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8-K/A - FORM 8-K AMENDMENT - CAFEPRESS INC. | d465481d8ka.htm |
EX-99.1 - AUDITED FINANCIAL STATEMENTS OF EZ PRINTS - CAFEPRESS INC. | d465481dex991.htm |
EX-99.2 - UNAUDITED CONDENSED FINANCIAL STATEMENTS OF EZ PRINTS - CAFEPRESS INC. | d465481dex992.htm |
EX-23.01 - CONSENT OF INDEPENDENT AUDITORS - CAFEPRESS INC. | d465481dex2301.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined balance sheet and statement of operations are presented to give effect to the purchase of all of the outstanding capital stock by CafePress, Inc. (CafePress) through the merger (the Transaction) of CafePress with EZ Prints, Inc. (EZ Prints). The pro forma information was prepared based on the historical consolidated financial statements and related notes of CafePress and EZ Prints after giving effect to the Transaction using the acquisition method of accounting. In addition, certain historical EZ Prints balances have been reclassified to conform to CafePress presentation.
The unaudited pro forma condensed combined balance sheet as of September 30, 2012 is presented as if the Transaction had occurred on September 30, 2012. The unaudited pro forma combined statements of operations combine the results of operations of CafePress and EZ Prints for the nine months ended September 30, 2012, and the results of CafePress for the year ended December 31, 2011 and EZ Prints for the year ended March 31, 2012 and are presented as if the Transaction had occurred on January 1, 2011 and were carried forward through each of the aforementioned periods presented.
The preliminary allocation of the purchase price used in the unaudited pro forma condensed combined financial statements is based upon an estimated valuation of certain assets and liabilities acquired as if the Transaction had occurred on September 30, 2012. The estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) upon the finalization of the valuation of the Transaction as of the actual acquisition date of October 25, 2012.
The unaudited pro forma condensed combined financial statements have been prepared for illustrative purposes only and are not intended to represent or be indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been achieved had CafePress and EZ Prints been a combined company during the respective periods presented. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies, post-Transaction synergies and/or cost savings that CafePress may achieve with respect to the combined companies.
These unaudited pro forma condensed combined financial statements should be read in conjunction with CafePress historical consolidated financial statements and related notes included in its Prospectus filed on March 29, 2012, and Form 10-Q for the nine months ended September 30,2012, as well as EZ Prints historical financial statements and related notes for the year ended March 31, 2012, and for the three months ended June 30, 2012 and 2011, which are included as Exhibits 99.1 and 99.2, respectively, to this Form 8-K/A.
CAFEPRESS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2012
(in thousands)
Historical | ||||||||||||||||||||
CafePress | EZ Prints | Pro forma Adjustments |
Pro forma Combined |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 45,507 | $ | 1,464 | $ | (30,000 | ) | A | $ | 16,971 | ||||||||||
Short-term investments |
9,652 | | | 9,652 | ||||||||||||||||
Accounts receivable, net |
3,466 | 2,636 | (25 | ) | B | 6,077 | ||||||||||||||
Inventory |
7,591 | 724 | | 8,315 | ||||||||||||||||
Deferred tax assets |
1,842 | | 1,550 | D | 3,392 | |||||||||||||||
Deferred costs |
3,405 | | | 3,405 | ||||||||||||||||
Prepaid expenses and other current assets |
8,302 | 132 | (250 | ) | B | 8,184 | ||||||||||||||
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Total current assets |
79,765 | 4,956 | (28,725 | ) | 55,996 | |||||||||||||||
Property and equipment, net |
16,683 | 3,427 | (1,556 | ) | C | 18,554 | ||||||||||||||
Goodwill |
17,204 | | 22,775 | D | 39,979 | |||||||||||||||
Intangible assets, net |
10,001 | | 11,130 | D | 21,131 | |||||||||||||||
Deferred tax assets |
3,250 | | | 3,250 | ||||||||||||||||
Other assets |
314 | 42 | | 356 | ||||||||||||||||
Total assets |
$ | 127,217 | $ | 8,425 | $ | 3,624 | $ | 139,266 | ||||||||||||
