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PFSWEB, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company is currently evaluating the provisions of SFAS No. 133 and its effect on
the accounting treatment of its financial instruments.
During 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition." SAB No. 101 requires that
revenue generally is realized or realizable and earned when all of the following
criteria are met: (i) persuasive evidence of an arrangement exists, (ii)
delivery has occurred or services have been rendered, (iii) the seller's price
to the buyer is fixed or determinable, and (iv) collectibility is reasonably
assured. SAB No. 101 is effective for fiscal years beginning after December 15,
1999. The Company is currently evaluating the provisions of SAB No. 101 and its
effect, if any, on the Company's financial statements.
Cash Paid During Year
The Company made payments for interest of approximately $0, $16,000 and
$3,514,000 and income taxes of approximately $139,000, $269,000 and $6,000
during fiscal 1998, 1999 and 2000, respectively (see Notes 3 and 7). Unpaid
taxes payable and intercompany accrued interest are included in the payable to
Daisytek as of March 31, 1999. The Company's income tax receivable and
intercompany accrued interest are included in the payable to Daisytek as of
March 31, 2000.
3. PAYABLE TO DAISYTEK:
Funds advanced by Daisytek to fund the Company's working capital
requirements and certain investment activities have been reflected as an
intercompany payable as of March 31, 1999. Interest expense charged by Daisytek
was based on its weighted average interest rates of 6.9%, 6.7% and 6.7% and
approximated $497,000, $1,039,000 and $1,688,000 for fiscal 1998, 1999 and 2000,
respectively.
During fiscal 2000, PFSweb used a portion of the proceeds from the Offering
to repay its payable to Daisytek. Following the completion of the Offering,
Daisytek is prohibited from advancing funds to PFSweb, except in the normal
course of business, and PFSweb will be restricted from borrowing from Daisytek
following the spin-off. As of March 31, 2000, the payable to Daisytek reflects
payables incurred in the normal course of business and includes approximately
$4.5 million related to VAT, for which the Company has corresponding receivables
from European governments (see Note 2).
4. CAPITAL LEASE OBLIGATIONS:
During fiscal 2000, the Company entered into certain non-cancelable capital
lease agreements involving warehouse and computer equipment. The Company's
property held under capital leases, included in furniture, fixtures and
equipment in the accompanying consolidated balance sheets, amounted to
approximately $2.7 million, net of accumulated amortization at March 31, 2000.
The following is a schedule of future minimum lease payments under the
capital leases together with the present value of the net minimum lease payments
as of March 31, 2000 (in thousands):
Fiscal year ended March 31,
2001...................................................... $ 442
2002...................................................... 506
2003...................................................... 506
2004...................................................... 493
2005...................................................... 425
Thereafter................................................ 1,310
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Total minimum lease payments.............................. $ 3,682
Less: Amount representing interest........................ (1,001)
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Present value of net minimum lease payments............... 2,681
Less: Current installments................................ (274)
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Long-term capital lease obligations....................... $ 2,407
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