Creative Computers, Inc.http://www.sec.gov/Archives/edgar/data/937941/0001017062-98-002319.txt
CONSOLIDATED BALANCE SHEET
(in thousands except share data)
<TABLE>
<CAPTION>
September 30, 1998
(unaudited) December 31, 1997
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<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 15,528 $ 8,018
Accounts receivable, net of allowance for
doubtful accounts 40,564 42,455
Inventories 44,958 42,643
Prepaid expenses and other current assets 4,098 2,894
Income tax refund receivable 613 469
Deferred income taxes 7,717 2,484
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Total current assets 113,478 98,963
Property, plant and equipment, net 15,040 16,868
Goodwill, net 11,973 15,141
Deferred income taxes 2,241 -
Other assets 99 182
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$ 142,831 $ 131,154
================== =================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 75,877 $ 45,958
Accrued expenses and other current liabilities 13,872 13,275
Capital leases - current portion 143 207
Notes payable - current portion 2,821 9,979
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Total current liabilities 92,713 69,419
Capital leases 29 148
Notes payable 154 348
Deferred income taxes 1,469 1,469
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Total liabilities 94,365 71,384
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, $.001 par value; 15,000,000 shares
authorized; 10,238,703 and 10,105,258 shares issued 10 10
Additional paid-in capital 57,630 56,772
Treasury stock, at cost: 15,000 shares (91) (91)
Retained earnings (accumulated deficit) (9,083) 3,079
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Total stockholders' equity 48,466 59,770
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$ 142,831 $ 131,154
================== =================
</TABLE>
See condensed notes to consolidated financial statements.
3
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Creative Computers, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in thousands except per share data)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- -------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $185,741 $132,236 $499,809 $368,394
Cost of goods sold 164,447 115,334 443,761 321,208
Retail store closure inventory reserves - - 3,679 -
-------- -------- -------- --------
Gross profit 21,294 16,902 52,369 47,186
Selling, general and administrative expenses 20,493 14,454 64,882 42,592
Non-recurring expenses related to retail store closures - - 6,773 -
-------- -------- -------- --------
Income (loss) from operations 801 2,448 (19,286) 4,594
Interest income/(expense), net (100) 152 (319) 473
-------- -------- -------- --------
Income (loss) before income taxes 701 2,600 (19,605) 5,067
Income tax provision (benefit) 266 1,006 (7,443) 1,943
-------- -------- -------- --------
Net income (loss) $ 435 $ 1,594 $(12,162) $ 3,124
======== ======== ======== ========
Basic earnings (loss) per share $ 0.04 $ 0.16 $(1.20) $ 0.32
======== ======== ======== ========
Diluted earnings (loss) per share $ 0.04 $ 0.16 $(1.20) $ 0.31
======== ======== ======== ========
Basic weighted average number of
shares outstanding 10,194 9,801 10,150 9,901
======== ======== ======== ========
Diluted weighted average number of
shares outstanding 10,353 9,981 10,150 9,998
======== ======== ======== ========
</TABLE>
See condensed notes to consolidated financial statements.
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Creative Computers, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
---------------------------
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(12,162) $ 3,124
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation and amortization 2,957 1,622
Deferred income taxes (7,474) 281
Loss on write-off of assets 2,052 -
Loss on impairment of goodwill 3,095 -
Loss on sale of equipment - 10
Changes in assets and liabilities, net of acquisition:
Accounts receivable 1,891 (3,544)
Inventories (2,315) 12,102
Prepaid expenses and other current assets (1,250) (232)
Other assets (237) (83)
Accounts payable 29,919 (5,232)
Accrued expenses and other current liabilities 597 (1)
Income taxes receivable (144) 3,376
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Total adjustments 29,091 8,299
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Net cash provided by operating activities 16,929 11,423
Cash flows from investing activities:
Purchases of securities available for sale - (1,015)
Redemption of securities available for sale - 998
Acquisition of ComputAbility - (5,482)
Proceeds from sale of equipment - 13
Acquisition of property, plant and equipment (2,742) (1,585)
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Net cash used in investing activities (2,742) (7,071)
Cash flows from financing activities:
Payments under notes payable (7,352) (41)
Principal payments of obligations under capital leases (183) (185)
Proceeds from stock issued under stock option plans 858 98
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Net cash used in financing activities (6,677) (128)
Net increase in cash and cash equivalents 7,510 4,224
Cash and cash equivalents:
Beginning of the period 8,018 17,329
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End of the period $ 15,528 $21,553
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</TABLE>
See condensed notes to consolidated financial statements.
5
<PAGE>
Creative Computers, Inc.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated interim financial statements include the accounts of
Creative Computers, Inc. (a Delaware corporation) and its wholly owned
subsidiaries (the "Company") and have been prepared, without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such regulations. These financial statements should be read in conjunction
with the audited financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K at December 31, 1997.
In the opinion of management, the accompanying financial statements contain
all adjustments necessary to present fairly the financial position of the
Company at September 30, 1998 and the results of operations and cash flows
for the three and nine months ended September 30, 1998 and 1997. The
results of operations for the interim periods are not necessarily
indicative of the results of operations for the full year.
Certain reclassifications have been made to the 1997 financial statements
to conform them to the 1998 presentation.
2. Public Offering of uBid Common Stock
On July 2, 1998, uBid, Inc. ("uBid") a wholly owned subsidiary of the
Company, filed a registration statement for an initial public offering
("IPO") of 1,580,000 shares of common stock. uBid also granted to the
underwriters an over-allotment option for up to 237,000 additional common
shares. The net proceeds after IPO expenses are intended to be used for
working capital needs of uBid and repayment of advances made by the Company
to uBid. Upon completion of the IPO, the Company would own approximately 80
percent of the capital stock of uBid. Subject to certain conditions, the
Company intends to separate the companies by distributing its ownership in
uBid common stock to its shareholders through a tax-free spin-off. Due to
market conditions, the IPO has been delayed. The Company is currently
working with the underwriters to determine an appropriate time to complete
the IPO. There can be no assurances that the planned IPO or spin-off will
be consummated.
3. Net Income (Loss) Per Share
During December 1997, the Company adopted Financial Accounting Standards
Board Statement No. 128, "Earnings Per Share" (SFAS 128). SFAS 128 replaced
the presentation of earnings per share reflected on the statement of income
with a dual presentation of Basic Earnings Per Share (Basic EPS) and
Diluted Earnings Per Share (Diluted EPS). Basic EPS excludes dilution and
is computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the reported periods. Diluted EPS reflects
the potential dilution that could occur under the treasury stock method if
stock options and other commitments to issue common stock were exercised.
Earnings (loss) Per Share have been restated for all periods presented to
reflect the adoption of SFAS 128. The computation of Basic and Diluted EPS
is as follows:
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<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
(in thousands except per share data)
Net income (loss) $ 435 $1,594 $(12,162) $3,124
======= ====== ======== ======
Weighted average shares - Basic 10,194 9,801 10,150 9,901
Effect of dilutive stock options
and warrants 159 180 - 97
------- ------ -------- ------
Weighted average shares-Diluted 10,353 9,981 10,150 9,998
======= ====== ======== ======
Net earnings/(loss) per share-Basic $ 0.04 $ 0.16 $ (1.20) $ 0.32
======= ====== ======== ======
Net earnings/(loss) per share-Diluted $ 0.04 $ 0.16 $ (1.20) $ 0.31
======= ====== ======== ======
</TABLE> |
