================================================================================
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 SEPTEMBER 30, 2000
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 November 9, 2000, 4,038,660 shares (including 32,141 shares held by a
wholly-owned subsidiary of the Registrant) of the common stock of All American
Semiconductor, Inc. were outstanding.
================================================================================
<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 September 30,
2000 (Unaudited) and December 31, 1999.................... 1
Consolidated Condensed Statements of Income for the
Quarters and Nine Months Ended September 30, 2000
and 1999 (Unaudited)...................................... 2
Consolidated Condensed Statements of Cash Flows for
the Nine Months Ended September 30, 2000 and 1999
(Unaudited)............................................... 3
Notes to Consolidated Condensed Financial Statements
(Unaudited)............................................... 4
Independent Accountants' Review Report...................... 7
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 7
3. Quantitative and Qualitative Disclosures about Market Risk.. 10
II OTHER INFORMATION:
6. Exhibits and Reports on Form 8-K............................ 11
SIGNATURES.................................................. 11
i
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
ASSETS 2000 1999
--------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash ..................................................... $ 316,000 $ 173,000
Accounts receivable, less allowances for doubtful
accounts of $3,330,000 and $1,987,000 .................. 95,162,000 53,202,000
Inventories .............................................. 118,525,000 85,260,000
Other current assets ..................................... 3,163,000 4,637,000
------------- -------------
Total current assets ................................... 217,166,000 143,272,000
Property, plant and equipment - net ........................ 4,270,000 4,482,000
Deposits and other assets .................................. 2,429,000 2,741,000
Excess of cost over fair value of net assets acquired - net. 964,000 1,006,000
------------- -------------
$ 224,829,000 $ 151,501,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt ........................ $ 243,000 $ 273,000
Accounts payable and accrued expenses .................... 76,336,000 51,584,000
Income taxes payable ..................................... 1,870,000 --
Other current liabilities ................................ 421,000 198,000
------------- -------------
Total current liabilities .............................. 78,870,000 52,055,000
Long-term debt:
Notes payable ............................................ 101,601,000 64,298,000
Subordinated debt ........................................ 6,054,000 6,089,000
Other long-term debt ..................................... 1,198,000 1,207,000
------------- -------------
187,723,000 123,649,000
------------- -------------
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, 4,037,160 and 3,973,431 shares
issued and outstanding ................................. 40,000 40,000
Capital in excess of par value ........................... 26,133,000 25,751,000
Retained earnings ........................................ 11,868,000 2,968,000
Treasury stock, at cost, 183,246 and 174,646 shares ...... (935,000) (907,000)
------------- -------------
37,106,000 27,852,000
------------- -------------
$ 224,829,000 $ 151,501,000
============= =============
</TABLE>
See notes to consolidated condensed financial statements
1
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS NINE MONTHS
PERIODS ENDED SEPTEMBER 30 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES .................... $ 152,526,000 $ 88,570,000 $ 385,793,000 $ 239,093,000
Cost of sales ................ (120,572,000) (71,837,000) (306,075,000) (193,449,000)
------------- ------------- ------------- -------------
Gross profit ................. 31,954,000 16,733,000 79,718,000 45,644,000
Selling, general and
administrative expenses .... (21,391,000) (14,576,000) (58,434,000) (40,450,000)
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS ....... 10,563,000 2,157,000 21,284,000 5,194,000
Interest expense ............. (2,246,000) (1,276,000) (5,666,000) (3,540,000)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES ... 8,317,000 881,000 15,618,000 1,654,000
Income tax provision ......... (3,576,000) (379,000) (6,718,000) (711,000)
------------- ------------- ------------- -------------
NET INCOME ................... $ 4,741,000 $ 502,000 $ 8,900,000 $ 943,000
============= ============= ============= =============
Earnings per share:
Basic ...................... $1.23 $ .13 $2.33 $ .24
===== ===== ===== =====
Diluted .................... $1.10 $ .13 $2.15 $ .24
===== ===== ===== =====
</TABLE>
See notes to consolidated condensed financial statements
2
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows Used For Operating Activities ............ $(36,633,000) $(13,781,000)
