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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

For the transition period from ________________________ to ________________________.

Commission file number  0-5734

Agilysys, Inc.
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (440) 720-8500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X  No      

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  X  No      

Indicate the number of shares outstanding of each of the issuer’s classes of Common Shares, as of the latest practical date: Common Shares, without par value, as of November 1, 2003: 32,115,614. (Includes 3,589,940 Common Shares subscribed by the Agilysys Stock Benefit Trust.)

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AGILYSYS, INC.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

See accompanying notes to unaudited condensed consolidated financial statements.

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See accompanying notes to unaudited condensed consolidated financial statements.

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During the six-month period ended September 30, 2002, investments in available for sale securities depreciated in value by $2.1 million. Such securities were sold in September 2003.

See accompanying notes to unaudited condensed consolidated financial statements.

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AGILYSYS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(Table Amounts in Thousands, Except Per Share Data)

1.     NAME CHANGE

On September 12, 2003, the shareholders of Pioneer-Standard Electronics, Inc. approved an amendment to the Company’s Amended Articles of Incorporation to change the Company’s name to Agilysys, Inc. The name change became effective on September 15, 2003. Prior to September 16, 2003, Agilysys, Inc. traded on the National Association of Securities Dealers and Automated Quotations (NASDAQ) Stock Market as Pioneer-Standard Electronics, Inc. under the symbol “PIOS.” On September 16, 2003, Agilysys, Inc. began trading on the NASDAQ Stock Market under the symbol “AGYS.” Agilysys, Inc. and its subsidiaries are referred to herein as the “Company.”

2.     BASIS OF PRESENTATION

Interim financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

The condensed consolidated balance sheet as of September 30, 2003, the condensed consolidated statements of operations and the condensed consolidated statements of cash flows for the periods ended September 30, 2003, and September 30, 2002, have been prepared by the Company without audit. The financial statements have been prepared on the same basis as those in the audited annual financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations, financial position, and cash flows have been made. The results of operations for the three and six-month periods ended September 30, 2003 are not necessarily indicative of the operating results for the full year.

Reclassifications. Certain reclassifications have been made to conform prior years’ data to the current presentation. These reclassifications had no effect on reported earnings.

Summary of Significant Accounting Policies. A detailed description of our significant accounting policies can be found in the Company’s audited financial statements for the year ended March 31, 2003, included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission.

3.     ACQUISITION

On September 30, 2003, pursuant to an Agreement and Plan of Merger entered into as of September 15, 2003, the Company completed the acquisition of Kyrus Corporation (“Kyrus”). The acquisition was accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations.” Accordingly, the estimated fair values of assets acquired and liabilities assumed in the acquisition are included in the Company’s Unaudited Condensed Consolidated Balance Sheet as of September 30, 2003.

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Kyrus, based in Greenville, South Carolina is an IBM® Master Distributor and Premier Business Partner in retail store solutions. The Company acquired Kyrus as part of its recently announced strategic plan to focus solely on the enterprise solutions business. The acquisition of Kyrus establishes the Company as the leading provider of IBM retail solutions and services, across two major market segments, supermarkets and chain drug.

As consideration for all the outstanding common stock of Kyrus, the Company paid $29.6 million ($28.7 million, net of cash acquired), including legal fees and other costs directly related to the acquisition. The purchase was funded through the Company’s available cash. As a result of the purchase, the Company recorded approximately $29 million of goodwill on its Unaudited Condensed Consolidated Balance Sheet at September 30, 2003. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the goodwill will not be amortized and will be tested for impairment using a fair value approach at least annually.

The Company is in the process of finalizing its plans to integrate the Kyrus operations. Such activities may include exiting duplicative facilities and the involuntary termination or relocation of certain employees. The Company’s plans in this regard will be finalized in the third quarter of Fiscal 2004. The acquisition-related restructuring liabilities will be accounted for under EITF 95-3 and therefore included in the purchase price allocation of the cost to acquire Kyrus. The Company has accrued a preliminary estimate of $1.0 million relating to the involuntary termination of Kyrus employees. The workforce reductions eliminated 71 operations and administrative positions. Any changes to this estimate will result in an increase or decrease to the accrued restructuring charges and a corresponding increase or decrease to goodwill.

4.     RECENT ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This Statement, the provisions of which are to be applied prospectively, is effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 on July 1, 2003, had no impact on the Company’s consolidated financial statements.

In April 2001, the FASB issued EITF No. 01-03, “Accounting in a Purchase Business Combination for Deferred Revenue of an Acquiree.” EITF 01-03 provides guidance regarding the recognition of deferred revenue as a liability with respect to business combinations. In March 2002, the FASB reached consensus that an acquiring entity should recognize a liability related to a revenue arrangement of an acquired entity only if it has assumed a legal obligation to provide goods, services, or other consideration to a customer. The amount assigned to this liability should be based on its fair value at the date of the acquisition. The Company adopted the guidelines set forth in EITF 01-03 to record deferred revenues purchased in connection with the Kyrus acquisition in September 2003. (See Note 3).

5.     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 and other electronic components in North America and Germany. Cash proceeds from the sale of IED are estimated to total $240 million, subject to purchase price adjustments, of which approximately $227 million has been collected as of September 30, 2003. The assets sold consisted primarily of accounts

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receivable and inventories and the Company’s shares of common stock in World Peace Industrial Co. Ltd, an Asian distributor of electronic components. The buyer also assumed certain liabilities.

In addition, as of the sale date, the Company announced its strategic transformation to focus solely on its enterprise computer solutions business. As a result, Agilysys’ majority owned subsidiary, Aprisa, Inc. (“Aprisa”), an Internet-based start-up corporation, which created customized software for the electronic components market 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, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, the Company’s consolidated financial statements and related notes have been presented to reflect IED and Aprisa as discontinued operations for all periods.

For the six-month periods ended September 30, 2003 and 2002, the Company realized a loss from discontinued operations of $1.1 million, net of $0.6 million in income taxes and income from discontinued operations of $5.0 million, net of $2.1 million in income taxes, respectively.

In the fourth quarter of Fiscal 2003, Agilysys recognized a pre-tax gain on the sale of IED of $53.5 million. This gain was offset by the following charges which relate solely to the discontinued operations and assets of IED: