UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)                             December 6, 2007

 

LIQUIDITY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

0-51813

 

52-2209244

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

 

 

 

 

 

 

 

 

 

1920 L Street, N.W., 6th Floor, Washington, D.C.

 

20036

(Address of principal executive offices)

 

(Zip Code)

 

 

Registrant’s telephone number, including area code                     (202) 467-6868

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 



Item 2.02.

 

Results of Operations and Financial Condition.

 

On December 6, 2007, Liquidity Services, Inc. (the “Company”) announced its financial results for the fiscal year ended September 30, 2007 and the quarter ended September 30, 2007.  The full text of the press release (the “Press Release”) issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in the Press Release shall be considered “furnished” pursuant to Item 2.02 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of the Company’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing.

 

Item 9.01.

 

Financial Statements and Exhibits

 

 

 

 

 

(d)

Exhibits

 

 

 

 

 

99.1

Press Release dated December 6, 2007

 

 

 

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

LIQUIDITY SERVICES, INC.

 

 

(Registrant)

 

 

Date:  December 6, 2007

By:

/s/ James E. Williams

 

Name:

James E. Williams

 

Title:

Vice President, General Counsel and

 

 

Corporate Secretary

 

 

 

 

 



 

Exhibit Index

 

Exhibit No.

 

Description

 

 

 

 

 

99.1

 

Press Release dated December 6, 2007

 

 

 

 

 


Exhibit 99.1

 

LIQUIDITY SERVICES, INC. ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2007 FINANCIAL RESULTS

 

–  Fiscal year revenue of $198.6 million up 34% – Gross Merchandise Volume (GMV) of $233.6 million up 35% -
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $20.4 million up 36% –

 

 

– Fourth quarter revenue of $51.7 million up 30% – Gross Merchandise Volume (GMV) of $58.1 million up 27% -
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $5.8 million up 43% –

 

WASHINGTON – December 6, 2007 - Liquidity Services, Inc. (NASDAQ: LQDT; www.liquidityservicesinc.com) today reported its financial results for its fiscal year (FY-07) and fourth quarter (Q4-07) ended September 30, 2007. Liquidity Services, Inc. is a leading online auction marketplace for wholesale, surplus and salvage assets.

 

Liquidity Services, Inc. (LSI or the Company) reported record consolidated FY-07 revenue of $198.6 million, a growth rate of approximately 34% over the prior year. Adjusted EBITDA for FY-07 was a record of $20.4 million, a growth rate of approximately 36% over the prior year. FY-07 GMV, the total sales volume of all merchandise sold through the Company’s marketplaces during a given period, was a record $233.6 million, a growth rate of approximately 35% over the prior year.

 

The Company reported consolidated Q4-07 revenue of $51.7 million, a growth rate of approximately 30% over the prior year’s comparable period. Adjusted EBITDA for Q4-07 was $5.8 million, a growth rate of approximately 43% over the prior year’s comparable period. GMV was $58.1 million for Q4-07, a growth rate of approximately 27% over the prior year’s comparable period.

 

Net income in FY-07 was a record $11.0 million or $0.39 diluted earnings per share. Adjusted net income in FY-07 was a record $12.2 million, a growth rate of approximately 46% over the prior year, or $0.43 adjusted diluted earnings per share, a growth rate of approximately 34% over the prior year.

 

Net income in Q4-07 was a record $3.2 million or $0.11 diluted earnings per share. Adjusted net income in Q4-07 was a record $3.5 million, a growth rate of approximately 45% over the prior year’s comparable period, or $0.12 adjusted diluted earnings per share, a growth rate of approximately 33% over the prior year’s comparable period.

 

LSI enables buyers and sellers to transact in an efficient, automated online auction environment. The Company’s marketplaces provide professional buyers access to a global, organized supply of wholesale, surplus and salvage assets presented with digital images and other relevant product information. Additionally, LSI enables its corporate and government sellers to enhance their financial return on excess assets by providing a liquid marketplace and value-added services that are integrated into a single offering. The Company organizes its products into categories across major industry verticals such as consumer electronics, general merchandise, apparel, scientific equipment, aerospace parts and equipment, technology hardware, and scrap metals. The Company’s online auction marketplaces are www.liquidation.com, www.govliquidation.com and www.liquibiz.com. LSI also operates a wholesale industry portal, www.goWholesale.com, that connects advertisers with buyers seeking products for resale and related business services.

 

The Company’s ability to create liquid marketplaces for wholesale, surplus and salvage assets generates a continuous flow of goods from its corporate and government sellers. This flow of goods in turn attracts an increasing number of professional buyers to the marketplaces.

 

“FY-07 was another strong year for LSI as our commercial business and our scrap business with the Department of Defense (DoD), continued to post impressive gains,” said Bill Angrick, Chairman and CEO of LSI. “Our performance during the fiscal year reflected solid execution of our business strategy as our commercial business grew approximately 137% over the prior year period. Our commercial GMV has grown more than five-fold during the past two years. Our scrap business, which grew approximately 40% over the prior year also contributed to strong growth in GMV and Adjusted EBITDA during the fiscal year and fourth quarter. We believe FY-07 results demonstrate that large organizations are increasingly relying on our online platform and service offerings to realize greater returns and efficiencies in the tracking and sale of surplus and salvage assets. Our business development activity remains strong and we continue to develop and test capabilities designed to meet the long-term needs of our clients and support a much larger commercial business. Our buyer marketplace continues to deliver strong results for our sellers as we averaged over 5 auction participants per completed transaction during the entire fiscal year.”

 

– more –

 



 

Business Outlook

 

The following forward-looking statements are based on current business trends and our current operating environment, including (i) the reengineering of certain business and inventory processes in our Surplus business with the DoD, which has resulted in a slowdown of property received by us from the DoD and our expectation that there will be a modest increase in the flow of goods received by us from the DoD over the next quarter and fiscal year and (ii) our belief that we have yet to realize the full potential of our distribution center network, personnel, and value-added services necessary to support a much larger commercial business in the future, which has resulted in less than our target profitability. Our results may be materially affected by changes in business trends and our operating environment, as well as by other factors, including investments we expect to make in our infrastructure and value-added services to support new business in both commercial and public sector markets.

 

Our Scrap contract with the DoD includes an incentive feature, which can increase the amount of profit sharing distribution we receive from 23% up to 25%. Payments under this incentive feature are based on the amount of scrap we sell for the DoD to small businesses during the preceding 12 months as of June 30th of each year. We are eligible to receive this incentive in each year of the term of the Scrap contract and have assumed for purposes of providing guidance regarding our projected financial results for fiscal year 2008 that we will again receive this incentive payment.

 

Under our Surplus contract there are incentive features that allow us to earn up to an additional 4.5% of the profit sharing distribution above our new base rate of 26%, which began June 1, 2007. This incentive will be measured quarterly beginning fiscal year 2008. For the fiscal year 2007 measurement period, we received a performance payment of approximately $1,500,000 in the quarter ended September 30, 2007. For the purposes of providing guidance regarding our projected financial results for the first quarter and fiscal year 2008, we have assumed that we will receive a portion of the Surplus contract incentive payments.

 

Our guidance adjusts EBITDA and Diluted EPS for the effects of the adoption of FAS 123(R), which we estimate to be approximately $1.2 million to $1.4 million per quarter for fiscal year 2008.

 

GMV – We expect GMV for fiscal year 2008 to range from $285 million to $295 million. We expect GMV for Q1-08 to range from $61 million to $63 million.

 

Adjusted EBITDA – We expect Adjusted EBITDA for fiscal year 2008 to range from $25.5 million to $26.5 million. We expect Adjusted EBITDA for Q1-08 to range from $5.2 million to $5.4 million.

 

Adjusted Diluted EPS – We estimate Adjusted Earnings Per Diluted Share for fiscal year 2008 to range from $0.53 to $0.55. In Q1-08, we estimate Adjusted Earnings Per Diluted Share to be $0.11.

 

– more –

 



 

Key FY-07 and Q4-07 Operating Metrics

 

Registered Buyers — At the end of FY-07, registered buyers totaled approximately 685,000, representing a 31% increase over the approximately 524,000 registered buyers at the end of FY-06.

