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 September 30, 1996
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, Georgia 30071
(Address of principal executive offices) (Zip Code)
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 September 30, 1996, the Registrant had 4,380,525 shares of Common
Stock, $.01 par value per share outstanding.
INDEX
Page
PART I - FINANCIAL INFORMATION
Item I - Financial Statements
Condensed Consolidated Financial Statements:
Balance Sheet as of September 30, 1996 (unaudited)
and December 31, 1995.......................................... 3
Statements of Income for the three months and nine months
ended September 30, 1996 and September 30, 1995
(unaudited).................................................... 4
Statements of Cash Flows for the nine months ended
September 30, 1996 and September 30, 1995 (unaudited).......... 5
Notes to Condensed Consolidated Financial Statements........... 6
Item II - Management's Discussion
Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 8
PART II - OTHER INFORMATION.......................................... 16
2
LUISKI INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
ASSETS
CURRENT
Cash $ 389,308 $ 200,989
Accounts Receivable,
net allowance for doubtful
accounts of $3,900,000 and
$1,050,000, as of 1996 and 1995,
respectively 38,257,324 33,013,943
Inventories 44,521,525 43,295,440
Prepaid Expenses and Other
Current Assets 4,712,599 3,840,889
-------------- -------------
TOTAL CURRENT ASSETS 87,880,756 80,351,261
FURNITURE, AUTOS, AND EQUIPMENT,
at cost, less Accumulated
Depreciation and
Amortization of
$3,369,374 and $2,645,806
as of 1996 and 1995, respectively 2,941,773 3,101,973
OTHER ASSETS 253,412 254,828
------- -------
TOTAL ASSETS $ 91,075,941 $ 83,708,062
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable: Affiliate $ 14,141,121 $ 9,245,742
Accounts Payable: Trade 24,121,641 24,491,010
Accrued Expenses and Other
Current Liabilities 2,072,474 1,964,893
--------------- ----------------
TOTAL CURRENT LIABILITIES 40,335,236 35,701,645
REVOLVING CREDIT LOAN 26,392,150 20,965,263
CAPITAL LEASE OBLIGATIONS 820,628 702,114
--------------- ----------------
TOTAL LIABILITIES 67,548,014 57,369,022
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 5,048,957 7,860,070
--------------- --------------
TOTAL STOCKHOLDERS' EQUITY 23,527,927 26,339,040
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 91,075,941 $ 83,708,062
=============== ===============
See notes to condensed consolidated financial statements
3
LUISKI INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
Net Sales $ 110,480,302 $96,060,729 $ 310,664,576 $293,441,679
Cost of Sales 102,903,391 88,851,108 289,071,696 271,942,535
Gross Profit 7,576,911 7,209,621 21,592,880 21,499,144
Selling, General
and Administrative
Expenses 9,432,853 6,949,836 23,505,161 21,917,754
------------- ----------- --------------- ------------
(Loss) from
Operations (1,855,942) 259,785 (1,912,281) (418,610)
Other Charges (Net) 671,561 781,066 1,648,832 1,713,540
------------- ----------- -------------- -------------
Loss before Income
Taxes (2,527,503) (521,281) (3,561,113) (2,132,150)
Income Taxes (608,000) (142,870) (750,000) (755,000)
------------- ----------- ------------- ------------
Net Loss $ (1,919,503) $ (378,411) $ (2,811,113) $ (1,377,150)
============= =========== ============= ============
(Loss) per
Common and
Common Equivalent
Shares Outstanding:
Primary and Fully
Diluted $ (0.44) $ (0.09) $ (0.64) $ (0.31)
============= ============ ============= ============
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
See notes to condensed consolidated financial statements
4
LUISKI INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
Nine months ended
September 30,
-------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (2,811,113) $ (1,377,150)
Adjustments to reconcile
Net Loss to Net Cash
provided (used) by
operating activities
Depreciation and
Amortization 723,251 694,619
Changes in Operating Assets
Accounts Receivable (5,243,381) (8,959,845)
Inventories (1,226,085) (5,176,549)
Prepaid Expenses and Other (871,710) (1,718,239)
Other Assets 1,416 20,375
Changes in Operating Liabilities
Accounts Payable: Affiliate 4,895,379 (2,315,607)
Accounts Payable and Accrued
Expenses (261,788) 18,490,168
---------- ----------
Total Adjustments (1,982,918) 1,034,922
Net Cash provided (used)
by Operating Activities (4,794,031) (342,228)
---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital Expenditures (563,051) (529,596)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Revolving
Credit Loan 5,426,887 804,524
Repayment of Capital
Lease Obligations 118,514 (321,785)
--------- ---------
Net Cash provided by
Financing Activities 5,545,401 482,739
--------- ---------
INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS 188,319 (389,085)
CASH AND CASH
EQUIVALENTS: BEGINNING 200,989 834,355
---------- ---------
CASH AND CASH
EQUIVALENTS: ENDING $ 389,308 445,270
========== =========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Cash paid during
period for Interest $1,630,259 $1,621,050
========== ==========
Cash paid during
period for Interest $ - $ -
========== ==========
See notes to condensed consolidated financial statements
5
LIUSKI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Condensed 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 nine month period ended September
30, 1996 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. 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, 1995, which are incorporated
by reference herein.
