Attached files
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| 8-K/A - FOOTSTAR INC | form8ka07827_04052011.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined statement of operations for the fiscal year ended January 1, 2011 reflects the adjustments necessary to present the historical Footstar, Inc. consolidated statement of operations on a going concern basis of accounting from a liquidation basis of accounting and then combines the going concern basis adjusted Footstar, Inc. consolidated statement of operations for the year ended January 1, 2011 with the historical CPEX, Inc. consolidated statement of operations for the year ended December 31, 2010, giving effect to the acquisition of CPEX by Footstar as if it had occurred on January 3, 2010. The unaudited pro forma condensed combined balance sheet reflects the adjustments necessary to present the historical Footstar, Inc. consolidated balance sheet on a going concern basis of accounting from a liquidation basis of accounting and then combines the going concern basis adjusted Footstar, Inc. consolidated balance sheet at January 1, 2011 with the historical CPEX, Inc. consolidated balance sheet at December 31, 2010, giving effect to the acquisition of CPEX by Footstar as if it had occurred on January 1, 2011. Additionally, these unaudited pro forma financial statements give effect to the financing obtained related to the CPEX acquisition, including the contribution to FCB I Holdings Inc. of the 19.5% non-controlling shareholder.
The unaudited pro forma condensed combined financial information provided herein does not purport to represent the results of operations or financial position of Footstar, Inc. that would have actually resulted had the acquisition of CPEX been completed as of the dates indicated, nor should the information be taken as indicative of the future results of operations or financial position of the combined company. The unaudited pro forma condensed combined financial statements do not reflect the impact of any potential operational efficiencies, cost savings or economies of scale that Footstar may achieve with respect to the combined operations of Footstar and CPEX.
FOOTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JANUARY 1, 2011
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Historical
Footstar, Inc. *
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Footstar, Inc. Adjustments
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Footstar, Inc. Adjusted
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Historical
CPEX Pharmaceuticals Inc. *
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Pro forma
Adjustments
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Pro forma
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ASSETS
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Current Assets
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Cash & cash equivalents
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$ | 8,719,993 | $ | - | $ | 8,719,993 | $ | 22,156,875 | $ | (12,155,190 | ) | c | $ | 16,115,028 | ||||||||||||
| 780,000 | e | |||||||||||||||||||||||||
| (886,650 | ) | h | ||||||||||||||||||||||||
| (2,500,000 | ) | f | ||||||||||||||||||||||||
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Restricted cash
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- | - | - | - | 2,500,000 | f | 2,500,000 | |||||||||||||||||||
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Accounts receivable
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- | - | - | 6,427,593 | - | 6,427,593 | ||||||||||||||||||||
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Real Estate
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6,172,500 | - | 6,172,500 | - | - | 6,172,500 | ||||||||||||||||||||
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Prepaid expenses
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1,550,367 | - | 1,550,367 | 700,887 | - | 2,251,254 | ||||||||||||||||||||
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Short-tern deferred tax asset
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- | - | - | 305,668 | (305,668 | ) | l | - | ||||||||||||||||||
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Total current assets
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16,442,860 | $ | - | 16,442,860 | 29,591,023 | (12,567,508 | ) | 33,466,375 | ||||||||||||||||||
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Non-current Assets
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Fixed assets
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- | - | - | 2,182,936 | - | 2,182,936 | ||||||||||||||||||||
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Intangible assets
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- | - | - | 1,663,679 | 70,897,056 | g | 72,560,735 | |||||||||||||||||||
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Notes receivable
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- | - | - | 326,918 | - | 326,918 | ||||||||||||||||||||
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Long-tern deferred tax asset
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- | - | - | 1,582,297 | (1,582,297 | ) | l | - | ||||||||||||||||||
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Deferred financing costs
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- | - | - | - | 886,650 | h | 886,650 | |||||||||||||||||||
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Total non-current assets
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- | - | 5,755,830 | 70,201,409 | 75,957,239 | |||||||||||||||||||||
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Total Assets
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$ | 16,442,860 | $ | - | $ | 16,442,860 | $ | 35,346,853 | $ | 57,633,901 | $ | 109,423,614 | ||||||||||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities
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Accounts payable & accrued expenses
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$ | 4,164,757 | $ | (3,075,836 | ) | i | $ | 1,088,921 | $ | 2,141,860 | $ | 725,259 | d | $ | 3,956,040 | |||||||||||
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Income taxes payable
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- | - | - | 1,534,982 | - | 1,534,982 | ||||||||||||||||||||
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Notes payable – Short-term
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- | - | - | - | 15,000,000 | b | 15,000,000 | |||||||||||||||||||
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Total current liabilities
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4,164,757 | (3,075,836 | ) | 1,088,921 | 3,676,842 | 15,725,259 | 20,491,022 | |||||||||||||||||||
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Other Liabilities
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Other long-tern liabilities
