All American Semiconductor Reports Second Quarter Results; Highest Quarterly Sales Level Since 2001; 11.5% Year Over Year Quarterly Sales Increase and 4.8% Sequential Increase; Losses Narrowed to $255,000 for Quarter.MIAMI Miami, cities, United States Miami (mīăm`ē, –ə). 1 City (1990 pop. 358,548), seat of Dade co., SE Fla., on Biscayne Bay at the mouth of the Miami River; inc. 1896. -- All American Semiconductor, Inc. (Nasdaq:SEMI), a leading distributor of electronic components, today announced its results for the second quarter of 2006. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter ended June 30, 2006 were $124.0 million, up from net sales of $111.2 million for the same period of 2005. Income from operations was $1.5 million for the second quarter of 2006, compared to $1.6 million for the second quarter of last year. Interest expense increased to $1.9 million for the second quarter of 2006 from $1.1 million for the same period of 2005. The Company recorded a net loss for the second quarter of 2006 in the amount of $255,000 (or $(.06) per share (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. )), compared to net income of $308,000 (or $.08 per share (diluted)) for the second quarter of 2005. For the first half of 2006, net sales were $242.3 million, compared to net sales of $205.5 million for the first half of 2005. Income from operations was $360,000 for the first six months of 2006, compared to $2.7 million for the same period of 2005. Interest expense increased to $3.5 million for the first half of 2006 from $2.2 million for the same period of 2005. For the first half of 2006 the Company recorded a net loss of $2.0 million (or $(.49) per share (diluted)) compared to net income of $369,000 (or $.09 per share (diluted)) for the 2005 period. Bruce M. Goldberg, President and Chief Executive Officer of All American, stated, "We are pleased that we were able to achieve 11.5% growth in sales for the second quarter of 2006 and our fifth consecutive quarterly increase in sales. Sales for the second quarter represented the highest quarterly sales level since the first quarter of 2001. The increase in sales reflects favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. industry conditions, opportunities created from the ongoing consolidation in our industry and gains resulting from the Company's growth strategies." "While the implementation of a new enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. (ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ) system which was placed into service in February of 2006 continues to have a material adverse impact on our operations and our results, we did achieve a significant reduction in our quarterly losses in the second quarter as compared to the first quarter of 2006. Much of the expenses incurred in connection with the new ERP system during the first six months of 2006 are non-recurring in nature but are expected to continue for the next few periods. In the first half, the Company also incurred recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. expenses for maintenance and further development expenses of the new system. "While the new ERP system has had a severe impact on our results so far this year, we are making marked progress. "Also having a significant impact on the results for the first half of 2006 is a non-recurring accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for severance pay Severance Pay Compensation that an employer gives to someone who is about to lose their job. Notes: Severance pay is not always paid to employees. It depends on the situation in which the employee is losing their job and whether legislation requires severance to be paid. and certain bad debt adjustments and write-offs that occurred in the first quarter. Profitability in the first six months was also impacted by the Company's strategic investment in expansion through the addition of personnel in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and Asia in order to take advantage of the continuing industry consolidation, continuing trends for business to transfer outside of North America and to address an overall improvement in conditions within the industry. Results for the first half of 2006 were also impacted by a significant increase in interest expense associated with increases in interest rates and increased borrowings to support the growth in inventory and receivables resulting from sales and backlog growth as well as ERP issues. "Our backlog of customer orders, which was $69 million at December 31, 2004, had increased significantly to $89 million by December 31, 2005 and $106 million as of June 30, 2006. As of July 31, 2006, our backlog was down slightly to $105 million. While our inventory levels have grown to support this significant increase in backlog, it is difficult to determine how strong the balance of 2006 will be as booking activity slowed in July." All American is now recognized as the nation's 4th largest distributor of semiconductors, the 8th largest electronic components distributor overall in the U.S. and the 10th largest global distributor of electronic components. The Company has offices in 36 strategic locations throughout North America, as well as operations in both Asia and Europe. To the extent that this press release discusses future performance, expectations, beliefs or intentions about our sales, gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. , markets, future operating results or investments in the growth of our business or otherwise makes statements about our new ERP system and anticipated future expenses and future impact on operations related to such ERP system, gains resulting from the Company's growth strategy and the current or future market or industry conditions or trends including continuing industry consolidation and improvement, the statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially from the statements made. Factors that could adversely affect the Company's future results, performance or achievements include, without limitation: the failure of the new ERP system to improve or to be fully and successfully implemented as expected; weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. industry and market conditions; a tightening by
customers of their inventory levels; a slowdown For articles with similar titles, see Slow Down (disambiguation).A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in sales; the continuance The adjournment or postponement of an action pending in a court to a later date of the same or another session of the court, granted by a court in response to a motion made by a party to a lawsuit. of a trend for electronics manufacturing This article presents a typical manufacturing process of an electronic assembly. Component manufacturing Components such as resistors, capacitors and integrated circuits are generally made by specialized contractors. to move offshore; the level of effectiveness of the Company's business and marketing strategies, including those outside North America and particularly in Asia; insufficient funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. , from the Company's credit facility because of borrowing base, financial covenant or other limitations or otherwise and from other sources (debt and/or equity) to support the Company's operations or the inability of the Company to obtain additional financing at all when needed or on terms acceptable to the Company; an increase in interest rates, including as a result of increased pricing levels under its credit facility and/or interest rate increases 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 de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the relationships with existing suppliers, particularly one of our largest suppliers; failure to improve or decreases in gross profit margins, including decreasing margins resulting from the implementation of the new ERP system, the Company being required to have aggressive pricing programs, an increasing number of low-margin, large volume transactions, inventory oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies conditions and/or increases in the costs of goods; problems with telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. , computer and information systems; the inability of the Company to expand its product offerings or obtain product during periods of allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as ; the impact from changes in accounting rules including the new accounting rules on stock-based compensation; adverse currency fluctuations; the adverse impact of terrorism or the threat of terrorism on the economy; and the other uncertainty, risks and factors including those detailed in the Company's reports on Forms 10-K and Forms 10-Q and other 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The Company undertakes no obligation to update publicly or revise any forward-looking statements, business risks and/or uncertainties.
ALL AMERICAN SEMICONDUCTOR, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands
except per share amounts)
Quarters Six Months
Periods Ended June 30 2006 2005 2006 2005
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Net Sales $ 123,999 $ 111,214 $ 242,311 $ 205,523
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Income from Operations $ 1,472 $ 1,629 $ 360 $ 2,748
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Net Income (Loss) $ (255) $ 308 $ (1,968) $ 369
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Earnings (Loss) Per Share:
Basic and Diluted $ (.06) $ .08 $ (.49) $ .09
========== ========== ========== ==========
Average Shares:
Basic 3,983,561 3,926,791 3,980,127 3,919,620
========== ========== ========== ==========
Diluted 3,983,561 4,105,271 3,980,127 4,118,387
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