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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 JUNE 30, 1998
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 August 11, 1998, 19,863,895 shares (including 160,703 shares held by a
wholly-owned subsidiary of the Registrant) of the common stock of All American
Semiconductor, Inc. were outstanding.
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<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
FORM 10-Q - INDEX
Part Item Page
No. No. Description No.
- --------------------------------------------------------------------------------
I FINANCIAL INFORMATION:
1. Financial Statements
Consolidated Condensed Balance Sheets at June 30, 1998
(Unaudited) and December 31, 1997................................ 1
Consolidated Condensed Statements of Income for the Quarters
and Six Months Ended June 30, 1998 and 1997 (Unaudited).......... 2
Consolidated Condensed Statements of Cash Flows for the
Six Months Ended June 30, 1998 and 1997 (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......................................................... 9
i
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
ASSETS 1998 1997
- --------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash .................................................... $ 128,000 $ 444,000
Accounts receivable, less allowances for doubtful
accounts of $1,325,000 and $1,166,000 ................. 35,131,000 32,897,000
Inventories ............................................. 66,957,000 67,909,000
Other current assets .................................... 2,697,000 2,074,000
------------- -------------
Total current assets .................................. 104,913,000 103,324,000
Property, plant and equipment - net ....................... 4,517,000 4,779,000
Deposits and other assets ................................. 2,956,000 3,157,000
Excess of cost over fair value of net assets acquired - net 1,108,000 1,026,000
------------- -------------
$ 113,494,000 $ 112,286,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt ....................... $ 319,000 $ 304,000
Accounts payable and accrued expenses ................... 38,644,000 39,154,000
Income taxes payable .................................... 433,000 389,000
Other current liabilities ............................... 170,000 169,000
------------- -------------
Total current liabilities ............................. 39,566,000 40,016,000
Long-term debt:
Notes payable ........................................... 39,311,000 39,084,000
Subordinated debt ....................................... 6,207,000 6,293,000
Other long-term debt .................................... 1,208,000 1,219,000
------------- -------------
86,292,000 86,612,000
------------- -------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued ............................... -- --
Common stock, $.01 par value, 40,000,000 shares
authorized, 19,863,895 and 20,353,894 shares
issued,19,863,895 shares outstanding .................. 199,000 199,000
Capital in excess of par value .......................... 25,588,000 25,588,000
Retained earnings ....................................... 1,866,000 338,000
Treasury stock, at cost, 180,295 shares ................. (451,000) (451,000)
------------- -------------
27,202,000 25,674,000
------------- -------------
$ 113,494,000 $ 112,286,000
============= =============
</TABLE>
See notes to consolidated condensed financial statements
1
<PAGE>
<TABLE>
<CAPTION>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
QUARTERS SIX MONTHS
PERIODS ENDED JUNE 30 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES ................ $ 62,981,000 $ 68,131,000 $ 126,511,000 $ 130,370,000
Cost of sales ............ (48,426,000) (52,935,000) (97,846,000) (101,034,000)
------------- ------------- ------------- -------------
Gross profit ............. 14,555,000 15,196,000 28,665,000 29,336,000
Selling, general and
administrative expenses (11,689,000) (12,846,000) (23,792,000) (25,259,000)
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS ... 2,866,000 2,350,000 4,873,000 4,077,000
Interest expense ......... (1,094,000) (1,259,000) (2,192,000) (2,456,000)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 1,772,000 1,091,000 2,681,000 1,621,000
Income tax provision ..... (762,000) (469,000) (1,153,000) (697,000)
------------- ------------- ------------- -------------
NET INCOME ............... $ 1,010,000 $ 622,000 $ 1,528,000 $ 924,000
============= ============= ============= =============
Earnings per share:
Basic and diluted ...... $ .05 $ .03 $ .08 $ .05
===== ===== ===== =====
</TABLE>
See notes to consolidated condensed financial statements
2
<PAGE>
<TABLE>
<CAPTION>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows Provided By (Used For) Operating Activities ... $ (162,000) $ 3,449,000
----------- -----------
Cash Flows From Investing Activities:
Acquisition of property and equipment .................... (189,000) (120,000)
Increase in other assets ................................. (67,000) (13,000)
----------- -----------
Cash flows used for investing activities ............. (256,000) (133,000)
----------- -----------
Cash Flows From Financing Activities:
Net borrowings (repayments) under line of credit agreement 247,000 (3,504,000)
Repayments of notes payable .............................. (145,000) (144,000)
Net proceeds from issuance of equity securities .......... -- 15,000
----------- -----------
Cash flows provided by (used for) financing activities 102,000 (3,633,000)
----------- -----------
Decrease in cash ......................................... (316,000) (317,000)
Cash, beginning of period ................................ 444,000 525,000
----------- -----------
Cash, end of period ...................................... $ 128,000 $ 208,000
=========== ===========
Supplemental Cash Flow Information:
Interest paid ............................................ $ 2,040,000 $ 2,320,000
=========== ===========
Income taxes paid (refunded) - net ....................... $ 1,111,000 $ (383,000)
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements
3
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 June 30, 1998, 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, 1997) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, including the
consolidated financial statements and notes thereto which should be read in
conjunction with these financial statements.