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2,495,335 | (1,301,397 | ) | j | 1,193,938 | - | - | 1,193,938 | ||||||||||||||||||
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Deferred tax liability
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- | - | - | - | 25,298,653 | l | 25,298,653 | |||||||||||||||||||
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Notes payable – Long-term
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- | - | - | - | 47,500,000 | b | 47,500,000 | |||||||||||||||||||
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Total other liabilities
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2,495,335 | (1,301,397 | ) | 1,193,938 | - | 72,798,653 | 73,992,591 | |||||||||||||||||||
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Total Liabilities
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6,660,092 | (4,377,233 | ) | 2,282,859 | 3,676,842 | 88,523,912 | 94,483,613 | |||||||||||||||||||
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EQUITY
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Stockholders’ equity
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Common Stock
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- | 322,870 | k | 322,870 | 26,169 | (26,169 | ) | a | 322,870 | |||||||||||||||||
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Additional paid in capital
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- | 244,438,669 | k | 244,438,669 | 28,760,297 | (28,760,297 | ) | a | 244,438,669 | |||||||||||||||||
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Treasury stock
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- | (234,978,771 | ) | k | (234,978,771 | ) | - | - | (234,978,771 | ) | ||||||||||||||||
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Retained earnings
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- | 4,377,233 | 4,377,233 | 2,883,545 | (2,883,545 | ) | a | 4,377,233 | ||||||||||||||||||
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Non-controlling interest
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- | - | - | - | 780,000 | e | 780,000 | |||||||||||||||||||
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Total stockholders’ equity
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14,160,001 | 14,160,001 | 31,670,011 | (30,890,011 | ) | 14,940,001 | ||||||||||||||||||||
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Net Assets in liquidation
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9,782,768 | (9,782,768 | ) | k | - | - | - | - | ||||||||||||||||||
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Total Liabilities and Stockholders’ Equity
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$ | - | $ | - | $ | 16,442,860 | $ | 35,346,853 | $ | 57,633,901 | $ | 109,423,614 | ||||||||||||||
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*
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Derived from audited financial information (Historical Footstar, Inc. is as of 1/1/2011 and Historical CPEX is as of 12/31/10)
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2
FOOTSTAR, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 1, 2011
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Historical Footstar, Inc. *
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Footstar, Inc. Adjustments
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Footstar, Inc. Adjusted
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Historical
CPEX Pharmaceuticals Inc. *
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Pro forma
Adjustments
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Pro forma
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Revenue
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$ | - | $ | - | $ | - | $ | 23,297,017 | $ | - | $ | 23,297,017 | |||||||||||||
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Expenses
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General, administrative and R&D expenses
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- | 2,198,462 | 2,198,462 | 16,286,014 | 414,196 | q | 18,898,672 | ||||||||||||||||||
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Depreciation & amortization
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- | - | - | 702,907 | 4,726,470 | n | 5,429,377 | ||||||||||||||||||
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Interest expense
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- | 61,400 | 61,400 | 2,148 | 10,799,858 | o | 10,863,406 | ||||||||||||||||||
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Interest income
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- | - | - | (101,611 | ) | - | (101,611 | ) | |||||||||||||||||
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Income (loss) before Income Taxes
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- | (2,259,862 | ) | (2,259,862 | ) | 6,407,559 | (15,940,524 | ) | (11,792,827 | ) | |||||||||||||||
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Benefit for income taxes
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- | - | - | 230,449 | 1,423,551 | p | 1,654,000 | ||||||||||||||||||
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Net Income (loss) before non-controlling interest
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- | (2,259,862 | ) | (2,259,862 | ) | 6,638,008 | (14,516,973 | ) | (10,138,827 | ) | |||||||||||||||
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Net income (loss) attributable to the Non-controlling interest
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- | - | - | - | (1,536,398 | ) | m | (1,536,398 | ) | ||||||||||||||||
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Net income (loss) attributable to controlling interest
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$ | - | $ | (2,259,862 | ) | $ | (2,259,862 | ) | $ | 6,638,008 | $ | (12,980,575 | ) | $ | (8,602,429 | ) | |||||||||
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Net Loss per Common Share
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Basic & Diluted
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$ | (0.10 | ) | $ | (0.36 | ) | |||||||||||||||||||
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Weighted average common shares Outstanding
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Basic & Diluted
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23,882,917 | 23,882,917 | |||||||||||||||||||||||
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*
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Derived from audited financial information (Historical Footstar, Inc. is for the year ended 1/1/11 and Historical CPEX is for the year ended 12/31/10)
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3
Notes to Unaudited Pro Forma Condensed Financial Statements
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1.
