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8-K - FORM 8-K - QUIKSILVER INC | d627937d8k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
QUIKSILVER, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following pro forma consolidated financial information is based on the historical financial statements of Quiksilver, Inc. and its subsidiaries (the Company), including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of the disposition of Mervin Manufacturing, Inc. (Mervin).
The unaudited pro forma consolidated statements of operations for the nine months ended July 31, 2013 and for the fiscal year ended October 31, 2012, assume that the disposition of Mervin occurred at the beginning of those periods. The statements of operations do not include any gain or loss on the sale or costs associated with the sale of the business. The unaudited pro forma consolidated balance sheet as of July 31, 2013 is presented as if the disposition of Mervin had occurred as of that date.
The unaudited pro forma consolidated financial information has been prepared based upon available information and management estimates; actual amounts may differ from these estimated amounts. The unaudited pro forma consolidated financial statements are not necessarily indicative of the financial position or results of operations that might have occurred had the disposition occurred as of the dates stated above. The pro forma adjustments are described in the notes to the pro forma financial statements.
The unaudited pro forma consolidated financial information should be read in conjunction with the audited financial statements and notes and related Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) included in the Companys Annual Report on Form 10-K for the fiscal year ended October 31, 2012 and unaudited interim financial statements and the related MD&A included in the July 31, 2013 Form 10-Q.
QUIKSILVER, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JULY 31, 2013
(In thousands, except per share amounts)
Unaudited | Unaudited | |||||||||||
Pro Forma | Pro Forma | |||||||||||
Unaudited | Adjustments | Statement | ||||||||||
Historical | Mervin | of Operations | ||||||||||
Revenues, net |
$ | 1,385,530 | $ | (11,462 | ) a | $ | 1,374,068 | |||||
Cost of goods sold |
709,912 | (5,038 | ) a | 704,874 | ||||||||
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Gross profit |
675,618 | (6,424 | ) | 669,194 | ||||||||
Sellling, general and administrative expense |
660,042 | (4,760 | ) a | 655,282 | ||||||||
Asset impairment |
10,652 | | 10,652 | |||||||||
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Operating income |
4,924 | (1,664 | ) | 3,260 | ||||||||
Interest expense |
50,991 | 8 | a | 50,999 | ||||||||
Foreign currency loss |
4,629 | (192 | ) a | 4,437 | ||||||||
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Loss/income before provision for income taxes |
(50,696 | ) | (1,480 | ) | (52,176 | ) | ||||||
Provision for income taxes |
10,322 | (84 | ) b | 10,238 | ||||||||
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Loss/income from continuing operations |
(61,018 | ) | (1,396 | ) | (62,414 | ) | ||||||
Less: net income attributable to non-controlling interest |
(435 | ) | | (435 | ) | |||||||
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Net loss/income attributable to Quiksilver, Inc. |
$ | (61,453 | ) | $ | (1,396 | ) | $ | (62,849 | ) | |||
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Loss/income per share attributable to Quiksilver Inc. |
$ | (0.37 | ) | $ | (0.01 | ) | $ | (0.38 | ) | |||
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Loss/income per share attributable to Quiksilver Inc., assuming dilution |
$ | (0.37 | ) | $ | (0.01 | ) | $ | (0.38 | ) | |||
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Weighted average common shares outstanding |
166,735 | | 166,735 | |||||||||
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Weighted average common shares outstanding, assuming dilution |
166,735 | | 166,735 | |||||||||
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QUIKSILVER, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012
(In thousands, except per share amounts)
Unaudited | Unaudited | |||||||||||
Pro Forma | Pro Forma | |||||||||||
Adjustments | Statement | |||||||||||
Historical | Mervin | of Operations | ||||||||||
Revenues, net |
$ | 2,013,239 | $ | (33,489 | ) a | $ | 1,979,750 | |||||
Cost of goods sold |
1,032,893 | (15,826 | ) a | 1,017,067 | ||||||||
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Gross profit |
980,346 | (17,663 | ) | 962,683 | ||||||||
Sellling, general and administrative expense |
916,144 | (10,464 | ) a | 905,680 | ||||||||
Asset impairment |
7,234 | | 7,234 | |||||||||
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Operating income |
56,968 | (7,199 | ) | 49,769 | ||||||||
Interest expense |
60,823 | 2 | a | 60,825 | ||||||||
Foreign currency gain |
(1,669 | ) | (17 | ) a | (1,686 | ) | ||||||
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Loss/income before provision for income taxes |
(2,186 | ) | (7,184 | ) | (9,370 | ) | ||||||
Provision for income taxes |
7,557 | (396 | ) b | 7,161 | ||||||||
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Loss/income from continuing operations |
(9,743 | ) | (6,788 | ) | (16,531 | ) | ||||||
Less: net income attributable to non-controlling interest |
(1,013 | ) | | (1,013 | ) | |||||||
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Net loss/income attributable to Quiksilver, Inc. |
$ | (10,756 | ) | $ | (6,788 | ) | $ | (17,544 | ) | |||
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Loss/income per share attributable to Quiksilver Inc. |
