Exhibit 99.3
Pro Forma Unaudited Consolidated Financial Statements
Mecox Lane Limited
Unaudited Pro Forma Financial Information
Spin-off of Mixblu Limited and Its Subsidiaries
On September 18, 2014 (the “Closing Date”), Mecox Lane completed a spin-off of its apparel and accessories business through the sale of Mixblu Limited and its subsidiaries (collectively, “Mixblu”) to Fast Fashion China Limited, a company controlled by Mecox Lane’s former chief executive officer, for an adjusted consideration of $6.1 million pursuant to a share purchase agreement dated as of August 8, 2014.
After the Closing Date, Mecox Lane does not own any shares of Mixblu and will no longer consolidate Mixblu within the Mecox Lane’s financial results. Beginning in the second quarter of 2014, Mixblu’s historical financial results for periods prior to the Closing Date will be reflected in Mecox Lane’s consolidated financial statements as a discontinued operation.
Unaudited Pro Forma Consolidated Financial Information
The following pro forma financial information concerns the historical performance of Mecox Lane’s apparel and accessories business, specifically Mixblu Limited. The pro forma information is provided for comparison purposes in consideration of the spin-off and sale of Mixblu and has no impact on Mecox Lane’s previously reported financial results.
The following unaudited pro forma consolidated financial statements are based on Mecox Lane’s historical consolidated financial statements and have been adjusted to give pro forma effect to the spin-off of the apparel and accessories business. The unaudited pro forma condensed consolidated statements of operations for the periods ended December 31, 2013, December 31, 2012andDecember 31, 2011 give effect to the spin-off transaction as if it had occurred as of January 1, 2011.
The unaudited pro forma consolidated financial statements have been prepared by Mecox Lane based upon certain assumptions as disclosed in the accompanying footnotes. The unaudited pro forma consolidated financial statements presented herein are shown for illustrative purposes only and are not necessarily indicative of Mecox Lane’s financial position or future results of operations that would have actually occurred as if the spin-off transaction had been in effect as of the date or for the periods presented.
Mecox Lane Limited
Unaudited Pro Forma Condensed Consolidataed Balance Sheet
(In Thousands, Except Per Share Data)
| | As of December 31, 2013 | |
| | Historical | | Spin-off
transaction | | Pro Forma | |
| | $’000 | | $’000 | | $’000 | |
| | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | 15,736 | | 4,757 | (A) | 20,493 | |
Accounts receivable | | 1,744 | | (800 | ) | 944 | |
Amount due from related parties | | 224 | | — | | 224 | |
Other receivables | | 4,174 | | (1,808 | ) | 2,366 | |
Advances to suppliers and prepaid expenses | | 1,971 | | (1,217 | ) | 754 | |
Merchandise inventories | | 24,585 | | (20,536 | ) | 4,049 | |
Held-for-sale assets | | 40,707 | | — | | 40,707 | |
Total current assets | | 89,141 | | (19,604 | ) | 69,537 | |
Property and equipment, net | | 6,219 | | (2,193 | ) | 4,026 | |
Intangible assets, net | | 917 | | (45 | ) | 872 | |
Investment in an affiliate | | 5,547 | | — | | 5,547 | |
Other non-current assets | | 826 | | (585 | ) | 241 | |
TOTAL ASSETS | | 102,650 | | (22,427 | ) | 80,223 | |
| | | | | | | |
LIABILITIES AND EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Secured short term borrowing | | (1,640 | ) | | | (1,640 | ) |
Accounts payable (including accounts payable of the consolidated VIEs without recourse to Mecox Lane Limited of $4,589,259 as of December 31, 2013) | | (17,500 | ) | 4,497 | | (13,003 | ) |
Advances from customers (including advances from customers of the consolidated VIEs without recourse to Mecox Lane Limited of $1,076,283 as of December 31, 2013) | | (3,608 | ) | 1,076 | | (2,532 | ) |
Amount due to related parties | | (636 | ) | — | | (636 | ) |
Accrued expenses (including accrued expenses of the consolidated VIEs without recourse to Mecox Lane Limited of $393,313 as of December 31, 2013) | | (3,630 | ) | 289 | (B) | (3,341 | ) |
Other current liabilities (including other current liabilities of the consolidated VIEs without recourse to Mecox Lane Limited of $1,489,649 as of December 31, 2013) | | (5,661 | ) | 1,490 | | (4,171 | ) |
Income tax payable (including income tax payable of the consolidated VIEs without recourse to Mecox Lane Limited of $33,545 as of December 31, 2013) | | (1,786 | ) | 34 | | (1,752 | ) |
