Attached files
| file | filename |
|---|---|
| EX-23.1 - EX-23.1 - DECKERS OUTDOOR CORP | a11-26618_1ex23d1.htm |
| 8-K/A - 8-K/A - DECKERS OUTDOOR CORP | a11-26618_18ka.htm |
| EX-99.1 - EX-99.1 - DECKERS OUTDOOR CORP | a11-26618_1ex99d1.htm |
| EX-99.5 - EX-99.5 - DECKERS OUTDOOR CORP | a11-26618_1ex99d5.htm |
| EX-99.3 - EX-99.3 - DECKERS OUTDOOR CORP | a11-26618_1ex99d3.htm |
| EX-99.2 - EX-99.2 - DECKERS OUTDOOR CORP | a11-26618_1ex99d2.htm |
| EX-23.2 - EX-23.2 - DECKERS OUTDOOR CORP | a11-26618_1ex23d2.htm |
SANUK U.S.A., LLC
Condensed Balance Sheet
June 30, 2011
(unaudited)
|
Assets | ||||
|
Current assets: |
|
|
| |
|
Cash and cash equivalents |
|
$ |
1,355,550 |
|
|
Accounts receivable, net of allowance for doubtful accounts of approximately $217,000 |
|
2,161,182 |
| |
|
Inventories |
|
424,134 |
| |
|
Total current assets |
|
3,940,866 |
| |
|
Property and equipment, net of accumulated depreciation |
|
609 |
| |
|
Other assets |
|
1,000 |
| |
|
Total assets |
|
$ |
3,942,475 |
|
|
Liabilities and Members’ Equity | ||||
|
Current liabilities: |
|
|
| |
|
Accounts payable and accrued liabilities |
|
$ |
2,665,442 |
|
|
Payable to Members |
|
107,498 |
| |
|
Other current liabilities |
|
213,258 |
| |
|
Total current liabilities |
|
2,986,198 |
| |
|
Members’ equity |
|
956,277 |
| |
|
Total liabilities and members’ equity |
|
$ |
3,942,475 |
|
See accompanying notes to financial statements.
SANUK U.S.A., LLC
Condensed Statements of Income
Six months ended June 30, 2011 and 2010
(unaudited)
|
|
|
2011 |
|
2010 |
| ||
|
Net sales |
|
$ |
4,034,453 |
|
$ |
3,312,977 |
|
|
Cost of sales |
|
2,550,981 |
|
2,328,654 |
| ||
|
Gross profit |
|
1,483,472 |
|
984,323 |
| ||
|
Royalty revenue, net |
|
1,630,359 |
|
991,021 |
| ||
|
Operating expenses |
|
1,319,103 |
|
412,161 |
| ||
|
Income from operations |
|
1,794,728 |
|
1,563,183 |
| ||
|
Other expense (income): |
|
|
|
|
| ||
|
Interest expense |
|
3 |
|
1,329 |
| ||
|
Interest income |
|
(591 |
) |
(301 |
) | ||
|
Other, net |
|
48,068 |
|
1,116 |
| ||
|
Total other expense |
|
47,480 |
|
2,144 |
| ||
|
Net income |
|
$ |
1,747,248 |
|
$ |
1,561,039 |
|
See accompanying notes to financial statements.
SANUK U.S.A., LLC
Condensed Statements of Members’ Equity
Six months ended June 30, 2011 and 2010
(unaudited)
|
|
|
Total |
| |
|
Balance, December 31, 2009 |
|
$ |
220,703 |
|
|
Net income |
|
1,561,039 |
| |
|
Distributions |
|
(609,226 |
) | |
|
Balance, June 30, 2010 |
|
$ |
1,172,516 |
|
|
|
|
|
| |
|
Balance, December 31, 2010 |
|
$ |
247,947 |
|
|
Net income |
|
1,747,248 |
| |
|
Distributions |
|
(1,038,918 |
) | |
|
Balance, June 30, 2011 |
|
$ |
956,277 |
|
See accompanying notes to financial statements.
