MicroAge, Inc.

MicroAge, Inc. is a leading franchiser of computer stores and distributor of microcomputer systems. The company is headquartered in Tempe, Arizona, incorporated in Delaware, and has a growing international network of outlets specializing in the sale, support and servicing of various office information and automation products. MicroAge distributes microcomputers, workstations, peripherals and software. The MicroAge Computer Store Network specializes in the sale, support and servicing of information technology products, consisting primarily of standalone and multi-user microcomputer systems and software, networking and telecommunications equipment and related services for business applications.

As of September 1992, MicroAge had 1,245 locations in operation, consisting of 585 domestic franchises, 167 international franchises, six company-owned locations and 487 affiliated resellers. These stores provide products and services to businesses of all sizes. Sales to large national business are developed through the combined efforts of company-owned sales locations, franchised locations and the company's National Accounts division.

The company's initial public stock offering was in 1987 when 1,150,000 common shares were issued at $10.625 per share. The company does not pay a cash dividend, and is prohibited from paying any dividend under its credit agreements without the bank's consent.

As illustrated by the following chart, the company's sales have risen steadily since 19

in shows the after-tax profit on revenues. A low sales margin suggests that the company's costs may be excessive, or that its pricing strategy should be re-evaluated. Productivity of assets measures the company's return against its investment. As the following chart illustrates, the profitability measurements for MicroAge have steadily fallen since 1988. These figures may indicate that the company needs to take steps to reduce costs (which it has done) or to re-evaluate its pricing strategy. Another useful measurement of a company's standing is that of cash flow. The cash flow measure the amount of discretionary funds over and above expenses available for use by the company. Positive cash flow indicates that there are additional funds available for investment, either within the company or in outside interests, while a negative cash flow indicates that the company must borrow funds in order to continue operations. MicroAge has maintained a positive cash flow for the past five years, and posted a significant increase in its cash flow from 1991 to 1992. The following chart illustrates the cash flow for MicroAge for the past five years. Since MicroAge is a publicly held company (traded on the NASDAQ system), the

Category: Economics - M