UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2005
All American Semiconductor, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-16207 59-2814714
(Commission File Number) (I.R.S. Employer
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
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On August 8, 2005, All American Semiconductor, Inc. (the "Company") entered into
a second amendment (the "Second Amendment") to the Credit Agreement dated May
14, 2003 (the "Credit Amendment") among the Company, as borrower, and Harris
N.A., successor by merger to Harris Trust and Savings Bank, as a lender and
administrative agent, U.S. Bank National Association, as a lender and co-agent,
and the other lenders party thereto (previously filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003),
as previously amended by the First Amendment to Credit Agreement (the "First
Amendment"), dated as of June 11, 2004 (previously filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004)
(the First Amendment and the Second Amendment, together with the Credit
Agreement, collectively the "Credit Facility").The Second Amendment provides,
among other things, for: an increase in the line of credit facility from $85
million to $100 million; an extension of the expiration date of the Credit
Facility from May 14, 2006 to May 31, 2009; improved pricing levels based on the
Company's debt service coverage ratio; an increase in the advance rate from 40%
to 50% on certain of the Company's inventory in determining the borrowing base
under the Credit Facility; a reduction in the debt service coverage ratio from
1.20:1.0 to 1.10:1.0 beginning with the quarterly period ending September 30,
2005; and for a reduction in the unused commitment fee to .15%. Borrowings under
the Credit Facility, after giving effect to the new pricing levels under the
Second Amendment, 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 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 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. 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) and 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 Facility as well
as a minimum debt service coverage ratio and a minimum inventory turnover level,
each tested on a quarterly basis.
The Company also issued a press release on August 10, 2005 announcing its
entering into the Second Amendment, a copy of which is also filed herewith and
incorporated herein by this reference.
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The foregoing is a brief description of the Credit Facility, including the
changes provided by the Second Amendment, and is qualified in its entirety by
reference to the Credit Agreement (previously filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and
incorporated herein by this reference), as amended by the First Amendment
(previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004 and incorporated herein by this reference)
and the Second Amendment (filed as Exhibit 10.1 to this report and incorporated
herein by this reference). The Second Amendment was executed on August 8, 2005
and became effective as of that date.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this report is incorporated by
reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Exhibit Description
----------- -------------------
10.1 Second Amendment to Credit Agreement,
dated as of August 8, 2005, among the
Company, as borrower, and Harris N.A.,
successor by merger to Harris Trust and
Savings Bank, as a lender and
administrative agent, U.S. Bank National
Association, as a lender and co-agent,
and the other lenders party thereto.
99 Press Release dated August 10, 2005.
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SIGNATURES
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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 hereunto duly authorized.
ALL AMERICAN SEMICONDUCTOR, INC.
Date: August 10, 2005 By: /s/ HOWARD L. FLANDERS
-----------------------------------
Howard L. Flanders
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Exhibit Description
----------- -------------------
10.1 Second Amendment to Credit Agreement,
dated as of August 8, 2005, among the
Company, as borrower, and Harris N.A.,
successor by merger to Harris Trust
and Savings Bank, as a lender and
administrative agent, U.S. Bank
National Association, as a lender and
co-agent, and the other lenders party
thereto.
99 Press Release dated August 10, 2005.
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