UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
Commission File Number 0-19378
LIUSKI INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3065217
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6585 Crescent Drive, Norcross, 30071
Georgia (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (770) 447-9454
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
___ ___
As of June 30, 1997, the Registrant had 4,380,525 shares of Common Stock, $.01
par value per share outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Financial Statements:
Balance sheets as of June 30, 1997 (unaudited)
and December 31, 1996................................................3
Statements of operations for the three months and six months
ended June 30, 1997 and June 30, 1996 (unaudited)....................4
Statements of cash flows for the six months ended June 30, 1997
and June 30, 1996 (unaudited)........................................5
Notes to Condensed Consolidated Financial Statements.................6
Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................7
2
<PAGE>
LIUSKI INTERNATIONAL, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
(unaudited)
Assets
Current assets:
Cash and cash equivalents $- $ 18,065
Accounts receivable, net of allowance
for doubtful accounts of
$4,100,000 in 1997 and
$3,208,000 in 1996 38,856,740 31,994,144
Inventories, net of allowance for 25,997,753 49,872,618
inventory obsolescence of
$1,100,000 in 1997 and
$1,600,000 in 1996
Prepaid expenses and other current assets 4,851,659 5,592,192
------------ ------------
Total current assets 69,706,152 87,477,019
Furniture, Autos and Equipment, at cost 2,758,584 2,741,814
less accumulated depreciation and
amortization of $3,953,882 in 1997 and
$3,425,870 in 1996
Other assets 275,759 235,145
------------ ------------
$ 72,740,495 $ 90,453,978
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Revolving credit loan $ 28,265,280 $ 28,614,929
Accounts payable - affiliate 10,164,830 13,889,474
Accounts payable - trade 19,340,862 26,209,403
Accrued expenses and other 2,891,406 2,810,144
------------ ------------
Total current liabilities 60,662,378 71,523,950
Capital lease obligations 540,679 406,428
------------ ------------
Total liabilities 61,203,057 71,930,378
Commitments and Contingencies
Stockholders' equity:
Preferred stock; $.01 par value -
1,000,000 shares authorized, -- --
none issued
Common stock; $.01 par value - 7,000,000
shares authorized; 4,380,525
issued and outstanding 43,806 43,806
Additional paid-in capital 18,435,164 18,435,164
Retained earnings (6,941,532) 44,630
------------ ------------
Total stockholders' equity 11,537,438 18,523,600
------------ ------------
$ 72,740,495 $ 90,453,978
============ ============
See notes to condensed consolidated
financial statements
3
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<TABLE>
<CAPTION>
LIUSKI INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------------- ------------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 79,573,901 $ 101,556,939 $ 173,009,679 $ 200,184,274
Cost of sales 75,541,912 95,417,967 164,669,403 186,168,305
------------- ------------- ------------- -------------
Gross profit 4,031,989 6,138,972 8,340,276 14,015,969
Selling, general and
administrative 6,718,656 7,509,739 13,849,930 14,072,308
------------- ------------- ------------- -------------
Loss from operations (2,686,667) (1,370,767) (5,509,654) (56,339)
Other charges, net 1,213,148 484,326 1,876,508 977,271
------------- ------------- ------------- -------------
Loss before income taxes (3,899,815) (1,855,093) (7,386,162) (1,033,610)
Income taxes -- (454,000) (400,000) (142,000)
------------- ------------- ------------- -------------
Net loss $ (3,899,815) $ (1,401,093) $ (6,986,162) $ (891,610)
============= ============= ============= =============
Earnings per share of
common and common
equivalent shares
outstanding: Primary and
fully diluted $ (0.89) $ (0.32) $ (1.59) $ (0.20)
============= ============= ============= =============
Weighted average number of
common and common
equivalent shares
outstanding: Primary and
fully diluted 4,380,525 4,380,525 4,380,525 4,380,525
============= ============= ============= =============
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
LIUSKI INTERNATIONAL, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
June 30,
----------------------------
1997 1996
---- ----
Cash Flows from Operating
Activities
Net loss $ (6,986,162) $ (891,610)
------------ ------------
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 528,012 463,195