$ | (0.07 | ) | $ | (0.04 | ) | $ | (0.11 | ) | |||
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Loss/income per share attributable to Quiksilver Inc., assuming dilution |
$ | (0.07 | ) | $ | (0.04 | ) | $ | (0.11 | ) | |||
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Weighted average common shares outstanding |
164,245 | | 164,245 | |||||||||
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Weighted average common shares outstanding, assuming dilution |
164,245 | | 164,245 | |||||||||
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QUIKSILVER, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JULY 31, 2013
(In thousands)
Unaudited | ||||||||||||
Pro Forma | Unaudited | |||||||||||
Unaudited | Adjustments | Pro Forma | ||||||||||
Historical | Mervin | Balance Sheet | ||||||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 62,383 | $ | 51,499 | c | $ | 113,882 | |||||
Restricted cash |
409,167 | | 409,167 | |||||||||
Trade accounts receivable, net |
418,189 | (7,211 | ) d | 410,978 | ||||||||
Other receivables |
24,980 | | 24,980 | |||||||||
Income taxes receivable |
2,779 | 480 | d | 3,259 | ||||||||
Inventories |
399,162 | (13,768 | ) d | 385,394 | ||||||||
Deferred income taxes |
28,086 | | 28,086 | |||||||||
Prepaid expenses and other current assets |
35,819 | (790 | ) d | 35,029 | ||||||||
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Total current assets |
1,380,565 | 30,210 | 1,410,775 | |||||||||
Fixed assets, net |
227,997 | (641 | ) d | 227,356 | ||||||||
Intangible assets, net |
138,384 | (269 | ) d | 138,115 | ||||||||
Goodwill |
272,417 | | 272,417 | |||||||||
Other assets |
54,561 | (92 | ) d | 54,469 | ||||||||
Deferred income taxes long-term |
118,603 | | 118,603 | |||||||||
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Total assets |
$ | 2,192,527 | $ | 29,208 | $ | 2,221,735 | ||||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 238,311 | $ | (846 | ) d | $ | 237,465 | |||||
Accrued liabilities |
107,001 | 198 | e | 107,199 | ||||||||
Current portion of long-term debt |
43,153 | | 43,153 | |||||||||
Debt to be redeemed |
409,167 | | 409,167 | |||||||||
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Total current liabilities |
797,632 | (648 | ) | 796,984 | ||||||||
Long-term debt, net of current portion |
807,094 | | 807,094 | |||||||||
Other long-term liabilities |
34,976 | (176 | ) d | 34,800 | ||||||||
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Total liabilities |
1,639,702 | (824 | ) | 1,638,878 | ||||||||
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Stockholders equity |
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Preferred stock, $.01 par value, authorized shares - 5,000,000; issued and outstanding shares - none |
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Common stock, $.01 par value, authorized shares - 285,000,000; issued shares - 171,247,866 |
1,712 | | 1,712 | |||||||||
Additional paid-in capital |
567,601 | | 567,601 | |||||||||
Treasury stock, 2,885,200 shares |
(6,778 | ) | | (6,778 | ) | |||||||
Accumulated deficit |
(104,774 | ) | 29,965 | f | (74,809 | ) | ||||||
Accumulated other comprehensive income |
75,659 | 67 | g | 75,726 | ||||||||
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Total stockholders equity |
533,420 | 30,032 | 563,452 | |||||||||
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Non-controlling interest |
19,405 | | 19,405 | |||||||||
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Total liabilities and stockholders equity |
$ | 2,192,527 | $ | 29,208 | $ | 2,221,735 | ||||||
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QUIKSILVER, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. | BASIS OF PRESENTATION |
The accompanying unaudited pro forma consolidated financial statements give effect to the pro forma adjustments necessary to reflect the disposition of Mervin as if the disposition occurred at the beginning of the periods presented in the pro forma statements of operations and as of July 31, 2013 in the pro forma balance sheet.
2. | PRO FORMA ADJUSTMENTS |
The unaudited pro forma consolidated statements of operations and balance sheet reflect the effect of the following pro forma adjustments:
a) | Reduction of revenue and expenses associated with Mervin included in the Companys historical consolidated financial statements. |
b) | Provision for income taxes based on the statutory rates in effect for the Mervin business in certain tax jurisdictions. No provision for income taxes was provided for the Mervin business in other tax jurisdictions as the Company recorded losses in those jurisdictions and did not record a tax benefit against those losses. |
c) | Cash proceeds received for sale of Mervin of $51.5 million, which exclude a working capital adjustment of $6.6 million, which is subject to future revision. |
d) | Elimination of assets and liabilities associated with Mervin included in the Companys historical consolidated financial statements. |
e) | Elimination of accrued liabilities associated with Mervin of $1.4 million, offset by the Companys estimate of the total costs before taxes to be incurred in connection with the sale of Mervin yet to be paid of approximately $1.6 million. The net amount is reflected as an increase to accrued liabilities. |
f) | Estimated net gain on sale of Mervin, reflected as a reduction of the Companys accumulated deficit as of July 31, 2013. |
g) | Foreign currency translation losses from Mervin of approximately $0.1 million, included as an increase to accumulated other comprehensive income as of July 31, 2013. |