Attached files
| file | filename |
|---|---|
| 8-K/A - CPI CORP 8-K/A ON BELLA PICTURES, INC. ACQUISITION - CPI CORP | cpi8ka_1262011.htm |
| EX-99.2 - EXHIBIT 99.2 - CPI CORP | exh99_2.htm |
| EX-99.3 - EXHIBIT 99.3 - CPI CORP | exh99_3.htm |
| EX-23.1 - EXHIBIT 23.1 - CPI CORP | exh23_1.htm |
EXHIBIT 99.4
CPI CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of CPI Corp. (“CPI”) and Bella Pictures, Inc. (“Bella”) after giving effect to the Asset Purchase Agreement and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. We acquired the operations, assets and certain liabilities of Bella on January 26, 2011. The pro forma balance sheet was prepared as if the acquisition occurred on November 13, 2010, the end of CPI’s most recent fiscal 2010 quarter, and the statements of operations were prepared as if the acquisition occurred on the first day of the earliest period presented.
The pro forma data is for informational purposes only and may not necessarily reflect future results of operations or financial position or what the results of operations or financial position would have been had CPI and Bella been operating as combined entities for the periods presented. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements, including the notes thereto, of CPI included in our Form 10-K for the year ended February 6, 2010, and the historical financial statements of Bella included elsewhere in this Form 8-K.
CPI CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)
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Historical CPI
November 13, 2010
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Historical Bella
September 30, 2010
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Assets/Liabilities
Not Acquired/Assumed (a)
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Pro Forma Adjustments
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Pro Forma
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|||||||||||||||||
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 9,631 | $ | 2,375 | $ | (1,347 | ) | $ | - | $ | 10,659 | ||||||||||
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Accounts receivable
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9,907 | - | - | 69 |
(b)
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9,976 | |||||||||||||||
| Inventories | 8,957 | - | - | 360 | (c) | 9,317 | |||||||||||||||
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Prepaid expenses and other current assets
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7,897 | 863 | (413 | ) | (377 | ) |
(c)
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7,970 | |||||||||||||
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Refundable income taxes
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772 | - | - | - | 772 | ||||||||||||||||
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Deferred tax assets
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7,859 | - | - | - | 7,859 | ||||||||||||||||
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Assets held for sale
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1,066 | - | - | - | 1,066 | ||||||||||||||||
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Total current assets
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46,089 | 3,238 | (1,760 | ) | 52 | 47,619 | |||||||||||||||
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Property and equipment, net
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36,149 | 2,239 | (127 | ) | (1,060 | ) |
(d)
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37,201 | |||||||||||||
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Other assets:
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|||||||||||||||||||||
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Prepaid debt fees
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1,967 | - | - | - | 1,967 | ||||||||||||||||
| Goodwill | 21,845 | - | - | 4,024 | (e) | 25,869 | |||||||||||||||
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Intangible assets, net
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37,521 | - | - | 755 |
(f)
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38,276 | |||||||||||||||
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Deferred tax assets
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11,273 | - | - | - | 11,273 | ||||||||||||||||
| Other assets | 9,484 | 527 | (527 | ) | - | 9,484 | |||||||||||||||
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Total assets
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$ | 164,328 | $ | 6,004 | $ | (2,414 | ) | $ | 3,771 | $ | 171,689 | ||||||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
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Current liabilities:
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Current maturities of long-term debt
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$ | - | $ | 707 | $ | (707 | ) | $ | - | - | |||||||||||
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Accounts payable
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9,745 | 441 | (441 | ) | - | 9,745 | |||||||||||||||
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Accrued employment costs
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10,875 | - | - | - | 10,875 | ||||||||||||||||
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Deferred revenue
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- | 7,220 | - | (7,220 | ) |
(g)
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0 | ||||||||||||||
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Customer deposit liability
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17,029 | 3,148 | - | 3,464 |
(g)
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23,641 | |||||||||||||||
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Sales tax payable
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3,874 | - | - | - | 3,874 | ||||||||||||||||
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Accrued advertising expenses
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2,997 | - | - | - | 2,997 | ||||||||||||||||
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Accrued expenses and other liabilities
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10,733 | 1,012 | (981 | ) | - | 10,764 | |||||||||||||||
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Total current liabilities
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55,253 | 12,528 | (2,129 | ) | (3,756 | ) | 61,896 | ||||||||||||||
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Long-term debt, less current maturities
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68,000 | 13,542 | (13,542 | ) | - | 68,000 | |||||||||||||||
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Accrued pension plan obligations
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17,396 | - | - | - | 17,396 | ||||||||||||||||
| Other liabilities | 17,957 | - | - | - | 17,957 | ||||||||||||||||
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Total liabilities
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158,606 | 26,070 | (15,671 | ) | (3,756 | ) | 165,249 | ||||||||||||||
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Stockholders' equity (deficiency):
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Preferred stock
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- | 29 | (29 | ) | - | - | |||||||||||||||
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Common stock
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3,779 | 3 | (3 | ) | - | 3,779 | |||||||||||||||
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Additional paid-in capital
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30,804 | 51,823 | (51,823 | ) | - | 30,804 | |||||||||||||||
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Retained earnings
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33,741 | (71,921 | ) | 71,921 | - | 33,741 | |||||||||||||||
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Accumulated other comprehensive loss
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(14,551 | ) | - | - | - | (14,551 | ) | ||||||||||||||
| 53,773 | (20,066 | ) | 20,066 | - | 53,773 | ||||||||||||||||
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Treasury stock
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(48,051 | ) | - | - | - | (48,051 | ) | ||||||||||||||
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Total CPI Corp. stockholders' equity (deficiency)
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5,722 | (20,066 | ) | 20,066 | - | 5,722 | |||||||||||||||
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Noncontrolling interest in subsidiary
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- | - | - | 718 |
(h)
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718 | |||||||||||||||
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Total stockholders' equity (deficiency)
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5,722 | (20,066 | ) | 20,066 | 718 | 6,440 | |||||||||||||||
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Total liabilities and stockholders' equity (deficiency)
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$ | 164,328 | $ | 6,004 | $ | 4,395 | $ | (3,038 | ) | $ | 171,689 | ||||||||||
CPI CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (continued)
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(a)
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Represents the elimination of assets not acquired and liabilities not assumed in connection with the purchase.