Provision for losses on accounts receivable 892,000 1,225,000
Provision for inventory obsolescence (500,000) 501,341
Changes in operating assets and
liabilities:
Accounts receivable (7,754,596) (7,213,739)
Inventories 24,374,865 (2,387,239)
Prepaid expenses and other 740,533 (429,436)
Other assets (40,614) 1,043
Accounts payable - affiliate (3,724,644) 5,023,574
Accounts payable and
accrued expenses (6,787,279) (2,780,803)
------------ ------------
Total adjustments 7,728,277 (5,597,064)
------------ ------------
Net cash used by operating activities 742,115 (6,488,674)
------------ ------------
Cash Flows from Investing
Activities
Capital expenditures (544,782) (320,255)
------------ ------------
Cash Flows from Financing
Activities
Proceeds from revolving credit loan (349,649) 7,764,343
Repayment of capital lease obligations 134,251 (182,210)
------------ ------------
Net cash provided (used) by financing activities (215,398) 7,582,133
Net increase (decrease) in cash
and cash equivalents (18,065) 773,204
Cash and cash equivalents,
beginning of year 18,065 200,989
------------ ------------
Cash and cash equivalents, end of year $ -- $ 974,193
============ ============
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 766,262 $ 997,581
============ ============
Income taxes $ -- $ --
============ ============
See notes to condensed consolidated financial statements
5
<PAGE>
LIUSKI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six month period ended June 30,
1997 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. For further information refer to the consolidated
financial statements and footnotes thereto in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, which are incorporated by
reference herein.
Note 2. Restatement of Interim Financial Information
The Company is currently in the process of restating its 10-Q unaudited
condensed consolidated financial statements for the quarterly period ended March
31, 1997. The restatement is required to properly match first quarter sales with
cost of sales. Additionally, in light of the Company's decrease in inventories,
the Company re-examined its methods of assessing and estimating the adequacy of
its allowance for inventory obsolescence and determined that such allowances
needed to be decreased as of March 31, 1997.
Note 3. Revolving Credit Loan
In June 1995, the Company signed a $50,000,000 credit facility replacing
the Company's existing $25,000,000 revolving credit loan and $14,000,000 line
for the floorplanning of inventory. The new facility provides for revolving
borrowings of up to $35,000,000, limited by available collateral, and
$15,000,000 for inventory floorplanning. Amounts available on the revolving
credit loan are based on a formula of the sum of up to 85% of eligible
receivables and the lesser of 50% (30% for Magitronic goods) of the eligible
inventory or $15,000,000. Under the loan agreement, in the absence of default,
outstanding borrowings bear interest at 1/4% per annum above the lending banks
prime rate or 125 basis points above LIBOR rates and mature in June, 1998. The
debt is collateralized by a lien on all of the Company's assets. As of June 30,
1997, the Company owed $28,265,280 under its revolving credit loans.
As of December 31, 1996, the Company is in violation of certain financial
covenants under its credit facility agreement. The Company's lender has
preserved all of the rights available to it as a result of the Company's default
of these financial covenants. Consequently, the balance of the revolving credit
loan is classified as a current liability at June 30, 1997. As a consequence of
this default, the interest rate paid by the Company under its revolving credit
loan was increased as of April 14, 1997 to 2 1/4% over the prime rate and the
LIBOR rates are no longer available. The Company has received notice of the
lender's intention to terminate the credit facility as of October 31, 1997. The
Company is currently pursuing other lending options, as well as continuing
negotiations with its current lender.
Note 4. Contingencies
None
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto.
RESULTS OF OPERATIONS
Six months ended June 30, 1997 and 1996
- ---------------------------------------
Net Sales: Net sales for the six months ended June 30, 1997 were
----------
$173,009,679 representing a decrease of $27,174,595 (13.6%) from $200,184,274
for the six months ended June 30, 1996. The Company's net sales were negatively
affected by shortages of working capital resulting in the inability of the
Company to maintain sufficient inventory of certain of the Company's products.
