Press Releases
Aug 19

Liquidity Services, Inc. Announces Fourth Quarter and Fiscal Year 2012 Financial Results

– Record fiscal year revenue of $475.3 million up 41% – Record Gross
Merchandise Volume (GMV) of $864.2 million up 55% – Record Adjusted
earnings before interest, taxes, depreciation and amortization (EBITDA)
of $110.1 million up 109% –

– Fourth quarter revenue of $122.3 million up 52% – Record GMV of
$241.0 million up 65% – Adjusted EBITDA of $23.1 million up 85% –

WASHINGTON–(BUSINESS WIRE)–Nov. 29, 2012–
Liquidity Services, Inc. (NASDAQ: LQDT; www.liquidityservicesinc.com)
today reported its financial results for its fiscal year (FY-12) and
fourth quarter (Q4-12) ended September 30, 2012. Liquidity Services,
Inc. provides business and government clients and buying customers
transparent, innovative and effective online marketplaces and integrated
services for surplus assets.

Liquidity Services, Inc. (LSI or the Company) reported record
consolidated FY-12 revenue of $475.3 million, an increase of
approximately 41% from the prior year. Adjusted EBITDA, which excludes
stock-based compensation and acquisition costs including changes in
acquisition earn out payment estimates, for FY-12 was a record $110.1
million, an increase of approximately 109% from the prior year. FY-12
GMV, the total sales volume of all merchandise sold through the
Company’s marketplaces, was a record $864.2 million, an increase of
approximately 55% from the prior year. Comparisons to FY-11 results
include our U.K. operations, which were shut down, effective September
30, 2011, and are accounted for as discontinued operations in our
statement of operations.

The Company reported consolidated Q4-12 revenue of $122.3 million, an
increase of approximately 52% from the prior year’s comparable period.
Adjusted EBITDA for Q4-12 was $23.1 million, an increase of
approximately 85% from the prior year’s comparable period. GMV was a
record $241.0 million for Q4-12, an increase of approximately 65% from
the prior year’s comparable period. These comparisons include the
results of our U.K. operations, as noted above.

Net income in FY-12 was $48.3 million or $1.47 diluted earnings per
share. Adjusted net income in FY-12, which excludes stock-based
compensation and acquisition costs including changes in acquisition earn
out payment estimates, was a record $60.9 million, an increase of
approximately 100% from the prior year, and was a record $1.86 adjusted
diluted earnings per share. Net income in Q4-12 was $5.5 million or
$0.17 diluted earnings per share. Adjusted net income in Q4-12 was $13.1
million, an increase of approximately 216% from the prior year’s
comparable period, and was $0.40 adjusted diluted earnings per share.
Adjusted net income excludes stock-based compensation and acquisition
costs including changes in acquisition earn out payment estimates, net
of tax. These comparisons include the results of our U.K. operations, as
noted above.

Annual operating cash flow was a record $52.1 million during FY-12, an
increase of approximately 31% from the prior year. Q4-12 operating cash
flow was $12.9 million, an increase of approximately 13% from the prior
year’s comparable period.

“Liquidity Services generated strong results during Q4-12 as we
continued to grow our market share and build on our leadership position
in the reverse supply chain market during a seasonally low quarter for
the Company. We continued to benefit from large commercial and
government clients placing their trust in us to handle more of their
excess inventory and high value capital asset sales, which drove strong
growth this quarter,” said Bill Angrick, Chairman and CEO of LSI. “Our
recent acquisition, of NESA, further enhances our position as the
leading reverse supply chain solution for large retailers and their
suppliers, and we are excited by the numerous related opportunities to
create value for our buyers and clients, which we plan to demonstrate
during fiscal year 2013.”

