distributors as well as with some of its suppliers. Several of the Company’s largest distribution competitors are significantly larger and have national and international distribution presence. Also, it is possible that certain suppliers may decide to distribute products directly, which would further heighten competitive pressures. With the divestiture of IED, Pioneer-Standard has the flexibility to make acquisitions without immediately increas- ing leverage or diluting the holdings of existing shareholders. The Company reviews acquisition prospects that could accelerate the growth of the business by expanding the Company’s customer base, extending the Com- pany’s reach into new markets and/or broadening the range of solutions offered by the Company. Pioneer- Standard’s continued growth depends in part on its ability to find suitable acquisition candidates and to consum- mate strategic acquisitions. To proceed, the prospect must have an appropriate valuation based on financial performance relative to acquisition price. However, acquisitions always present risks and uncertainties that could have a material adverse impact on the Company’s business and results of operations. As of March 31, 2003, the Company had 1,061 employees. The Company is not a party to any collective bargaining agreements, has had no strikes or work stoppages and considers its employee relations to be excellent. Pioneer-Standard sells its products principally in the United States and Canada. Non-U.S. and Canada sales are not a significant portion of the Company’s sales. The Company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports available free of charge through its Internet site (http://www.pioneerstandard.com) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (‘‘SEC’’). The information posted on the Com- pany’s Internet site is not incorporated into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company owns a 102,500 square-foot office facility located in Solon, Ohio, which houses certain sales, marketing, operational accounting and information system functions associated with the enterprise computer systems business. In addition, the Company owns a 106,000 square-foot facility, located in Twinsburg, Ohio. The Twinsburg facility housed the Company’s Industrial Electronics Distribution Center. This location is now vacant and held for sale as a result of the Company’s divestiture of IED. Certain of the Company’s corporate offices are located in a 60,450 square-foot facility in Mayfield Heights, Ohio, for which the Company entered into an 11-year lease in April 1999. The Company’s operations occupy a total of approximately 622,000 square feet, with the majority, approximately 494,000 square feet, devoted to product distribution facilities and sales offices. Of the approximately 622,000 square feet occupied, 102,500 square feet are owned and 519,500 square feet are occupied under operating leases. The Company’s facilities of 100,000 square feet or larger, as of March 31, 2003, are set forth in the table below. The Company’s major leases contain renewal options for periods of up to 10 years. For information concern- ing the Company’s rental obligations, see Note 6 to the Consolidated Financial Statements contained in Part IV hereof. The Company believes that its distribution and office facilities are well maintained, are suitable and provide adequate space for the operations of the Company. Growth through acquisitions Employees Distribution Item 2. Properties Access to information 4 Type of Approximate Leased or Location Facility Square Footage Owned Solon, Ohio Distribution 224,600 Leased Solon, Ohio Office Facility 102,500 Owned Twinsburg, Ohio Distribution 106,000 Owned