Attached files
| file | filename |
|---|---|
| 8-K - 8-K - COSTA INC | atx-20130906x8k.htm |
Exhibit 99.1
A.T. CROSS COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On September 6, 2013 (the “Closing Date”), A.T. Cross Company (the “Company”) completed the sale of its Cross Accessory Division (“CAD”) to a newly-formed affiliate of Clarion Capital Partners, LLC (the "Purchaser") for $60 million in cash. As previously announced, Purchaser will assume substantially all of the liabilities associated with the CAD Business, other than those related to the U.S. defined benefit pension plan, certain pre-closing environmental matters and certain other liabilities, which will be retained by the Company.
Taking into account certain seasonal working capital adjustments, A.T. Cross received proceeds from the Purchaser of approximately $57 million.
The following unaudited pro forma condensed consolidated financial statements are presented to comply with Article 11 of Regulation S-X and follow prescribed SEC regulations. The unaudited condensed consolidated pro forma financial statements do not purport to present what the Company’s results would have been had the disposition actually occurred on the dates indicated or to project what the Company’s results of operations or financial position would have been for any future period. The prescribed regulations limit pro forma adjustments to those that are directly attributable to the disposition on a factually supported basis. Consequently, the Company was not permitted within the condensed consolidated pro forma financial statements to allocate to the disposed operations any indirect corporate overhead or costs, such as administrative corporate functions or any other costs that were shared with the retained business of the Company. As a result such costs are not reflected in the pro forma adjustments and are included in the retained business of the Company. The pro forma adjustments are described in the notes to the unaudited condensed consolidated pro forma financial statements.
The unaudited condensed consolidated pro forma financial statements have been prepared for informational purposes and to assist in the analysis of Company’s sale of its Cross Accessory Division to the Purchaser. This information should be read together with the historical consolidated financial statements and related notes of A.T. Cross included in its Annual Report on Form 10-K for the year ended December 29, 2012 and its Quarterly Report on Form 10-Q for the quarter ended June 29, 2013.
The unaudited pro forma condensed consolidated statements of operations for the six months ended June 29, 2013 and the years ended December 29, 2012, December 31, 2011 and January 1, 2011 give effect to the transaction described above as if it had occurred on January 3, 2010. The unaudited pro forma condensed consolidated balance sheet as of June 29, 2013 gives effect to the transaction described above as if it had occurred on June 29, 2013. The unaudited pro forma condensed consolidated financial statements are derived from the historical consolidated financial statements of A.T. Cross and are based on assumptions that management believes are reasonable in the circumstances.
A.T. Cross Company and Subsidiaries
Pro Forma Consolidated Balance Sheet as of June 29, 2013
(Unaudited, amounts in thousands, except per share amounts)
|
|
Historical (a) |
|
CAD (b) |
|
Pro Forma |
|||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
19,050 |
|
$ |
52,900 |
|
$ |
71,950 |
|
Short-term investments |
|
262 |
|
|
- |
|
|
262 |
|
Accounts receivable, gross |
|
33,956 |
|
|
(16,674) |
|
|
17,282 |
|
Allowance for doubtful accounts |
|
(602) |
|
|
423 |
|
|
(179) |
|
Accounts receivable, net |
|
33,354 |
|
|
(16,251) |