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(b)
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Represents receivable amounts due by customers that were not previously recorded.
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(c )
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Reclassification from prepaid expenses and other current assets to inventory to conform to the balance sheet classifications used by CPI. Also includes a $17,000 adjustment to write-off certain inventory.
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(d)
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Represents a net decrease to property and equipment to present them at their estimated fair values. However, these estimates are preliminary and subject to change based upon completion of CPI's final valuation analysis.
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(e)
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Under the purchase accounting method of accounting, the total estimated consideration is allocated to tangible and intangible assets, net of liabilitiies assumed, based on a preliminary estimate of fair value as of January 26, 2011. These estimates and allocations are preliminary and subject to change based upon the completion of CPI's final valuation analysis and are as follows (in thousands):
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January 26, 2011
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Total purchase consideration
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718 | |||
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Preliminary purchase price allocated to tangible and
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intangible assets, net of liabilities
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3,306 | |||
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Pro forma goodwill
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4,024 | |||
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(f)
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Represents the estimated fair value given to the tradename acquired. However, this estimate is preliminary and subject to change based upon completion of CPI's final valuation analysis.
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(g)
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Reclassification from deferred revenue to customer deposit liability to conform to the balance sheet classifications used by CPI. Also includes a purchase accounting adjustment associated with deferred revenue of $3.8 million.
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(h)
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Estimated fair value assigned to noncontrolling interest. This amount represents 5% of the total estimated fair value of Bella Holdings, LLC as of the acquisition date and the consideration transferred by CPI for the assets acquired. However, this estimate is preliminary and subject to change based upon completion of CPI's final valuation analysis.
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CPI CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FIRST THREE QUARTERS OF OPERATIONS
(in thousands)
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Historical CPI
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Historical Bella
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For the 40
weeks ended
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Historical Bella For
the 9 months ended
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Pro Forma
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November 13, 2010
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September 30, 2010
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Adjustments
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Pro Forma
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Net sales
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$ | 106,174 | $ | 8,183 | $ | - | $ | 114,357 | |||||||||
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Cost of sales (exclusive of depreciation and amortization shown below)
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7,516 | 4,043 | (2,713 | ) |
(a)
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8,846 | |||||||||||
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Selling, general and administrative expenses
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102,220 | 10,427 | 1,882 |
(b)
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114,529 | ||||||||||||
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Depreciation and amortization
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5,267 | - | 515 |
(c)
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5,782 | ||||||||||||
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Other charges and impairments
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3,645 | - | - | 3,645 | |||||||||||||
| 118,648 | 14,470 | (316 | ) | 132,802 | |||||||||||||
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Loss from operations
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(12,474 | ) | (6,287 | ) | 316 | (18,445 | ) | ||||||||||
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Interest expense
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892 | 179 | (179 | ) |
(d)
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892 | |||||||||||
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Interest income
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9 | 2 | (2 | ) |
(e)
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9 | |||||||||||
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Other income, net
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170 | - | - | 170 | |||||||||||||
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Loss before income tax (benefit) expense
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(13,187 | ) | (6,464 | ) | 493 | (19,158 | ) | ||||||||||
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Income tax (benefit) expense
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(5,474 | ) | 21 | 187 |
(f)
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(5,266 | ) | ||||||||||
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Net loss
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(7,713 | ) | (6,485 | ) | 306 | (13,892 | ) | ||||||||||
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Net loss attributable to noncontrolling interest
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- | - | (309 | ) |
(g)
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(309 | ) | ||||||||||
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Net loss attributable to CPI Corp.
