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): June 7, 1999
------------
CREATIVE COMPUTERS, INC.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware
--------
(State or Other Jurisdiction of
Incorporation or Organization)
0-25790 95-4518700
------- ----------
(Commission File Number) (I.R.S. Employer Identification No.)
2555 West 190th Street
Torrance, California 90504
---------------------------
(Address of Principal Executive Offices) (Zip Code)
(310) 354-5600
--------------
(Registrant's telephone number,
including area code)
Item 2. Acquisition or Disposition of Assets.
On June 7, 1999, Creative Computers, Inc. (the "Company") distributed (the
"Distribution") to the holders of the Company's common stock of all of the
7,329,883 shares of common stock of uBid, Inc. ("uBid") owned by the Company,
representing approximately 80.1% of the outstanding stock of uBid. The
Distribution was made to stockholders of record as of May 24, 1999 (the "Record
Date"). Each of the holders of the Company's common stock entitled to the
Distribution received approximately .70488 shares of uBid common stock for each
share of the Company's common stock outstanding on the Record Date.
No fractional shares were issued in connection with the Distribution. In
lieu of receiving fractional shares, each record holder of the Company's common
stock who would otherwise have been entitled to receive a fractional interest
received cash representing such record holder's pro-rata interest in the net
proceeds of the sale by the distribution agent of the aggregated fractional
shares in the open market.
Stockholders were not required to pay any cash or other consideration or
surrender or exchange shares of Company common stock in order to receive shares
of uBid common stock in the Distribution.
The discussion regarding the nature of material relationships between the
persons who received the Distribution and the registrant and its affiliates,
directors and officers of the registrant, and any associate of any such director
or officer, is included in the information statement (the "Information
Statement") dated May 26, 1999, under the caption entitled "Transactions between
the Company and uBid," and is incorporated herein by reference. The Information
Statement was filed as Exhibit 99.1 to the Company's Report on Form 8-K dated
May 27, 1999.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The unaudited pro forma consolidated financial information of the Company,
included in Item 7(b) of this Report, is based on and should be read in
conjunction with the audited consolidated financial statements and notes thereto
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 and the unaudited consolidated financial statements and notes
thereto appearing in the Company's Form 10-Q for the period ended March 31,
1999. The accompanying unaudited pro forma consolidated balance sheet gives
effect to the distribution (the "Distribution") of the common stock of uBid as
if the Distribution had occurred on March 31, 1999. The accompanying unaudited
pro forma consolidated statements of operations gives effect to the Distribution
as if the Distribution had occurred on January 1, 1998.
The pro forma financial statements are not necessarily indicative of the
current or future financial position or results of operations of the Company and
such statements should be read in the context of the Company's historical
consolidated financial statements. The pro forma adjustments are based upon
information currently available to the Company and contain estimates and
assumptions. Management believes that the estimates and assumptions provide a
reasonable basis for presenting the significant effects of the Distribution and
that the pro forma adjustments give appropriate effect to these estimates and
assumptions and are properly applied in the pro forma financial
statements.
CREATIVE COMPUTERS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1999
(in thousands except share data)
Company uBid Pro Forma Company
as Reported as Reported Adjustments (1) Pro Forma
----------- ----------- --------------- ---------
Assets
Current assets:
Cash and cash equivalents $ 27,906 $ 25,909 $ $ 1,997
Accounts receivable, net of allowance for
doubtful accounts 40,605 482 40,123
Due from uBid - - 910 (7) 910 (7)
Inventories 43,688 7,981 35,707
Prepaid expenses and other current assets 3,207 164 3,043
Income tax refund receivable 187 - 187
Deferred income taxes 4,978 - 4,978
-------- -------- ------- --------
Total current assets 120,571 34,536 910 86,945
Notes receivable from uBid 3,331 (7) 3,331
Property, plant and equipment, net 15,615 1,165 14,450
Goodwill, net 12,198 - 12,198
Deferred income taxes 1,262 - 1,262
Other assets 104 - 104
-------- -------- ------- --------
$149,750 $ 35,701 $ 4,241 $118,290
======== ======== ======= ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 61,493 $ 12,275 $ $ 49,218
Accrued expenses and other current liabilities 13,237 3,019 10,218
Due to the Company - 910 910 (7) -
Line of credit 4,500 - 4,500
Capital leases - current portion 229 - 229
Notes payable - current portion 6 - 6
-------- -------- ------- --------
Total current liabilities 79,465 16,204 910 64,171
Capital leases 238 - 238
Notes payable to the Company - 3,331 -
Notes payable 155 - 3,331 (7) 155
-------- -------- ------- --------
Total liabilities 79,858 19,535 4,241 64,564
Minority interest 3,041 - (3,041)(3) -
Stockholders' equity:
Common stock, $.001 par value; 15,000,000 shares
authorized; 10,375,893 shares issued and outstanding 11 2 2 (5) 11
Additional paid-in capital 83,944 29,998 3,039 (3)(4)(5) 56,985
Treasury stock, at cost (91) - (91)
Retained earnings (accumulated deficit) (17,013) (13,834) - (3,179)
-------- -------- ------- --------
Total stockholders' equity 66,851 16,166 3,041 53,726
$149,750 $ 35,701 $ 4,241 $118,290
======== ======== ======= ========
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
CREATIVE COMPUTERS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
(in thousands, except per share data)
Company uBid Company Pro Forma Company
as Reported as Reported Adjusted Adjustments (2) Pro Forma
----------- ----------- -------- ----------- ---------
Net sales $690,238 $ 48,232 $642,006 $ $642,006
Cost of sales 612,566 44,257 568,309 568,309
Retail store closure inventory reserves 3,679 - 3,679 3,679
-------- -------- -------- ------- ---------
Gross profit 73,993 3,975 70,018 70,018
Selling, general and administrative expenses 85,519 8,707 76,812 76,812
Expenses related to retail store closures 6,773 - 6,773 6,773
uBid stock-based compensation 5,267 5,267 - -
-------- -------- -------- ------- ---------
Income (loss) from operations (23,566) (9,999) (13,567) (13,567)
Interest income (expense) (461) (170) (291) (291)
-------- -------- -------- ------- ---------
Income (loss) before income taxes (24,027) (10,169) (13,858) (13,858)
Income tax provision (benefit) (5,034) - (5,034) (5,034)
-------- -------- -------- ------- ---------
Income (loss) before minority interest (18,993) (10,169) (8,824) (8,824)
Minority interest 1,198 - 1,198 (1,198) (3) -
-------- -------- -------- ------- ---------
Income (loss) from continuing operations (17,795) $(10,169) (7,626) (1,198) (8,824)
========
Income (loss) from discontinued
operations (net of taxes) - (10,169) 10,169 (6) -
-------- -------- ------- ---------
Net income (loss) $(17,795) $(17,795) $ 8,971 $ (8,824)
======== ======== ======= =========
Earnings (loss) per share
Continuing operations $(1.75) $(0.75) $(0.87)
Discontinued operations - (1.00) -
-------- -------- ---------
$(1.75) $(1.75) $(0.87)
======== ======== =========
Weighted average number of shares outstanding 10,176 10,176 10,176
======== ======== =========
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
CREATIVE COMPUTERS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Three Months Ended March 31, 1999
(in thousands, except per share data)
Company uBid Company Pro Forma Company
as Reported as Reported Adjusted Adjustments (2) Pro Forma
----------- ----------- -------- ----------- ---------
Net sales $210,603 $34,314 $176,289 $ $ 176,289
Cost of sales 187,588 31,337 156,251 156,251
------- ------- --------- ------- ---------
Gross profit 23,015 2,977 20,038 20,038
Selling, general and administrative expenses 25,006 5,645 19,361 19,361
uBid stock-based compensation 885 885 - -
-------- ------- --------- ------- ---------
Income (loss) from operations (2,876) (3,553) 677 677
Interest income (expense) 150 201 (51) (51)
-------- ------- -------- ------- ---------