|
|
17,103 |
|
Inventories |
|
46,023 |
|
|
(27,480) |
|
|
18,543 |
|
Deferred income taxes |
|
3,410 |
|
|
(360) |
|
|
3,050 |
|
Other current assets |
|
8,576 |
|
|
(4,151) |
|
|
4,425 |
|
Total Current Assets |
|
110,675 |
|
|
4,658 |
|
|
115,333 |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, gross |
|
114,596 |
|
|
(104,981) |
|
|
9,615 |
|
Accumulated depreciation |
|
(100,677) |
|
|
95,276 |
|
|
(5,401) |
|
Property, Plant and Equipment, Net |
|
13,919 |
|
|
(9,705) |
|
|
4,214 |
|
Goodwill |
|
15,279 |
|
|
- |
|
|
15,279 |
|
Intangibles, Net |
|
8,403 |
|
|
(1,286) |
|
|
7,117 |
|
Deferred Income Taxes |
|
10,089 |
|
|
3,437 |
|
|
13,526 |
|
Other Assets |
|
1,799 |
|
|
- |
|
|
1,799 |
|
Total Assets |
$ |
160,164 |
|
$ |
(2,896) |
|
$ |
157,268 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other liabilities |
$ |
20,867 |
|
$ |
(8,115) |
|
$ |
12,752 |
|
Line of credit |
|
15,000 |
|
|
- |
|
|
15,000 |
|
Accrued compensation and related taxes |
|
7,604 |
|
|
(2,180) |
|
|
5,424 |
|
Retirement plan obligations |
|
2,343 |
|
|
(212) |
|
|
2,131 |
|
Income taxes payable |
|
823 |
|
|
5,749 |
|
|
6,572 |
|
Total Current Liabilities |
|
46,637 |
|
|
(4,758) |
|
|
41,879 |
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan Obligations |
|
18,890 |
|
|
- |
|
|
18,890 |
|
Deferred Gain on Sale of Real Estate |
|
1,434 |
|
|
- |
|
|
1,434 |
|
Other Long-Term Liabilities |
|
751 |
|
|
- |
|
|
751 |
|
Accrued Warranty Costs |
|
1,283 |
|
|
(988) |
|
|
295 |
|
Commitments and Contingencies (Note L) |
|
- |
|
|
|
|
|
- |
|
Total Liabilities |
|
68,995 |
|
|
(5,746) |
|
|
63,249 |
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
Common stock, par value $1 per share: |
|
|
|
|
|
|
|
|
|
Class A - authorized 40,000 shares, 19,530 shares issued and 11,398 |
|
|
|
|
|
|
|
|
|
shares outstanding at June 29, 2013, and 19,177 shares |
|
|
|
|
|
|
|
|
|
issued and 11,163 shares outstanding at December 29, 2012 |
|
19,530 |
|
|
- |
|
|
19,530 |
|
Class B - authorized 4,000 shares, 1,805 shares issued and |
|
|
|
|
|
|
|
|
|
outstanding at June 29, 2013 and December 29, 2012 |
|
1,805 |
|
|
- |
|
|
1,805 |
|
Additional paid-in capital |
|
33,741 |
|
|
7,100 |
|
|
40,841 |
|
Retained earnings |
|
105,396 |
|
|
(7,108) |
|
|
98,288 |
|
Accumulated other comprehensive loss |
|
(18,940) |
|
|
2,858 |
|
|
(16,082) |
|
Treasury stock, at cost |
|
(50,363) |
|
|
- |
|
|
(50,363) |
|
Total Shareholders' Equity |
|
91,169 |
|
|
2,850 |
|
|
94,019 |
|
Total Liabilities and Shareholders' Equity |
$ |
160,164 |
|
$ |
(2,896) |
|
$ |
157,268 |
See accompanying notes to unaudited pro forma financial statements
A.T. Cross Company and Subsidiaries
Pro Forma Consolidated Statement of Income for the Six Months Ended June 29, 2013
(Unaudited, amounts in thousands, except per share amounts)
|
|
Historical (c) |
|
CAD (d) |
|
Pro Forma |
|||
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
97,903 |
|
$ |
(41,649) |
|
$ |
56,254 |
|
Cost of goods sold |
|
41,718 |
|
|
(18,687) |
|
|
23,031 |
|
Gross Profit |
|
56,185 |
|
|
(22,962) |
|
|
33,223 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
42,921 |
|
|
(21,601) |
|
|
21,320 |
|
Service and distribution costs |
|
4,299 |
|
|
(1,817) |
|
|
2,482 |
|
Research and development expenses |
|
1,549 |
|
|
(818) |
|
|
731 |
|
Operating Income |
|
7,416 |
|
|
1,274 |
|
|
8,690 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
4 |
|
|
(2) |
|
|
2 |
|
Interest expense |
|
(251) |
|
|
- |
|
|
(251) |
|
Other expense |
|
(49) |
|
|
23 |
|
|
(26) |
|
Interest and Other Expense |
|
(296) |
|
|
21 |
|
|
(275) |
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
7,120 |
|
|
1,295 |
|
|
8,415 |
|
Income tax provision |
|
2,390 |
|
|
493 |
|
|
2,883 |
|
Net Income |
