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## 2 

## DISCONTINUED OPERATIONS 

On February 28, 2003, the Company completed the sale of substantially all of the assets and liabilities of its Industrial Electronics Division (‘‘IED’’), which distributed semiconductors, interconnect, passive and electromechanical components, power supplies and embedded computer products in North America and Ger- many. In addition, as of the sale date, the Company announced its strategic transformation to focus solely on its enterprise computer systems business. Cash proceeds from the sale of IED are estimated to total $240 million, subject to purchase price adjustments, of which $227 million has been collected as of March 31, 2003. The assets sold consisted primarily of accounts receivable and inventories and the Company’s shares of common stock in World Peace Industrial Co. Ltd, (‘‘WPI’’), an Asian distributor of electronic components. The buyer also assumed certain liabilities. 

As a result of the sale of the Company’s shares of WPI stock, the Company realized a $1.0 million loss on the sale of this investment, as unrealized losses that had been previously recorded in ‘‘Accumulated other compre- hensive loss’’ on the accompanying Consolidated Balance Sheets were charged to operations. The loss was included in the gain on sale of net assets within ‘‘Income from Discontinued Operations’’ on the accompanying Statement of Operations for the year ended March 31, 2003. 

In December 2001, Pioneer-Standard acquired a majority interest in Aprisa, Inc. (‘‘Aprisa’’), an Internet-based start-up corporation, which created customized software for the electronic components market. As a result of the IED sale and Pioneer-Standard’s subsequent decision to become solely an enterprise computer systems busi- ness, Aprisa ceased to provide strategic value to the Company and the operations were discontinued. 

The disposition of IED and discontinuation of Aprisa’s operations represent a disposal of a ‘‘component of an entity’’ as defined by SFAS No. 144. Accordingly, the Company’s consolidated financial statements and related notes have been presented to reflect IED and Aprisa as discontinued operations for all periods. 

Included in Income (Loss) from Discontinued Operations are net sales of $758.4 million, $1.0 billion and $1.5 billion for the years ended March 31, 2003, 2002 and 2001, respectively. In addition, the Company has allocated interest to discontinued operations based on net assets. 

For the years ended March 31, 2003, 2002 and 2001, the Company reported Income from Discontinued Operations of $18.8 million, net of $9.3 million in income taxes, a Loss from Discontinued Operations of $4.1 million, net of $3.1 million in income taxes and Income from Discontinued Operations of $52.9 million, net of $29.1 million in income taxes, respectively. The Income (Loss) from Discontinued Operations for the periods ended March 31, 2002 and 2001 consisted of normal operating results of IED and Aprisa. For the year ended March 31, 2003, Income from Discontinued Operations was comprised of the following: 

(Dollars in Thousands) 

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Severance costs relate to the severance and other employee benefit costs to be paid to approximately 525 employees previously employed by IED and not re-hired by the purchaser. Facilities costs represent the present value of qualifying exit costs, offset by an estimate for future sublease rentals provided by external brokers, for approximately 30 vacated locations no longer required as a result of the sale. These leases have expiration dates extending to 2010. 

