Perfumania Holdings, Inc. |
Florida | 0-19714 | 65-0977964 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
35 Sawgrass Drive, Suite 2 Bellport, NY 11713 |
(Address of Principal Executive Offices)(Zip Code) |
N/A |
(Former Name or Former Address, if Changed Since Last Report) |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description |
99.1 | Unaudited Pro Forma Financial Information of Perfumania as of and for the year ended January 28, 2012. |
Perfumania Holdings, Inc. | |
Date: May 10, 2012 | By: /s/ Donna L. Dellomo Donna L. Dellomo Chief Financial Officer |
Exhibit No. | Description |
99.1 | Unaudited Pro Forma Financial Information of Perfumania as of and for the year ended January 28, 2012. |
Historical | |||||||||||||||||
Perfumania Hldgs 52 weeks Ending 1/28/12 | Parlux 12 months Ending 12/31/11 | Pro Forma Adjustments | Combined Pro Forma | ||||||||||||||
Net sales, unaffiliated | $ | 493,507 | $ | 80,396 | $ | — | $ | 573,903 | |||||||||
Net sales, affiliated | — | 49,417 | (a) | (42,723 | ) | 6,694 | |||||||||||
Total net sales | 493,507 | 129,813 | (42,723 | ) | 580,597 | ||||||||||||
Cost of goods sold, unaffiliated | 302,365 | 35,250 | (b) | 6,776 | 344,391 | ||||||||||||
Cost of goods sold, affiliated | — | 23,819 | (b) | (20,640 | ) | 3,179 | |||||||||||
Total cost of goods sold | 302,365 | 59,069 | (13,864 | ) | 347,570 | ||||||||||||
Gross profit | 191,142 | 70,744 | (28,859 | ) | 233,027 | ||||||||||||
Selling, general and administrative expenses | 167,348 | 70,917 | (d) | (367 | ) | 237,898 | |||||||||||
Merger related expenses | 2,267 | 1,437 | (r) | (3,704 | ) | — | |||||||||||
Depreciation and amortization | 7,713 | 2,139 | (h) | 2,491 | 12,343 | ||||||||||||
Asset impairment | 1,141 | — | — | 1,141 | |||||||||||||
Total operating expenses | 178,469 | 74,493 | (1,580 | ) | 251,382 | ||||||||||||
Income (loss) from operations | 12,673 | (3,749 | ) | (27,279 | ) | (18,355 | ) | ||||||||||
Interest expense | 7,824 | 777 | (e) | 1,740 | 11,416 | ||||||||||||
(g) | 642 | ||||||||||||||||
(f) | 433 | ||||||||||||||||
Income (loss) before income taxes | 4,849 | (4,526 | ) | (30,094 | ) | (29,771 | ) | ||||||||||
Income tax expense (benefit) | 718 | (1,799 | ) | (1,081 | ) | ||||||||||||
Net income (loss) | $ | 4,131 | $ | (2,727 | ) | $ | (30,094 | ) | $ | (28,690 | ) | ||||||
Weighted average shares | |||||||||||||||||
Basic | 8,968,000 | 20,762,000 | 6,314,000 | 15,282,000 | |||||||||||||
Diluted | 9,028,000 | 20,762,000 | 6,314,000 | 15,282,000 | |||||||||||||
Net income (loss) per share | |||||||||||||||||
Basic | $ | 0.46 | $ | (0.13 | ) | $ | (4.77 | ) | $ | (1.88 | ) | ||||||
Diluted | $ | 0.46 | $ | (0.13 | ) | $ | (4.77 | ) | $ | (1.88 | ) |
Historical | |||||||||||||||||
Perfumania Hldgs 1/28/12 | Parlux 12/31/11 | Pro Forma Adjustments | Combined Pro Forma | ||||||||||||||
($ in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Current: | |||||||||||||||||
Cash | $ | 1,682 | $ | 22,987 | (m) | $ | (7,300 | ) | $ | 17,369 | |||||||
Accounts receivable - unaffiliated | 17,671 | 11,188 | — | 28,859 | |||||||||||||
Accounts receivable - affiliated | — | 12,314 | (i) | (10,649 | ) | 1,665 | |||||||||||
Inventories, net | 216,850 | 43,391 | (c) | (18,311 | ) | 256,756 | |||||||||||
(p) | 14,826 | ||||||||||||||||
Prepaid and other | 11,383 | 20,284 | 31,667 | ||||||||||||||
Total current assets | 247,586 | 110,164 | (21,434 | ) | 336,316 | ||||||||||||