“During fiscal year 2012, we continued to advance our business strategy
of building a defensible, leadership position in the reverse supply
chain market and generated strong results for our clients and
shareholders. With our large and growing buyer marketplace, integrated
services and domain expertise, we are enabling retailers, manufacturers
and government agencies to drive efficiencies in their global supply
chains and better compete in an increasingly complex environment. We
believe our continued focus on delivering the breadth of services,
geographic coverage and global market data that large enterprises
require in the reverse supply chain positions us well for fiscal year
2013 and continued long term profitable growth and market leadership,”
said Mr. Angrick. “Operationally, Liquidity Services continued to build
on the process improvements and scale efficiencies started last fiscal
year resulting in overall improved cycle times and margins. Adjusted
EBITDA margins improved significantly from 15.6% of revenue and 9.4% of
GMV in FY-11 to 23.2% and 12.7%, respectively for FY-12. Liquidity
Services remains focused on executing our long term growth strategy to
ensure the Company is well positioned to drive attractive returns for
shareholders.”

Business Outlook

While economic conditions have improved, our overall outlook remains
cautious due to the volatility in the macro environment and its
potential impact on the retail and industrial supply chains and GDP
growth. Additionally, we plan to further invest in our technology
infrastructure and product roadmap to support further expansion and
integration of our existing businesses and online marketplaces which are
proceeding according to our original plan. In the longer term, we expect
our business to continue to benefit from the following trends: (i) as
consumers trade down and seek greater value, we anticipate stronger
buyer demand for the surplus merchandise sold in our marketplaces, (ii)
as corporations and public sector agencies focus on reducing costs,
improving transparency and working capital flows by outsourcing reverse
supply chain activities, we expect our seller base to increase, and
(iii) as corporations and public sector agencies increasingly prefer
service providers with a proven track record, innovative technology
solutions and demonstrated financial strength, we expect our seller base
to increase.

The following forward looking statements reflect trends and assumptions
for the next quarter and FY 2013:

(i) stable commodity prices in our scrap business;

(ii) stable average sales prices realized in our capital assets
marketplaces;

(iii) an effective income tax rate of 40%; and

(iv) improved operations and service levels in our retail goods
marketplaces.

Our results may also be materially affected by changes in business
trends and our operating environment, and by other factors, such as: (i)
investments in infrastructure and value-added services to support new
business in both commercial and public sector markets; and (ii) pricing
pressure from buyers in selected categories of our retail goods
marketplaces, which can result in lower than optimal margins.

Our Scrap Contract with the Department of Defense (DoD) includes an
incentive feature, which can increase the amount of profit sharing
distribution we receive from 23% up to 25%. Payments under this
incentive feature are based on the amount of scrap we sell for the DoD
to small businesses during the preceding 12 months as of June 30th
of each year. We are eligible to receive this incentive in each year of
the term of the Scrap Contract and have assumed for purposes of
providing guidance regarding our projected financial results for fiscal
year 2013 that we will again receive this incentive payment.

In addition, we estimate that we will make investments totaling several
million dollars to fully integrate GoIndustry into Liquidity Services
over the next year resulting in a drag on our earnings during the first
half of fiscal year 2013. This is a change in our expectation that
GoIndustry would be accretive to the bottom line throughout fiscal year
2013. We believe this investment is required to fully realize the
synergies available across the Company’s buyer marketplaces and clients
and to position us for growth within the $100 billion global market for
capital assets.

GMV – We expect GMV for fiscal year 2013 to
range from $1.1 billion to $1.2 billion. We expect GMV for Q1-13 to
range from $240 million to $250 million.

Adjusted EBITDA – We expect Adjusted EBITDA
for fiscal year 2013 to range from $123 million to $133 million. We
expect Adjusted EBITDA for Q1-13 to range from $22.0 million to $24.0
million.

Adjusted Diluted EPS – We estimate Adjusted
Earnings Per Diluted Share for fiscal year 2013 to range from $2.05 to
$2.23. In Q1-13, we estimate Adjusted Earnings Per Diluted Share to be
$0.36 to $0.40. This guidance assumes that we have an average fully
diluted number of shares outstanding for the year of 33.4 million, and
that we will not repurchase shares with the approximately $18.1 million
yet to be expended under the share repurchase program.

