UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
| SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-32613
EXCELLIGENCE LEARNING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| Delaware |
77-0559897 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 2 Lower Ragsdale Drive Monterey, CA |
93940 | |
| (Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (831) 333-2000
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 report(s)), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $.01 par value, 8,523,345 shares outstanding as of May 6, 2003.
EXCELLIGENCE LEARNING CORPORATION
| PART I: |
1 | |||
| Item 1. |
1 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | ||
| Item 3. |
14 | |||
| Item 4. |
15 | |||
| PART II: |
16 | |||
| Item 1. |
16 | |||
| Item 2. |
16 | |||
| Item 3. |
16 | |||
| Item 4. |
16 | |||
| Item 5. |
16 | |||
| Item 6. |
16 | |||
| 17 | ||||
| 18 | ||||
FINANCIAL INFORMATION
EXCELLIGENCE LEARNING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for par value and share amounts)
(Unaudited)
| March 31, 2003 |
December 31, 2002* |
|||||||
| ASSETS |
||||||||
| Current assets : |
||||||||
| Cash and cash equivalents |
$ |
3,613 |
|
$ |
2,713 |
| ||
| Accounts receivable, net |
|
5,375 |
|
|
5,018 |
| ||
| Inventories |
|
21,242 |
|
|
13,938 |
| ||
| Prepaid expenses and other current assets |
|
2,443 |
|
|
2,701 |
| ||
| Deferred income taxes |
|
1,672 |
|
|
1,672 |
| ||
| Total current assets |
|
34,345 |
|
|
26,042 |
| ||
| Property and equipment, net |
|
4,283 |
|
|
4,305 |
| ||
| Deferred income taxes |
|
2,851 |
|
|
1,998 |
| ||
| Other assets |
|
1,028 |
|
|
1,046 |
| ||
| Goodwill |
|
5,834 |
|
|
4,701 |
| ||
| Other intangible assets, net |
|
1,102 |
|
|
1,084 |
| ||
| Total assets |
$ |
49,443 |
|
$ |
39,176 |
| ||
| LIABILITIES, REDEEMABLE SECURITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Revolving line of credit |
$ |
4,395 |
|
$ |
— |
| ||
| Accounts payable |
|
10,050 |
|
|
3,524 |
| ||
| Accrued expenses |
|
4,275 |
|
|
4,297 |
| ||
| Income tax payable |
|
213 |
|
|
216 |
| ||
| Other current liabilities |
|
492 |
|
|
529 |
| ||
| Total current liabilities |
|
19,425 |
|
|
8,566 |
| ||
| Redeemable common shares, 100,000 shares authorized, issued and outstanding at March 31, 2003 |
|
400 |
|
|
— |
| ||
| Stockholders’ equity: |
||||||||
| Common stock, $0.01 par value; 15,000,000 shares authorized; 8,423,345 and 8,401,914 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
84 |
|
|
84 |
| ||
| Additional paid-in capital |
|
62,219 |
|
|
62,206 |
| ||
| Deferred stock compensation |
|
(1,339 |
) |
|
(1,482 |
) | ||
| Accumulated deficit |
|
(31,346 |
) |
|
(30,198 |
) | ||
| Total stockholders’ equity |
|
29,618 |
|
|
30,610 |
| ||
| Total liabilities and stockholders’ equity |
$ |
49,443 |
|
$ |
39,176 |
| ||
| * | Derived from audited consolidated financial statements filed in the Company’s 2002 Annual Report on Form 10-K. |
See accompanying notes to condensed consolidated financial statements.
1
EXCELLIGENCE LEARNING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share amounts)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
17,418 |
|
$ |
15,574 |
| ||
| Cost of goods sold |
|
11,290 |
|
|
9,953 |
| ||
| Gross profit |
|
6,128 |
|
|
5,621 |
| ||
| Operating expenses: |
||||||||
| Selling, general and administrative |
|
8,027 |
|
|
8,371 |
| ||
| Amortization of other intangible assets |
|
75 |
|
|
72 |
| ||
| Operating loss |
|
(1,974 |
) |
|
(2,822 |
) | ||
| Other (income) expense: |
||||||||
| Interest expense |
|
32 |
|
|
102 |
| ||
| Interest income |
|
(5 |
) |
|
(12 |
) | ||
| Loss before income taxes |
|
(2,001 |
) |
|
(2,912 |
) | ||
| Income tax benefit |
|
853 |
|
|
— |
| ||
| Net loss |
$ |
(1,148 |
) |
$ |
(2,912 |
) | ||
| Net Loss Per Share Calculation: |
||||||||
| Net loss per share—basic and diluted |
$ |
(0.14 |
) |
$ |
(0.35 |
) | ||
| Weighted average shares used in loss per share calculation—basic and diluted |
|
8,471,463 |
|
|
8,364,260 |
| ||
See accompanying notes to condensed consolidated financial statements.
2
EXCELLIGENCE LEARNING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(1,148 |
) |
$ |
(2,912 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
421 |
|
|
379 |
| ||
| Provision for losses on accounts receivable |
|
25 |
|
|
(10 |
) | ||
| Equity-based compensation |
|
143 |
|
|
143 |
| ||
| Deferred income taxes |
|
(853 |
) |
|
— |
| ||
| Changes in operating assets and liabilities, net of assets and liabilities assumed in acquisitions: |
||||||||
| Accounts receivable |
|
(382 |
) |
|
505 |
| ||
| Inventories |
|
(7,304 |
) |
|
(4,306 |
) | ||
| Prepaid expenses and other current assets |
|
258 |
|
|
109 |
| ||
| Other assets |
|
18 |
|
|
(12 |
) | ||
| Accounts payable |
|
6,526 |
|
|
4,105 |
| ||
| Accrued expenses |
|
(22 |
) |
|
(839 |
) | ||
| Income tax related liabilities |
|
(3 |
) |
|
— |
| ||
| Other current liabilities |
|
(37 |
) |
|
140 |
| ||
| Net cash used in operating activities |
|
(2,358 |
) |
|
(2,698 |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
|
(323 |
) |
|
(195 |
) | ||
| Acquisition of Marketing Logistics, Inc. |
|
(827 |
) |
|
— |
| ||
| Net cash used in investing activities |
|
(1,150 |
) |
|
(195 |
) | ||
| Cash flows from financing activities: |
||||||||
| Bank overdraft |
|
— |
|
|
450 |
| ||
| Borrowings on line of credit |
|
12,852 |
|
|
19,517 |
| ||
| Principal payments on line of credit |
|
(8,457 |
) |
|
(18,683 |
) | ||
| Principal payments on notes payable |
|
— |
|
|
(14 |
) | ||
| Issuance of equity, net of fees |
&nb | |||||||