EX-99.3 4 0004.txt UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL Exhibit 99.3 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following unaudited pro forma condensed combined financial information for Global Sports consists of the Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2000 and the fiscal year ended January 1, 2000, and the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2000. The Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2000 and fiscal year ended January 1, 2000 give effect to the merger as if it had taken place on January 1, 1999. The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the merger as if it had taken place on September 30, 2000. The Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2000 combines Global Sports' historical results of operations for the nine months ended September 30, 2000 with Fogdog's historical results of operations for the nine months ended September 30, 2000. The Unaudited Pro Forma Condensed Combined Statement of Operations for the fiscal year ended January 1, 2000 combines Global Sports' historical results of operations for the fiscal year ended January 1, 2000 with Fogdog's historical results of operation for the fiscal year ended December 31, 1999. The Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2000 combines Global Sports' unaudited balance sheet as of September 30, 2000 with Fogdog's unaudited balance sheet as of September 30, 2000. The merger will be accounted for using the purchase method of accounting. The pro forma financial information has been prepared on the basis of assumptions described in the notes, and include assumptions relating to the allocation of the consideration paid for the assets and liabilities of Fogdog, based on preliminary estimates of their fair value. The actual allocation of the consideration may differ from that reflected in the pro forma financial information after valuations and other procedures to be performed after the closing of the merger. The pro forma financial information should be read in conjunction with the related notes included in this document and the historical consolidated financial statements of Global Sports and Fogdog, and the related notes thereto, which are included elsewhere in this prospectus/proxy statement. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not purport to be indicative of the operating results or financial position that would have actually occurred if the merger had been in effect during the periods or on the dates indicated, nor is it necessarily indicative of future operating results or financial position of Global Sports following the merger. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (in thousands, except per share data)
Nine Months Ended September 30, 2000 --------------------- Pro Global Fogdog, Pro Forma forma Sports, Inc. Inc. Adjustments Combined ------------ -------- ----------- -------- Net revenues.................. $ 22,484 $ 16,443 $ -- $ 38,927 Cost of revenues.............. 15,742 14,786 30,528 -------- -------- -------- -------- Gross Profit.............. 6,742 1,657 -- 8,399 Operating expenses: Sales and marketing......... 27,937 35,710 (9,012)(2) 54,146 (489)(3) Product development......... 5,421 3,891 (131)(3) 9,181 General and administrative.. 6,462 4,598 (87)(3) 10,973 Stock-based compensation.... 4,297 4,529 236 (4) 9,062 Depreciation and amortization............... 5,468 996 (996)(5) 5,468 -------- -------- -------- -------- Total operating expenses.. 49,585 49,724 (10,479) 88,830 -------- -------- -------- -------- Operating loss................ (42,843) (48,067) 10,479 (80,431) Other (income) expense: Interest (income) expense, net........................ (826) (2,613) -- (3,439) -------- -------- -------- -------- Loss from continuing operations................... (42,017) (45,454) 10,479 (76,992) ======== ======== ======== ======== Loss from continuing operations per share--basic and diluted.................. $ (2.06) $ (1.26) $ (3.02) ======== ======== ======== Weighted average shares outstanding--basic and diluted....................... 20,466 36,154 (31,137) 25,483 ======== ======== ======== ========
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (in thousands, except per share data)
Fiscal year ended -------------------------------- January 1, December 31, 2000 1999 Pro ------------------- ------------ Pro forma forma Global Sports, Inc. Fogdog, Inc. Adjustments Combined ------------------- ------------ ----------- -------- Net revenues............ $ 5,511 $ 7,023 $ -- $ 12,534 Cost of revenues........ 3,817 6,374 10,191 -------- -------- ------- -------- Gross Profit........ 1,694 649 -- 2,343 Operating expenses: Sales and marketing... 11,609 21,450 (3,470)(2) 29,383 (206)(3) Product development... 7,264 3,448 (55)(3) 10,657 General and administrative....... 8,583 2,052 (37)(3) 10,598 Stock-based compensation......... 2,655 3,424 315 (4) 6,394 Depreciation and amortization......... 728 473 (473)(5) 728 -------- -------- ------- -------- Total operating expenses........... 30,839 30,847 (3,926) 57,760 -------- -------- ------- -------- Operating loss.......... (29,145) (30,198) 3,926 (55,417) Other (income) expense: Interest (income) expense, net......... (461) (585) -- (1,046) Other, net............ (2) -- -- (2) -------- -------- ------- -------- Total other (income) expense............ (463) (585) -- (1,048) -------- -------- ------- -------- Loss from continuing operations before income tax benefit..... (28,682) (29,613) 3,926 (54,369) Benefit from income taxes.................. 2,221 -- -- 2,221 -------- -------- ------- -------- Loss from continuing operations............. $(26,461) $(29,613) $ 3,926 $(52,148) ======== ======== ======= ======== Loss from continuing operations per share-- basic and diluted...... $ (1.78) $ (4.14) $ (2.62) ======== ======== ======== Weighted average shares outstanding--basic and diluted................ 14,874 7,148 (2,131) 19,891 ======== ======== ======= ========