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LIABILITIES, AND STOCKHOLDERS EQUITY (DEFICIT) |
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Current liabilities: |
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Line of credit |
$ | | $ | 894 | | $ | 894 | |||||||||||||
Accounts payable |
7,010 | 1,223 | (25 | ) | B | 8,208 | ||||||||||||||
Accrued royalties payable and payable to partners |
4,605 | 5,797 | | 10,402 | ||||||||||||||||
Accrued liabilities |
13,277 | 632 | 3,673 | E | 17,582 | |||||||||||||||
Income tax payable |
| | | | ||||||||||||||||
Deferred revenue |
6,717 | | | 6,717 | ||||||||||||||||
Capital lease obligation, current |
495 | 28 | | 523 | ||||||||||||||||
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Total current liabilities |
32,104 | 8,574 | 3,648 | 44,326 | ||||||||||||||||
Capital lease obligation, non-current |
2,327 | 90 | | 2,417 | ||||||||||||||||
Other long-term liabilities |
3,668 | 200 | (200 | ) | B | 3,668 | ||||||||||||||
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TOTAL LIABILITIES |
38,099 | 8,864 | 3,448 | 50,411 | ||||||||||||||||
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Stockholders Equity: |
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Preferred stock Series 1 and 2 |
| 35,887 | (35,887 | ) | F | | ||||||||||||||
Common stock |
2 | 4 | (4 | ) | F | 2 | ||||||||||||||
Additional paid-in capital |
92,804 | 1,101 | (1,101 | ) | F | 92,804 | ||||||||||||||
Treasury stock |
| (190 | ) | 190 | F | | ||||||||||||||
Accumulated deficit |
(3,688 | ) | (37,241 | ) | 36,978 | F | (3,951 | ) | ||||||||||||
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TOTAL STOCKHOLDERS EQUITY (DEFICIT) |
89,118 | (439 | ) | 176 | F | 88,855 | ||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 127,217 | $ | 8,425 | $ | 3,624 | $ | 139,266 | ||||||||||||
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See accompanying notes to the unaudited pro forma condensed combined financial statements.
CAFEPRESS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 (in thousands, except per share data)
Historical | ||||||||||||||||||||
CafePress | EZ Prints | Pro
forma Adjustments |
Pro forma Combined |
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Net revenue |
$ | 130,537 | $ | 19,141 | $ | (176 | ) | B | $ | 149,502 | ||||||||||
Cost of net revenues: |
76,015 | 14,222 | (176 | ) | B | 90,061 | ||||||||||||||
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Gross profit: |
54,522 | 4,919 | | 59,441 | ||||||||||||||||
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Operating expenses: |
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Sales and marketing |
34,338 | 2,081 | 238 | G | 36,657 | |||||||||||||||
Technology and development |
9,810 | 1,677 | 1,224 | H | 12,711 | |||||||||||||||
General and administrative |
12,181 | 3,530 | | 15,711 | ||||||||||||||||
Acquisition-related costs |
2,508 | | (283 | ) | I | 2,225 | ||||||||||||||
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Total operating expenses |
58,837 | 7,288 | 1,179 | 67,304 | ||||||||||||||||
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Loss from operations |
(4,315 | ) | (2,369 | ) | (1,179 | ) | (7,863 | ) | ||||||||||||
Interest income |
58 | | (58 | ) | J | | ||||||||||||||
Interest expense |
(146 | ) | (54 | ) | | (200 | ) | |||||||||||||
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Loss before provision for income taxes |
(4,403 | ) | (2,423 | ) | (1,237 | ) | (8,063 | ) | ||||||||||||
Benefit from income taxes |
(1,216 | ) | | (420 | ) | K | (1,636 | ) | ||||||||||||
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Net loss |
$ | (3,187 | ) | $ | (2,423 | ) | $ | (817 | ) | $ | (6,427 | ) | ||||||||
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Net loss per share of common stock |
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Basic and diluted |
$ | (0.22 | ) | $ | (0.45 | ) | ||||||||||||||
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Shares used in computing net loss per share of common stock |
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Basic and diluted |
14,319 | 14,319 | ||||||||||||||||||
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See accompanying notes to the unaudited pro forma condensed combined financial statements.
