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SEC Filings

10-Q
LIQUIDITY SERVICES INC filed this Form 10-Q on 02/06/2015
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Table of Contents

 

Changes in Cash Flows: Three Months Ended December 31, 2014 Compared to Three Months Ended December 31, 2013

 

Net cash provided by operating activities was $13.1 million for the three months ended December 31, 2014 and $4.9 million for the three months ended December 31, 2013. For the three months ended December 31, 2014, net cash provided by operating activities primarily consisted of a net loss of $64.1 million, depreciation and amortization expense of $3.2 million, stock compensation expense of $2.6 million, impairment of goodwill and long-lived assets of $96.2 million, inventory decrease of $.8.1 million, a net decrease in accounts receivable and prepaid assets of $2.3 million, a net decrease in accounts payable, accrued expenses and other liabilities of $13.0 million, provisions for inventory allowance, doubtful accounts, and incremental tax from exercises of common stock options of $0.1 million, net, and deferred tax benefit of $22.1 million as a result of the impairment of goodwill and long-lived assets.  For the three months ended December 31, 2013, net cash provided by operating activities primarily consisted of net income of $7.1 million, depreciation and amortization expense of $4.4 million, stock compensation expense of $3.7 million, and a net increase in accounts payable, accrued expenses and other liabilities of $0.4 million, offset in part by a net increase in accounts receivable, inventory ($6.8 million of the total increase resulting from seasonality and growth in our retail vertical) and prepaid assets of $8.1 million and provisions for inventory allowance, doubtful accounts, and incremental tax from exercises of common stock options of $2.6 million, net.

 

Net cash used in investing activities was $1.6 million for the three months ended December 31, 2014 and $2.7 million for the three months ended December 31, 2013.  Net cash used in investing activities for the three months ended December 31, 2014 consisted primarily of capital expenditures of $1.6 million for purchases of equipment and leasehold improvements.  Net cash used in investing activities for the three months ended December 31, 2013 consisted primarily of capital expenditures of $2.7 million for purchases of equipment and leasehold improvements.

 

Net cash provided by financing activities was $0.2 million for the three months ended December 31, 2014 and $3.4 million for the three months ended December 31, 2013.  Net cash provided by financing activities for the three months ended December 31, 2014 consisted primarily of proceeds from the exercise of common stock options including the tax benefit of $0.2 million. Net cash provided by financing activities for the three months ended December 31, 2013 consisted primarily of proceeds from the exercise of common stock options including the tax benefit of $3.4 million.

 

Capital Expenditures.  Our capital expenditures consist primarily of computers and purchased software, office equipment, furniture and fixtures, and leasehold improvements. The timing and volume of such capital expenditures in the future will be affected by the addition of new customers or expansion of existing customer relationships. We expect capital expenditures to range from $8.0 million to $9.0 million in the fiscal year ending September 30, 2015. We intend to fund those expenditures primarily from operating cash flows. Our capital expenditures for the three months ended December 31, 2014 were $1.6 million. As of December 31, 2014, we had no outstanding commitments for capital expenditures.

 

Senior credit facility.  We maintain a $75.0 million senior credit facility due May 31, 2015. The senior credit facility bears an annual interest rate of 30 day LIBOR plus 1.25%. As of December 31, 2014, we had no outstanding indebtedness under our senior credit facility and our borrowing availability was $67.2 million due to issued letters of credit for $7.8 million; $1.0 million of our availability under this facility is set aside as a contractual obligation under our DoD Scrap Contract. The obligations under our senior credit facility are unconditionally guaranteed by us and each of our existing and subsequently acquired or organized subsidiaries (other than our subsidiary organized to service our DoD Scrap Contract) and secured on a first priority basis by security interests (subject to permitted liens) in substantially all assets owned by us, and each of our other domestic subsidiaries, subject to limited exceptions. The Agreement contains certain financial and non-financial restrictive covenants including, among others, the requirements to maintain a minimum level of earnings before interest, income taxes, depreciation and amortization (EBITDA) and a minimum debt coverage ratio. Our credit agreement contains a number of affirmative and restrictive covenants including limitations on mergers, consolidations and dissolutions, sales of assets, investments and acquisitions, indebtedness and liens, and dividends and other restricted payments. As of December 31, 2014, we were in full compliance with the terms and conditions of our credit agreement.

 

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