Note 2. 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 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% of the eligible
inventory or $15,000,000. 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 September 30, 1996, the Company owed $26,392,150 under
its revolving credit loans.
Note 3. Contingencies
In March 1994, several shareholders of the Company filed class action
lawsuits in the United States District Court for the Eastern District of New
York against the Company and certain of its officers asserting violation of
Section 10(b) of the Securities Exchange act of 1934 and Rule 10(b)5 promulgated
thereunder. These actions, since consolidated into a single action, purport to
be based on statements contained in a press release and SEC Form 10-Q issued by
the Company in the latter part of 1993 and is entitled "In re Liuski
International, Inc. Securities Litigation," Civil Action No. 94-CV-1045. The
plaintiffs' consolidated amended complaint asserts that the Company's purported
omissions or misrepresentations falsely inflated the value of the Company's
stock. The plaintiffs seek to represent purchasers who acquired the Company's
common stock during various periods, the earliest of which commenced on November
8, 1993 and ended on March 4, 1994. No class has been certified to this date.
The complaint demands damages in an unspecified amount. In September, 1995, the
plaintiffs filed and served a second amended and consolidated complaint.
6
On December 4, 1995, the Company and its named officers filed a motion to
dismiss the action for failure to state a cause of action and failure to plead
fraud with particularity. That motion has been fully briefed by both sides and
submitted to the court. To date, no decision has been made on the motion. The
Company also moved for a stay of discovery pending determination of the motion
to dismiss. That motion was granted by Magistrate Judge Boyle by order dated
December 13, 1995. The Company and its named officers intend to defend this suit
vigorously.
7
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
Nine months ended September 30, 1996 and 1995
- ---------------------------------------------
Net Sales: Net sales for the nine months ended September 30, 1996 were
$310,664,576 representing an increase of $17,222,897 (5.8%) from $ 293,441,679
for the nine months ended September 30, 1995. Sales from the distribution
centers in the following regions changed as follows: Southeast region, 39.5%;
Northeast region (including Canadian distribution center), (20.6)%; Mid- and
Southwest region, (18.7)%; Western region, 9.5%; Pacific region, (71.5)% and
Mail Order, (30.5)%. Part of the decrease in the Northeast and Southwest regions
and increase in the Southeast region was caused by crediting corporate sales
previously allocated to New York to Georgia in conjunction with the relocation
of corporate sales personnel to the Georgia office.
At the beginning of March, 1996, the Company changed its computerized
management information systems software. As a result of this transition, the
Company experienced problems that adversely impacted its ability to process
orders and ship products, which negatively impacted sales during the second
quarter. Sales were also affected as a result of increased pricing to allow for
the recovery of shipping costs related to certain heavy low margin products. To
a lesser extent, sales during the nine months ended September 30, 1996, were
negatively affected by the shortages the Company experienced with respect to
certain multimedia kits.
Sales of the Company's Magitronic brand of personal computers and notebook
computers for the nine months ended September 30, 1996, increased to $66,417,372
(21.4% of net sales) from $49,732,256 (16.9 % of net sales) for the nine months
ended September 30, 1995. The Company believes that the increase in sales of
these products was due to the success of the Company's high end notebook
computers, competitive pricing, fast delivery of custom-made systems as well as
the growing acceptance of the Company's Magitronic brand in the market. In
addition, sales of Magitronic computers for the nine months ended September 30,
1995, were negatively affected by production problems associated with relocating
the Company's assembly operations from Melville, New York, to Norcross, Georgia.
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. To enhance the visibility of Magitronic products, in January, 1996, the
Company created a separate Magitronic division that will focus on distributing
Magitronic products through new distribution channels including third party mail
order businesses and other distributors. Sales of this division through these
new distribution channels was $2,543,517 for the nine months ended September 30,
1996. Because the Company is attempting to distribute products through third
party mail order businesses, the Company discontinued its own mail order efforts
in June of 1996.
8
While the Company distributes products from more than 70 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 third calendar quarter is generally a period of stronger net sales in
comparison to the first two quarters of the year.