CAFEPRESS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2011 AND MARCH 31, 2012 (in thousands, except per share data)
Historical | ||||||||||||||||||||
CafePress | EZ Prints | Pro forma Adjustments |
Pro forma Combined |
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Net revenue |
$ | 175,482 | $ | 33,979 | $ | (21 | ) | B | $ | 209,440 | ||||||||||
Cost of net revenues: |
100,191 | 24,455 | (21 | ) | B | 124,625 | ||||||||||||||
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Gross profit: |
75,291 | 9,524 | | 84,815 | ||||||||||||||||
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Operating expenses: |
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Sales and marketing |
40,809 | 2,436 | 318 | G | 43,563 | |||||||||||||||
Technology and development |
12,768 | 2,413 | 1,797 | H | 16,978 | |||||||||||||||
General and administrative |
13,573 | 4,508 | | 18,081 | ||||||||||||||||
Acquisition-related costs |
2,696 | | | 2,696 | ||||||||||||||||
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Total operating expenses |
69,846 | 9,357 | 2,115 | 81,318 | ||||||||||||||||
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Income from operations |
5,445 | 167 | (2,115 | ) | 3,497 | |||||||||||||||
Interest income |
56 | | (56 | ) | J | | ||||||||||||||
Interest expense |
(194 | ) | (62 | ) | | (256 | ) | |||||||||||||
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Income before provision for income taxes |
5,307 | 105 | (2,171 | ) | 3,241 | |||||||||||||||
Provision (benefit) for income taxes |
1,701 | | (738 | ) | K | 963 | ||||||||||||||
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Net income (loss) |
$ | 3,606 | $ | 105 | $ | (1,433 | ) | $ | 2,278 | |||||||||||
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Net income per share of common stock: |
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Basic |
$ | 0.17 | $ | 0.07 | ||||||||||||||||
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Diluted |
$ | 0.16 | $ | 0.07 | ||||||||||||||||
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Shares used in computing net income per share of common stock: |
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Basic |
8,798 | 8,798 | ||||||||||||||||||
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Diluted |
9,403 | 9,403 | ||||||||||||||||||
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See accompanying notes to the unaudited pro forma condensed combined financial statements.
CAFEPRESS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. | Basis of Presentation |
Pro forma combined income statement for the year ended December 31, 2011 includes historical income statement of EZ Prints for the year ended March 31, 2012. Pro forma combined income statement for the nine months ended September 30, 2012 includes historical income statement of EZ Prints for the period from January 1, 2012 to September 30, 2012. As such the following results of EZ Prints for the three months period ended March 31, 2012 were included in both periods presented:
Three months ended March 31, 2012 |
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Net revenue |
$ | 6,767 | ||
Costs of net revenues: |
5,187 | |||
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Gross profit: |
1,580 | |||
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Operating expenses: |
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Sales and marketing |
711 | |||
Technology and development |
324 | |||
General and administrative |
866 | |||
Bad debt expense |
1,091 | |||
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Total operating expenses |
2,992 | |||
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Loss from operations |
(1,412 | ) | ||
Other expenses, net |
22 | |||
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Loss before provision for income taxes |
(1,434 | ) | ||
Provision for income taxes |
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Net loss |
$ | (1,434 | ) | |
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2. | Acquisition of EZ Prints, Inc. |
The Company acquired EZ Prints Inc., a complete deployable e-commerce platform, on October 25, 2012. The purchase consideration issued included cash payment of $30 million, and additional cash earn-outs (not to exceed $10 million in aggregate) contingent upon achieving certain performance targets for the twelve months following the closing of the Transaction. The contingent earn-outs are valued using a probability-based approach on various revenue assumptions. Final determination of the earn-out liability can range from zero to $10 million based on the actual achievement of the revenue targets.