------------ ------------
Cash Flows From Investing Activities:
Acquisition of property and equipment ............... (753,000) (460,000)
Increase in other assets ............................ (42,000) (222,000)
------------ ------------
Cash flows used for investing activities ...... (795,000) (682,000)
------------ ------------
Cash Flows From Financing Activities:
Net borrowings under line of credit agreement ....... 37,430,000 14,904,000
Repayments of notes payable ......................... (213,000) (231,000)
Purchase of treasury shares ......................... (28,000) (86,000)
Net proceeds from issuance of equity securities ..... 382,000 --
------------ ------------
Cash flows provided by financing activities ... 37,571,000 14,587,000
------------ ------------
Increase in cash .................................... 143,000 124,000
Cash, beginning of period ........................... 173,000 473,000
------------ ------------
Cash, end of period ................................. $ 316,000 $ 597,000
============ ============
Supplemental Cash Flow Information:
Interest paid ....................................... $ 4,453,000 $ 3,007,000
============ ============
Income taxes paid ................................... $ 4,071,000 $ 720,000
============ ============
</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, which have been reviewed by our independent accountants,
include all adjustments (consisting of normal recurring accruals or adjustments
only) necessary to present fairly the financial position at September 30, 2000,
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, 1999) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, 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:
Quarters Nine Months
---------------------- ----------------------
Periods Ended September 30 2000 1999 2000 1999
--------------------------------------------------------------------------------
Basic......................... 3,844,454 3,922,838 3,820,112 3,932,527
Diluted....................... 4,295,192 3,922,838 4,140,648 3,932,527
2. LONG-TERM DEBT
The Company's agreement with our banks, as recently amended on September 29,
2000, provides us with a $150 million revolving line of credit facility based on
eligible accounts receivable and inventories as defined in the agreement. The
credit facility, which expires on May 3, 2004, currently bears interest, at our
option, at the prime rate plus .25% or LIBOR plus 2.25%. On a quarterly basis,
the applicable interest rate margins for the prime rate and LIBOR options may be
adjusted based upon our debt service coverage ratio for the 12 month period
ending on the last day of the immediately preceding calendar quarter and our
average excess loan availability for the three month period ending on the last
day of the immediately preceding calendar quarter. The applicable interest rate
margin for the prime rate option may adjust between 0% to .5% and the applicable
interest rate margin for the LIBOR option may adjust between 2.0% to 2.5%. The
outstanding balance of the line of credit was $101,404,000 at September 30,
2000. Borrowings under this facility are collateralized by substantially all of
our assets.
3. OPTIONS
During the quarter ended September 30, 2000, no stock options were granted by
the Company pursuant to the Employees', Officers', Directors' Stock Option Plan,
as previously amended and restated. During the quarter ended September 30, 2000,
35,879 stock options were exercised at exercise prices ranging from $4.49 to
$7.50 per share and 11,850 stock options were canceled at exercise prices
ranging from $3.27 to $13.02 per share.
4
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
During the quarter ended June 30, 2000, the Company granted an aggregate of
124,850 stock options to 158 individuals pursuant to the Employees', Officers',
Directors' Stock Option Plan, as previously amended and restated. These options
have exercise prices ranging from $13.02 to $14.32 per share (based on fair
market value at date of grant) and vest over a four or five-year period and are
exercisable over a five or six-year period. During the quarter ended June 30,
2000, 5,150 stock options were exercised at exercise prices ranging from $4.49
to $11.55 per share and 4,225 stock options were canceled at exercise prices
ranging from $3.27 to $7.20 per share.
During the quarter ended March 31, 2000, the Company granted an aggregate of
1,200 stock options to four individuals pursuant to the Employees', Officers',
Directors' Stock Option Plan, as previously amended and restated. These options
have an exercise price of $3.93 per share (based on fair market value at date of
grant) and vest over a five-year period and are exercisable over a six-year
period. During the quarter ended March 31, 2000, 22,700 stock options were
exercised at exercise prices ranging from $4.49 to $10.63 per share and 16,000
stock options were canceled at exercise prices ranging from $3.27 to $7.20 per
share.