Total current liabilities | | (34,461 | ) | 7,386 | | (27,075 | ) |
| | | | | | | |
Equity: | | | | | | | |
Ordinary shares ($0.0001 par value; 10,000,000,000 shares authorized, 439,876,279 shares issued, and outstanding as of December 31, 2013) | | (44 | ) | — | | (44 | ) |
Additional paid-in capital | | (168,834 | ) | — | | (168,834 | ) |
Accumulated deficit | | 109,433 | | 15,041 | (C) | 124,474 | |
Accumulated other comprehensive income | | (7,701 | ) | — | | (7,701 | ) |
Statutory reserve | | (943 | ) | — | | (943 | ) |
Total Mecox Lane Limited equity | | (68,089 | ) | 15,041 | | (53,048 | ) |
Noncontrolling interests | | (100 | ) | — | | (100 | ) |
Total equity | | (68,189 | ) | 15,041 | | (53,148 | ) |
TOTAL LIABILITIES AND EQUITY | | (102,650 | ) | 22,427 | | (80,223 | ) |
Note1. Unaudited Pro Forma Balance Sheet: The audited pro forma consolidated balance sheet gives effect to the spin-off of the apparel and accessories operations of the Mecox Lane, as described below, as if these events had occurred as of December 31, 2013. As a result of the spin-off, these adjustments reflect the historical balances as of December 31, 2013 for the assets sold and liability assumed.
Note (A): Besides the $1.5 million cash to be control by the buyer, the Cash received from the buyer under the terms of the split-off transaction should be $6.2 million
Note (B): Besides the accrued expenses assumed by the buyer, the accompany should additionally accrued the transaction and professional related fees amounted around $0.1 million
Note (C): Based on the terms of the transaction outlined in August 8, including the $21.2 million net assets the Company plans to sell, the $0.1 million of transaction and professional fees, and the $6.2 million cash the Company will receive from the buyer, Mecox Lane Limited would have recorded a loss of $15.0 million which has been recorded as an addition in accumulated deficit on the pro forma balance sheet.
Mecox Lane Limited
Unaudited Pro Forma Condensed Consolidataed statement Of Comprehensive Income
(In Thousands, Except Per Share Data)
| | Year Ended December 31, 2013 | |
| | Historical | | Historical Enterprise
Operations (A) | | Pro Forma | |
| | $’000 | | $’000 | | $’000 | |
| | | | | | | |
Net revenues | | 87,423 | | 44,800 | | 42,623 | |
| | | | | | | |
Cost of goods sold (excluding depreciation and amortization) | | 52,694 | | 36,797 | | 15,897 | |
| | | | | | | |
Operating expenses: | | | | | | — | |
Selling, general and administrative expenses | | 58,780 | | 36,321 | | 22,459 | |
Depreciation and amortization | | 5,227 | | 4,125 | | 1,102 | |
Other operating income, net | | (6,484 | ) | (302 | ) | (6,182 | ) |
Total operating expenses | | 57,523 | | 40,144 | | 17,379 | |
| | | | | | | |
Income (loss) from operations | | (22,794 | ) | (32,141 | ) | 9,347 | |
Interest expense | | (342 | ) | — | | (342 | ) |
Interest income | | 977 | | — | | 977 | |
Other income, net | | 1,039 | | — | | 1,039 | |
Income (loss) before income taxes, equity in an affiliate and noncontrolling interests | | (21,120 | ) | (32,141 | ) | 11,021 | |
Income tax expense | | — | | — | | — | |
Income (loss) before equity in an affiliate and noncontrolling interests | | (21,120 | ) | (32,141 | ) | 11,021 | |
Loss from equity in an affiliate | | (5,491 | ) | — | | (5,491 | ) |
Net income (loss) | | (26,611 | ) | (32,141 | ) | 5,530 | |
Accretion of noncontrolling interest | | 103 | | — | | 103 | |
Net loss attributable to noncontrolling interests | | (103 | ) | — | | (103 | ) |
Net income (loss) attributable to Mecox Lane Limited shareholders | | (26,611 | ) | (32,141 | ) | 5,530 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Basic | | (0.06 | ) | | | 0.01 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Diluted | | (0.06 | ) | | | 0.01 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Basic | | (2.23 | ) | | | 0.46 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Diluted | | (2.23 | ) | | | 0.46 | |
| | | | | | | |
Weighted average ordinary shares used in per share calculation | | | | | | | |
Basic | | 418,347 | | | | 418,347 | |
Diluted | | 418,347 | | | | 422,252 | |
Weighted average ADS used in per share calculation (1) | | | | | | | |
Basic | | 11,953 | | | | 11,953 | |
Diluted | | 11,953 | | | | 12,064 | |
(1) ADS amounts adjusted for a change in the ratio of the Company’s American Depositary Shares (“ADSs”) to ordinary shares (“Shares”) from 1:7 to 1:35 (“Ratio Change”), effective as of February 1, 2013.