In addition, the mail order business was discontinued in June, 1996.
Sales of the Company's Magitronic brand of personal computers and notebook
computers for the six months ended June 30, 1997 decreased to $35,721,194 (20.6%
of net sales) from $43,256,614 (21.6% of net sales) for the six months ended
June 30, 1996. This decrease is substantially attributable to lower sales of
notebook computers in the first quarter, and price decreases in components which
have resulted in a corresponding price decrease in Magitronic personal computers
and notebook computers. Specifically, Intel central processing units ("CPU's")
have dropped in price by fifty percent (50%), and monitor and CD Rom prices also
have decreased dramatically. These price decreases have intensified price
competition in the industry. In addition, there has been substantial turnover in
Magitronic product management. Included in Magitronic personal computers are
private-label and brand-name components that the Company also sells separately
in its distribution business. In addition, the company also sells components
separately under the Magitronic name.
While the Company distributes products from more than 40 U.S. suppliers,
the loss of major suppliers or a shortage in a particular product could have a
material adverse impact on the Company during the relatively brief period the
Company believes it would need to establish alternate sources of supply at
required volume levels. Although the Company's business is not highly seasonal,
the second calendar quarter is generally a period of weaker net sales in
comparison to the rest of the year.
Gross Profit: Gross profit decreased by $5,675,693 to $8,340,276 (4.8% of
------------
net sales) for the six months ended June 30, 1997 from $14,015,969 (7.0% of net
sales) for the six months ended June 30, 1996. The lower gross margin was
primarily due to the reduced sales of the Company's Magitronic notebook
computers which generally have higher margins, and price decreases in components
which have resulted in a corresponding price decrease in Magitronic personal
computers and notebook computers. Additionally, margins were negatively impacted
by turnover in key product management positions which caused the Company to not
take full advantage of various vendor pricing and incentive programs. Over the
last few years, the computer industry has experienced intense price competition
and Management believes that the price competitive conditions in the industry
will continue.
Selling, General and Administrative Expenses: For the six months ended June
--------------------------------------------
30, 1997, selling, general and administrative expenses decreased by $222,378 to
$13,849,930 (8.0% of net sales) from $14,072,308 (7.0% of net sales) for the six
months ended June 30, 1996. The decrease is primarily due to a substantial
reduction in the Company's workforce as the Company continues to reduce staff in
order to reduce expenses. Headcount has been reduced by thirty-one percent (31%)
since the beginning of March, 1997. As a result of this reduction in force,
salaries, employment taxes and employee benefits for the six months ended June
30, 1997 decreased to $6,940,533 from $8,477,960 for the six months ended June
30, 1996. This decrease was partially offset by an increase due to an
advertising and promotional campaign during the three months ended March 31,
1997 which amounted to $560,835.
7
<PAGE>
Other Charges: Net interest expense increased to $1,276,182 for the six
--------------
months ended June 30, 1997 from $986,838 for the first half of 1996 as a result
of increased borrowings and a 2.0% increase, as of April 14, 1997, in the
interest rate the Company is paying on its revolving credit loan. Due to the
default under its credit facility agreement, the Company is paying interest at 2
1/4% over the prime rate on its revolving credit facility and no LIBOR rates are
currently available. Additionally, the Company incurred costs of $580,000 in
settlement of various discrimination issues brought on by fourteen former
employees.
Net Loss: Net loss increased by $6,094,552 to $6,986,162 (4.0% of net
--------
sales) for the six months ended June 30, 1997 from a net loss of $891,610 (0.4%
of net sales) for the six months ended June 30, 1996.
Three months ended June 30, 1997 and 1996
- -----------------------------------------
Net Sales: Net sales for the three months ended June 30, 1997 were
----------
$79,573,901 representing a decrease of $21,983,038 (21.6%) from $101,556,939 for
the three months ended June 30, 1996. The Company's net sales were negatively
affected by shortages of working capital resulting in the inability of the
Company to maintain sufficient inventory of certain of the Company's products.
The Company's mail order business was discontinued in June 1996. Although the
Company's business is not highly seasonal, the second quarter is generally a
period of weaker net sales in comparison to the rest of the year.
