================================================================================
UNITED STATES
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
For the quarterly period ended September 30, 2005
--or--
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
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. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of November 7, 2005, 3,975,176 shares of the common stock of All American
Semiconductor, Inc. were outstanding.
================================================================================
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, 2005
(Unaudited) and December 31, 2004....................................... 1
Consolidated Condensed Statements of Income for the Quarters
and Nine Months Ended September 30, 2005 and 2004 (Unaudited)........... 2
Consolidated Condensed Statements of Cash Flows for the
Nine Months Ended September 30, 2005 and 2004 (Unaudited)............... 3
Notes to Consolidated Condensed Financial Statements (Unaudited).......... 4
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... 9
3. Quantitative and Qualitative Disclosures about Market Risk................ 15
4. Controls and Procedures................................................... 15
II OTHER INFORMATION:
4. Submission of Matters to a Vote of Security Holders....................... 15
6. Exhibits.................................................................. 16
SIGNATURES................................................................ 17
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
September 30 December 31
ASSETS 2005 2004
------------------------------------------------------------------------------------------------
(Unaudited)
Current assets:
Cash ........................................................ $ 593,000 $ 645,000
Accounts receivable, less allowances for doubtful
accounts of $2,514,000 and $1,955,000 ..................... 79,976,000 69,010,000
Inventories ................................................. 71,557,000 67,608,000
Other current assets ........................................ 2,695,000 4,370,000
------------- -------------
Total current assets ...................................... 154,821,000 141,633,000
Property, plant and equipment - net ........................... 7,496,000 3,185,000
Deposits and other assets ..................................... 2,457,000 2,648,000
------------- -------------
$ 164,774,000 $ 147,466,000
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt ........................... $ 697,000 $ 705,000
Accounts payable ............................................ 47,765,000 41,100,000
Accrued expenses ............................................ 5,452,000 5,499,000
Other current liabilities ................................... 214,000 197,000
------------- -------------
Total current liabilities ................................. 54,128,000 47,501,000
Long-term debt:
Notes payable ............................................... 85,201,000 75,174,000
Subordinated debt ........................................... 663,000 714,000
Other long-term debt ........................................ 1,063,000 1,063,000
------------- -------------
141,055,000 124,452,000
------------- -------------
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,
3,939,158 and 3,893,161 shares issued and outstanding ..... 39,000 39,000
Capital in excess of par value .............................. 25,874,000 25,747,000
Accumulated deficit ......................................... (2,194,000) (2,772,000)
------------- -------------
23,719,000 23,014,000
------------- -------------
$ 164,774,000 $ 147,466,000
============= =============
See notes to consolidated condensed financial statements
1
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Quarters Nine Months
PERIODS ENDED SEPTEMBER 30 2005 2004 2005 2004
-------------------------------------------------------------------------------------------------
NET SALES .................... $ 113,249,000 $ 103,757,000 $ 318,772,000 $ 308,908,000
Cost of sales ................ (95,476,000) (87,153,000) (266,947,000) (257,007,000)
------------- ------------- ------------- -------------
Gross profit ................. 17,773,000 16,604,000 51,825,000 51,901,000
Selling, general and
administrative expenses .... (16,083,000) (14,932,000) (47,387,000) (45,067,000)
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS ....... 1,690,000 1,672,000 4,438,000 6,834,000
Interest expense ............. (1,368,000) (945,000) (3,521,000) (2,746,000)
Other income ................. - 1,081,000 - 1,081,000
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES ... 322,000 1,808,000 917,000 5,169,000
Income tax provision ......... (113,000) (720,000) (339,000) (2,165,000)
------------- ------------- ------------- -------------
NET INCOME ................... $ 209,000 $ 1,088,000 $ 578,000 $ 3,004,000
============= ============= ============= =============
EARNINGS PER SHARE:
Basic ........................ $.05 $.28 $.15 $.79
==== ==== ==== ====
Diluted ...................... $.05 $.26 $.14 $.73
==== ==== ==== ====
See notes to consolidated condensed financial statements
2
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 2005 2004
-------------------------------------------------------------------------------------
Cash Flows Used For Operating Activities ........... $ (5,197,000) $ (19,398,000)
------------- -------------
Cash Flows From Investing Activities:
Acquisition of property and equipment .............. (3,599,000) (397,000)
Decrease (increase) in other assets ................ (101,000) 16,000
------------- -------------
Cash flows used for investing activities ....... (3,700,000) (381,000)
------------- -------------
Cash Flows From Financing Activities:
Borrowings under line of credit agreement .......... 321,401,000 325,336,000
Repayments under line of credit agreement .......... (311,873,000) (300,842,000)
Repayments of notes payable ........................ (810,000) (5,194,000)
Net proceeds from issuance of equity securities .... 127,000 421,000
------------- -------------
Cash flows provided by financing activities .... 8,845,000 19,721,000
------------- -------------
Decrease in cash ................................... (52,000) (58,000)
Cash, beginning of period .......................... 645,000 620,000
------------- -------------
Cash, end of period ................................ $ 593,000 $ 562,000
============= =============
Supplemental Cash Flow Information:
Interest paid ...................................... $ 3,055,000 $ 2,451,000
============= =============
Income taxes paid (refunded) - net ................. $ (762,000) $ 1,400,000
============= =============
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
In June 2004, the Company entered into a financing arrangement with a third
party to finance $1.1 million related to the purchase of a portion of a new
enterprise resource planning system.