Our guidance adjusts EBITDA and Diluted EPS for (i) acquisition costs
including transaction costs and changes in earn out estimates; (ii)
amortization of contract intangible assets of $33.3 million from our
acquisition of Jacobs Trading; and (iii) for stock based compensation
costs, which we estimate to be approximately $3.0 million to $3.5
million per quarter for fiscal year 2013. These stock based compensation
costs are consistent with fiscal year 2012.

Key FY-12 and Q4-12 Operating Metrics

Registered Buyers — At the end of FY-12,
registered buyers totaled approximately 2,186,000, representing a 36%
increase over the approximately 1,604,000 registered buyers at the end
of FY-11.

Auction Participants — Auction
participants, defined as registered buyers who have bid in an auction
during the period (a registered buyer who bids in more than one auction
is counted as an auction participant in each auction in which he or she
bids), increased to approximately 2,105,000 in FY-12, an approximately
9% increase over the approximately 1,936,000 auction participants in
FY-11. Auction participants increased to approximately 565,000 in Q4-12,
an approximately 28% increase over the approximately 442,000 auction
participants in Q4-11.

Completed Transactions — Completed
transactions increased to approximately 501,000, an approximately 5%
increase for FY-12 from the approximately 475,000 completed transactions
in FY-11. Completed transactions increased to approximately 140,000, an
approximately 35% increase for Q4-12 from the approximately 104,000
completed transactions in Q4-11. Average transaction sizes increased
approximately 47% from $1,175 in FY-11 to $1,725 in FY-12, and 23% from
$1,400 in Q4-11 to $1,716 in Q4-12, due to our lotting and merchandising
strategies.

GMV and Revenue Mix — GMV continues to
diversify due to the continued growth in our commercial business and
state and local government business (the GovDeals.com marketplace). As a
result, the percentage of GMV derived from our DoD Contracts during
FY-12 decreased to 23.7% compared to 33.9% in the prior year and in
Q4-12 decreased to 20.7% compared to 35.1% in the prior year period. The
table below summarizes GMV and revenue by pricing model. The purchase
model revenue mix has increased, as a result of the Jacobs Trading
acquisition.

GMV Mix

               
FY-12   FY-11   Q4-12   Q4-11
Profit-Sharing Model:      
Scrap Contract 8.9 %   15.4 %   6.7 %   16.8 %
Total Profit Sharing 8.9 % 15.4 % 6.7 % 16.8 %
Consignment Model:
GovDeals 15.2 % 20.0 % 13.2 % 20.2 %
Commercial 37.1 %   24.7 %   45.0 %   30.1 %
Total Consignment 52.3 % 44.7 % 58.2 % 50.3 %
Purchase Model:
Commercial 24.0 % 21.1 % 21.1 % 14.6 %
Surplus Contract 14.8 %   18.5 %   14.0 %   18.3 %
Total Purchase 38.8 % 39.6 % 35.1 % 32.9 %
 
Other 0.0 %   0.3 %   0.0 %   0.0 %
Total 100.0 %   100.0 %   100.0 %   100.0 %

Revenue Mix

Profit-Sharing Model:
Scrap Contract 16.1 %   25.5 %   13.3 %   30.3 %
Total Profit Sharing 16.1 % 25.5 % 13.3 % 30.3 %
Consignment Model:
GovDeals 2.6 % 3.0 % 2.5 % 3.4 %
Commercial 9.9 %   5.8 %   13.7 %   6.9 %
Total Consignment 12.5 % 8.8 % 16.2 % 10.3 %
Purchase Model:
Commercial 44.5 % 34.9 % 42.9 % 26.4 %
Surplus Contract 26.9 %   30.3 %   27.6 %   32.9 %
Total Purchase 71.4 % 65.2 % 70.5 % 59.3 %
 
Other 0.0 %   0.5 %   0.0 %   0.1 %
Total 100.0 %   100.0 %   100.0 %   100.0 %

Liquidity Services, Inc.
Reconciliation
of GAAP to Non-GAAP Measures

EBITDA and Adjusted EBITDA. EBITDA
is a supplemental non-GAAP financial measure and is equal to net income
plus interest expense and other expense, net; provision for income
taxes; amortization of contract intangibles; and depreciation and
amortization. Our definition of Adjusted EBITDA differs from EBITDA
because we further adjust EBITDA for stock based compensation expense,
and acquisition costs including changes in earn out estimates and
goodwill impairment. Adjusted EBITDA for the three and twelve months
ended September 30, 2011 includes the operating losses generated by our
UK operations, which were closed down as of September 30, 2011.

  Three Months
Ended September 30,
  Twelve Months
Ended September 30,
2012   2011 2012   2011
(In thousands)
Net income $ 5,545 $ 3,126 $ 48,296 $ 8,512
Interest and other expense, net 593 62 2,218 111
Provision for income taxes 2,627 2,527 31,652 4,419
Amortization of contract intangibles 1,884 203 7,943 813
Depreciation and amortization   1,715   1,587   6,223   5,519
 
EBITDA 12,364 7,505 96,332 19,374
Stock compensation expense 3,462 2,387 12,117 9,136
Acquisition costs and goodwill impairment   7,256   2,578   1,695   24,167
 
Adjusted EBITDA $ 23,082 $ 12,470 $ 110,144 $ 52,677

Adjusted Net Income and Adjusted Basic and Diluted
Earnings Per Share
. Adjusted net income is a supplemental
non-GAAP financial measure and is equal to net income plus tax effected
stock compensation expense, amortization of contract-related intangible
assets associated with the Jacobs Trading acquisition and acquisition
costs including changes in earn out estimates and goodwill impairment.
Adjusted basic and diluted earnings per share are determined using
Adjusted Net Income. Adjusted net income for the three and twelve months
ended September 30, 2011 includes the operating losses generated by our
UK operations, which were closed down as of September 30, 2011.

  Three Months Ended

September 30,

Twelve Months Ended

September 30,

2012   2011 2012   2011
(Dollars in thousands, except per share data)
Net income $ 5,545 $ 3,126 $ 48,296 $ 8,512
Stock compensation expense (net of tax) 2,077 1,034 7,270 6,029
Amortization of contract intangibles (net of tax) 1,090 4,359
Acquisition costs and goodwill impairment (net of tax)   4,354   (26 )   1,017   15,950
 
Adjusted net income $ 13,066 $ 4,134 $ 60,942 $ 30,491
 
Adjusted basic earnings per common share $ 0.42 $ 0.15 $ 1.98 $ 1.10
 
Adjusted diluted earnings per common share $ 0.40 $ 0.14 $ 1.86 $ 1.05
 
Basic weighted average shares outstanding   31,045,293   28,512,433   30,854,796   27,736,865
 
Diluted weighted average shares outstanding   32,788,205   30,527,438   32,783,079   29,081,933

Conference Call

The Company will host a conference call to discuss the fiscal 2012 and
fourth quarter 2012 results at 10:30 a.m. Eastern Time today. Investors
and other interested parties may access the teleconference by dialing
800-561-2731 or 617-614-3528 and providing the participant pass code
20943794. A live web cast of the conference call will be provided on the
Company’s investor relations website at http://www.liquidityservicesinc.com.
A replay of the web cast will be available on the Company’s website for
30 calendar days ending December 29, 2012 at 11:59 p.m. ET. An audio
replay of the teleconference will also be available until December 29,
2012 at 11:59 p.m. ET. To listen to the replay, dial 888-286-8010 or
617-801-6888 and provide pass code 18384625. Both replays will be
available starting at 12:30 p.m. today.

Non-GAAP Measures

To supplement our consolidated financial statements presented in
accordance with GAAP, we use certain non-GAAP measures of certain
components of financial performance. These non-GAAP measures include
earnings before interest, taxes, depreciation and amortization (EBITDA),
Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share.
These non-GAAP measures are provided to enhance investors’ overall
understanding of our current financial performance and prospects for the
future. We use EBITDA and Adjusted EBITDA: (a) as measurements of
operating performance because they assist us in comparing our operating
performance on a consistent basis as they do not reflect the impact of
items not directly resulting from our core operations; (b) for planning
purposes, including the preparation of our internal annual operating
budget; (c) to allocate resources to enhance the financial performance
of our business; (d) to evaluate the effectiveness of our operational
strategies; and (e) to evaluate our capacity to fund capital
expenditures and expand our business.

We believe these non-GAAP measures provide useful information to both
management and investors by excluding certain expenses that may not be
indicative of our core operating measures. In addition, because we have
historically reported certain non-GAAP measures to investors, we believe
the inclusion of non-GAAP measures provides consistency in our financial
reporting. These measures should be considered in addition to financial
information prepared in accordance with generally accepted accounting
principles, but should not be considered a substitute for, or superior
to, GAAP results. A reconciliation of all historical non-GAAP measures
included in this press release, to the most directly comparable GAAP
measures, may be found in the financial tables included in this press
release.

Supplemental Operating Data

To supplement our consolidated financial statements presented in
accordance with GAAP, we use certain supplemental operating data as a
measure of certain components of operating performance. We review GMV
because it provides a measure of the volume of goods being sold in our
marketplaces and thus the activity of those marketplaces. GMV and our
other supplemental operating data, including registered buyers, auction
participants and completed transactions, also provide a means to
evaluate the effectiveness of investments that we have made and continue
to make in the areas of customer support, value-added services, product
development, sales and marketing and operations. Therefore, we believe
this supplemental operating data provides useful information to both
management and investors. In addition, because we have historically
reported certain supplemental operating data to investors, we believe
the inclusion of this supplemental operating data provides consistency
in our financial reporting. This data should be considered in addition
to financial information prepared in accordance with generally accepted
accounting principles, but should not be considered a substitute for, or
superior to, GAAP results.

Forward-Looking Statements

This document contains forward-looking statements made pursuant to the
Private Securities Litigation Reform Act of 1995. These statements are
only predictions. The outcome of the events described in these
forward-looking statements is subject to known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to differ materially
from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. These
statements include, but are not limited to, statements regarding the
Company’s business outlook and expected future effective tax rates. You
can identify forward-looking statements by terminology such as “may,”
“will,” “should,” “could,” “would,” “expects,” “intends,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential,”
“continues” or the negative of these terms or other comparable
terminology. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance or achievements.

There are a number of risks and uncertainties that could cause our
actual results to differ materially from the forward-looking statements
contained in this document. Important factors that could cause our
actual results to differ materially from those expressed as
forward-looking statements are set forth in our filings with the SEC
from time to time, and include, among others, our dependence on our
contracts with the DoD and Walmart for a significant portion of our
revenue and profitability; our ability to successfully expand the supply
of merchandise available for sale on our online marketplaces; our
ability to attract and retain active professional buyers to purchase
this merchandise; the timing and success of upgrades to our technology
infrastructure; our ability to successfully complete the integration of
any acquired companies, including NESA, GoIndustry, Jacobs Trading and
Truckcenter.com, into our existing operations and our ability to realize
any anticipated benefits of these or other acquisitions; and our ability
to recognize any expected tax benefits as a result of closing our U.K.
operations. There may be other factors of which we are currently unaware
or deem immaterial that may cause our actual results to differ
materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on
our behalf apply only as of the date of this document and are expressly
qualified in their entirety by the cautionary statements included in
this document. Except as may be required by law, we undertake no
obligation to publicly update or revise any forward-looking statement to
reflect events or circumstances occurring after the date of this
document or to reflect the occurrence of unanticipated events.

About LSI

Liquidity Services, Inc. (NASDAQ: LQDT) provides leading corporations,
public sector agencies and buying customers the world’s most
transparent, innovative and effective online marketplaces and integrated
services for surplus assets. On behalf of its clients, Liquidity
Services has completed the sale of over $3.0 billion of surplus,
returned and end-of-life assets, in over 500 product categories,
including consumer goods, capital assets and industrial equipment. The
Company is based in Washington, D.C. and has nearly 1,200 employees.
Additional information can be found at: http://www.liquidityservicesinc.com.

Liquidity Services, Inc. and Subsidiaries

Consolidated Balance Sheets

(Dollars in Thousands)

 
September 30,
2012   2011
Assets
Current assets:
Cash and cash equivalents $ 104,782 $ 128,984
Accounts receivable, net of allowance for doubtful accounts of
$1,248 and $514 in 2012 and 2011, respectively
16,226 6,049
Inventory 20,669 15,065
Prepaid and deferred taxes 16,927 16,073
Prepaid expenses and other current assets 3,973 4,805
Current assets of discontinued operations     277
Total current assets 162,577 171,253
Property and equipment, net 10,382 7,042
Intangible assets, net 34,204 2,993
Goodwill 185,771 40,549
Other assets   7,474   5,970
Total assets $ 400,408 $ 227,807
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 9,997 $ 8,590
Accrued expenses and other current liabilities 36,425 23,411
Profit-sharing distributions payable 4,041 7,267
Current portion of acquisition earn out payable 14,511 5,410
Customer payables 34,255 12,728
Current portion of note payable 10,000
Current liabilities of discontinued operations   154   2,160
Total current liabilities 109,383 59,566
Acquisition earn out payable 4,741
Note payable, net of current portion 32,000
Deferred taxes and other long-term liabilities   9,022   2,087
Total liabilities 150,405 66,394
Stockholders’ equity:
Common stock, $0.001 par value; 120,000,000 shares authorized;
31,138,111 shares issued and outstanding at September 30, 2012;
31,192,608 shares issued and 29,030,552 shares outstanding at
September 30, 2011
31 29
Additional paid-in capital 182,361 124,886
Treasury stock, at cost (21,884 )
Accumulated other comprehensive income 1,246 52
Retained earnings   66,365   58,330
Total stockholders’ equity   250,003   161,413
Total liabilities and stockholders’ equity $ 400,408 $ 227,807

Liquidity Services, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in Thousands, Except Share and Per Share Data)

 
Three Months Ended

September 30,

Twelve Months Ended

September 30,

2012   2011 2012   2011
Revenue $ 102,424 $ 70,814 $ 415,829 $ 297,584
Fee revenue   19,851   8,391   59,475   29,794
Total revenue from continuing operations 122,275 79,205 475,304 327,378
 
Costs and expenses from continuing operations:
Cost of goods sold (excluding amortization) 50,626 25,440 198,123 126,395
Profit-sharing distributions 9,125 14,788 43,242 49,318
Technology and operations 20,025 13,239 67,553 52,178
Sales and marketing 10,444 5,970 31,252 23,279
General and administrative 12,435 6,849 37,107 26,484
Amortization of contract intangibles 1,884 203 7,943 813
Depreciation and amortization 1,715 1,342 6,223 4,881
Acquisition costs   7,256   1,762   1,695   6,702
 
Total costs and expenses   113,510   69,593   393,138   290,050
 
Income from continuing operations 8,765 9,612 82,166 37,328
Interest and other expense, net   593   401   2,218   1,190
 
Income before provision for income taxes from continuing operations 8,172 9,211 79,948 36,138
Provision for income taxes   2,627   2,528   31,652   15,459
Income from continuing operations 5,545 6,683 48,296 20,679
Loss from discontinued operations, net of tax     (3,557 )     (12,167 )
Net income $ 5,545 $ 3,126 $ 48,296 $ 8,512
 
Basic earnings (loss) per common share:

From continuing operations

$ 0.18 $ 0.23 $ 1.57 $ 0.75
From discontinued operations     (0.12 )     (0.44 )
Basic earnings per common share $ 0.18 $ 0.11 $ 1.57 $ 0.31
 
