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SEC Filings

10-Q
LIQUIDITY SERVICES INC filed this Form 10-Q on 05/06/2016
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Table of Contents

 

Changes in Cash Flows: Six Months Ended March 31, 2016 Compared to Six Months Ended March 31, 2015

 

Net cash provided by operating activities was $24.7 million for the six months ended March 31, 2016 and $28.9 million for the six months ended March 31, 2015. The $4.2 million decrease in cash provided by operations between periods was primarily attributable to an overall increase in cash flows from changes in working capital of approximately $14.7 million offset by a decrease of approximately $18.9 million in net income including non-cash adjustments. For the six months ended March 31, 2016, net cash provided by operating activities primarily consisted of $34.7 million related to the recovery of prior year income taxes, netted with estimated taxes for fiscal 2016. This cash benefit resulted from the tax loss on the recent sale of the Jacobs Trading Company. Another significant change over prior year relates to the $29.3 million decrease in inventory during fiscal 2015 resulting from the loss of the Wal-Mart Agreement and the sale of isolated principal deals.

 

Net cash used in investing activities was $2.8 million for the six months ended March 31, 2016 and $5.1 million for the six months ended March 31, 2015.  Net cash used in investing activities for the six months ended March 31, 2016 consisted primarily of expenditures of $2.7 million for purchases of equipment and leasehold improvements.  Net cash used in investing activities for the six months ended March 31, 2015 consisted primarily of capital expenditures of $5.1 million for purchases of equipment and leasehold improvements.

 

Net cash used by financing activities was $0.2 million for the six months ended March 31, 2016 and net cash provided by financing activities was $0.2 million for the six months ended March 31, 2015.  Net cash provided by financing activities for the six months ended March 31, 2015 consisted primarily of proceeds from the exercise of common stock options including the tax benefit of $0.2 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 $9.5 million in the fiscal year ending September 30, 2016. We intend to fund those expenditures primarily from operating cash flows. Our capital expenditures for the six months ended March 31, 2016 were $2.7 million. As of March 31, 2016, we had no outstanding commitments for capital expenditures.

 

Effective March 25, 2016, the Company terminated its $75 million a senior credit facility.  Borrowings under the Agreement bore interest at an annual rate equal to the 30 day LIBOR rate plus 1.25% (1.608% at December 31, 2015) due monthly.  The Company’s borrowing availability under the Facility as of December 31, 2015 was $37.5 million.  There were no outstanding borrowings under the Facility at the time of its termination.

 

We believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors including our rate of revenue growth, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the development and deployment of new marketplaces, the introduction of new value added services and the costs to establish additional distribution centers. Although we are currently not a party to any definitive agreement with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders. Additional debt would result in increased interest expense and could result in covenants that would restrict our operations. There is no assurance that such financing, if required, will be available in amounts or on terms acceptable to us, if at all.

 

Off-Balance Sheet Arrangements

 

We do not have any transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Interest rate sensitivity. We had no debt as of March 31, 2016, and thus do not have any related interest rate exposure. Our investment policy requires us to invest funds in excess of current operating requirements. The principal objectives of our investment activities are to preserve principal, provide liquidity and maximize income consistent with minimizing risk of material loss.

 

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