EARNINGS PER SHARE
The following average shares were used for the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Quarters Six Months
PERIODS ENDED JUNE 30 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic........................... 19,683,600 19,673,600 19,683,600 19,669,489
Diluted......................... 20,279,532 19,686,277 20,217,534 19,691,161
</TABLE>
2. LONG-TERM DEBT
Outstanding borrowings at June 30, 1998 under the Company's $100 million line of
credit facility aggregated $39,247,000. In July 1998, subsequent to the balance
sheet date, the Company's credit facility was amended whereby certain financial
covenants were modified.
3. OPTIONS
During the quarter ended June 30, 1998, no stock options were granted by the
Company. During the quarter ended March 31, 1998, the Company granted an
aggregate of 195,000 stock options to 31 individuals pursuant to the Employees',
Officers', Directors' Stock Option Plan, as previously amended and restated.
These options have an exercise price of $1.44 per share and generally vest over
a five-year period and are exercisable over a six-year period. During the six
months ended June 30, 1998, 33,750 stock options were canceled at exercise
prices ranging from $1.00 to $1.44 per share.
4. ACQUISITIONS
In connection with the December 29, 1995 acquisitions of all of the capital
stock of Added Value Electronics Distribution, Inc. and A.V.E.D.-Rocky Mountain,
Inc. (collectively the "Added Value Companies"), the Company is currently
obligated to pay approximately $107,000 of additional consideration to certain
of the selling stockholders of the Added Value Companies since the aggregate
value of the shares of the Company's common stock issued to certain of the
selling stockholders of the Added Value Companies did not, by June 30, 1998,
appreciate in the aggregate by $107,000. The additional consideration is
included in excess of cost over fair value of net assets acquired in the
4
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
accompanying Consolidated Condensed Balance Sheet as of June 30, 1998. The
Company has not included in excess of cost over fair value of net assets
acquired as of June 30, 1998 approximately $159,000 of additional consideration
that would have been payable to another selling stockholder of the Added Value
Companies since such additional consideration has been applied by the Company to
partially satisfy certain claims alleged by the Company against such selling
stockholder arising with respect to the transaction with the Added Value
Companies.
5. MERGER
The Company has signed a letter of intent ("LOI") dated June 21, 1998 with
Reptron Electronics, Inc. ("Reptron"). The LOI memorializes the nonbinding
understanding between the Company and Reptron regarding the merger of Reptron's
distribution operations with the Company (the "Merger"). The merged businesses
will be conducted in a wholly-owned subsidiary of Reptron dedicated to the
distribution activities of the combined businesses. The transaction is subject
to the execution of a definitive agreement and plan of merger and thereafter,
among other conditions, compliance with the Hart-Scott-Rodino Antitrust Act, the
filing and effectiveness of a registration statement with the Securities and
Exchange Commission, completion of certain due diligence items and approval of
the shareholders of each of the Company and Reptron. If all of the conditions
are satisfied and if the Merger becomes effective, the Company's shareholders
will receive .2222 shares of fully paid and nonassessable shares of common
stock, $.01 par value, of Reptron for each issued and outstanding share of
common stock, $.01 par value, of the Company. The transaction is expected to
close around October 1998 and be accounted for as a pooling of interests and a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986.