In June 2000, the Company established the 2000 Nonemployee Director Stock Option
Plan. The 2000 Nonemployee Director Option Plan provides for awards of options
to purchase shares of common stock, $.01 par value per share, of the Company to
nonemployee directors of the Company. An aggregate of 75,000 shares of the
Company's common stock has been reserved for issuance under the 2000 Nonemployee
Director Option Plan. During the quarter ended June 30, 2000, the Company
granted an aggregate of 4,500 stock options to 3 individuals pursuant to the
2000 Nonemployee Director Option Plan. These options have an exercise price of
$10.53 per share (based on fair market value at date of grant) and vest over a
two-year period and are exercisable over a ten-year period. No stock options
were granted during the quarter ended September 30, 2000.
4. STOCK REPURCHASE PROGRAM
During the six months ended September 30, 2000, the Company did not repurchase
any shares of our common stock. During the quarter ended March 31, 2000, the
Company repurchased 8,600 shares at an average price of $3.18 per share. The
aggregate cost of repurchased shares is included in treasury stock on the
Consolidated Condensed Balance Sheets. The Company presently does not intend to
make further stock repurchases at the current market prices.
5. STOCK PURCHASE RIGHTS
In June 2000, the Board of Directors of the Company adopted a Common Stock
Purchase Rights Plan and authorized and approved a dividend distribution of one
right for each outstanding share of common stock of the Company to shareholders
of record at the close of business on June 23, 2000. Each share of common stock
of the Company that is issued after June 23, 2000 will also include one right.
Each right initially entitles the registered holder to purchase from the
Company, but only when exercisable under the Common Stock Purchase Rights Plan,
one share of common stock at a price of $95.00 per share, subject to certain
future adjustments. The rights will be exercisable only if a person or group
acquires 15% or more of the Company's common stock (or 10% of such stock under
certain circumstances) or announces a tender offer the consummation of which
would result in ownership by a person or group of 15% or more of the common
stock (or 10% of such stock under certain
5
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
circumstances). Upon such occurrence, each right (other than rights owned by
such person or group) will entitle the holder to purchase from the Company the
number of shares of the Company's common stock having a market value equal to
twice the exercise price of the right.
If the Company is acquired in a merger or other business combination
transaction, or sells more than 50% of our assets or earning power, after a
person or group has acquired 15% or more of the Company's outstanding common
stock (or 10% of such stock under certain circumstances), each right (other than
rights owned by such person or group) will entitle its holder to purchase, at
the right's then-current exercise price, a number of the acquiring company's
common shares having a market value of twice such price.
Following the acquisition by a person or group of 15% or more of the Company's
common stock (or 10% of such stock under certain circumstances) and prior to an
acquisition of 50% or more of the common stock, the Board of Directors may
exchange the rights (other than rights owned by such person or group) at an
exchange ratio of one share of common stock per right.
Prior to the acquisition by a person or group of beneficial ownership of 15% or
more of the Company's common stock (or 10% of such stock under certain
circumstances), the rights are redeemable for $.001 per right at the option of
the Board of Directors. The rights will expire on June 8, 2010.
6
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
We have reviewed the accompanying consolidated condensed balance sheet of All
American Semiconductor, Inc. and subsidiaries as of September 30, 2000 and the
related consolidated condensed statements of income for the quarter and nine
months ended September 30, 2000 and cash flows for the nine months ended
September 30, 2000. These consolidated condensed financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
/s/ LAZAR LEVINE & FELIX LLP
-------------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
October 31, 2000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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
in a diverse and growing range of industries, including manufacturers of
computers and computer-related products; networking, satellite, wireless and
other communications products; Internet infrastructure equipment and appliances;
automotive; consumer electronics; robotics and industrial equipment; avionics
and aerospace equipment; and medical instrumentation. The Company also sells
products to electronic manufacturing services companies 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 certain board
level products including memory modules and flat panel display driver boards,
both of which are sold to original equipment manufacturers.
RESULTS OF OPERATIONS
The Company achieved record net sales for the quarter and nine months ended
September 30, 2000 of $152.5 million and $385.8 million, an increase of $64.0
million and $146.7 million, or 72.2% and 61.4% over net sales of $88.6 million
and $239.1 million for the same periods of 1999. Our net sales increased
substantially as a result of improved conditions in our industry and the
benefits of the strategies that we have implemented over the past several years.