Sales of the Company's Magitronic brand of personal computers and notebook
computers for the three months ended June 30, 1997 decreased to $19,569,556
(24.6% of net sales) from $20,588,640 (20.3% of net sales) for the three months
ended June 30, 1996. This decrease is substantially attributable to price
decreases in components which have resulted in a corresponding price decrease in
Magitronic personal computers and notebook computers. Specifically, Intel
central processing units ("CPU's") have dropped in price by fifty percent (50%),
and monitor and CD Rom prices also have decreased dramatically. These price
decreases have intensified price competition in the industry. In addition, there
has been substantial turnover in Magitronic product management.
Gross Profit: Gross profit decreased by $2,106,983 to $4,031,989 (5.1% of
------------
net sales) for the three months ended June 30, 1997 from $6,138,972 (6.0% of net
sales) for the three months ended June 30, 1996. The lower gross margin was
primarily due to price decreases in components which have resulted in a
corresponding price decrease in Magitronic personal computers and notebook
computers. Additionally, margins were negatively impacted by turnover in key
product management positions which caused the Company to not take full advantage
of various vendor pricing and incentive programs. Over the last few years, the
computer industry has experienced intense price competition and Management
believes that the price competitive conditions in the industry will continue.
Selling, General and Administrative Expenses: For the three months ended
----------------------------------------------
June 30, 1997, selling, general and administrative expenses decreased by
$1,091,083 to $6,418,656 (8.4% of net sales) from $7,509,739 (7.7% of net sales)
for the three months ended June 30, 1996. The decrease is primarily due to a
substantial reduction in the Company's workforce as the Company continues to
reduce staff in order to reduce expenses. Headcount has been reduced by
thirty-one percent (31%) since the beginning of March, 1997. As a result of this
reduction in force, salaries, employment taxes and employee benefits for the
three months ended June 30, 1997 decreased to $3,015,068 from $4,260,960 for the
three months ended June 30, 1996.
8
<PAGE>
Other Charges: Net interest expense increased to $593,589 for the three
--------------
months ended June 30, 1997 from $523,951 for the second quarter of 1996 as a
result of increased borrowings during a part of the period and a 2.0% increase,
as of April 14, 1997, in the interest rate the Company is paying on its
revolving credit loan. Due to the default under its credit facility agreement,
the Company is paying interest at 2 1/4% over the prime rate on its revolving
credit facility and no LIBOR rates are currently available. Additionally, the
Company incurred costs of $580,000 in settlement of various discrimination
issues brought on by fourteen former employees.
Net Loss: Net loss increased by $2,498,722 to $3,899,815 (4.9% of net
--------
sales) for the three months ended June 30, 1997 from a net loss of $1,401,093
(1.4% of net sales) for the three months ended June 30, 1996.
IMPACT OF INFLATION
The Company has not been adversely affected by inflation because
technological advances and competition within the microcomputer industry have
generally caused prices of products sold by the Company to decline. The Company
has flexibility in its pricing because it has no long-term contracts with any of
its customers and, accordingly, could, if necessary, and depending on
competitive factors, pass along price changes to its customers.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its growth through borrowings under its revolving
credit loan, equity capital and credit terms from its major suppliers. In the
six months ended June 30, 1997, net cash provided by operating activities was
$742,115 compared to net cash used by operating activities of $6,488,674 for the
six months ended June 30, 1996. The change in net cash flow from operating
activities between the six months ended June 30, 1997 and June 30, 1996, in the
amount of $7,230,789 was primarily due to a significant reduction in inventories
which was partially offset by a decrease in accounts payable. Additionally,
accounts receivable grew due to a sale of approximately $8.3 million in May 1997
which was collected subsequent to June 30, 1997. The Company will experience
shifts in cash flow in the future, in part because suppliers are providing more
restrictive credit terms than the Company historically has been afforded. For
the six month periods ended June 30, 1997 and June 30, 1996, the Company
generally paid its suppliers approximately 35-45 days from the date of invoice.
Terms vary from 1 day to 60 days.