5
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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All American Semiconductor, Inc. and its 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, switches, connectors, filters and
sockets. These products are sold primarily to original equipment manufacturers
("OEMs") in a diverse and growing range of industries, including manufacturers
of computers and computer-related products, satellite and communications
products, consumer goods, robotics and industrial equipment, defense and
aerospace equipment and medical instrumentation. The Company also sells products
to contract electronics manufacturers who manufacture products for companies in
all electronics industry segments. Through the Aved Memory Products and Aved
Display Technologies divisions of its subsidiary, Aved Industries, Inc., the
Company also designs and has manufactured under the label of its subsidiary's
divisions, certain board level products including memory modules and flat panel
display driver boards. These products are also sold to OEMs.
RESULTS OF OPERATIONS
Net sales for the quarter and six months ended June 30, 1998 were $63.0 million
and $126.5 million, representing a 7.6% and 3.0% decrease from net sales of
$68.1 million and $130.4 million for the same periods of 1997. The decreases in
net sales were attributable to market conditions and the continued decline in
unit prices on certain products. The decline in unit prices more than offset an
increase in volume.
Gross profit was $14.6 million and $28.7 million for the second quarter and
first six months of 1998, compared to $15.2 million and $29.3 million for the
same periods of 1997. The decreases were due to the decrease in net sales. Gross
profit margins as a percentage of net sales were 23.1% and 22.7% for the second
quarter and first six months of 1998 compared to 22.3% and 22.5% for the second
quarter and first six months of 1997. The gross profit margins for the 1998
periods reflected a fewer number of low margin, large volume transactions as
compared to the same periods of 1997 as well as continued changes in the
Company's product mix. Management expects downward pressure on gross profit
margins in the future.
Selling, general and administrative expenses ("SG&A") was $11.7 million for the
second quarter of 1998 compared to $12.8 million for the second quarter of 1997.
SG&A for the first half of 1998 was $23.8 million compared to $25.3 million for
the first six months of 1997. The decreases reflect the continued benefits of
the Company's expense control programs. SG&A as a percentage of net sales
improved to 18.6% and 18.8% for the second quarter and six months ended June 30,
1998, from 18.9% and 19.4% for the same periods of 1997. The improvement in SG&A
as a percentage of net sales reflects the decrease in SG&A in absolute dollars
which more than offset the impact of the reduction in net sales. With its
present infrastructure, including the Company's excess plant capacity, the
Company believes that it can support higher sales without a significant increase
in fixed costs. This should result in improved operating efficiencies and
greater economies of scale in the future if the Company succeeds in increasing
its sales volume. SG&A in absolute dollars and as a percentage of net sales may
increase in the near term.
Income from operations increased to $2.9 million for the second quarter of 1998,
compared to $2.4 million for the second quarter of 1997. For the six months
ended June 30, 1998, income from operations increased to $4.9 million, compared
to $4.1 million for the same period of 1997. The increases in income from
operations were attributable to the benefits derived from the Company's cost
control programs and improved operating efficiencies as well as the decrease in
SG&A in both absolute dollars and as a percentage of net sales.
6
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
Interest expense was $1.1 million and $2.2 million for the second quarter and
first half of 1998, as compared to $1.3 million and $2.5 million for the same
periods of 1997. The decrease in the second quarter and first six months of 1998
as compared to the 1997 periods resulted from lower average borrowings.
Net income was $1.0 million ($.05 per share) and $1.5 million ($.08 per share)
for the quarter and six months ended June 30, 1998, compared to $622,000 ($.03
per share) and $924,000 ($.05 per share) for the same periods of 1997. The
increase in earnings reflects the improved operating efficiencies combined with
a reduction in interest expense which offset the decrease in net sales.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1998 increased to $65.3 million from working capital
of $63.3 million at December 31, 1997. The current ratio was 2.65:1 at June 30,
1998, as compared to 2.58:1 at December 31, 1997. The increases in working
capital and the current ratio were primarily due to an increase in accounts
receivable and a decrease in accounts payable. These changes more than offset a
decrease in inventory. Accounts receivable levels at June 30, 1998 were $35.1
million, up from accounts receivable of $32.9 million at December 31, 1997,
reflecting increased sales for June 1998 over December 1997.