Gross Profit: Gross profit increased by $93,736 to $21,592,880 (6.9% of net
sales) for the nine months ended September 30, 1996, from $21,499,144 (7.3% of
net sales) for the nine months ended September 30, 1995. During the third
quarter of 1996, the Company re-examined its methods of assessing and estimating
the adequacy of allowances for doubtful vendor receivables and determined that
such allowances were inadequate and needed to be increased. The lower gross
margin as a percentage of net sales was primarily a result of increases in
reserves and writeoffs with respect to vendor related receivables such as
rebates, returns, price protection and co-operative advertising in the amount of
$2,160,808 (0.7% of net sales). The Company also increased its inventory
obsolescence reserve in the amount of $203,000 (0.1% of net sales). These
increases in reserves and writeoffs were somewhat offset by increased levels of
sales of Magitronic personal computers and notebook computers, which generally
have higher margins. 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: In 1995, the Company
initiated and completed a strategic streamlining program that included the
relocation of the Company's corporate headquarters and assembly operations as
well as the restructuring and consolidation of the Company's distribution
system. Prior to the streamlining program, the Company's headquarters and
primary assembly facility were located in Melville (NY) and the Company's
products were supplied from ten distribution centers. During 1995, the Company
moved its headquarters and primary assembly operations to Norcross (GA) and
consolidated its distribution centers from ten to four. The strategic
streamlining program was implemented to provide the Company with the opportunity
to improve operating efficiencies and economies of scale.
For the nine months ended September 30, 1996, selling, general and
administrative expenses increased by $1,587,407 to $23,505,161 (7.6% of net
sales) from $21,917,754 (7.5% of net sales) for the nine months ended September
30, 1995. Due to its expansion of extending credit and growth in accounts
receivables in total and in age, in the third quarter of 1996, the Company
re-examined its method of assessing the adequacy of its allowance for doubtful
accounts receivable and determined that such allowance needed to be increased.
The allowance increased by $2,850,000 (0.9% of net sales). This increase was,
however, somewhat offset by the efficiencies generated by the strategic
streamlining program, as well as the nonrecurrance of $995,000 in costs incurred
through September 30,1995, to implement this program. Additional savings of
approximately $200,000 were achieved through reductions of rent, telephone and
other office expenses. Salaries, employment taxes and employee benefits for the
nine months ended September 30, 1996, decreased to $13,096,125 from $13,954,646
for the nine months ended September 30, 1995.
9
Other Charges: Net interest expense increased to $1,653,577 for the nine
months ended September 30, 1996, from $1,559,034 for the first nine months of
1995 as a result of increased borrowings, which was partially offset by
decreases in interest costs due to the Company's new revolving credit loan. The
interest rate paid by the Company under its revolving credit loan was 1/4% over
the prime rate or 125 basis points over LIBOR.
Net Loss: Net loss increased by $1,433,963 to $2,811,113 (-0.9% of net
sales) for the nine months ended September 30, 1996, from a net loss of
$1,377,150 (0.5 % of net sales) for the nine months ended September 30, 1995.
10
Three months ended September 30, 1996 and 1995
- ----------------------------------------------
Net Sales: Net sales for the three months ended September 30, 1996, were
$110,480,302 representing an increase of $14,419,573 (15.1%) from $96,060,729
for the three months ended September 30, 1995. Sales from the distribution
centers in the following regions changed as follows: Southeast region, 59.2%;
Northeast region (including Canadian distribution center), (15.5)%; Mid- and
Southwest region, (5.7)%; Western region, 16.8%; Pacific region, (65.9)% and
Mail Order, (99.0)%. The mail order business was discontinued in June, 1996.
Although the Company's business is not highly seasonal, the third calendar
quarter is generally a period of stronger net sales in comparison to the first
two quarters of the year.
Sales of the Company's Magitronic brand of personal computers and notebook
computers for the three months ended September 30, 1996, increased to
$23,160,758 (21.0% of net sales) from $17,931,008 (18.7% of net sales) for the
three months ended September 30, 1995. Sales of Magitronic personal computers
during the third quarter of 1995 were affected by production problems resulting
from the relocation of the assembly facilities from New York to Georgia. These
production problems included longer delivery times and quality control issues.