Working capital was $9,043,774 as of June 30, 1997 and $15,953,069 as of
December 31, 1996. On June 23, 1995, the Company signed a new three year
$50,000,000 credit facility replacing its existing $25,000,000 revolving credit
loan and a $14,000,000 line for floorplanning of inventory. The new facility
provides for revolving cash borrowings of up to $35,000,000 and $15,000,000 for
inventory floorplanning. Borrowings under the revolving credit loan bear
interest at 125 basis points over LIBOR or the prime rate plus 1/4%. Amounts
available under the revolving credit loan are based on a formula of the sum of
up to 85% of eligible receivables and 50% of eligible inventory not to exceed
$15,000,000. At June 30, 1997 and December 31, 1996, the Company owed
$28,265,280 and $28,614,929, respectively, under its revolving credit loans. The
Company was obligated under letters of credit in the amount of $742,800 on June
30, 1996 and had no such obligations outstanding as of December 31, 1996. As of
June 30, 1997 and December 31, 1996, the Company had $0 and $1,641,424 available
for cash borrowings under its revolving credit loan and $5,105,966 and
$11,128,407 available for the floorplanning of inventory purchases,
respectively.
As of December 31, 1996, the Company is in violation of certain financial
covenants under its credit facility agreement. The Company's lender has
preserved all of the rights available to it as a result of the Company's default
of these financial covenants. Consequently, the balance of the revolving credit
loan is classified as a current liability at June 30, 1997. As a consequence of
this default, the interest rate paid by the Company under its revolving credit
loan was increased as of April 14, 1997 to 2 1/4% over the prime rate and the
LIBOR rates are no longer available. The Company has received notice of the
lender's intention to terminate the credit facility as of October 31, 1997. The
Company is currently pursuing other lending options, as well as continuing
negotiations with its current lender.
9
<PAGE>
ASSET MANAGEMENT
Inventory: Management attempts to maximize product availability and
delivery while minimizing inventory levels so as to lessen the risk of product
obsolescence and price fluctuations. Historically, most products have been
stocked to provide a 30 to 45-day supply. The Company often reduces prices of
products in its inventory in order to improve its turnover rate. The Company
turned its inventory on an average every 41 days during the first six months of
1997 and every 44 days for the first six months of 1996. This decrease in the
average days in inventory resulted from the Company's initiative of reducing
aged inventory through either returning the goods to vendors for credit or
selling to customers at reduced prices. Additionally, inventory was negatively
affected in the first six months of 1997 by shortages of working capital
resulting in the inability of the Company to maintain sufficient inventory of
certain of the Company's products. The Company takes a physical inventory every
month which is compared to its perpetual inventory and monitors inventory levels
daily according to sales made by product and distribution center.
Most of the Company's U.S. suppliers provide price protection, by way of
credits, against price reductions by the supplier between the time of the
initial sale to the Company and the subsequent sale by the Company to its
customer. Such suppliers accept defective merchandise returned within 12 to 15
months after shipment to the Company and some permit the Company to rotate its
inventory by returning slow moving inventory for other inventory.
Accounts Receivable: The Company primarily sells its products on a cash,
--------------------
C.O.D. or terms of up to 30 days basis. The Company's average days' receivable
was approximately 37 days for the six month period ended June 30, 1997 and
approximately 33 days for the six month period ended June 30, 1996. This
increase in the average days sales receivable resulted primarily from a customer
sale of approximately $8.3 million in May 1997 which was collected subsequent to
June 30, 1997.
MANAGEMENT ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles necessitates the use of management estimates. Management
has estimated reserves for inventory obsolescence and uncollectible accounts
receivable based upon historical and developing trends, aging of items, and
other information it deems pertinent to estimate collectibility and
realizability. It is possible that these reserves will change within a year, and
the effect of the change could be material to the Company's consolidated
financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", which
establishes financial and reporting standards for stock-based employee
compensation plans. The Standard encourages, but does not require, companies to
recognize compensation expense based upon the fair value of grants of stock
options and other equity instruments to employees. Companies which do not adopt
the expense recognition provision of the Standard, must disclose pro forma net
income and earnings per share. The Company adopted this statement during its
year ended December 31, 1996 and continues to apply the prior accounting rules.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", which requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
Company adopted this statement during its year ended December 31, 1996. The
statement did not have a material impact on the Company's consolidated financial
statements.