Income (loss) before income taxes (2,726) (3,352) 626 626
Income tax provision (benefit) 238 - 238 238
-------- ------- -------- ------- ---------
Income (loss) before minority interest (2,964) (3,352) 388 388
Minority interest 667 - 667 (667) (3) -
-------- ------- -------- ------- ---------
Income (loss) from continuing operations (2,297) $(3,352) 1,055 (667) 388
=======
Income (loss) from discontinued
operations (net of taxes) - (3,352) 3,352 (6) -
-------- -------- ------- ---------
Net income (loss) $ (2,297) $ (2,297) $ 2,685 $ 388
======== ======== ======= =========
Earnings (loss) per share - Basic
Continuing operations $ (0.22) $ 0.10 $ 0.04
Discontinued operations - (0.32) -
-------- -------- ---------
$ (0.22) $ (0.22) $ 0.04
======== ======== =========
Earnings (loss) per share - Diluted
Continuing operations $ 0.10 $ 0.04
Discontinued operations (0.32) -
-------- ---------
$ (0.22) $ 0.04
======== =========
Weighted average number of shares outstanding
Basic 10,340 10,340 10,340
======== ======== =========
Diluted 10,814 10,814
======== =========
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
CREATIVE COMPUTERS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998
(in thousands, except per share data)
Company uBid Company Pro Forma Company
as Reported as Reported Adjusted Adjustments (2) Pro Forma
----------- ----------- -------- ----------- ---------
Net sales $164,134 $ 2,075 $162,059 $ $162,059
Cost of sales 147,878 1,891 145,987 145,987
Retail store closure inventory reserves 3,679 - 3,679 3,679
-------- ------- -------- ------- --------
Gross profit 12,577 184 12,393 12,393
Selling, general and administrative expenses 26,377 1,048 25,329 25,329
Expenses related to retail store closures 6,773 - 6,773 6,773
uBid stock-based compensation - - - - -
-------- ------- -------- ------- --------
Income (loss) from operations (20,573) (864) (19,709) (19,709)
Interest income (expense) (87) (31) (56) (56)
-------- ------- -------- ------- --------
Income (loss) before income taxes (20,660) (895) (19,765) (19,765)
Income tax provision (benefit) (7,851) - (7,851) (7,851)
-------- ------- -------- ------- --------
Income (loss) before minority interest (12,809) (895) (11,914) (11,914)
Minority interest - - - -
-------- ------- -------- ------- --------
Income (loss) from continuing operations (12,809) $ (895) (11,914) (11,914)
=======
Income (loss) from discontinued
operations (net of taxes) - (895) 895(3) -
-------- -------- ------- --------
Net income (loss) $(12,809) $(12,809) $ 895 $(11,914)
======== ======== ======= ========
Earnings (loss) per share
Continuing operations $ (1.27) $ (1.18) $ (1.18)
Discontinued operations - (0.09) -
-------- -------- --------
$ (1.27) $ (1.27) $ (1.18)
======== ======== ========
Weighted average number of shares outstanding 10,121 10,121 10,121
======== ======== ========
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
CREATIVE COMPUTERS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(1) Reflects adjustments for the spin-off of uBid as if it had taken place as
of the date presented.
(2) Reflects adjustments for the spin-off of uBid as if it had taken place at
January 1, 1998.
(3) Reflects elimination of 19.9% minority share of uBid's loss.
(4) Reflects $4,906 elimination of 19.9% minority share of proceeds from uBid's
December 4, 1998 initial public offering.
(5) Reflects $2 reclassification of uBid's common stock to additional paid-in
capital.
(6) Reflects the elimination of the loss from discontinued operations.
(7) Reflects reclassification of intercompany receivable and payable.
(c) Exhibits
10.1 Separation and Distribution Agreement, dated as of December 7,
1998, by and between Creative Computers, Inc. and uBid, Inc., as
amended (incorporated by reference to the Company's Report on
Form 8-K, filed with the Commission on May 28, 1999).
99.1 Information Statement dated May 26, 1999 (incorporated by
reference to the Company's Report on Form 8-K, filed with the
Commission on May 28, 1999).
SIGNATURE
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.
CREATIVE COMPUTERS, INC.
Date: June 21, 1999 By: /s/ TED SANDERS
------------------------
Ted Sanders
Chief Financial Officer
(Principal Financial Officer)
Index to Exhibits
Exhibit Description
------- -----------
10.1 Separation and Distribution Agreement, dated as of December 7,
1998, by and between Creative Computers, Inc. and uBid, Inc.,
as amended (incorporated by reference to the Company's Report
on Form 8-K, filed with the Commission on May 28, 1999).
99.1 Information Statement dated May 26, 1999 (incorporated by
reference to the Company's Report on Form 8-K, filed with the
Commission on May 28, 1999).