SANUK U.S.A., LLC
Condensed Statements of Cash Flows
Six months ended June 30, 2011 and 2010
(unaudited)
|
|
|
2011 |
|
2010 |
| ||
|
Cash flows from operating activities: |
|
|
|
|
| ||
|
Net income |
|
$ |
1,747,248 |
|
$ |
1,561,039 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
|
Depreciation and amortization |
|
1,831 |
|
1,116 |
| ||
|
Provision for allowance for doubtful accounts |
|
216,785 |
|
— |
| ||
|
Changes in: |
|
|
|
|
| ||
|
Accounts and other receivables |
|
(1,366,918 |
) |
(1,322,182 |
) | ||
|
Inventories |
|
373,866 |
|
566,105 |
| ||
|
Accounts payable and accrued expenses |
|
1,278,630 |
|
40,482 |
| ||
|
Net cash provided by operating activities |
|
2,251,442 |
|
846,560 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from investing activities: |
|
|
|
|
| ||
|
Purchases of property and equipment |
|
(807 |
) |
— |
| ||
|
Net cash used in investing activities |
|
(807 |
) |
— |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from financing activities |
|
|
|
|
| ||
|
Net (decrease) increase in credit line |
|
(263 |
) |
461 |
| ||
|
Distributions |
|
(1,038,918 |
) |
(609,226 |
) | ||
|
Net cash used in financing activities |
|
(1,039,181 |
) |
(608,765 |
) | ||
|
Net increase in cash |
|
1,211,454 |
|
237,795 |
| ||
|
Cash and cash equivalents, beginning of period |
|
144,096 |
|
252,033 |
| ||
|
Cash and cash equivalents, end of period |
|
$ |
1,355,550 |
|
$ |
489,828 |
|
|
|
|
|
|
|
| ||
|
Supplemental disclosure of cash flow information: |
|
|
|
|
| ||
|
Cash paid during the year for: |
|
|
|
|
| ||
|
Interest |
|
$ |
3 |
|
$ |
1,329 |
|
See accompanying notes to financial statements.
SANUK U.S.A., LLC
Notes to Condensed Financial Statements
(unaudited)
(1) Description of Business
Sanuk U.S.A., LLC (the Company) is a wholesaler and distributor of men’s, women’s, junior’s, and children’s sandals and shoes outside the United States, Canada, and Europe bearing the “Sanuk” trade name. The Company was formed in accordance with the laws of California and is an unincorporated association where its members have limited personal liability for the obligations or debts of the entity, and it is classified as a disregarded entity for federal income tax purposes. The Company has granted an exclusive license to the “Sanuk” trade name to C&C Partners, Ltd. (C&C) in the United States, Europe, and Canada. C&C pays the Company royalties and is required to spend a minimum amount on advertising for, and marketing and promotion of the “Sanuk” brand (note 7). The Company will cease to exist on December 31, 2026 based on its operating agreement.
On May 19, 2011, the Members and the stockholders of C&C entered into an Asset Purchase Agreement with Deckers Outdoor Corporation (Deckers). This agreement called for Deckers to purchase substantially all of the assets and assume substantially all of the liabilities of the Company and C&C (collectively, the “Sanuk” companies). On July 1, 2011, the “Sanuk” companies and Deckers entered into Amendment No. 1 to Asset Purchase Agreement and completed the sales transaction. The purchase price paid by Deckers upon the close of the transaction included an initial cash payment to the “Sanuk” companies of approximately $119,800,000, subject to certain post-closing adjustments. Deckers expects to make estimated net payments totaling approximately $2,900,000 related to working capital adjustments. The purchase price also includes additional participation payments (contingent consideration) based upon performance of the “Sanuk” brand over the next five years as follows:
· 2011 earnings before interest, taxes, depreciation and amortization multiplied by ten, less the closing payment, up to a maximum of $30,000,000;
· 51.8% of the gross profit in 2012, defined as total sales less the cost of sales for the business of the “Sanuk” companies;
· 36.0% of gross profit in 2013;
· 8.0% of the product of gross profit in 2015 multiplied by five.
The unaudited interim financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments necessary for a fair presentation for the period presented. The results of operations for this interim period are not necessarily indicative of results to be achieved for full fiscal years.