Other comprehensive income, net of tax of nil | | | | | | | |
Change in cumulative foreign currency translation adjustment | | 1,408 | | — | | 1,408 | |
Other comprehensive income (loss), net of tax | | 1,408 | | — | | 1,408 | |
| | | | | | | |
Comprehensive income (loss) attributable to Mecox Lane Limited shareholders | | (25,203 | ) | (32,141 | ) | 6,938 | |
Note1. Unaudited Pro Forma Condensed Consolidated statement of Comprehensive Income:
Note (A):The following adjustments to the unaudited pro forma condensed consolidated statement of comprehensive income reflect the elimination of historical revenues generated from discontinued apparel and accessories operations pursuant to the spin-off transaction, as well as historical expenses relating to the operations assumed by apparel and accessories business until the transactions were consummated as of January 1,2011. Any gain or loss related to this transaction is not reflected in the pro forma condensed consolidated statements of comprehensive income as it has been recorded on the closing date of the transaction.
Mecox Lane Limited
Unaudited Pro Forma Condensed Consolidataed statement Of Comprehensive Income
(In Thousands, Except Per Share Data)
| | Year Ended December 31, 2012 | |
| | Historical | | Historical Enterprise
Operations (A) | | Pro Forma | |
| | $’000 | | $’000 | | $’000 | |
| | | | | | | |
Net revenues | | 151,816 | | 112,996 | | 38,820 | |
| | | | | | | |
Cost of goods sold (excluding depreciation and amortization) | | 97,467 | | 84,509 | | 12,958 | |
| | | | | | | |
Operating expenses: | | | | | | — | |
Selling, general and administrative expenses | | 76,310 | | 56,779 | | 19,531 | |
Depreciation and amortization | | 4,217 | | 3,503 | | 714 | |
Other operating income, net | | (1,805 | ) | (952 | ) | (853 | ) |
Total operating expenses | | 78,722 | | 59,330 | | 19,392 | |
Income (loss) from operations | | (24,373 | ) | (30,843 | ) | 6,470 | |
Interest income | | 2,143 | | — | | 2,143 | |
Other income, net | | 120 | | — | | 120 | |
Income (loss) before income taxes, equity in an affiliate and noncontrolling interests | | (22,110 | ) | (30,843 | ) | 8,733 | |
Income tax expense | | (324 | ) | — | | (324 | ) |
Income (loss) before equity in an affiliate and noncontrolling interests | | (22,434 | ) | (30,843 | ) | 8,409 | |
Loss from equity in an affiliate | | — | | — | | — | |
Net income (loss) | | (22,434 | ) | (30,843 | ) | 8,409 | |
Accretion of noncontrolling interest | | 20 | | — | | 20 | |
Net loss attributable to noncontrolling interests | | (20 | ) | — | | (20 | ) |
Net income (loss) attributable to Mecox Lane Limited shareholders | | (22,434 | ) | (30,843 | ) | 8,409 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Basic | | (0.06 | ) | | | 0.02 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Diluted | | (0.06 | ) | | | 0.02 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Basic | | (1.94 | ) | | | 0.73 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Diluted | | (1.94 | ) | | | 0.73 | |
| | | | | | | |
Weighted average ordinary shares used in per share calculation | | | | | | | |
Basic | | 404,247 | | | | 404,247 | |
Diluted | | 404,247 | | | | 404,387 | |
Weighted average ADS used in per share calculation (1) | | | | | | | |
Basic | | 11,550 | | | | 11,550 | |
Diluted | | 11,550 | | | | 11,554 | |
(1) ADS amounts adjusted for a change in the ratio of the Company’s American Depositary Shares (“ADSs”) to ordinary shares (“Shares”) from 1:7 to 1:35 (“Ratio Change”), effective as of February 1, 2013.