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Purchase Price
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The following table summarizes the components of the total consideration determined for accounting purposes under ASC Topic 805 for these pro-forma condensed combined financial statements and reflect the allocation of the purchase consideration based on managements estimate of the fair value of the CPEX Pharmaceuticals, Inc. assets and liabilities acquired assuming acquired as of January 1, 2011.
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Components of consideration:
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Cash paid to CPEX Pharmaceuticals, Inc. shareholders at closing
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$ | 75,380,449 | ||
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CPEX liabilities assumed by Footstar
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3,676,842 | |||
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Gross consideration at closing
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79,057,291 | |||
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Less: net fair value of non-intangible acquired assets
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(8,160,235 | ) | ||
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Allocation to Intangible Asset
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70,897,056 | |||
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Allocation of consideration
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Cash
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$ | 22,156,875 | ||
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Accounts receivable
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6,754,511 | |||
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Tangible fixed assets
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2,182,936 | |||
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Fair value of non-intangible acquired assets
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2,364,566 | |||
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Other specific intangible asset specifically recorded in acquisition
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70,897,056 | |||
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Net Deferred tax liability
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(25,298,653 | ) | ||
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Gross assets
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79,057,291 | |||
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Less: current liabilities
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(3,676,842 | ) | ||
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Net assets to be acquired
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$ | 75,380,449 | ||
Direct acquisition costs, consisting of investment banking fees and legal fees directly related to the acquisition, are expensed as period costs, and are not capitalized. Financing costs amounted to $886,650. These costs were not expensed as acquisition costs, but treated as loan origination costs and are included in Deferred financing costs.
The excess of the purchase price over the estimated fair value of tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to Intangible Assets. The allocation of consideration is subject to change in the event that assumptions used in estimating fair values should change. Intangible assets are expected to be amortized using a straight-line method over its useful life.
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2.
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Pro-Forma Adjustments
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Explanations of the adjustments to the unaudited pro-forma condensed combined balance sheet as of January 1, 2011 are as follows:
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a.
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To eliminate CPEX Pharmaceuticals, Inc. historical equity accounts
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b.
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To record Notes Payable for CPEX Pharmaceuticals, Inc. acquisition - $64.0 million obligation, net of $1.5 million Original Issue Discount
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c.
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To record cash disbursed for CPEX Pharmaceuticals, Inc. acquisition, net of debt proceeds
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d.
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To record portion of the purchase price as yet unpaid
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e.
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To record 19.5% shareholders Non-controlling interest in FCB I Holdings Inc.
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f.
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To record Interest Reserve as restricted cash
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g.
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To record the estimated fair value of the acquired intangible asset which represents the contractual right to acquire future cash flows pursuant to a royalty definitive agreement in place. Due to the nature of the contracts, this asset has a life of 180 months, which is considered in the amortization life of the 2010 pro forma adjustments in the statement of operations.
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h.
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To record the deferred financing costs
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i.
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To reverse Footstar Liquidation Accruals Short-term
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j.
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To reverse Footstar Liquidation Accruals Long-term
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k.
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To adjust Footstar Net Assets in Liquidation to Going Concern Accounting
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l.
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To record net tax liability related to Intangible asset
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Explanations of the adjustments included in the unaudited pro-forma condensed combined statement of operations for the year ended January 1, 2011 are as follows:
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m.
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To record 19.5% shareholders Non-controlling interest in FCB I Holdings Inc.
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n.
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To record additional Intangible asset amortization - $60,897,056 straight-line amortized over 180 months
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o.
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To record interest expense on Notes Payable - $10,402,250 interest expense. $250,000 Original Issue Discount and $147,608 deferred financing fee expense straight-line over 72 months
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p.
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To record tax benefit from amortization of Intangible asset
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q.
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To record the estimated transaction costs
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4