The increase in sales for the nine months ended September 30, 2000 over the same
period in 1999 also reflects contributions from new sales offices; two of which
were opened during the second quarter of 1999, and one which was opened during
the second quarter of 2000.
7
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
Gross profit was $32.0 million and $79.7 million for the third quarter and first
nine months of 2000, an increase of $15.2 million and $34.1 million, or 91.0%
and 74.7% over gross profit of $16.7 million and $45.6 million for the same
periods of 1999. These significant increases were attributable to the increases
in net sales and an increase in the gross profit margins. Gross profit margins
as a percentage of net sales increased to 20.9% and 20.7% for the third quarter
and first nine months of 2000, from 18.9% and 19.1% for the third quarter and
first nine months of 1999. The improvements in gross profit margins reflect a
tightening in the supply of and strong demand for certain electronic components.
Although gross profit margins have improved, the Company continues to develop
long-term strategic relationships with accounts which have required aggressive
pricing programs. Management is unsure whether gross profit margins will
continue to improve or possibly decline.
Selling, general and administrative expenses was $21.4 million for the third
quarter of 2000, an increase of $6.8 million, or 46.8%, over selling, general
and administrative expenses of $14.6 million for the third quarter of 1999.
Selling, general and administrative expenses for the first nine months of 2000
was $58.4 million, an increase of $18.0 million, or 44.5%, over selling, general
and administrative expenses of $40.5 million for the first nine months of 1999.
The increase in spending is primarily attributable to an increase in our
infrastructure to support the changing needs and additional requirements of our
customers, as well as an increase in variable expenses associated with the
increases in sales and gross profit. Furthermore, in an effort to drive
expansion and internal growth, we increased and enhanced our management team and
expanded our sales force in almost every location since early 1999. As a
percentage of net sales, selling, general and administrative expenses decreased
for the quarter and nine months ended September 30, 2000 to 14.0% and 15.1%
compared to 16.5% and 16.9% for the same periods of 1999. The decrease in
selling, general and administrative expenses as a percentage of net sales
reflects the operating leverage achieved by increased sales.
Income from operations for the third quarter of 2000 was $10.6 million, an
increase of $8.4 million, or 390%, over $2.2 million for the third quarter of
1999. For the nine months ended September 30, 2000, income from operations was
$21.3 million, an increase of $16.1 million, or 310%, over $5.2 million for the
comparable period of 1999.
Interest expense increased to $2.2 million and $5.7 million for the third
quarter and first nine months of 2000, compared to $1.3 million and $3.5 million
for the same periods of 1999. The increases in interest expense resulted from
increases in average borrowings to support our sales growth and the expanded
infrastructure, as well as an increase in interest rates.
Net income for the quarter ended September 30, 2000 reached a record $4.7
million, or $1.10 per share diluted, an increase of $4.2 million, or 844%, over
net income of $502,000, or $.13 per share diluted, for the third quarter of
1999. For the first nine months of 2000, net income was a record $8.9 million,
or $2.15 per share diluted, an increase of $8.0 million, or more than nine-fold
over net income of $943,000, or $.24 per share diluted, for the 1999 period. The
substantial increases in net income were attributable to the increases in gross
profit partially offset by increases in selling, general and administrative
expenses and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at September 30, 2000 increased significantly to $138.3 million
from working capital of $91.2 million at December 31, 1999. The current ratio
was 2.75:1 at September 30, 2000 and December 31, 1999. The substantial increase
in working capital was primarily due to increases in accounts receivable and
inventories. These increases more than offset an increase in accounts payable.
Accounts receivable levels
8
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
at September 30, 2000 were $95.2 million, up from accounts receivable of $53.2
million at December 31, 1999, reflecting the record level of sales for the third
quarter of 2000 compared to the latter part of 1999. Inventory levels were
$118.5 million at September 30, 2000, up from $85.3 million at December 31,
1999. Accounts payable and accrued expenses increased to $76.3 million at
September 30, 2000 from $51.6 million at December 31, 1999. The increases in
inventory and accounts payable reflect increases in inventory purchases to
support the higher sales levels as well as anticipated future growth in sales
based on increased bookings. In addition, inventory purchases during the third
quarter of 2000 reflect an initial stocking package from a new supplier.