Diluted earnings (loss) per common share:
From continuing operations $ 0.17 $ 0.22 $ 1.47 $ 0.71
From discontinued operations     (0.12 )     (0.42 )
Diluted earnings per common share $ 0.17 $ 0.10 $ 1.47 $ 0.29
 
Basic weighted average shares outstanding   31,045,293   28,512,433   30,854,796   27,736,865
 
Diluted weighted average shares outstanding   32,788,205   30,527,438   32,783,079   29,081,933

Liquidity Services, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

 
Three Months Ended

September 30,

Twelve Months Ended

September 30,

2012   2011   2012   2011
Operating activities
Net income $ 5,545 $ 3,126 $ 48,296 $ 8,512
Less: Discontinued operations, net of tax     (3,557   )     (12,167 )
 
Income from continuing operations 5,545 6,683 48,296 20,679
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities from continued operations:
Depreciation and amortization 3,599 1,545 14,166 5,694
Stock compensation expense 3,462 2,386 12,117 9,136
Provision (benefit) for inventory allowance 1,660 (73 ) 884 (22 )
Provision (benefit) for doubtful accounts 334 90 117 221
Deferred tax (benefit) provision (1,719 ) 66 (1,719 ) 66
Incremental tax benefit from exercise of common stock options (1,765 ) (4,146 ) (16,953 ) (6,597 )
Changes in operating assets and liabilities:
Accounts receivable (483 ) (883 ) (1,596 ) (1,809 )
Inventory 4,384 (1,693 ) (132 ) (392 )
Prepaid expenses and other assets 4,490 1,480 17,890 7,815
Accounts payable (1,331 ) 2,582 (7,570 ) 1,552
Accrued expenses and other (15,298 ) 4,312 (8,534 ) (691 )
Profit-sharing distributions payable 1,103 1,909 (3,226 ) 1,671
Customer payables 2,677 (608 ) 2,510 2,945
Acquisition earn out payable 6,242 (1,838 ) (3,826 ) 358
Other liabilities   77   (21 )   205   (1 )
 
Net cash provided by operating activities from continuing activities 12,977 11,791 52,629 40,625
Net cash used in operating activities from discontinued operations   (102 )   (405   )   (483 )   (739 )
Net cash provided by operating activities 12,875 11,386 52,146 39,886
Investing activities
Purchases of short-term investments (1,462 ) (10,292 )
Proceeds from the sale of short-term investments 12,392 43,812
Cash paid for acquisitions and decrease (increase) in goodwill and
intangibles
8,267 (62 ) (71,796 ) (9,092 )
Purchases of property and equipment   (3,965 )   (423   )   (6,793 )   (4,822 )
 
Net cash provided by (used in) investing activities 4,302 10,445 (78,589 ) 19,606
Financing activities
Proceeds from exercise of common stock options (net of tax) 1,469 10,590 15,491 23,639
Incremental tax benefit from exercise of common stock options 1,765 4,146 16,953 6,597
Repurchases of common stock         (29,999 )   (3,541 )
 
Net cash provided by financing activities 3,234 14,736 2,445 26,695
Effect of exchange rate differences on cash and cash equivalents   (288 )   (990   )   (309 )   (476 )
 
Net increase (decrease) in cash and cash equivalents 20,123 35,577 (24,307 ) 85,711
Cash and cash equivalents at beginning of the period   84,659   93,512     129,089   43,378
 
Cash and cash equivalents at end of period $ 104,782 $ 129,089 $ 104,782 $ 129,089
Less: Cash and cash equivalents of discontinued operations at end of
year
    105       105
Cash and cash equivalents of continuing operations at end of year $ 104,782 $ 128,984 $ 104,782 $ 128,984
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 2,721 $ 12 $ 14,482 $ 6,245
Cash paid for interest 65 14 117 62
Contingent purchase price accrued 6,242 7,438 6,989
Note payable issued in connection with acquisition 40,000

Source: Liquidity Services, Inc.

Liquidity Services, Inc.
Julie Davis, 202-467-6868 ext. 2234
Director,
Investor Relations
julie.davis@liquidityservicesinc.com