During the first quarter of 1998, as a result of the Company satisfying certain
conditions, the Company's borrowing rate under its credit facility was decreased
by one-quarter of one percent (.25%). In July 1998, subsequent to the balance
sheet date, the Company's credit facility was amended whereby certain financial
covenants were modified. At June 30, 1998, outstanding borrowings under this
facility aggregated $39.2 million.
The Company expects that its cash flows from operations and additional
borrowings available under its credit facility will be sufficient to meet its
current financial requirements over the next twelve months.
The Company has signed a letter of intent ("LOI") dated June 21, 1998 with
Reptron Electronics, Inc. ("Reptron"). The LOI memorializes the nonbinding
understanding between the Company and Reptron regarding the merger of Reptron's
distribution operations with the Company (the "Merger"). The merged businesses
will be conducted in a wholly-owned subsidiary of Reptron dedicated to the
distribution activities of the combined businesses. The transaction is subject
to the execution of a definitive agreement and plan of merger and thereafter,
among other conditions, compliance with the Hart-Scott-Rodino Antitrust Act, the
filing and effectiveness of a registration statement with the Securities and
Exchange Commission, completion of certain due diligence items and approval of
the shareholders of each of the Company and Reptron. If all of the conditions
are satisfied and if the Merger becomes effective, the Company's shareholders
will receive .2222 shares of fully paid and nonassessable shares of common
stock, $.01 par value, of Reptron for each issued and outstanding share of
common stock, $.01 par value, of the Company. The transaction is expected to
close around October 1998 and be accounted for as a pooling of interests and a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements (within the meaning of
Section 21E. of the Securities Exchange Act of 1934, as amended), representing
the Company's current expectations and beliefs concerning the Company's future
performance and operating results, its products, services, markets and
7
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
================================================================================
industry, and/or future events (including the contemplated Merger with Reptron)
relating to or effecting the Company and its business and operations. When used
in this Form 10-Q, the words "believes," "estimates," "plans," "expects,"
"intends," "anticipates," and similar expressions as they relate to the Company
or its management are intended to identify forward-looking statements. The
actual results or achievements of the Company could differ materially from those
indicated by the forward-looking statements because of various risks and
uncertainties. Factors that could adversely affect the Company's future results,
performance or achievements or the Merger with Reptron include, without
limitation, the failure of the Company and Reptron to enter into a definitive
agreement and plan of merger or thereafter, among other matters, the inability
to obtain any required consents or approvals of governmental agencies, the
shareholders of either company not approving the proposed Merger or Reptron
being unable to refinance or otherwise retire the Company's revolving credit
facility, the effectiveness of the Company's business and marketing strategies,
timing of delivery of products from suppliers, the product mix sold by the
Company, the Company's development of new customers, existing customer demand as
well as the level of demand for products of its customers, availability of
products from and the establishment and maintenance of relationships with
suppliers, price competition for products sold by the Company, management of
growth and expenses, the Company's ability to collect accounts receivable, price
decreases on inventory that is not price protected, gross profit margins,
availability and terms of financing to fund capital needs, the continued
enhancement of telecommunication, computer and information systems, the
achievement by the Company and its vendors and customers of Year 2000 compliance
in a timely and cost efficient manner, the continued and anticipated growth of
the electronics industry and electronic components distribution industry, the
impact on certain of the Company's suppliers and customers of economic or
financial turbulence in off-shore economies and/or financial markets, change in
government tariffs or duties, a change in interest rates, the state of the
general economy, and the other risks and factors detailed in this Form 10-Q and
in the Company's other filings with the Securities and Exchange Commission.
These risks and uncertainties are beyond the ability of the Company to control.