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$ | (7,713 | ) | $ | (6,485 | ) | $ | 615 | $ | (13,583 | ) | ||||||
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(a)
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Reclassification to selling, general and administrative expenses from cost of sales to conform to the expense classifications used by CPI.
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(b)
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Includes a $2.7 million reclassification from cost of sales to selling, general and administrative expenses and a $0.8 million reclassification from selling, general and administravie expenses to depreciation expense to conform to the expense classifications used by CPI.
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(c)
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Includes a reclassification of $0.8 million to depreciation expense from selling, general and administrative expenses to conform to the expense classifications used by CPI. Also includes a net decrease in expense of $0.3 million related to (1) the amortization of an identifiable intangible asset using the straight-line method over an average life of 9 years and (2) a decrease in depreciation resulting from revalued assets at the time of the purchase, depreciated on a straight-line basis over periods of 1 to 5 years; accordingly, these estimates are preliminary and subject to change based upon completion of CPI's final valuation analysis.
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(d)
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Represents the elimination of interest expense as no debt was acquired and there was no change in CPI's debt structure related to the acquisition.
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(e)
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Represents the elimination of the interest income.
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(f)
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Represents the estimated income tax effect of the above adjustments at the estimated rate of 38%.
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(g)
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Represents the loss attributable to noncontrolling interest.
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CPI CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands)
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For the year ended
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|||||||||||||||||
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Historical CPI
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Historical Bella
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Pro Forma
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February 6, 2010
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December 31, 2009
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Adjustments
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Pro Forma
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Net sales
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$ | 422,371 | $ | 13,161 | $ | (5,528 | ) |
(a)
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$ | 430,004 | |||||||
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Cost of sales (exclusive of depreciation and amortization shown below)
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30,626 | 7,079 | (4,975 | ) |
(b)
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32,730 | |||||||||||
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Selling, general and administrative expenses
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339,138 | 16,720 | (1,627 | ) |
(c)
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354,231 | |||||||||||
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Depreciation and amortization
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22,740 | - | 966 |
(d)
|
23,706 | ||||||||||||
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Other charges and impairments
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3,294 | - | - | 3,294 | |||||||||||||
| 395,798 | 23,799 | (5,636 | ) | 413,961 | |||||||||||||
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Income (loss) from operations
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26,573 | (10,638 | ) | 108 | 16,043 | ||||||||||||
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Interest expense
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7,392 | 5,715 | (5,715 | ) |
(e)
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7,392 | |||||||||||
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Loss on change in fair value of warrants
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- | 770 | (770 | ) |
(f)
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- | |||||||||||
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Interest income
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456 | 21 | (21 | ) |
(g)
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456 | |||||||||||
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Other (expense) income, net
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(44 | ) | 122 | (122 | ) |
(g)
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(44 | ) | |||||||||
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Income (loss) before income tax expense
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19,593 | (16,980 | ) | 6,450 | 9,063 | ||||||||||||
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Income tax expense
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5,796 | 5 | 2,451 |
(h)
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8,252 | ||||||||||||
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Net income (loss)
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13,797 | (16,985 | ) | 3,999 | 811 | ||||||||||||
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Net loss attributable to noncontrolling interest
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- | - | (649 | ) |
(i)
|
(649 | ) | ||||||||||
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Net income attibutable to CPI Corp.
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$ | 13,797 | $ | (16,985 | ) | $ | 4,648 | $ | 1,460 | ||||||||
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(a)
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Includes the elimination of revenue as a result of a purchasing accounting adjustment for deferred revenue.
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(b)
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Includes a $4.6 million reclassification to selling, general and administrative expenses from cost of sales to conform to the expense classifications used by CPI and a reduction of $0.3 million of costs related to a purchase accounting adjustment for deferred revenue.
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(c )
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Includes a $4.6 million reclassification from cost of sales to selling, general and administrative expenses and a $0.9 million reclassification from selling, general and administravie expenses to depreciation expense to conform to the expense classifications used by CPI, and a reduction of $5.3 million of costs related to a purchase accounting adjustment for deferred revenue.
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(d)
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Includes a reclassification of $0.9 million to depreciation expense from selling, general and administrative expenses to conform to the expense classifications used by CPI. Also includes a net increase in expense of $44,000 related to (1) the amortization of an identifiable intangible asset using the straight-line method over an average life of 10 years and (2) a decrease in depreciation resulting from revalued assets at the time of the purchase, depreciated on a straight-line basis over periods of 1 to 6 years; accordingly, these estimates are preliminary and subject to change based upon completion of CPI's final valuation analysis.
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(e)
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Represents the elimination of interest expense as no debt was acquired and there was no change in CPI's debt structure related to the acquisition.
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(f)
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Represents the elimination of the loss on change in the fair value of warrants as no debt was acquired.
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(g)
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Represents the elimination of the interest and other income.
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(h)
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Represents the estimated income tax effect of the above adjustments at the estimated rate of 38%.
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(i)
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Represents the loss attributable to noncontrolling interest.
|