first quarter of 1995 increased significantly to $38.3
million, a 63.5% increase over net sales of $23.4 million for the first quarter
of last year. This was a new quarterly sales record, exceeding the previous
record by more than $10 million. The dramatic sales increase was attributable
to a strong increase in demand for electronic products, an increase in sales
in substantially all territories, revenues generated by new sales offices and
revenues generated by acquired companies. In addition, the Company continues
to benefit from consolidations within the industry.
Gross profit was $8.9 million in the first quarter of 1995, a $2.6 million or
41.6% increase over gross profit of $6.3 million for the same period of 1994.
The increase was due to the significant growth in sales. Gross profit margins
as a percentage of net sales were 23.2% for the first quarter of 1995 compared
to 26.7% for the first quarter of 1994. The downward trend reflects a decline
associated with a greater number of large volume transactions at reduced
margins, the competitive environment in the electronic distribution
marketplace, as well as a change in the Company's overall sales mix. This
downward trend may continue if the Company maintains its rapid growth in sales.
The Company believes, however, that the effect of declining gross profit
margins should be more than offset by increases in sales and improved operating
efficiencies in the future.
Selling, general and administrative expenses ("SG&A") increased $2.1 million to
$7.3 million for the first quarter of 1995 compared to $5.1 million for the
first quarter of 1994. The
6
<PAGE> 9
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
increase was primarily the result of the Company's rapid growth and aggressive
expansion. As sales grew by $14.9 million for the quarter ended March 31,
1995, over the same period of 1994, selling expenses increased including sales
commissions and telephone expenses. As a result of the relocation of the
Company's corporate headquarters and distribution facility in May 1994, the
expansion of the computer and communications systems, the opening of new sales
offices and the relocating of existing sales offices occurring during 1994,
rent (both for realty and personalty), occupancy expenses and depreciation and
amortization costs increased for the first quarter of 1995 as compared to the
first quarter of 1994. In addition, the Company expanded its sales personnel,
created and staffed a corporate operations department and a west coast credit
department and increased staffing in almost all corporate departments during
1994. As a result, SG&A for the first quarter of 1995 reflects increased
salaries, payroll taxes and employee benefit costs. SG&A as a percentage of
net sales improved to 19.0% for the first quarter ended March 31, 1995, from
21.9% for the same period of 1994. The improvement in SG&A as a percentage of
sales reflects increased operating efficiencies and benefits from economies of
scale.
Income from operations increased 43.0% to $1.6 million for the first quarter of
1995 compared to $1.1 million for the same period of last year. This increase
was attributable to the significant increase in sales and improved operating
efficiencies which more than offset the decline in gross profit margins and the
additional expenses associated with the Company's rapid growth and aggressive
expansion discussed above.
Interest expense increased to $665,000 for the first quarter of 1995, as
compared to $275,000 for the same period of 1994. The increase resulted from
additional borrowings required to fund the Company's continued growth,
including the issuance of subordinated debentures in the amount of $5,150,000
in a private placement completed in the second quarter of 1994, additional debt
incurred in connection with two acquisitions during 1994 and the financing of
tenant improvements and personal property in connection with the Company's new
corporate headquarters and distribution center. Additionally, an increase in
interest rates more than offset savings associated with the decrease in the
rate charged the Company by its senior lender.
Net income increased to $538,000 ($.04 per share) for the quarter ended March
31, 1995 from net income of $481,000 ($.04 per share) for the first quarter of
1994. The increase in net income for the 1995 period resulted primarily from
the significant increase in sales as well as from the increased operating
efficiencies and benefits from economies of scale discussed above.
7
<PAGE> 10
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
Liquidity and Capital Resources
Working capital at March 31, 1995 increased to approximately $41.9 million from
working capital of $39.8 million at December 31, 1994. The current ratio was
3.03:1 at March 31, 1995, as compared to 3.94:1 at December 31, 1994. Accounts
receivable levels at March 31, 1995 were $22.7 million, up from accounts
receivable of $16.6 million at December 31, 1994 reflecting the record level of
sales for the first quarter of 1995. Inventory increased to $38.5 million at
March 31, 1995 from $35.0 million at December 31, 1994. The increase in
inventory was primarily to support the increases in both semiconductor and
passive product sales as well as to support budgeted future growth. Accounts
payable and accrued expenses increased to $19.8 million at March 31, 1995, from
$13.0 million at December 31, 1994, primarily as a result of the increase in
inventory during the first quarter of 1995.
On March 28, 1995, the Company's credit facility was increased to $30 million;
provided, however, that the Company may borrow in excess of $27 million only
after (i) the senior lender has reviewed and been satisfied, in its sole
discretion, with the Company's audited consolidated financial statements for
the year ended December 31, 1994, and (ii) the Company has received additional
capitalization of not less than $4 million (after all expenses of issuance and
sale) from the issuance of its equity securities. Outstanding borrowings under
this facility, which are collateralized by accounts receivable, inventories and
equipment and a pledge of the capital stock of the Company's subsidiaries,
amounted to $22.1 million at March 31, 1995. The increase in outstanding
borrowings of approximately $2 million over December 31, 1994, reflects the
increase in working capital to support the significant growth of the Company.
The Company expects that its cash flows from operations and additional
borrowings available under the line of credit agreement will be sufficient to
meet its current financial requirements over the next twelve months. However,
the Company continues to explore available financing alternatives to fund the
Company's long-term growth. In that regard, the Company has filed a
registration statement with the Securities and Exchange Commission relating to
a public offering of 4,550,000 shares of its common stock (excluding the
over-allotment option covering an additional 682,500 shares) on a firm
commitment basis. The Company currently anticipates that such offering will
come to market in May 1995. See Note 5 to Notes to Consolidated Condensed
Financial Statements. There is no assurance, however, that such underwriting
will be successfully completed.
8
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ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
================================================================================
<TABLE>
<S> <C>
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
27.1 Financial Data Schedule (for SEC purposes only)
(b) Reports on Form 8-K
-------------------
The Company did not file any reports on Form 8-K during the
quarter ended March 31, 1995.
</TABLE>
9
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
All American Semiconductor, Inc.
---------------------------------------------
(Registrant)
Date: April 28, 1995 /s/ Bruce M. Goldberg
---------------------------------------------
Bruce M. Goldberg, President and
Chief Operating Officer
(Duly Authorized Officer)
Date: April 28, 1995 /s/ Howard L. Flanders
---------------------------------------------
Howard L. Flanders, Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
DOCUMENTS NUMBER
---------- ------
<S> <C> <C>
27.1 Financial Data Schedule (for SEC purposes only)
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE REGISTRANT'S
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AS OF AND FOR THE QUARTER ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 172
<SECURITIES> 0
<RECEIVABLES> 23,253
<ALLOWANCES> 523
<INVENTORY> 38,452
<CURRENT-ASSETS> 62,497
<PP&E> 4,784
<DEPRECIATION> 1,889
<TOTAL-ASSETS> 67,219
<CURRENT-LIABILITIES> 20,630
<BONDS> 29,071
<COMMON> 124
0
0
<OTHER-SE> 17,394
<TOTAL-LIABILITY-AND-EQUITY> 67,219
<SALES> 38,286
<TOTAL-REVENUES> 38,286
<CGS> 29,418
<TOTAL-COSTS> 29,418
<OTHER-EXPENSES> 7,161
<LOSS-PROVISION> 98
<INTEREST-EXPENSE> 665
<INCOME-PRETAX> 944
<INCOME-TAX> 406
<INCOME-CONTINUING> 538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