Other comprehensive income , net of tax of nil | | | | | | | |
Change in cumulative foreign currency translation adjustment | | 91 | | — | | 91 | |
Other comprehensive income (loss), net of tax | | 91 | | — | | 91 | |
| | | | | | | |
Comprehensive income (loss) attributable to Mecox Lane Limited shareholders | | (22,343 | ) | (30,843 | ) | 8,499 | |
Mecox Lane Limited
Unaudited Pro Forma Condensed Consolidataed statement Of Comprehensive Income
(In Thousands, Except Per Share Data)
| | Year Ended December 31, 2011 | |
| | Historical | | Historical Enterprise
Operations (A) | | Pro Forma | |
| | $’000 | | $’000 | | $’000 | |
| | | | | | | |
Net revenues | | 217,894 | | 187,357 | | 30,537 | |
| | | | | | | |
Cost of goods sold (excluding depreciation and amortization) | | 144,739 | | 133,833 | | 10,906 | |
| | | | | | | |
Operating expenses: | | | | | | — | |
Selling, general and administrative expenses | | 104,534 | | 89,970 | | 14,564 | |
Depreciation and amortization | | 4,411 | | 4,048 | | 363 | |
Other operating income, net | | (933 | ) | (712 | ) | (221 | ) |
Total operating expenses | | 108,012 | | 93,306 | | 14,706 | |
| | | | | | | |
Income (loss) from operations | | (34,857 | ) | (39,782 | ) | 4,925 | |
Interest income | | 2,231 | | — | | 2,231 | |
Other income, net | | 2,307 | | — | | 2,307 | |
Income (loss) before income taxes, equity in an affiliate and noncontrolling interests | | (30,319 | ) | (39,782 | ) | 9,463 | |
Income tax expense | | (2,944 | ) | (249 | ) | (2,695 | ) |
Income (loss) before equity in an affiliate and noncontrolling interests | | (33,263 | ) | (40,031 | ) | 6,768 | |
Loss from equity in an affiliate | | — | | — | | — | |
Net income (loss) | | (33,263 | ) | (40,031 | ) | 6,768 | |
Accretion of noncontrolling interest | | 257 | | — | | 257 | |
Net loss attributable to noncontrolling interests | | (296 | ) | — | | (296 | ) |
Net income (loss) attributable to Mecox Lane Limited shareholders | | (33,224 | ) | (40,031 | ) | 6,807 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Basic | | (0.08 | ) | | | 0.02 | |
| | | | | | | |
Net income (loss) per share attributable to Mecox Lane-Diluted | | (0.08 | ) | | | 0.02 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Basic | | (2.87 | ) | | | 0.59 | |
| | | | | | | |
Net income (loss) per ADS attributable to Mecox Lane-Diluted | | (2.87 | ) | | | 0.55 | |
| | | | | | | |
Weighted average ordinary shares used in per share calculation | | | | | | | |
Basic | | 405,192 | | | | 405,192 | |
Diluted | | 405,192 | | | | 431,453 | |
Weighted average ADS used in per share calculation (1) | | | | | | | |
Basic | | 11,577 | | | | 11,577 | |
Diluted | | 11,577 | | | | 12,327 | |
(1) ADS amounts adjusted for a change in the ratio of the Company’s American Depositary Shares (“ADSs”) to ordinary shares (“Shares”) from 1:7 to 1:35 (“Ratio Change”), effective as of February 1, 2013.
Other comprehensive income, net of tax of nil | | | | | | | |
Change in cumulative foreign currency translation adjustment | | 3,909 | | — | | 3,909 | |
Other comprehensive income (loss), net of tax | | 3,909 | | — | | 3,909 | |
| | | | | | | |
Comprehensive income (loss) attributable to Mecox Lane Limited shareholders | | (29,354 | ) | (40,031 | ) | 10,677 | |