During the third quarter of 2005 the Company entered into capital leases
aggregating $1.3 million for certain costs relating to a new enterprise resource
planning system.
See notes to consolidated condensed financial statements
3
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 September 30, 2005, 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 in any future interim
period or for the entire year.
For a summary of significant accounting policies (which have not changed from
December 31, 2004) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 2004, including the
consolidated financial statements and notes thereto which should be read in
conjunction with these financial statements.
The accompanying unaudited interim financial statements have been prepared in
accordance with instructions to Form 10-Q and, therefore, do not include all
information and footnotes required to be in conformity with accounting
principles generally accepted in the United States of America.
Stock-Based Compensation
------------------------
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related Interpretations to account for the option
plans using the intrinsic value method. The Company grants its options based on
market value; accordingly, no compensation cost has been recognized for the
option plans. Had compensation cost for the option plans been determined using
the fair value based method, as defined in Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), the
Company's net earnings and earnings per share would have been adjusted to the
pro forma amounts indicated below. The Company adopted Statement of Financial
Accounting Standards No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure - an amendment of FASB Statement No. 123" as of
January 1, 2003, which amended SFAS 123. The effect of the adoption of this
Statement was not material as the Company continues to use the intrinsic value
method allowed under SFAS 123. Statement of Financial Accounting Standards No.
123 (revised 2004), "Share-Based Payment" (SFAS 123 (revised 2004)), requires
the recognition of compensation costs related to services received in exchange
for awards of equity instruments based on the grant-date fair value of those
awards. SFAS 123 (revised 2004) required compliance beginning with the first
interim or annual report beginning on or after June 15, 2005. In April 2005, the
Securities and Exchange Commission amended the date for compliance with SFAS 123
(revised 2004) until the first interim or annual reporting period of the first
fiscal year beginning on or after June 15, 2005. Accordingly, the Company will
discontinue application of the intrinsic method and will adopt SFAS 123 (revised
2004) for the fiscal year beginning January 1, 2006.
4
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
Quarters Nine Months
Periods Ended September 30 2005 2004 2005 2004
-------------------------------------------------------------------------------------------------------
Net earnings:
As reported $209,000 $1,088,000 $578,000 $3,004,000
Pro forma 151,000 1,086,000 519,000 2,968,000
Basic earnings per share:
As reported $.05 $.28 $.15 $.79
Pro forma .04 .28 .13 .78
Diluted earnings per share:
As reported $.05 $.26 $.14 $.73
Pro forma .04 .26 .13 .72
The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions: expected volatility of 59% for the quarter and nine months ended
September 30, 2005, compared to 87% for the same periods of 2004; risk-free
interest rate of 3.9% for the quarter and nine months ended September 30, 2005,
compared to 2.8% for the same periods of 2004; and expected lives of 2 to 5
years for all periods presented.
The effects of applying SFAS 123 in the above pro forma disclosures are not
indicative of future amounts as future amounts are likely to be affected by the
number of grants awarded and since additional awards are generally expected to
be made at varying prices.
2. EARNINGS PER SHARE
The following table sets forth the calculation of earnings per share on a basic
and diluted basis:
Quarters Nine Months
PERIODS ENDED SEPTEMBER 30 2005 2004 2005 2004
----------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE:
-------------------------
Net Income ............................... $ 209,000 $1,088,000 $ 578,000 $3,004,000
========== ========== ========== ==========
Weighted Average Shares Outstanding ...... 3,933,457 3,877,819 3,924,232 3,818,697
========== ========== ========== ==========
Basic Earnings Per Share ................. $.05 $.28 $.15 $.79
==== ==== ==== ====
DILUTED EARNINGS PER SHARE:
---------------------------
Net Income ............................... $ 209,000 $1,088,000 $ 578,000 $3,004,000
========== ========== ========== ==========
Weighted Average and Dilutive Shares:
Weighted average shares outstanding .... 3,933,457 3,877,819 3,924,232 3,818,697
Dilutive shares ........................ 178,185 323,898 189,867 309,249
---------- ---------- ---------- ----------
4,111,642 4,201,717 4,114,099 4,127,946
========== ========== ========== ==========
Diluted Earnings Per Share ............... $.05 $.26 $.14 $.73
==== ==== ==== ====
5
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
Basic earnings per share are determined by dividing the Company's net income by
the weighted average shares outstanding. Diluted earnings per share include any
dilutive effects of outstanding stock options.
Excluded from the calculation of earnings per share are stock options to
purchase 84,390 common shares in the quarter and nine months ending September
30, 2005 and 228,050 common shares in the quarter and nine months ending
September 30, 2004, as their inclusion would have been antidilutive.