 

Auction Participants — Auction participants, defined as registered buyers who have bid in an auction during the period (a registered buyer who bids in more than one auction is counted as an auction participant in each auction in which he or she bids), increased to 1,115,000 in FY-07, an approximately 12% increase over the approximately 993,000 auction participants in FY-06. Auction participants increased to 293,000 in Q4-07, an approximately 19% increase over the approximately 246,000 auction participants in Q4-06.

 

Completed Transactions — Completed transactions increased to approximately 212,000, an approximately 9% increase for FY-07 from the approximately 194,000 completed transactions in FY-06. In addition, we experienced a 24% increase in the average value of our transactions, over the same period, resulting from product mix, lotting and merchandising strategies, and buyer demand. Completed transactions increased to approximately 56,000, an approximately 17% increase for Q4-07 from the approximately 48,000 completed transactions in Q4-06. In addition, we experienced a 9% increase in the average value of our transactions, over the same period.

 

GMV and Revenue Mix — GMV and revenue continue to diversify due to the continued rapid growth in our commercial and scrap businesses. As a result, the percentage of GMV and revenue derived from the DoD Surplus Contract (under which our revenue is based on the profit-sharing model) during FY-07 decreased to 28.8% and 33.9%, respectively, compared to 48.3% and 56.6%, respectively, in the prior year period. The percentage of GMV and revenue derived from our commercial business, which includes the acquired STR business and our Liquidation.com marketplace, during FY-07 increased to 44.0% and 32.7%, respectively, from 25.0% and 10.2%, respectively, in the prior year period. The table below summarizes the GMV and revenue from our two significant contracts with the DoD (Surplus and Scrap), and our commercial and international businesses.

GMV Mix

 

 

 

FY-07

 

FY-06

 

Q4-07

 

Q4-06

 

Profit-Sharing Model:

 

 

 

 

 

 

 

 

 

Surplus

 

28.8

%

48.3

%

30.6

%

40.1

%

Scrap

 

23.5

%

22.6

%

22.8

%

30.1

%

Total Profit Sharing

 

52.3

%

70.9

%

53.4

%

70.2

%

 

 

 

 

 

 

 

 

 

 

Commercial Marketplaces:

 

 

 

 

 

 

 

 

 

Consignment Model

 

22.4

%

22.4

%

17.2

%

21.3

%

Purchase Model

 

21.6

%

2.6

%

26.3

%

4.2

%

Total Commercial Marketplaces

 

44.0

%

25.0

%

43.5

%

25.5

%

 

 

 

 

 

 

 

 

 

 

International and Other

 

3.7

%

4.1

%

3.1

%

4.3

%

Total

 

100.0

%

100.0

%

100.0

%

100.0

%

 

Revenue Mix

 

 

 

FY-07

 

FY-06

 

Q4-07

 

Q4-06

 

Profit-Sharing Model:

 

 

 

 

 

 

 

 

 

Surplus

 

33.9

%

56.6

%

34.4

%

46.3

%

Scrap

 

27.6

%

26.5

%

25.7

%

34.7

%

Total Profit Sharing

 

61.5

%

83.1

%

60.1

%

81.0

%

 

 

 

 

 

 

 

 

 

 

Commercial Marketplaces:

 

 

 

 

 

 

 

 

 

Consignment Model

 

7.3

%

7.2

%

5.3

%

7.5

%

Purchase Model

 

25.4

%

3.0

%

29.5

%

4.9

%

Total Commercial Marketplaces

 

32.7

%

10.2

%

34.8

%

12.4

%

 

 

 

 

 

 

 

 

 

 

International and Other

 

5.8

%

6.7

%

5.1

%

6.6

%

Total

 

100.0

%

100.0

%

100.0

%

100.0

%

 

– more –



 

Liquidity Services, Inc.

Reconciliation of GAAP to Non-GAAP Measures

 

EBITDA and Adjusted EBITDA. EBITDA is a supplemental non-GAAP financial measure and is equal to net income plus (a) interest income and expense and other income, net; (b) provision for income taxes; (c) amortization of contract intangibles; and (d) depreciation and amortization. Our definition of Adjusted EBITDA differs from EBITDA because we further adjust EBITDA for stock compensation expense.