In many cases, the Company cannot predict the risks and uncertainties that could
cause actual results to differ materially from those indicated by the
forward-looking statements.
8
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
================================================================================
ITEM 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
10.1 Amendment No. 3 to Loan and Security Agreement dated July 31,
1998.
11.1 Statement Re: Computation of Per Share Earnings (Unaudited).
27.1 Financial Data Schedule.
(b) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1998.
------------------------
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: August 13, 1998 /s/ PAUL GOLDBERG
-------------------------------------------------
Paul Goldberg, Chairman of the Board
(Duly Authorized Officer)
Date: August 13, 1998 /s/ HOWARD L. FLANDERS
-------------------------------------------------
Howard L. Flanders, Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
9
EXHIBIT 10.1
AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
July 31, 1998
All American Semiconductor, Inc.
16115 Northwest 52nd Avenue
Miami, Florida 33014
Attention: Chief Financial Officer
Ladies and Gentlemen:
Reference is made to the Loan and Security Agreement dated as
of May 3, 1996 among Harris Trust and Savings Bank, as a Lender and as
Administrative Agent for the Lenders, American National Bank and Trust Company
of Chicago, as a Lender and as Collateral Agent for the Lenders and the other
Lenders party thereto and All American Semiconductor, Inc., as amended to date
(the "Loan Agreement"). Unless defined herein, capitalized terms used herein
shall have the meanings provided for such terms in the Loan Agreement.
Borrower has requested that Requisite Lenders agree to amend
the Loan Agreement in order to modify certain financial covenants contained
therein. Requisite Lenders have agreed to the foregoing on the terms and
pursuant to the conditions provided herein.
Therefore, the parties hereto hereby agree as follows:
1. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is
hereby amended as follows:
(a) SECTION 8.12. Section 8.12 of the Loan Agreement is
hereby amended by deleting therefrom the phrase "Three Million Two Hundred
Thousand Dollars ($3,200,000) for any fiscal year" and inserting in its place
the following phrase:
"(i) Four Million Five Hundred Thousand Dollars ($4,500,000)
for the 1998 fiscal year or (ii) Four Million Five Hundred Thousand
Dollars ($4,500,000) for any fiscal year after the 1998 fiscal year."
(b) SECTION 8.17. The table contained in Section 8.17 of
the Loan Agreement is hereby amended and restated in its entirety, as follows:
<TABLE>
<CAPTION>
"Period Amount
------- ------
<S> <C> <C>
Each three month period commencing on The actual Tangible Net
March 31 and ending on the next succeeding Worth of the Designated
June 29 (beginning with the period ending Companies as of the prior
June 29, 1998) September 30, plus
$1,500,000
Each three month period commencing on The actual Tangible Net
June 30 and ending on the next succeeding Worth of the Designated
September 29 (beginning with the period Companies as of the prior
ending September 29, 1998) December 31, plus $750,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Each three month period commencing on The actual Tangible Net
September 30 and ending on the next Worth of the Designated
succeeding December 30 (beginning with Companies as of the prior
the period ending December 31, 1998) March 31, plus $750,000
Each three month period commencing on The actual Tangible Net
December 31 and ending on the next Worth of the Designated
succeeding March 30 (beginning with the Companies as of the prior
period ending March 30, 1999) June 30, plus $1,000,000"
</TABLE>
(c) SCOPE. This Amendment No. 3 to Loan and Security
Agreement shall have the effect of amending the Loan Agreement and the other
Financing Agreements as appropriate to express the agreements contained herein.
In all other respects, the Loan Agreement and the other Financing Agreements
shall remain in full force and effect in accordance with their respective terms.
2. CONDITIONS TO EFFECTIVENESS. This Amendment No. 3 to
Loan and Security Agreement shall be effective immediately upon the execution
hereof by Requisite Lenders, the acceptance hereof by each Borrower and each
Guarantor, and the delivery hereof to the Administrative Agent, at 111 West
Monroe Street, Chicago, Illinois 60603, Attention: Mr. William Kane, on or
before July 31, 1998.