On May 24, 1999, we announced that our Board of Directors authorized the
repurchase of up to $2 million in purchase price of the Company's common stock.
As of September 30, 2000, the Company repurchased 147,186 shares of its common
stock at an average price of $3.29 per share. Any shares of common stock
repurchased will be available for reissuance in connection with the Company's
stock option plans or for other corporate purposes. The Company presently does
not intend to make further stock repurchases at the current market prices.
The Company's agreement with its banks, as recently amended on September 29,
2000, provides us with a $150 million revolving line of credit facility based on
eligible accounts receivable and inventories as defined in the agreement. The
credit facility, which expires on May 3, 2004, currently bears interest, at our
option, at the prime rate plus .25% or LIBOR plus 2.25%. On a quarterly basis,
the applicable interest rate margins for the prime rate and LIBOR options may be
adjusted based upon our debt service coverage ratio for the 12 month period
ending on the last day of the immediately preceding calendar quarter and our
average excess loan availability for the three month period ending on the last
day of the immediately preceding calendar quarter. The applicable interest rate
margin for the prime rate option may adjust between 0% to .5% and the applicable
interest rate margin for the LIBOR option may adjust between 2.0% to 2.5%. The
outstanding balance of the line of credit was $101.4 million at September 30,
2000. Borrowings under this facility are collateralized by substantially all of
our assets.
We expect that our cash flows from operations and additional borrowings
available under our credit facility will be sufficient to meet our current
financial requirements over the next twelve months.
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 relating to the Company's future
performance and operating results, its bookings, products, services, markets and
industry, and/or future events relating to or effecting the Company and its
business and operations. If and when used in this Form 10-Q, the words
"believes," "estimates," "plans," "expects," "intends," "anticipates," "could,"
"may," and similar expressions as they relate to the Company or its management
are intended to identify forward-looking statements. The actual performance,
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 include, without limitation, the amount and timing
of shipments of previously booked customer orders, the continued effectiveness
of the Company's business and marketing strategies, availability and timing of
delivery of products from suppliers, price increases from suppliers that cannot
be passed on to the Company's customers at the same rate, 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, the ability
of the Company to open new sales offices in a timely and cost-effective manner
and to expand its product offerings and continue to enhance its
9
<PAGE>
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
service capabilities and the timing and cost thereof, availability of products
from and the establishment and maintenance of relationships with suppliers,
price erosion in and price competition for products sold by the Company,
management of growth and expenses, the ability of the Company to generate the
expected return from its addition of people, addition of sales offices and the
increase of its infrastructure, the Company's ability to collect accounts
receivable, price decreases on inventory that is not price protected, gross
profit margins, including decreasing margins in the future resulting from the
Company being required to have aggressive pricing programs and resulting from
increased availability of the supply for certain products, increased competition
from third party logistics companies, e-brokers and other forms of e-commerce
companies through the use of the Internet as well as from its traditional
competitors, availability of funds from operations, from our credit facility and
from other sources (debt and/or equity) to support our operations and growth,
the continued enhancement of telecommunication, computer and information
systems, any adverse impact in the future on the Company, its vendors or
customers or other third parties with which the Company has a business
relationship arising from Year 2000 issues, the continued and anticipated growth
of the electronics industry and electronic components distribution industry, as
well as general technology growth, the failure to achieve acceptance or grow at
the expected level of some of the new technologies being supported by the
Company, 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, currency fluctuations, 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 and in its press releases. 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's credit facility bears interest based on interest rates tied to the
prime or LIBOR rate, either of which may fluctuate over time based on economic
conditions. As a result, the Company is subject to market risk for changes in
interest rates and could be subjected to increased or decreased interest
payments if market interest rates fluctuate. If market interest rates increase,
the impact may have a material adverse effect on the Company's financial
results.
10
<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. 6 (without schedules) to Loan and Security
Agreement dated September 29, 2000.
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 September 30, 2000.
------------------------
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: November 14, 2000 /s/ PAUL GOLDBERG
----------------------------------------------
Paul Goldberg, Chairman of the Board
(Duly Authorized Officer)
Date: November 14, 2000 /s/ HOWARD L. FLANDERS
----------------------------------------------
Howard L. Flanders, Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
11