Property and equipment, net | 24,493 | 1,292 | — | 25,785 | |||||||||||||
Goodwill | — | — | (q) | 23,779 | 23,779 | ||||||||||||
Other assets, net | 14,676 | 6,176 | (m) | 1,300 | 37,241 | ||||||||||||
(n) | 14,383 | ||||||||||||||||
(o) | 2,520 | ||||||||||||||||
(s) | (1,814 | ) | |||||||||||||||
Total Assets | $ | 286,755 | $ | 117,632 | $ | 18,734 | $ | 423,121 | |||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||
Current: | |||||||||||||||||
Accounts payable, non affiliates | 29,838 | 15,862 | 45,700 | ||||||||||||||
Accounts payable, affiliates | 10,899 | — | (i) | (10,476 | ) | 423 | |||||||||||
Accrued expenses | 20,908 | 2,437 | (p) | 5,930 | 29,275 | ||||||||||||
Current portion of N/P - affiliate | — | — | — | ||||||||||||||
Current maturities of long-term debt | 1,129 | 37 | — | 1,166 | |||||||||||||
Total current liabilities | 62,774 | 18,336 | (4,546 | ) | 76,564 | ||||||||||||
Revolving credit facility | 30,057 | (j) | 32,100 | 62,157 | |||||||||||||
Notes payable - affiliates | 95,366 | — | (j) | 30,000 | 125,366 | ||||||||||||
Long-term portion of obligation under capital leases | 1,616 | 1,616 | |||||||||||||||
Other long-term liabilities | 32,145 | 59 | (o)(n) | 6,762 | 38,966 | ||||||||||||
Total liabilities | 221,958 | 18,395 | 64,316 | 304,669 | |||||||||||||
Commitments and contingencies | |||||||||||||||||
Shareholders' equity | |||||||||||||||||
Common stock | 99 | 304 | (l) | 63 | 162 | ||||||||||||
(k) | (304 | ) | |||||||||||||||
Additional paid in capital | 125,344 | 107,046 | (l) | 78,076 | 203,247 | ||||||||||||
(k) | (107,046 | ) | |||||||||||||||
(i) | (173 | ) | |||||||||||||||
Retained earnings (deficit) | (52,069 | ) | 27,160 | (k) | (27,160 | ) | (76,380 | ) | |||||||||
(m) | (6,000 | ) | |||||||||||||||
(c) | (18,311 | ) |
Treasury Stock | (8,577 | ) | (35,273 | ) | (k) | 35,273 | (8,577 | ) | |||||||||
Total shareholders' equity | 64,797 | 99,237 | (45,582 | ) | 118,452 | ||||||||||||
$ | 286,755 | $ | 117,632 | $ | 18,734 | $ | 423,121 |
Perfumania shares issued | 6,314 | |||
Perfumania stock price April 18, 2012 | $ | 9.38 | ||
$ | 59,225 | |||
Cash proceeds from note payable to affiliate | 30,000 | |||
Cash proceeds from bank credit facility | 32,100 | |||
Fair value of Perfumania's stock options and warrants issued in connection with the merger | 18,914 | |||
Total Consideration | $ | 140,239 |
(in thousands) | ||||
Cash | $ | 22,987 | ||
Accounts receivable | 23,502 | |||
Inventories | 58,217 | |||
Other current assets | 20,284 | |||
Property and equipment | 1,292 | |||
Other non-current assets | 615 | |||
Identified intangible assets | 20,650 | |||
Goodwill | 23,779 | |||
Accounts payable | (15,862 | ) | ||
Deferred tax liabilities | (12,692 | ) | ||
Other liabilities assumed | (2,533 | ) | ||
Total estimated purchase price | $ | 140,239 |
(a) | Eliminate affiliated sales from Parlux to Perfumania. |
(b) | Remove Parlux gross profit markup on inventory acquired from Parlux and sold by Perfumania. |
(c) | Remove gross profit on inventory purchased from Parlux remaining in Perfumania's inventory as of January 28, 2012. |
(d) | Eliminate share based compensation expense from Parlux's historical Statement of Operations, as of the assumed merger of January 30, 2011, as Parlux's equity awards are no longer outstanding. |
(e) | Recognize interest expense on $30 million subordinated note payable to affiliates issued for portion of merger consideration at an interest rate which is 2% higher than the average interest rate on borrowings |