3. LONG-TERM DEBT
Line of Credit
--------------
On August 8, 2005, the Company's line of credit facility was amended to increase
the facility to $100 million from $85 million and to extend the term from May
14, 2006 to May 31, 2009. Additionally, the Company's credit facility was
amended to, among other things, reduce the interest rate margins and increase
the advance rate on certain of the Company's inventory. Borrowings under the
Company's $100 million credit facility, as amended (the "Credit Facility"), bear
interest at one of five pricing levels dependent on the Company's debt service
coverage ratio at the quarterly pricing date (as defined), and are secured by
all of the Company's assets including accounts receivable, inventories and
equipment. At the first pricing level, at the Company's option, the rate will be
either (a) .25% below the greater of the Federal funds rate plus .5% and prime
or (b) 1.75% over LIBOR. At the second level, at the Company's option, the rate
will be either (a) the greater of the Federal funds rate plus .5% and prime or
(b) 2.00% over LIBOR. At the third level, at the Company's option, the rate will
be either (a) .25% over the greater of the Federal funds rate plus .5% and prime
or (b) 2.25% over LIBOR. At the fourth pricing level, at the Company's option,
the rate will be either (a) .5% over the greater of the Federal funds rate plus
.5% and prime or (b) 2.50% over LIBOR. At the fifth pricing level, at the
Company's option, the rate will be either (a) .75% over the greater of the
Federal funds rate plus .5% and prime or (b) 2.75% over LIBOR. In addition to
the improved pricing levels, the advance rate used in determining the borrowing
base under the Credit Facility was increased to 50% from 40% on certain of the
Company's inventory. The amounts that the Company may borrow under the Credit
Facility are based upon specified percentages of the Company's eligible accounts
receivable and inventories (as defined). The Company is required to comply with
certain affirmative and negative covenants and certain financial ratios. The
covenants, among other things, place limitations and restrictions on the
Company's borrowings, investments, capital expenditures and transactions with
affiliates; prohibit dividends and acquisitions; and prohibit stock redemptions
in excess of an aggregate cost of $2,000,000 during the term of the Credit
Facility. The Credit Facility requires the Company to maintain certain minimum
levels of tangible net worth throughout the term of the credit agreement as well
as a minimum debt service coverage ratio and a minimum inventory turnover level,
each tested on a quarterly basis. As part of the August 2005 amendment, the
minimum debt service coverage ratio was reduced from 1.20:1.0 to 1.10:1.0
beginning with the quarterly period ending September 30, 2005 and the unused
commitment fee was reduced from a range of .25% to .375% depending on the then
pricing levels to .15% at all five pricing levels.
In connection with the interest rate charged under the Credit Facility prior to
the August 2005 amendment, the Company had improved from the then third pricing
level at the beginning of 2004, to the then first pricing level effective in the
middle of the third quarter of 2004. The improvement to the then first pricing
level, which aggregated 100 basis points, was based on the Company achieving an
increase in its debt service coverage ratio as calculated pursuant to the Credit
Facility. The rate associated with the then first pricing level continued
through the middle of the third quarter of 2005, at which time the Company's
pricing level changed to the third pricing level under the August 2005 amendment
to the Credit Facility. This pricing level change, however, improved the rate by
50 basis points. The Company was in compliance with all
6
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
covenants under its credit facility at September 30, 2005. At September 30,
2005, outstanding borrowings under the Company's credit facility aggregated
$84,486,000 compared to $74,958,000 at December 31, 2004.
Obligations under Capital Leases
--------------------------------
During the quarter ended September 30, 2005, the Company became the lessee of
enterprise resource planning system (ERP) related assets under two capital
leases expiring in 2008. The assets, aggregating $1,257,000, and liabilities
under capital leases are recorded at the lower of the present value of the
minimum lease payments or the fair value of the assets. The assets will be
depreciated over their estimated useful lives once the ERP system is
implemented. Interest rates on these capital leases vary from 1.6% to 2.2% per
annum. At September 30, 2005, the outstanding obligations under these capital
leases aggregated $1,129,000.
4. OPTIONS
Option Plan
-----------
During the quarter ended September 30, 2005, the Company granted an aggregate of
4,000 stock options to two individuals pursuant to the Employees', Officers',
Directors' Stock Option Plan, as previously amended and restated (the "Option
Plan"). These options have an exercise price of $4.46 per share (fair market
value at date of grant), vest over a three-year period and are exercisable over
a four-year period. During the quarter ended September 30, 2005, a total of
2,724 stock options previously granted pursuant to the Option Plan were canceled
at exercise prices ranging from $1.92 to $4.29 per share. During the quarter
ended September 30, 2005, a total of 8,767 stock options previously granted
pursuant to the Option Plan were exercised at exercise prices ranging from $1.92
to $4.29 per share.
During the quarter ended June 30, 2005, no stock options were granted by the
Company pursuant to the Employees', Officers', Directors' Stock Option Plan, as
previously amended and restated (the "Option Plan"). During the quarter ended
June 30, 2005, a total of 211,760 stock options previously granted pursuant to
the Option Plan were canceled at exercise prices ranging from $1.92 to $14.32
per share. During the quarter ended June 30, 2005, a total of 7,667 stock
options previously granted pursuant to the Option Plan were exercised at
exercise prices ranging from $1.92 to $3.27 per share.
During the quarter ended March 31, 2005, no stock options were granted by the
Company pursuant to the Option Plan. During the quarter ended March 31, 2005, a
total of 29,231 stock options previously granted pursuant to the Option Plan
were canceled at exercise prices ranging from $1.92 to $5.64 per share. During
the quarter ended March 31, 2005, a total of 29,563 stock options previously
granted pursuant to the Option Plan were exercised at exercise prices ranging
from $1.92 to $5.64 per share.
Director Option Plan
--------------------
During the nine months ended September 30, 2005, no stock options were granted
by the Company pursuant to the 2000 Nonemployee Director Stock Option Plan, as
amended.
5. STOCK REPURCHASE PROGRAM
The Company repurchased no shares of its common stock during the nine months
ended September 30, 2005 in connection with the Company's stock repurchase
program, which provides for the repurchase of up to $2.0 million in purchase
price of the Company's common stock. To date the Company has repurchased 244,089
shares at an aggregate price of $758,000 under this program. Shares purchased
under this
7
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
================================================================================
program are immediately retired and become authorized and unissued shares of
common stock available for reissuance for any corporate purpose. The Company
presently does not intend to make further stock repurchases at the current
market prices.
6. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
Management believes that the Company is operating in a single business segment,
distribution of electronic components, in accordance with the rules of Statement
of Financial Accounting Standards No. 131 ("Disclosure About Segments of an
Enterprise and Related Information").
Sales by geographic areas are as follows:
Quarters Nine Months
Periods Ended September 30 2005 2004 2005 2004
------------------------------------------------------------------------------------------
Americas (1) ................. $101,418,000 $ 88,876,000 $286,854,000 $279,900,000
Europe ....................... 5,173,000 4,344,000 14,080,000 11,684,000
Asia/Pacific ................. 6,658,000 10,537,000 17,838,000 17,324,000
------------ ------------ ------------ ------------
$113,249,000 $103,757,000 $318,772,000 $308,908,000
============ ============ ============ ============
(1) Includes sales in the United States and Puerto Rico of $93,420,000 and
$83,880,000 for the quarters ended September 30, 2005 and 2004 and
$265,660,000 and $257,512,000 for the nine months ended September 30, 2005
and 2004.
Long-lived assets (property, plant and equipment - net) are located
substantially in the Americas and include long-lived assets in the United States
of $7,491,000 and $3,177,000 at September 30, 2005 and December 31, 2004.
7. OTHER INCOME
In August 2004, the Company received $1,158,000, including accrued interest and
attorney's fees, as a result of prevailing in a contract litigation initiated in
August 2001. The Company reflected the reimbursement of attorney's fees of
$77,000 in selling, general and administrative expenses and the balance of
$1,081,000 in other income on the unaudited Consolidated Condensed Statements of
Income for the quarter and nine months ended September 30, 2004.
8
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
Management's Discussion and Analysis of Financial Condition and Results of
--------------------------------------------------------------------------
Operations
----------
All American Semiconductor, Inc. and its subsidiaries (the "Company") is a
distributor of electronic components manufactured by others. The Company
distributes a full range of semiconductors (active components), including
transistors, diodes, memory devices, microprocessors, microcontrollers, other
integrated circuits, active matrix displays and various board-level products, as
well as passive/electromechanical components. Passive products include
capacitors, resistors and inductors. Electromechanical products include power
supplies, 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; office and home office equipment; cellular and portable products;
wireless products; networking, satellite and other communications products;
Internet infrastructure equipment and appliances; automobiles and automotive
subsystems; consumer goods; voting and gaming machines; point-of-sale equipment;
robotics and industrial equipment; defense and aerospace equipment; home
entertainment; security and surveillance equipment; and medical instrumentation.
The Company also sells products to contract electronics manufacturers, or
electronics manufacturing services, or EMS, providers who manufacture products
for companies in all electronics industry segments. Through the Aved Memory
Products division of its subsidiary, Aved Industries, Inc., the Company also
designs and has manufactured by third parties under the label of its
subsidiary's division, certain memory modules which are sold to original
equipment manufacturers.
Overview
--------
Industry conditions, which had improved during the first half of 2004, began to
slow during the second half of 2004 and remained relatively soft through the
first quarter of 2005. From the end of the second quarter of 2004 through the
first quarter of 2005 we experienced a decline in sales. Industry conditions
improved slightly during the second and third quarters of 2005. Sales for the
third quarter of 2005 represented our second consecutive quarterly increase in
sales, with sales increasing 18% and 2% sequentially from sales for the previous
quarters of this year. Industry conditions continue to be challenging. The
Company's backlog of customer orders is currently $74 million at September 30,
2005, down from $80 million at June 30, 2005 and up from $69 million at December
31, 2004. At September 30, 2004, our customer backlog was $76 million.
While we expect that the future growth in global markets will include growth in
the Americas, the Company believes that growth rates will be higher in Asian
markets and possibly European markets as well. To further support the continuing
trend for business to transfer outside of North America, as well as to take
advantage of developments in industry trends towards consolidation, the Company
is expanding and expects to continue to expand further. There can be no
assurance that the Company will achieve any growth in any particular market in
the future.
Critical Accounting Policies and Estimates
------------------------------------------
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the unaudited Consolidated Condensed Financial Statements and
accompanying notes. Estimates are used for, but not limited to, the accounting
for the allowance for doubtful accounts, inventories, income taxes, a
postretirement benefit obligation and loss contingencies. Management bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results could differ
from these estimates under different assumptions or conditions.
9
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
The Company believes there have been no significant changes, during the nine
month period ended September 30, 2005, to the items disclosed as critical
accounting policies and estimates in Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report on
Form 10-K for the year ended December 31, 2004.
Results of Operations
---------------------
Net sales for the quarter and nine months ended September 30, 2005 were $113.2
million and $318.8 million representing a 9.1% and 3.2% increase from net sales
of $103.8 million and $308.9 million for the same periods of 2004. Sales for the
third quarter of 2005 increased 1.8% sequentially from sales for the second
quarter of 2005 representing the second consecutive quarterly increase in sales.
The increases in sales reflect a slight improvement in industry conditions
during the second and third quarters of 2005. Sales for the nine months ended
September 30, 2005 were impacted by the softness in the first quarter of 2005
which carried over from the second half of 2004. While sales have increased for
the second consecutive quarter of 2005, management believes that it is still
difficult to determine how strong the balance of 2005 will be.