 

 

 

Three Months
Ended September 30,

 

Twelve Months
Ended September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

(Audited)

 

Net income

 

$

3,180

 

$

2,229

 

$

11,019

 

$

7,981

 

Interest expense (income) and other expense (income), net

 

(552

)

(550

)

(2,176

)

(430

)

Provision for income taxes

 

2,038

 

1,641

 

7,460

 

5,294

 

Amortization of contract intangibles

 

203

 

203

 

813

 

813

 

Depreciation and amortization

 

366

 

225

 

1,302

 

727

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

5,235

 

3,748

 

18,418

 

14,385

 

Stock compensation expense

 

535

 

299

 

1,943

 

623

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

5,770

 

$

4,047

 

$

20,361

 

$

15,008

 

 

Adjusted Net Income and Adjusted Basic and Diluted Earnings Per Share. Adjusted net income is a supplemental non-GAAP financial measure and is equal to net income plus tax effected stock compensation expense. Adjusted basic and diluted earnings per share are determined using Adjusted Net Income.

 

 

 

Three Months Ended
September 30,

 

Twelve Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

(Dollars in thousands, except per share data)

 

 

 

(Unaudited)

 

(Audited)

 

Net income

 

$

3,180

 

$

2,229

 

$

11,019

 

$

7,981

 

Stock compensation expense (net of tax)

 

319

 

179

 

1,158

 

374

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

$

3,499

 

$

2,408

 

$

12,177

 

$

8,355

 

 

 

 

 

 

 

 

 

 

 

Adjusted basic earnings per common share

 

$

0.13

 

$

0.09

 

$

0.44

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per common share

 

$

0.12

 

$

0.09

 

$

0.43

 

$

0.32

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

27,911,902

 

27,532,067

 

27,768,679

 

24,080,780

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

28,013,199

 

28,159,384

 

28,146,923

 

26,087,809

 

 

– more –



 

Conference Call

 

The Company will host a conference call to discuss the fiscal 2007 and fourth quarter 2007 results at 5 p.m. Eastern Time today. Investors and other interested parties may access the teleconference by dialing 800-510-9834 or 617-614-3669 and providing the participant pass code 36249377. A live web cast of the conference call will be provided on the Company’s investor relations website at http://www.liquidityservicesinc.com. A replay of the web cast will be available on the Company’s website until January 7, 2008 at 11:59 p.m. ET. An audio replay of the teleconference will also be available until January 7, 2008 at 11:59 p.m. ET. To listen to the replay, dial 888-286-8010 or 617-801-6888 and provide pass code 42896106. Both replays will be available starting at 7:00 p.m. on the day of the call.

 

Non-GAAP Measures

 

To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of certain components of financial performance. These non-GAAP measures include earnings before interest, taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and Adjusted Net Income and Adjusted Earnings Per Share. These non-GAAP measures are provided to enhance investors’ overall understanding of our current financial performance and prospects for the future. We use EBITDA and Adjusted EBITDA: (a) as measurements of operating performance because they assist us in comparing our operating performance on a consistent basis because the measures do not reflect the impact of items not directly resulting from our core operations; (b) for planning purposes, including the preparation of our internal annual operating budget; (c) to allocate resources to enhance the financial performance of our business; (d) to evaluate the effectiveness of our operational strategies; and (e) to evaluate our capacity to fund capital expenditures and expand our business.

 

We believe these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of our core operating measures. In addition, because we have historically reported certain non-GAAP measures to investors, we believe the inclusion of non-GAAP measures provides consistency in our financial reporting. These measures should be considered in addition to financial information prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. A reconciliation of all non-GAAP measures included in this press release, to the most directly comparable GAAP measures, can be found in the financial tables included in this press release.