Very truly yours,
HARRIS TRUST AND SAVINGS BANK,
as Administrative Agent and a Lender
Pro Rata Share: 25%
By:_______________________________________
Its:______________________________________
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
as Collateral Agent and a Lender
Pro Rata Share: 25%
By:_______________________________________
Its:______________________________________
SANWA BUSINESS CREDIT
CORPORATION, as a Lender
Pro Rata Share: 12.5%
By:_______________________________________
Its:______________________________________
-2-
<PAGE>
MERCANTILE BUSINESS CREDIT,
INC., as a Lender
Pro Rata Share: 12.5%
By:_______________________________________
Its:______________________________________
THE BANK OF NEW YORK
COMMERCIAL CORPORATION,
as a Lender
Pro Rata Share: 12.5%
By:_______________________________________
Its:______________________________________
NATIONSBANK OF TEXAS, N.A.,
as a Lender
Pro Rata Share: 12.5%
By:_______________________________________
Its:______________________________________
Acknowledged and agreed to as of this 31st day of July, 1998.
ALL AMERICAN SEMICONDUCTOR, INC.
By:_______________________________________
Its:______________________________________
-3-
<PAGE>
ACKNOWLEDGMENT AND ACCEPTANCE OF GUARANTORS
Each of the undersigned, in its capacity as a Guarantor of the
Liabilities of Borrowers to Agents and Lenders under the Loan Agreement, hereby
acknowledges receipt of the foregoing Amendment No. 3 to Loan and Security
Agreement, accepts and agrees to be bound by the terms thereof, ratifies and
confirms all of its obligations under the Master Corporate Guaranty executed by
it and agrees that such Master Corporate Guaranty shall continue in full force
and effect as to it, notwithstanding such amendment.
Dated: July 31, 1998
Each of the Subsidiaries of All American
Semiconductor, Inc.
By:_______________________________________
Its:______________________________________
-4-
<TABLE>
<CAPTION>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
QUARTERS SIX MONTHS
PERIODS ENDED JUNE 30 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net Income................................. $ 1,010,000 $ 622,000 $ 1,528,000 $ 924,000
=============== =============== =============== ===============
Weighted Average Shares Outstanding........ 19,683,600 19,673,600 19,683,600 19,669,489
=============== =============== =============== ===============
Basic Earnings Per Share................... $ .05 $ .03 $ .08 $ .05
====== ====== ====== ======
DILUTED EARNINGS PER SHARE:
Net Income................................. $ 1,010,000 $ 622,000 $ 1,528,000 $ 924,000
=============== =============== =============== ===============
Weighted Average and Dilutive Shares:
Weighted average shares outstanding...... 19,683,600 19,673,600 19,683,600 19,669,489
Dilutive shares.......................... 595,932 12,677 533,934 21,672
--------------- --------------- --------------- ---------------
20,279,532 19,686,277 20,217,534 19,691,161
=============== =============== =============== ===============
Diluted Earnings Per Share................. $ .05 $ .03 $ .08 $ .05
====== ====== ====== ======
</TABLE>
<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 six months ended June 30, 1998, and is qualified in its entirety by
reference to such consolidated financial statements.
</LEGEND>
<CIK> 0000818074
<NAME> ALL AMERICAN SEMICONDUCTOR, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 128
<SECURITIES> 0
<RECEIVABLES> 36,456
<ALLOWANCES> 1,325
<INVENTORY> 66,957
<CURRENT-ASSETS> 104,913
<PP&E> 9,617
<DEPRECIATION> 5,100
<TOTAL-ASSETS> 113,494
<CURRENT-LIABILITIES> 39,566
<BONDS> 46,726
0
0
<COMMON> 199
<OTHER-SE> 27,003
<TOTAL-LIABILITY-AND-EQUITY> 113,494
<SALES> 126,511
<TOTAL-REVENUES> 126,511
<CGS> 97,846
<TOTAL-COSTS> 97,846
<OTHER-EXPENSES> 23,348
<LOSS-PROVISION> 444
<INTEREST-EXPENSE> 2,192
<INCOME-PRETAX> 2,681
<INCOME-TAX> 1,153
<INCOME-CONTINUING> 1,528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,528
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