Gross profit was $17.8 million and $51.8 million for the third quarter and first
nine months of 2005 compared to $16.6 million and $51.9 million for the same
periods of 2004. The increase in gross profit for the third quarter of 2005
compared to the same period of 2004 was due to the increase in net sales which
more than offset the decline in gross profit margins. For the nine months ended
September 30, 2005 gross profit decreased slightly from the same period of 2004
due to a decline in gross profit margins which more than offset the increase in
sales for the first nine months of 2005 compared to the same period of 2004.
Gross profit margins as a percentage of net sales were 15.7% and 16.3% for the
third quarter and first nine months of 2005 compared to 16.0% and 16.8% for the
third quarter and first nine months of 2004. The decreases in gross profit
margins for the quarter and nine months ended September 30, 2005 reflect
increases of 49% and 27% in sales to accounts which require aggressive pricing
programs. In addition, the decrease in gross profit margin for the nine months
ended September 30, 2005 reflects a decline of .4 points in the gross profit
margin on sales of active products. Sales of active products represented
approximately 88% of total sales for each of the periods presented. The gross
profit margins on passive/electromechanical products declined 2.6 points and 1
point for the third quarter and first nine months of 2005 compared to the same
periods of 2004. Additionally, the decreases in gross profit margins reflect
increases in sales of 22% and 23% for the third quarter and first nine months of
2005 compared to the same periods of 2004 in connection with low margin, large
volume transactions. Furthermore, profit margins continue to be under downward
pressure as a result of slight oversupply conditions that exist in the market.
Management expects that the downward pressure on gross profit margins will
continue as a result of the anticipation of an increase in sales to accounts
that require aggressive pricing programs and a greater number of low margin,
large volume transactions in the future.
Selling, general and administrative expenses ("SG&A") was $16.1 million for the
third quarter of 2005 compared to $14.9 million for the third quarter of 2004.
SG&A was $47.4 million for the first nine months of 2005 compared to $45.1
million for the first nine months of 2004. SG&A for the third quarter and first
nine months of 2005 reflects increases in variable expenses of $438,000 and
$993,000. These increases in variable expenses reflect increases in commission
rates resulting from pressure in labor markets. Variable expenses for the nine
months ended September 30, 2005 increased notwithstanding a slight decrease in
gross profit dollars for the 2005 period compared to the same period of 2004. In
addition to the increases in variable expenses, fixed expenses increased
$714,000 for the third quarter of 2005 and $1.4 million for the first nine
months of 2005 compared to the 2004 periods. The increases in fixed expenses
related primarily to increases in compensation expense and maintenance and
repairs during the second and third quarters of 2005. For the first nine months
of 2005, the increase in fixed expenses was partially offset by a reduction in
other expenses including occupancy costs. The Company is expanding and expects
to continue to expand further, including personnel additions, to enhance our
position in order to take advantage of industry consolidation and the continuing
trends for business to transfer outside of
10
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
North America. In addition, in connection with a new enterprise resource
planning (ERP) system which is expected to be implemented within the next three
months, SG&A will increase by approximately $240,000 per quarter representing
the depreciation and amortization of the cost of the new ERP system over a seven
year period. Accordingly, the Company expects that SG&A will increase in future
periods.
SG&A as a percentage of net sales was 14.2% and 14.9% for the quarter and nine
months ended September 30, 2005 compared to 14.4% and 14.6% for the same periods
of 2004. The decrease in SG&A as a percentage of net sales for the third quarter
of 2005 reflects the impact of the increase in net sales which more than offset
the increase in SG&A in absolute dollars. For the nine months ended September
30, 2005 the increase in SG&A as a percentage of net sales reflects the increase
in SG&A in absolute dollars which more than offset the impact from the increase
in sales.
Income from operations was $1.7 million and $4.4 million for the quarter and
nine months ended September 30, 2005 compared to $1.7 million and $6.8 million
for the same periods of 2004. The decrease in income from operations for the
nine month period was primarily due to the increase in SG&A as discussed
previously.
Interest expense increased to $1.4 million and $3.5 million for the third
quarter and first nine months of 2005 compared to $945,000 and $2.7 million for
the third quarter and first nine months of 2004. The increases in interest
expense resulted from increases in average borrowings and increases in overall
interest rates. Our average borrowings increased by $7.5 million and $7.8
million for the third quarter and first nine months of 2005 compared to the same
periods of 2004 primarily as a result of increases in our accounts receivable.
Accounts receivable increased in connection with the increase in sales,
particularly towards the end of the third quarter of 2005. Overall interest
rates increased despite the positive impact from the Company improving its
pricing levels under its credit facility and a positive impact from repayment of
fixed-rate debt. The Company improved from the then third pricing level under
its credit facility at the beginning of 2004 to the then first pricing level
effective in the middle of the third quarter of 2004. The improvement to the
then first pricing level, which aggregated 100 basis points, was based on the
Company achieving an increase in its debt service coverage ratio as calculated
pursuant to the credit facility. The rate associated with the then first pricing
level continued through the middle of the third quarter of 2005, at which time
the Company's pricing level changed to the third pricing level under the August
8, 2005 amendment to the credit facility. This pricing level change, however,
improved the rate by 50 basis points. On June 14, 2004, the Company repaid $5.2
million of 9% subordinated debt with borrowings under the credit facility at
lower interest rates. The positive impact on interest expense from the
improvement in the rate associated with the change in pricing levels as well as
the repayment of fixed-rate debt with lower interest rate debt was more than
offset by the adverse effect from interest rate hikes by the Federal Reserve
Board. If the Federal Reserve continues to increase interest rates as
anticipated, interest expense will increase. However, the improvement to the
first pricing level under the credit facility prior to the recent amendment, as
well as a reduction in interest rate margins of approximately 100 basis points
associated with the August 8, 2005 amendment to the credit facility, will
continue to have a positive effect on interest expense when compared to the
prior year. Interest expense for the third quarter and first nine months of 2005
included non-cash amortization of deferred financing fees of $100,000 and
$293,000. As a result of the recent amendment which extended the term of the
credit facility to May 31, 2009, non-cash amortization of deferred financing
fees will be reduced to approximately $22,000 per quarter and interest expense
will reflect an aggregate of $1.3 million of deferred financing fees over the
term of the amended credit facility. See "Liquidity and Capital Resources" below
and Note 3 to Notes to Consolidated Condensed Financial Statements (Unaudited).