 

Supplemental Operating Data

 

To supplement our consolidated financial statements presented in accordance with GAAP, we use certain supplemental operating data as a measure of certain components of operating performance. We review GMV because it provides a measure of the volume of goods being sold in our marketplaces and thus the activity of those marketplaces. GMV and our other supplemental operating data, including registered buyers, auction participants and completed transactions, also provide a means to evaluate the effectiveness of investments that we have made and continue to make in the areas of customer support, value-added services, product development, sales and marketing and operations. Therefore, we believe this supplemental operating data provides useful information to both management and investors. In addition, because we have historically reported certain supplemental operating data to investors, we believe the inclusion of this supplemental operating data provides consistency in our financial reporting. This data should be considered in addition to financial information prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results.

 

– more –



 

Forward-Looking Statements

 

This document contains forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These statements include, but are not limited to, statements regarding the Company’s business outlook. You can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

 

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this document. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements are set forth in our filings with the SEC from time to time, and include, among others, our dependence on our contracts with the DoD for a significant portion of our revenue; our ability to successfully expand the supply of merchandise available for sale on our online marketplaces; and our ability to attract and retain active professional buyers to purchase this merchandise. There may be other factors of which we are currently unaware or deem immaterial that may cause our actual results to differ materially from the forward-looking statements.

 

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this document and are expressly qualified in their entirety by the cautionary statements included in this document. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date of this document or to reflect the occurrence of unanticipated events.

 

Contact:

Julie Davis

Director, Investor Relations

202.558.6234

julie.davis@liquidityservicesinc.com

– more –

 



 

Liquidity Services, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in Thousands)

 

 

 

September 30,

 

 

 

2007

 

2006

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

39,954

 

$

54,359

 

Short-term investments

 

21,655

 

12,289

 

Accounts receivable, net of allowance for doubtful accounts of $371 and $200 in 2007 and 2006, respectively

 

5,098

 

2,557

 

Inventory

 

16,467

 

4,704

 

Prepaid expenses and other current assets

 

5,486

 

2,001

 

Total current assets

 

88,660

 

75,911

 

Property and equipment, net

 

4,202

 

2,362

 

Intangible assets, net

 

4,568

 

4,909

 

Goodwill

 

11,446

 

3,678

 

Other assets

 

2,266

 

1,178

 

Total assets

 

$

111,142

 

$

88,038

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

3,333

 

$

2,073

 

Accrued expenses and other current liabilities

 

10,298

 

5,283

 

Profit-sharing distributions payable

 

6,919

 

7,736

 

Customer payables

 

6,328

 

6,658

 

Current portion of capital lease obligations

 

5

 

63

 

Current portion of long-term debt

 

13

 

16

 

Total current liabilities

 

26,898

 

21,829

 

Capital lease obligations, net of current portion

 

5

 

2

 

Long-term debt, net of current portion

 

29

 

42

 

Other long-term liabilities

 

2,176

 

413

 

Total liabilities

 

29,108

 

22,286

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.001 par value; 120,000,000 shares authorized; 27,939,059 and 27,584,608 shares issued and outstanding at September 30, 2007 and 2006, respectively

 

28

 

27

 

Additional paid-in capital

 

60,820

 

55,964

 

Accumulated other comprehensive income

 

653

 

247

 

Retained earnings

 

20,533

 

9,514

 

Total stockholders’ equity

 

82,034

 

65,752

 

Total liabilities and stockholders’ equity

 

$

111,142

 

$

88,038

 

 

– more –



 

Liquidity Services, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

Three Months Ended
September 30,

 

Twelve Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

(Unaudited)

 

(Audited)

 

Revenue

 

$

51,668

 

$

39,755

 

$

198,620

 

$

147,813

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding amortization)

 

13,751

 

3,756

 

47,043

 

12,160

 

Profit-sharing distributions

 

15,460

 

20,830

 

69,638

 

80,253

 

Technology and operations

 

9,052

 

5,966

 

33,417

 

20,081

 

Sales and marketing

 

3,458

 

2,536

 

13,203

 

8,861

 

General and administrative

 

4,712

 

2,919

 

16,901

 

12,073

 

Amortization of contract intangibles

 

203

 

203

 

813

 

813

 

Depreciation and amortization

 

366

 

225

 

1,302

 