(f) | Recognize amortization of deferred finance costs incurred in connection with amendment of senior secured credit facility over the remaining 3 year term of Perfumania's senior secured credit facility. |
(g) | Recognize incremental interest expense on $32.1 million additional borrowing under senior secured credit facility utilized for portion of merger consideration at a projected average interest rate of 3.8%, netted against the interest savings from Parlux's cash flows from operations resulting from the assumed merger date as of January 30, 2011. |
(h) | Recognize incremental amortization expense related to fair value adjustment for acquired intangible assets with estimated lives ranging from 4 to 10 years. |
(i) | Eliminate intercompany receivable and payable between Perfumania and Parlux as of the assumed merger date of January 28, 2012. |
(j) | Reflect issuance of $30 million subordinated note payable to affiliates and approximately $32.1 million additional borrowing under senior secured credit facility to fund cash portion of merger consideration as of the assumed merger date of January 28, 2012. |
(k) | Elimination of all of Parlux's historical stockholders' equity, including common stock, additional paid in capital, retained earnings and treasury stock as of the assumed merger date of January 28, 2012. |
(l) | Reflect issuance of approximately 6.0 million shares of Perfumania common stock to Parlux stockholders and 0.3 million shares of Perfumania's common stock to Artistic Brands or its designee at a per share price of $9.38 which was Perfumania's closing share price on April 18, 2012, conversion of all outstanding and unexercised options and warrants to purchase Parlux common stock at the time of the merger into options or warrants to purchase a number of shares of Perfumania common stock determined by applying the exchange formula provided in the merger agreement, and issuance of warrants in related licensing transaction. |
(m) | Reflect estimated transaction fees for both Perfumania and Parlux as of the assumed merger date of January 28, 2012. |
(n) | Recognize adjustment to record the estimated fair value of Parlux's identifiable intangible assets associated with license agreements and associated deferred tax liability as of the assumed merger date of January 28, 2012. |
(o) | Recognize adjustment to record the estimated fair value of Parlux's identifiable intangible assets associated with non-contractual customer relationships and the associated deferred tax liability. |
(p) | Write-up Parlux's inventory as of assumed merger date of January 28, 2012 to fair value and associated deferred tax liability. |
(q) | Record goodwill resulting from the merger as of the assumed merger date of January 28, 2012. Goodwill is not amortized, but rather is assessed for impairment at least annually, or more frequently when events or circumstances indicate that goodwill may be impaired. |
(r) | Remove the direct, incremental costs of the merger which have been incurred by Perfumania and Parlux and are reflected in the historical statements of operations. |
(s) | Recognize adjustment to record barter credits at fair value. |
(t) | No income tax provision (benefit) is reflected for any pro forma adjustments as Perfumania maintained a full valuation allowance against all deferred taxes as of January 28, 2012. |