In August 2004, the Company received $1.2 million, including accrued interest
and attorney's fees, as a result of prevailing in a contract litigation
initiated in August 2001. The Company reflected the reimbursement of attorney's
fees of $77,000 in selling, general and administrative expenses and the balance
of $1.1 million in other income on the unaudited Consolidated Condensed
Statements of Income for the quarter and nine months ended September 30, 2004.
11
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
Net income for the third quarter of 2005 was $209,000 (or $.05 per share
(diluted)). For the first nine months of 2005, net income was $578,000 (or $.14
per share (diluted)). Net income for the quarter and nine months ended September
30, 2004 includes other income of $1.1 million on a pre-tax basis ($616,000 on
an after-tax basis or $.15 per share (diluted)) as a result of prevailing in a
contract litigation. Including the other income, net income for the third
quarter of 2004 was $1.1 million (or $.26 per share (diluted)) and $3.0 million
(or $.73 per share (diluted)) for the first nine months of 2004.
Liquidity and Capital Resources
-------------------------------
Working capital at September 30, 2005 increased to $100.7 million from working
capital of $94.1 million at December 31, 2004. The current ratio was 2.86:1 at
September 30, 2005 compared to 2.98:1 at December 31, 2004. The increase in
working capital was primarily due to increases in accounts receivable and
inventory, which increases were partially offset by an increase in accounts
payable and a decrease in other current assets. Accounts receivable was $80.0
million at September 30, 2005 compared to $69.0 million at December 31, 2004.
The increase in accounts receivable reflects an increased level of sales towards
the latter part of the third quarter of 2005 compared to the latter part of the
fourth quarter of 2004. Inventory levels were $71.6 million at September 30,
2005 compared to $67.6 million at December 31, 2004. The increase primarily
reflects higher inventory levels needed to support the increased level of sales
as compared to the fourth quarter of 2004. Accounts payable increased to $47.8
million at September 30, 2005 from $41.1 million at December 31, 2004 in
connection with an increase in the level of purchases made during the latter
part of the third quarter of 2005 over the same period of the fourth quarter of
2004.
At September 30, 2005, the Company had subordinated debt with various maturities
through 2015 which aggregated $731,000 including the current portion of such
debt, and had an unfunded postretirement benefit obligation of $1.1 million. See
the table below.
On August 8, 2005, the Company's line of credit facility was amended to increase
the facility to $100 million from $85 million and to extend the term from May
14, 2006 to May 31, 2009. Additionally, the Company's credit facility was
amended to, among other things, reduce the interest rate margins and increase
the advance rate on certain of the Company's inventory. Borrowings under the
Company's $100 million credit facility, as amended (the "Credit Facility"), bear
interest at one of five pricing levels dependent on the Company's debt service
coverage ratio at the quarterly pricing date (as defined), and are secured by
all of the Company's assets including accounts receivable, inventories and
equipment. At the first pricing level, at the Company's option, the rate will be
either (a) .25% below the greater of the Federal funds rate plus .5% and prime
or (b) 1.75% over LIBOR. At the second level, at the Company's option, the rate
will be either (a) the greater of the Federal funds rate plus .5% and prime or
(b) 2.00% over LIBOR. At the third level, at the Company's option, the rate will
be either (a) .25% over the greater of the Federal funds rate plus .5% and prime
or (b) 2.25% over LIBOR. At the fourth pricing level, at the Company's option,
the rate will be either (a) .5% over the greater of the Federal funds rate plus
.5% and prime or (b) 2.50% over LIBOR. At the fifth pricing level, at the
Company's option, the rate will be either (a) .75% over the greater of the
Federal funds rate plus .5% and prime or (b) 2.75% over LIBOR. In addition to
the improved pricing levels, the advance rate used in determining the borrowing
base under the Credit Facility was increased to 50% from 40% on certain of the
Company's inventory. The amounts that the Company may borrow under the Credit
Facility are based upon specified percentages of the Company's eligible accounts
receivable and inventories (as defined). The Company is required to comply with
certain affirmative and negative covenants and certain financial ratios. The
covenants, among other things, place limitations and restrictions on the
Company's borrowings, investments, capital expenditures and transactions with
affiliates; prohibit dividends and acquisitions; and prohibit stock redemptions
in excess of an aggregate cost of $2.0 million during the term of the Credit
Facility. The Credit Facility requires the Company to maintain certain minimum
levels of tangible net worth throughout the term of the credit agreement as well
as a minimum debt service coverage ratio and a minimum inventory turnover level,
each tested on a quarterly basis. As part of the August 2005 amendment, the
12
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
minimum debt service coverage ratio was reduced from 1.20:1.0 to 1.10:1.0
beginning with the quarterly period ending September 30, 2005 and the unused
commitment fee was reduced from a range of .25% to .375% depending on the then
pricing levels to .15% at all five pricing levels.