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (in thousands)
September 30, 2000 ------------------------- Pro Global Pro forma forma Sports, Inc. Fogdog, Inc. Adjustments Combined ------------ ------------ ----------- -------- ASSETS Current assets: Cash and cash equivalents......... $ 31,098 $41,587 $ -- $ 72,685 Short-term investments............ 799 987 -- 1,786 Accounts receivable, net.......... 7,619 689 -- 8,308 Inventory......................... 14,923 4,964 -- 19,887 Prepaid expenses and other current assets........................... 1,982 3,044 -- 5,026 -------- ------- -------- -------- Total current assets............ 56,421 51,271 -- 107,692 Property and equipment, net of accumulated depreciation........... 25,004 3,352 (2,885)(6) 25,471 Other assets, net................... 537 16,934 (13,552)(7) 1,011 (2,908)(6) -------- ------- -------- -------- Total assets.................... $ 81,962 $71,557 $(19,345) $134,174 ======== ======= ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses......................... $ 16,617 $ 6,395 $ -- $ 23,012 Deferred revenue.................. 812 -- -- 812 Current portion of long-term debt............................. 202 418 -- 620 Other current liabilities......... -- 2,952 -- 2,952 -------- ------- -------- -------- Total current liabilities....... 17,631 9,765 -- 27,396 Long-term debt...................... 7,200 -- -- 7,200 Commitments and contingencies Stockholders' equity: Common stock...................... 236 37 14 287 Additional paid-in capital and other components of stockholders' equity........................... 147,029 147,452 (104,111) 190,370 Unearned stock-based compensation..................... -- (4,848) 3,903 (945) Accumulated deficit............... (90,134) (80,849) 80,849 (90,134) -------- ------- -------- -------- Total stockholders' equity...... 57,131 61,792 (19,345)(8) 99,578 -------- ------- -------- -------- Total liabilities and stockholders' equity........... $ 81,962 $71,557 $(19,345) $134,174 ======== ======= ======== ========
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The pro forma financial information gives effect to the following pro forma adjustments: 1. In accordance with the agreement for the Fogdog merger: The Fogdog merger will be accounted for as a purchase. The purchase price is based on $7.75 per share, which is the closing price of Global Sports common stock on October 23, 2000. All vested and unvested Fogdog stock options and warrants are deemed to have been assumed by Global Sports upon consummation of the merger for purposes of these pro forma statements. These stock options and warrants are included as part of the purchase price based on their fair value as of the date of the merger agreement. The pro forma financial information has been prepared on the basis of assumptions described in these notes, and include assumptions relating to the allocation of the consideration paid for the assets and liabilities of Fogdog, based on preliminary estimates of their fair value. The actual allocation of such consideration may differ from that reflected in the pro forma financial information, after valuations and other procedures to be performed after the closing of the Fogdog acquisition. Tangible assets of Fogdog acquired in the merger principally include cash and cash equivalents, and inventory. Liabilities of Fogdog assumed in the merger principally include accounts payable and accrued expenses. The pro forma financial information does not reflect cost savings, estimated at $19.5 million for the nine months ended September 30, 2000, and $4.5 million for the year ended January 1, 2000, that may result from the elimination of duplicate functions, expenditures, and activities. Although management expects that cost savings will result from the merger, there can be no assurance that cost savings will be achieved. 2. The pro forma adjustment is to adjust the amortization related to the warrant held by Nike based on the adjustment of the warrant to fair market value as of the date of the merger agreement, and the assumption of the warrant by Global Sports. 3. The pro forma adjustment reduces Fogdog's depreciation expense based on the write-down of Fogdog's property and equipment. 4. The pro forma adjustment is for amortization of unearned stock-based compensation based on the adjustment of Fogdog's unvested stock options to fair market value as of the date of the merger agreement, and the assumption of the unvested stock options by Global Sports. 5. The pro forma adjustment eliminates Fogdog's amortization of goodwill relating to its merger with Sports Universe, Inc. which was effective on September 3, 1999. 6. The pro forma adjustment is to write down Fogdog's non-current assets acquired due to the excess of the fair market value of Fogdog's net assets over the purchase price. 7. The pro forma adjustment is to adjust the Fogdog warrant held by Nike to fair market value as of the date of the merger agreement. 8. The pro forma adjustment to stockholders' equity reflects the elimination of Fogdog's stockholders' equity ($61.8 million) and the impact of the issuance of Global Sports common stock ($43.4 million) in connection with the Fogdog merger.