$ |
4,730 |
|
$ |
802 |
|
$ |
5,532 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.38
|
|
|
$ 0.07
|
|
|
$ 0.45
|
|
Diluted |
|
$ 0.36
|
|
|
$ 0.06
|
|
|
$ 0.43
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Denominator for Basic Net Income Per Share |
|
12,288 |
|
|
12,288 |
|
|
12,288 |
|
Effect of dilutive securities |
|
694 |
|
|
694 |
|
|
694 |
|
Denominator for Diluted Net Income Per Share |
|
12,982 |
|
|
12,982 |
|
|
12,982 |
See accompanying notes to unaudited pro forma financial statements
A.T. Cross Company and Subsidiaries
Pro Forma Consolidated Statement of Income for the Year Ended December 29, 2012
(Unaudited, amounts in thousands, except per share amounts)
|
|
Historical (c) |
|
|
CAD (d) |
|
|
Pro Forma |
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
180,508 |
|
$ |
(97,221) |
|
$ |
83,287 |
|
Cost of goods sold |
|
81,198 |
|
|
(46,420) |
|
|
34,778 |
|
Gross Profit |
|
99,310 |
|
|
(50,801) |
|
|
48,509 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
75,154 |
|
|
(39,317) |
|
|
35,837 |
|
Service and distribution costs |
|
8,174 |
|
|
(4,069) |
|
|
4,105 |
|
Research and development expenses |
|
2,708 |
|
|
(1,663) |
|
|
1,045 |
|
Operating Income |
|
13,274 |
|
|
(5,752) |
|
|
7,522 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
16 |
|
|
(9) |
|
|
7 |
|
Interest expense |
|
(525) |
|
|
(267) |
|
|
(792) |
|
Other expense |
|
(6) |
|
|
- |
|
|
(6) |
|
Interest and Other Expense |
|
(515) |
|
|
(276) |
|
|
(791) |
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
12,759 |
|
|
(6,028) |
|
|
6,731 |
|
Income tax provision |
|
3,611 |
|
|
(1,377) |
|
|
2,234 |
|
Net Income |
$ |
9,148 |
|
$ |
(4,651) |
|
$ |
4,497 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.74
|
|
|
($0.38) |
|
|
$ 0.36
|
|
Diluted |
|
$ 0.70
|
|
|
($0.36) |
|
|
$ 0.34
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Denominator for Basic Net Income Per Share |
|
12,335 |
|
|
12,335 |
|
|
12,335 |
|
Effect of dilutive securities |
|
714 |
|
|
714 |
|
|
714 |
|
Denominator for Diluted Net Income Per Share |
|
13,049 |
|
|
13,049 |
|
|
13,049 |
See accompanying notes to unaudited pro forma financial statements
A.T. Cross Company and Subsidiaries
Pro Forma Consolidated Statement of Income for the Year Ended December 31, 2011
(Unaudited, amounts in thousands, except per share amounts)
|
|
Historical (c) |
|
CAD (d) |
|
Pro Forma |
|||
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
174,637 |
|
$ |
(102,131) |
|
$ |
72,506 |
|
Cost of goods sold |
|
77,613 |
|
|
(47,819) |
|
|
29,794 |
|
Gross Profit |
|
97,024 |
|
|
(54,312) |
|
|
42,712 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
74,451 |
|
|
(41,285) |
|
|
33,166 |
|
Service and distribution costs |
|
7,830 |
|
|
(4,058) |
|
|
3,772 |
|
Research and development expenses |
|
2,697 |
|
|
(1,835) |
|
|
862 |
|
Operating Income |
|
12,046 |
|
|
(7,134) |
|
|
4,912 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
12 |
|
|
(5) |
|
|
7 |
|
Interest expense |
|
(661) |
|
|
(162) |
|
|
(823) |
|
Other expense |
|
(248) |
|
|
- |
|
|
(248) |
|
Interest and Other Expense |
|
(897) |
|
|
(167) |
|
|
(1,064) |
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
11,149 |
|
|
(7,301) |
|
|
3,848 |
|
Income tax provision |
|
2,839 |
|
|
(1,489) |
|
|
1,350 |
|
Net Income |
$ |
8,310 |
|
$ |
(5,812) |
|
$ |
2,498 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.68
|
|
|
($0.48) |
|
|
$ 0.20
|
|
Diluted |
|
$ 0.64
|
|
|
($0.45) |
|
|
$ 0.19
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Denominator for Basic Net Income Per Share |
|
12,195 |
|
|
12,195 |
|
|
12,195 |
|
Effect of dilutive securities |
|
810 |
|
|
810 |
|
|
810 |
|
Denominator for Diluted Net Income Per Share |
|
13,005 |
|
|
13,005 |
|
|