Gross Profit: Gross profit increased by $367,290 to $7,576,911 (6.9% of net
sales) for the three months ended September 30, 1996, from $7,209,621 (7.5% of
net sales) for the three months ended September 30, 1995. During the third
quarter of 1996, the Company re-examined its methods of assessing and estimating
the adequacy of allowances for doubtful vendor receivables and determined that
such allowances were inadequate and needed to be increased. The lower gross
margin as a percentage of net sales was primarily a result of increases in
reserves with respect to vendor related receivables such as rebates, returns,
price protection and co-operative advertising in the amount of $585,022 (0.5% of
net sales). The company also increased its inventory obsolescence reserve in the
amount of $203,000 (0.1% of net sales). These increases in reserves were
somewhat offset by increased levels of sales of Magitronic personal computers
and notebook computers, which generally have higher margins. 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: As previously mentioned, in
1995, the Company initiated and completed a strategic streamlining program that
included the relocation of the Company's corporate headquarters and assembly
operations as well as the restructuring and consolidation of the Company's
distribution system.
For the three months ended September 30, 1996, selling, general and
administrative expenses increased by $2,483,017 to $9,432,853 (8.5% of net
sales) from $6,949,836 (7.2% of net sales) for the three months ended September
30, 1995. Due to it's expansion of extending credit and growth in accounts
receivables in total and in age, in the third quarter of 1996, the Company
re-examined it's method of assessing the adequacy of it's allowance for doubtful
accounts receivable and determined that such allowance needed to be increased.
The allowance increased by $1,625,000 (1.5% of net sales). Additionally, the
Company recorded direct writeoffs for bad debt which totaled approximately
$550,000. Salaries, employment taxes, and employee benefits for the three months
ended September 30, 1996, decreased to $4,618,165 from $4,650,990 for the three
months ended September 30, 1995.
11
Other Charges: Net interest expense increased to $666,739 for the three
months ended September 30, 1996, from $681,350 for the third quarter of 1995 as
a result of increased borrowings, which was partially offset by decreases in
interest costs due to the Company's new revolving credit loan. The interest rate
paid by the Company under its revolving credit loan was 1/4% over the prime rate
or 125 basis points over LIBOR.
Net Loss: Net loss increased by $1,541,092 to $1,919,503 (-1.7% of net
sales) for the three months ended September 30, 1996, from a net loss of
$378,411 (0.4 % of net sales) for the three months ended September 30, 1995.
12
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
nine months ended September 30, 1996, net cash used by operating activities was
$5,876,568 compared to net cash used by operating activities of $342,228 for the
nine months ended September 30, 1995. The change in net cash flow from operating
activities between the nine months ended September 30, 1996 and September 30,
1995, in the amount of $5,534,340, was primarily due to higher growth in
accounts receivable and inventories. In addition, one of the Company's vendors
provided a special discount to pay early for a large purchase of inventory. The
Company may experience shifts in cash flow in the future, particularly if its
suppliers provide more restrictive credit terms than the Company is currently
afforded. For the nine month periods ended September 30, 1996 and September 30,
1995, the Company generally paid its suppliers approximately 35-40 days from the
date of invoice. Terms vary from 1 day to 60 days. The Company takes most early
pay discounts when offered.
Working capital was $47,545,520 as of September 30, 1996 and $44,649,616 as
of December 31, 1995. 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 $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 September 30, 1996 and December 31, 1995, the Company owed
$26,392,150 and $20,965,263, respectively, under its revolving credit loans. The
Company has no obligations under letters of credit at September 30, 1996 and had
no such obligations outstanding as of December 31, 1995, leaving an availability
under its revolving credit loan of $8,607,850 on September 30, 1996, and
$14,034,737 on December 31, 1995.
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. Most products are 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 44 days during the first nine months of 1996 and 1995. The Company
takes a physical inventory monthly, which is then 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.
13
Accounts Receivable: The Company primarily sells its products on a cash,
C.O.D., or terms of up-to-30 days basis, however, the Company has expanded it's
extension of credit terms. The Company's average days' receivable was
approximately 31 days for the nine month period ended September 30, 1996, and
approximately 20 days for the nine month period ended September 30, 1995. This
increase in the average days sales receivable results from the Company extending
credit to more of its customers.
MANAGEMENT ESTIMATES
Financial statements prepared in conformity with generally accepted
accounting principles necessitate 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
Stock Based Compensation: 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 Company intends to adopt this
statement during its year ending December 31, 1996. Other than additional
disclosures in the financial statements regarding stock options granted pursuant
to the Company's 1991 and 1994 Stock Option Plans, this statement will not have
an effect on the Company's consolidated financial statements.
Long-Lived Assets: 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 intends to adopt this statement during the year ending
December 31, 1996. Management does not believe this statement will have a
material impact on the Company's consolidated financial statements.
14
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.
15
PART II - OTHER INFORMATION
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 nine months of
1996)
(b) No reports on Form 8-K were filed by the Registrant during the period
ended September 30, 1996.
16
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: November 18, 1996
LIUSKI INTERNATIONAL, INC.
By: /s/Hsing-Yen Liu
------------------------
Hsing-Yen Liu
Chairman
17