The accompanying condensed financial statements and related footnotes have been condensed and do not contain certain information that is included in the Company’s annual financial statements and footnotes thereto. For further information, refer to the financial statements and related footnotes for the year ended December 31, 2010.
The Company has evaluated subsequent events from the balance sheet date through September 16, 2011, the date the financial statements were available to be issued, and determined that there are no other subsequent events to disclose.
SANUK U.S.A., LLC
Notes to Condensed Financial Statements
(unaudited)
(2) Cash and cash equivalents
The Company considers cash and cash equivalents to include cash on hand and all highly liquid investments and demand deposits in bank and financial institutions with an original maturity of ninety days or less. The Company places its cash with major financial institutions. The majority of the cash is invested in money market accounts. At June 30, 2011, and at various times throughout the six months then ended, the Company had bank deposits in excess of federally insured limits.
(3) Revolving Credit Facility
The Company has a revolving credit facility with Security Business Bank of San Diego (the Facility) providing for a maximum availability of $500,000. The Facility bears interest at the prime rate (3.25% at June 30, 2011), which is the prime rate as published in the Money Rates Section of the Wall Street Journal defined as the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks plus 1.0%. The rate shall not be less than 5% or the maximum allowed by law. The Facility is secured by substantially all assets of the Company and guaranteed by the Members of the LLC. The Facility includes an annual minimum interest charge of $100 per year and expires on May 15, 2012. At June 30, 2011, the Company has no outstanding balance under the Facility. As a result, $500,000 was available under the Facility at June 30, 2011.
The Facility requires the Company to maintain a zero balance for a minimum of 30 consecutive days annually. The agreement underlying the Facility contains a financial covenant. The covenant currently includes a debt/effective tangible net worth ratio not to exceed 2.5x. The Company was in compliance with such covenant at June 30, 2011.
(4) Related-Party Transactions
The Company made compensation payments to the Members of approximately $240,000 in each of the six months ended June 30, 2011 and 2010. Such amounts are included in operating expenses of the accompanying statement of income. The Company made distributions to the Members for approximately $1,039,000 and $609,000 in the six months ended June 30, 2011 and 2010, respectively. At June 30, 2011, the Company owes its Members approximately $107,000, which is reflected as a current liability on the accompanying balance sheet. Such obligation does not bear interest.
(5) Commitments and Contingencies
Customer Prepayments — The Company at times requires deposits on purchase orders. As of June 30, 2011, the Company had approximately $98,000 in customer prepayments included in other current liabilities in the accompanying balance sheet.
(6) Vendor Concentration
During the six months ended June 30, 2011, the Company purchased 95% of its merchandise inventory from two suppliers in Asia. Accounts payables to these two suppliers totaled 58% and 7% of total accounts payables and accrued liabilities at June 30, 2011. During the six months ended June 30, 2010, the Company purchased 92% of its merchandise from three suppliers in Asia.
SANUK U.S.A., LLC
Notes to Condensed Financial Statements
(unaudited)
(7) Royalty Agreement with C&C Partners, Ltd.
C&C designs, manufactures, and distributes men’s, women’s, junior’s, and children’s footwear and accessories bearing the “Sanuk” trade name throughout the United States, Canada, Puerto Rico, Mexico, and Guam. C&C obtained certain rights to the “Sanuk” trade name pursuant to the terms of a licensing agreement, which expires on October 31, 2019. Pursuant to the terms of the licensing agreement, C&C pays royalties on the “Sanuk” brand at percentages ranging from 2% to 5%. In addition, C&C is required to spend a minimum amount on advertising for, and marketing and promoting of the “Sanuk” brand. Sanuk is required to reimburse C&C for half of these expenses above the minimum required amount. For the six months ended June 30, 2011 and 2010, royalty revenue from this agreement totaled approximately $1,916,000 and $1,236,000, respectively, and the advertising and promotion expenses paid to C&C totaled approximately $322,000 and $250,000, respectively, which are netted against royalty revenue. A Member of the Company has entered into an employment agreement with C&C to provide design and brand management services.