727

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

47,002

 

36,435

 

182,317

 

134,968

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

4,666

 

3,320

 

16,303

 

12,845

 

Interest income (expense) and other income, net

 

552

 

550

 

2,176

 

430

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

5,218

 

3,870

 

18,479

 

13,275

 

Provision for income taxes

 

(2,038

)

(1,641

)

(7,460

)

(5,294

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,180

 

$

2,229

 

$

11,019

 

$

7,981

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.11

 

$

0.08

 

$

0.40

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.11

 

$

0.08

 

$

0.39

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

27,911,902

 

27,532,067

 

27,768,679

 

24,080,780

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

28,013,199

 

28,159,384

 

28,146,923

 

26,087,809

 

 

– more –



 

Liquidity Services, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

(In Thousands)

 

 

 

Three Months Ended
September 30,

 

Twelve Months Ended
September 30,

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

(Unaudited)

 

(Audited)

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income

 

$

3,180

 

$

2,229

 

$

11,019

 

$

7,981

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

569

 

429

 

2,115

 

1,540

 

Stock compensation expense

 

535

 

299

 

1,943

 

623

 

Amortization of debt discount

 

 

 

 

14

 

Interest expense related to put warrant liability and debt issue costs

 

 

 

 

315

 

Provision for doubtful accounts

 

171

 

 

171

 

150

 

Deferred tax benefit

 

(2,296

)

(691

)

(2,296

)

(691

)

Loss on early extinguishment of debt

 

 

 

 

171

 

Loss on disposal of property and equipment

 

85

 

12

 

85

 

19

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(1,569

)

(872

)

(3,087

)

(2,022

)

Inventory

 

(2,165

)

710

 

(9,986

)

(2,770

)

Prepaid expenses and other assets

 

(1,311

)

(1,918

)

(3,849

)

90

 

Accounts payable

 

1,014

 

642

 

1,260

 

1,149

 

Accrued expenses and other

 

2,882

 

(3,397

)

4,984

 

1,947

 

Profit-sharing distributions payable

 

703

 

795

 

(816

)

3,399

 

Customer payables

 

1,161

 

4,486

 

(405

)

5,377

 

Other liabilities

 

2,275

 

322

 

3,336

 

371

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

5,234

 

3,046

 

4,474

 

17,663

 

Investing activities

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

(7,505

)

(6,374

)

(36,099

)

(20,037

)

Proceeds from the sale of short-term investments

 

4,921

 

7,835

 

26,809

 

7,834

 

Increase in goodwill and intangibles

 

(220

)

(20

)

(208

)

(90

)

Cash paid for acquisitions

 

376

 

 

(9,856

)

 

Purchases of property and equipment

 

(405

)

(959

)

(2,688

)

(2,049

)

 

 

 

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

(2,833

)

482

 

(22,042

)

(14,342

)

Financing activities

 

 

 

 

 

 

 

 

 

Proceeds from issuance of debt

 

 

71

 

10

 

118

 

Repayments of debt

 

(14

)

(4

)

(16

)

(4,413

)

Principal repayments of capital lease obligations

 

7

 

(87

)

(65

)

(194

)

Proceeds from exercise of common stock options and warrants (net of tax)

 

289

 

378

 

1,037

 

506

 

Incremental tax benefit from exercise of common stock options

 

26

 

489

 

807

 

489

 

Net proceeds from the issuance of common stock

 

25

 

(19

)

1,070

 

43,977

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

333

 

828

 

2,843

 

40,483

 

Effect of exchange rate differences on cash and cash equivalents

 

117

 

(15

)

320

 

177

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

2,851

 

4,341

 

(14,405

)

43,981

 

Cash and cash equivalents at beginning of the period

 

37,103

 

50,018

 

54,359

 

10,378

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

39,954

 

$

54,359

 

$

39,954

 

$

54,359

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

Property and equipment acquired through capital leases

 

$

10

 

$

71

 

$

10

 

$

71

 

Cash paid for income taxes

 

2,317

 

1,568

 

7,901

 

4,816

 

Cash paid for interest

 

$

1

 

$

3

 

$

5

 

$

217