13,005 |
See accompanying notes to unaudited pro forma financial statements
A.T. Cross Company and Subsidiaries
Pro Forma Consolidated Statement of Income for the Year Ended January 1, 2011
(Unaudited, amounts in thousands, except per share amounts)
|
|
Historical (c) |
|
CAD (d) |
|
Pro Forma |
|||
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
158,312 |
|
$ |
(97,776) |
|
$ |
60,536 |
|
Cost of goods sold |
|
70,090 |
|
|
(45,316) |
|
|
24,774 |
|
Gross Profit |
|
88,222 |
|
|
(52,460) |
|
|
35,762 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
68,817 |
|
|
(39,216) |
|
|
29,601 |
|
Service and distribution costs |
|
7,524 |
|
|
(4,120) |
|
|
3,404 |
|
Research and development expenses |
|
2,811 |
|
|
(1,841) |
|
|
970 |
|
Operating Income |
|
9,070 |
|
|
(7,283) |
|
|
1,787 |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
25 |
|
|
(3) |
|
|
22 |
|
Interest expense |
|
(975) |
|
|
(125) |
|
|
(1,100) |
|
Other expense |
|
(270) |
|
|
- |
|
|
(270) |
|
Interest and Other Expense |
|
(1,220) |
|
|
(128) |
|
|
(1,348) |
|
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes |
|
7,850 |
|
|
(7,411) |
|
|
439 |
|
Income tax provision |
|
1,642 |
|
|
(1,473) |
|
|
169 |
|
Net Income |
$ |
6,208 |
|
$ |
(5,938) |
|
$ |
270 |
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.49
|
|
|
($0.47) |
|
|
$ 0.02
|
|
Diluted |
|
$ 0.48
|
|
|
($0.45) |
|
|
$ 0.02
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding: |
|
|
|
|
|
|
|
|
|
Denominator for Basic Net Income Per Share |
|
12,686 |
|
|
12,686 |
|
|
12,686 |
|
Effect of dilutive securities |
|
379 |
|
|
379 |
|
|
379 |
|
Denominator for Diluted Net Income Per Share |
|
13,065 |
|
|
13,065 |
|
|
13,065 |
See accompanying notes to unaudited pro forma financial statements
Notes to Unaudited Pro Forma Financial Information
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited pro forma condensed consolidated statements of income:
|
a) |
Reflects the consolidated historical balance sheet of the Company as of June 29, 2013, as contained in the historical consolidated financial statements and notes thereto presented in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2013. |
The pro forma adjustments to the Company’s consolidated balance sheet as of June 29, 2013 are as follows:
|
b) |
Represents adjustments to reflect the sale of the Cross Accessory Division as follows: |
|
· |
The elimination of the assets and the liabilities of the Cross Accessory Division as if the sale had occurred on June 29, 2013. |
|
· |
The receipt of net proceeds from the Purchaser of approximately $57 million less $4.4 million of cash which was left with the Purchaser. |
|
· |
The accrual of costs associated with the sale totaling approximately $4.5 million related to transaction costs and other sale related costs. |
|
· |
Deferred tax assets created related to the sale of CAD and the vesting of stock based compensation. |
|
c) |
Reflects the consolidated statements of operations of the Company for the six months ended June 29, 2013 and the years ended December 29, 2012, December 31, 2011 and January 1, 2011, as contained in the historical consolidated financial statements and notes thereto presented in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2013 and the Company’s Annual Report on Form 10-K for the year ended December 29, 2012, respectively. |
The pro forma adjustments to the Company’s consolidated statements of income for the six months ended June 29, 2013 the years ended December 29, 2012, December 31, 2011 and January 1, 2011, are as follows:
|
d) |
Represents adjustments to reflect the sale of the Cross Accessory Division as follows: |
|
· |
The elimination of revenues and expenses of the Cross Accessory Division for the periods presented. |