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities". This Standard provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. This Standard is effective for transfers and servicing of financial
assets and extinguishment of liabilities occurring after December 31, 1996. The
adoption of this Standard is not expected to impact the Company's consolidated
financial statements.
10
<PAGE>
In March 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". This new Standard simplifies the standards for
computing earnings per share and requires presentation of two new amounts, basic
and diluted earnings per share. The Company will be required to retroactively
adopt this Standard when it reports its operating results for the quarter and
year ending December 31, 1997. The Company does not expect the effect of this
new Standard to be material.
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This report contains forward-looking statements and information that are
based on management's beliefs, as well as assumptions made by, and information
currently available to, management. When used in this document, the words
"anticipate," "believe," "estimate" and "expect," and similar expressions are
intended to identify forward-looking statements. Such statements involve a
number of risks and uncertainties. Among the factors that could cause results to
differ materially are the following: business conditions and growth in the
industry, general economic conditions, rapid or unexpected technological
changes, product development, inventory risks due to shifts in product demand,
competition, domestic and foreign government regulations, fluctuations in
foreign exchange rates, rising costs for components or unavailability of
components, the timing of orders booked, and the risk factors listed from time
to time in the Company's SEC reports.
11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The Company held its Annual Meeting of Stockholders on July 18, 1997. The
Company's stockholders elected Edwin J. Feinberg and Eric R. Bashford as Class 3
directors, ratified the appointment of BDO Seidman, LLP as the Company's
Independent Auditors for the calendar year ending December 31, 1997, and
approved an amendment of the 1994 Stock Option Plan to increase the number of
shares of the Company's Common Stock that may be granted thereunder from 650,000
to 850,000 by the following stockholders' vote:
(a) Election of Directors
Votes received Votes
Name (Net of all votes withheld) withheld
---- --------------------------- --------
Edwin J. Feinberg 3,881,182 67,345
Eric R. Bashford 3,881,482 67,045
(b) Ratification of the appointment of Independent Public Accountants:
For 3,914,066
Against 25,061
Withheld 9,400
(c) Approval of an amendment to the 1994 Stock Option Plan to increase the
number of shares of the Company's Common Stock that may be granted thereunder
from 650,000 to 850,000:
For 3,656,268
Against 273,119
Withheld 19,140
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) (i) Exhibit 11 (statement concerning computation of per share earnings)
and exhibit 15 (letter concerning unaudited interim financial information) are
each hereby incorporated by reference from "Notes to Condensed Consolidated
Financial Statements" of Part I - Financial Information, Item 1 - Financial
Statements, contained in this Form 10-Q.
(ii) Exhibit 27 (financial data schedule for the first six months of
1997)
(b) No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1997.
12
<PAGE>
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 thereunto duly authorized.
Dated: August 18, 1997
LIUSKI INTERNATIONAL, INC.
By:/s/ Ting Y. Tsai
------------------------------------
Ting Y. Tsai
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 38,857
<ALLOWANCES> 4,100
<INVENTORY> 25,998
<CURRENT-ASSETS> 69,706
<PP&E> 2,759
<DEPRECIATION> 3,954
<TOTAL-ASSETS> 72,740
<CURRENT-LIABILITIES> 60,662
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 11,494
<TOTAL-LIABILITY-AND-EQUITY> 72,740
<SALES> 173,010
<TOTAL-REVENUES> 173,010
<CGS> 164,669
<TOTAL-COSTS> 164,669
<OTHER-EXPENSES> 13,850
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,876
<INCOME-PRETAX> (7,386)
<INCOME-TAX> (400)
<INCOME-CONTINUING> (6,986)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,986)
<EPS-PRIMARY> (1.59)
<EPS-DILUTED> (1.59)
</TABLE>