In connection with the interest rate charged under the Credit Facility prior to
the August 2005 amendment, the Company had improved from the then third pricing
level at the beginning of 2004, to the then first pricing level effective in the
middle of the third quarter of 2004. The improvement to the then first pricing
level, which aggregated 100 basis points, was based on the Company achieving an
increase in its debt service coverage ratio as calculated pursuant to the Credit
Facility. The rate associated with the then first pricing level continued
through the middle of the third quarter of 2005, at which time the Company's
pricing level changed to the third pricing level under the August 2005 amendment
to the Credit Facility. This pricing level change, however, improved the rate by
50 basis points. The Company was in compliance with all covenants under its
credit facility at September 30, 2005. At September 30, 2005, outstanding
borrowings under the Company's credit facility aggregated $84.5 million compared
to $75.0 million at December 31, 2004. See Note 3 to Notes to Consolidated
Condensed Financial Statements (Unaudited).
Long-term debt, operating leases and other long-term obligations as of September
30, 2005 mature as follows:
Payments Due by Period
-----------------------------------------------------
Less than More than
Obligations Total 1 year 1-3 years 4-5 years 5 years
---------------------------------------------------------------------------------------------------------
Long-term debt (1) ................ $85,432,000 $ 284,000 $84,719,000 $ 185,000 $ 244,000
Capital leases .................... 1,129,000 413,000 716,000 - -
Operating leases .................. 11,247,000 3,262,000 5,185,000 1,600,000 1,200,000
Other long-term obligations (2) ... 1,063,000 - - - 1,063,000
----------- ----------- ----------- ----------- -----------
Total obligations ................. $98,871,000 $ 3,959,000 $90,620,000 $ 1,785,000 $ 2,507,000
=========== =========== =========== =========== ===========
_________
(1) Reflected on the Company's Consolidated Condensed Balance Sheet (Unaudited)
as of September 30, 2005 and includes $84,486,000 under the Company's
Credit Facility which matures on May 31, 2009.
(2) Reflected on the Company's Consolidated Condensed Balance Sheet (Unaudited)
as of September 30, 2005 and represents a postretirement benefit
obligation.
In June 2004 the Company entered into a software license and services agreement
in connection with a new enterprise resource planning (ERP) system. The
aggregate cost of this new ERP system, including estimated costs of training and
implementation, is now expected to be approximately $6.5 to $7.0 million. The
expected cost reflects an increase in hardware requirements as well as software
development costs. At September 30, 2005, $5.0 million associated with this ERP
system has been reflected in property, plant and equipment - net on the
Consolidated Condensed Balance Sheet. In July 2004, the Company financed $1.1
million of its ERP costs with a third party finance company under an installment
payment arrangement. At September 30, 2005, the outstanding balance under this
arrangement was $216,000 which is due in full on January 1, 2006. The effective
interest rate under this agreement is 1.9% per annum. The Company also financed
an additional $1.8 million of the aggregate cost of the ERP system with another
third party finance company, which financing arrangement has maturities through
November 2008 and has effective interest rates ranging from 1.6% to 2.2% per
annum. Of this $1.8 million financing, $565,000 is classified as operating
leases and $1.3 million is classified as capital leases. At September 30, 2005,
the outstanding obligation under these capital leases aggregating $1.3 million
was $1.1 million. The Company is currently exploring additional sources of
financing in connection with this new ERP system. There can be no assurances,
however, that the Company will be successful in obtaining further financing of
this new ERP system, or that the terms of such financing will be acceptable to
the Company.
13
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
The Company currently expects that its cash flows from operations and additional
borrowings available under its Credit Facility will be sufficient to meet the
Company's current financial requirements over the next twelve months, including
obligations related to the current portion of long-term debt and capital and
operating leases. However, the Company continues to explore additional sources
of financing in order to support its growth.
Off-Balance Sheet Arrangements
------------------------------
The Company continues to guarantee the future payment to a third party of
certain leases which were previously pledged to the Company as collateral for
the payment of outstanding receivables which were owed by a customer. This
guaranty was made when the leases were sold to this third party who paid to the
Company in 2001 the net present value of the future payments of the leases. As
of September 30, 2005, the Company had made unreimbursed payments aggregating
$53,000 under this guaranty as a result of nonpayments of rental amounts by
lessees, $13,000 of which nonpayments have been collected subsequent to the
balance sheet date. The Company plans to seek recovery from the lessees for any
amounts that the Company pays under its guaranty. There can be no assurance,
however, that the Company will be successful in recovering any amounts paid
under its guaranty. At September 30, 2005 the maximum additional exposure under
this guaranty, which continues through the latest lease expiration date of March
31, 2006, was $96,000 with a net present value of $93,000.