The preliminary purchase price of and purchase price allocation for EZ Prints, as presented below, are our best estimates. These estimates are preliminary as the Company is currently in the process of finalizing many of the purchase amounts presented below.
Preliminary purchase price
In thousands | ||||
Cash |
$ | 30,000 | ||
Fair value of contingent consideration |
3,460 | |||
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$ | 33,460 | |||
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The total preliminary purchase price was allocated to EZ Prints net tangible and identifiable intangible assets based on their estimated fair values as of October 25, 2012 as set forth below.
Preliminary purchase price allocation
In thousands | Estimated useful lives (in years) |
Method of amortization |
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Current assets |
$ | 4,956 | N/A | |||||||
Fixed assets and other long-term assets |
1,913 | 2-5 | Straight-line | |||||||
Intangible assets: |
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Customer relationships |
2,540 | 8 | Straight-line | |||||||
Developed technology (Builder) |
6,940 | 4 | Straight-line | |||||||
Developed technology (E-Commerce) |
550 | 3 | Straight-line | |||||||
Developed technology (Order to Store) |
90 | 4 | Straight-line | |||||||
Developed technology (Back-end) |
1,010 | 5 | Straight-line | |||||||
Goodwill |
22,775 | N/A | ||||||||
Deferred tax asset, net |
1,550 | N/A | ||||||||
Liabilities assumed |
(8,864 | ) | N/A | |||||||
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$ | 33,460 | |||||||||
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3. | Pro forma financial statement adjustments |
A | To record the purchase price of $30.0 million paid in cash |
B | To eliminate Intercompany balances and transactions |
C | To eliminate historical EZ Prints technology related assets to be replaced with a fair market value of developed technology acquired |
D | To record preliminary goodwill and intangible assets acquired and deferred taxes |
E | To record following adjustments to liabilities: |
To record a fair value of the estimated potential earn out payment |
$ | 3,460 | ||
To record direct acquisition-related costs incurred by CafePress |
263 | |||
To eliminate Intercompany balances and transactions |
(50) | |||
$ | 3,673 | |||
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F | To record following adjustments to stockholders equity: |
To eliminate EZ Prints historical stockholders equity:
Preferred stock Series 1 and 2 |
$ | (35,887 | ) | |
Common stock |
(4 | ) | ||
Additional paid-in capital |
(1,101 | ) | ||
Treasury Stock |
190 | |||
Accumulated deficit |
37,241 | |||
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439 | ||||
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To record direct acquisition-related costs incurred by CafePress | (263 | ) | ||
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$ | 176 | |||
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G | To record the estimated amount of amortization of customer relationships acquired by CafePress over its estimated useful life |
H | To record following adjustments to Technology and development expenses: |
Nine months ended September 30, 2012 |
Year ended December 31, 2011 and March 31, 2012 |
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To record the estimated amount of amortization of developed technology asset acquired by CafePress over its estimated useful life |
$ | 1,607 | $ | 2,143 | ||||
To eliminate amortization of internally developed software historically capitalized by EZ Prints |
(383 | ) | (346 | ) | ||||
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$ | 1,224 | $ | 1,797 | |||||
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I | To eliminate CafePress acquisition-related costs included in their respective historical financials that are non-recurring in nature. |
J | To record the estimated decrease in interest income due to the reduction in cash used for the acquisition. |
K | To record tax benefit to reflect the pro forma income tax impact at the statutory federal income tax rate. The pro forma combined provision and benefit for income taxes do not reflect the amounts that would have resulted had the Company and EZ Prints filed consolidated income tax returns during the period presented. |