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interest rates. Prior to October 2002, the interest rate exposure was managed by an interest rate swap used to fix the interest on a portion of the Revolver. This interest rate swap was terminated in October 2002. During Fiscal 2003, total interest-bearing debt on the Facilities decreased by $29.0 million. The decrease primarily represents the repayment of borrowings against the Asset Securitization with cash generated from working capital. The lower borrowing level can be primarily attributed to lower working capital needs. The Company fully anticipates that borrowings on the 2003 Revolver will increase when the Company begins to expand its business and when the economy begins to recover. 

In addition to the 2003 Revolver, the Company has approximately $131.0 million principal amount of 9.5% Senior Notes (the ‘‘Notes’’) due August 2006 and $143.7 million of 6.75% Mandatorily Redeemable Convertible Trust Preferred Securities. In March 2003, the Company submitted a Tender Offer to purchase the Notes for cash, at a price of $1,047.50 per $1,000 principal amount. The Company received valid tenders for and repurchased Senior Notes approximating $19.0 million. The premium paid, as well as the disposition of other financing fees, resulted in a charge of approximately $1.2 million, which is included in the ‘‘Other (Income) Expense’’ section of the accompanying Consolidated Statement of Operations for the year ended March 31, 2003. 

In March and April 1998, the Company’s wholly-owned subsidiary, the Pioneer-Standard Financial Trust (the ‘‘Pioneer-Standard Trust’’), issued 2,875,000 shares relating to $143.7 million of 6.75% Mandatorily Redeem- able Convertible Trust Preferred Securities (‘‘the Trust preferred securities’’). The sole asset of the Pioneer- Standard Trust is $148.2 million aggregate principal amount of 6.75% Junior Convertible Subordinated Deben- tures due March 31, 2028. The Company has executed a guarantee providing a full and unconditional guarantee of the Pioneer-Standard Trust’s obligations under the Trust preferred securities. A portion of the Company’s cash flow from operations is dedicated to servicing these aggregate obligations and is not available for other purposes. However, the Company may cause the Pioneer-Standard Trust to delay payment of these servicing obligations for 20 consecutive quarters. During such deferral periods, distributions, to which holders of the Trust preferred securities are entitled, will compound quarterly, and the Company may not declare or pay any dividends on its Common Shares. The Company does not currently anticipate suspending these obligations. After March 31, 2003, the Trust preferred securities are redeemable, at the option of the Company, for a redemption price of 103.375% of par reduced annually by 0.675% to a minimum of $50 per Trust preferred security. The Trust preferred securities are subject to mandatory redemption on March 31, 2028, at a redemption price of $50 per Trust preferred security. In June 2001, 4,761 shares of the Trust preferred securities were converted at an exercise price of $15.75 increasing equity by $0.1 million. Subsequent to March 31, 2003, the Company repurchased 365,000 Trust preferred securities, approximating $18.3 million face value, for a cash purchase price of approxi- mately $17.0 million. The Company does not currently anticipate any further redemption of these Trust preferred securities, however, as opportunities arise the Company may purchase certain of the Trust preferred securities on the open market. 

The ratio of debt to total capital, defined as current and long-term debt plus the Trust preferred securities (combined ‘‘Debt’’) divided by Debt plus Shareholders’ Equity, is 48% at March 31, 2003 compared with 49% one year ago. The Company is working to opportunistically reduce this ratio to 25-35%. 

A summary of the contractual obligations of the Company follows. As of March 31, 2003, the only contractual debt obligations of the Company are the Notes and the Trust preferred securities. There are no unfavorable credit rating triggers in any of the Company’s financing agreements which would increase the cost of debt. 

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Capital expenditures were $8.4 million in 2003 and primarily reflected ongoing initiatives designed to improve efficiencies through IT enhancements. Management estimates that capital expenditures will be approximately $6.0 to $8.0 million in Fiscal 2004. 