Forward-Looking Statements; Business Risks and Uncertainties
------------------------------------------------------------
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, beliefs and intentions relating to the
Company's or industry's future performance, market conditions, its future
operating results, investments in the growth of its business, bookings,
backlogs, sales, products, services and markets (including expansion of
operations in Asia and Europe), trends or developments including relating to
industry conditions or industry consolidation or future growth in global
markets, expected capital expenditures (including for the new ERP system) and/or
future events relating to or affecting the Company and its business and
operations. If and when used in this Form 10-Q, the words "believes,"
"estimates," "plans," "expects," "attempts," "intends," "anticipates," "could,"
"may," "explore" 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 level of strength
of industry and market conditions and business activity being less than we
believe or weakening; a tightening by customers of their inventory levels; a
slowdown in sales; the continuance of a trend for electronics manufacturing to
move offshore; the level of effectiveness of the Company's business, investment
and marketing strategies, including those outside the Americas and particularly
in Asia; insufficient funds from operations, from the Company's Credit Facility
and from other sources (debt and/or equity) to support the Company's operations
or the inability of the Company to obtain additional financing when needed or on
terms acceptable to the Company; an increase in interest rates, including as a
result of an increase in pricing levels under its Credit Facility, interest rate
hikes by the Federal Reserve Board and/or an increase in the Company's average
outstanding borrowings; a reduction in the level of demand for products of its
customers including the level of growth of some of the new technologies
supported by the Company; deterioration in the relationships with existing
suppliers, particularly one of our largest suppliers; decreases in gross profit
margins, including decreasing margins resulting from the Company being required
to have aggressive pricing programs, an increasing number of low-margin, large
volume transactions, inventory oversupply conditions and/or increases in the
costs of goods; problems with telecommunication, computer and information
systems, including related to the completion of the installation of the new ERP
system and the effectiveness of the operation thereof, as well as the ultimate
total cost of installing and implementing the ERP system being materially
greater than expected; the inability of the Company to expand its product
offerings or obtain product during periods of allocation; the impact from
changes in accounting rules; adverse currency fluctuations; the adverse impact
of terrorism or the threat of terrorism on the economy; and the other risks
14
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
and factors detailed in this Form 10-Q and in the Company's Form 10-K for the
fiscal year ended December 31, 2004 and 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. The Company
undertakes no obligation to update publicly or revise any forward-looking
statements, business risks and/or uncertainties.
Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
The Company's Credit Facility bears interest based on interest rates tied to the
Federal funds rate, prime or LIBOR rate, any 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. For each 100 basis point fluctuation in the interest rates
charged on the Company's borrowings under its Credit Facility, interest expense
will increase or decrease by approximately $211,000 per quarter based on
outstanding borrowings at September 30, 2005. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources."
Controls and Procedures
-----------------------
Evaluation of Disclosure Controls and Procedures
------------------------------------------------
As of the end of the period covered by this report, we evaluated, under the
supervision and with the participation of our management, including our chief
executive officer and the chief financial officer, the effectiveness of the
design and operation of our "disclosure controls and procedures" (as defined in
the Securities Exchange Act of 1934, Rules 13a - 15(e) and 15d - 15(e)). Based
on this evaluation our management, including our chief executive officer and
chief financial officer, have concluded that as of the date of the evaluation
our disclosure controls and procedures were effective to ensure that all
material information required to be filed in this report has been made known to
them.
Changes In Internal Controls Over Financial Reporting
-----------------------------------------------------
There have been no changes in internal controls over financial reporting that
occurred during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
(a) On November 2, 2005, the Company held its 2005 annual meeting of
shareholders (the "Annual Meeting").
(b) One matter voted on at the Annual Meeting was the election of three
directors of the Company. The three nominees, who were existing directors
of the Company and nominees of the Company's Board of Directors, were
re-elected at the Annual Meeting as directors of the Company, receiving the
number and percentage of votes for election and abstentions as set forth
next to their respective names below:
Nominee for Director For Abstain
-------------------- --------- -------
Bruce M. Goldberg 3,331,455 90.3% 356,267 9.7%
Howard L. Flanders 3,324,071 90.1% 363,651 9.9%
Richard E. Siegel 3,335,900 90.5% 351,822 9.5%
15
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
The other directors whose term of office as directors continued after the
Annual Meeting are Paul Goldberg, Robin L. Crandell, Michael W. Forman and
Howard M. Pinsley.
(c) The following additional matters were separately voted upon at the Annual
Meeting and received the votes of the holders of the number of shares of
Common Stock and the percentage of total votes cast by holders represented
in person or by proxy at the Annual Meeting as indicated below:
Proposal to approve an extension of the term and expiration date of the
Company's Employees', Officers', Directors' Stock Option Plan, as
previously amended and restated (the "Option Plan"), to September 6, 2015
and to increase the number of shares of common stock reserved for issuance
under the Option Plan to 1,350,000 shares
For 856,090 54.7%
Against 686,058 43.8%
Abstain 23,656 1.5%
There were also 2,121,918 broker non-votes.
Proposal to ratify the selection of Lazar Levine & Felix LLP as the
Company's independent public accountants for the year ending December 31,
2005
For 3,585,023 97.2%
Against 73,385 2.0%
Abstain 29,314 .8%
(d) Not applicable.
ITEM 6. Exhibits
------- --------
Exhibits
--------
10.1 Amended and Restated All American Semiconductor, Inc.
Employees', Officers', Directors' Stock Option Plan, as
amended through November 2, 2005 (incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form 8-K for
events the earliest of which occurred November 2, 2005 and
filed on November 7, 2005).
31.1 Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.
ss. 1350.
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
ss. 1350.
16
ALL AMERICAN SEMICONDUCTOR, INC. AND SUBSIDIARIES
================================================================================
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 10, 2005 /s/ BRUCE M. GOLDBERG
--------------------------------------------
Bruce M. Goldberg, President and
Chief Executive Officer
(Duly Authorized Officer)
Date: November 10, 2005 /s/ HOWARD L. FLANDERS
--------------------------------------------
Howard L. Flanders, Executive Vice President
and Chief Financial Officer
(Principal Financial and Accounting Officer)
17