EXHIBIT 99.1
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 28, 2013 and the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine and three months ended September 28, 2013 and September 29, 2012 and for the years ended December 29, 2012, December 31, 2011 and January 1, 2011 have been derived from the historical financial statements of Fifth & Pacific Companies, Inc. and Subsidiaries (the “Company”) and adjusted to give effect to two sales transactions (collectively, the “Transactions”), the first of which was the November 6, 2013 sale of the Juicy Couture brand name and related intellectual property assets (the “Juicy Couture IP”) of Juicy Couture, Inc. (“Juicy Couture”), a wholly-owned subsidiary of the Company, and certain other subsidiaries to ABG - Juicy LLC (“ABG”), for $195.0 million (the “Juicy Couture Transaction”), as well as the wind-down of the Juicy Couture operations pursuant to the Purchase Agreement by and among ABG, the Company and Juicy Couture, Inc. (the “Juicy Couture Purchase Agreement”). Additional consideration may be payable to the Company in an amount of up to $10.0 million if certain conditions regarding future performance are achieved. The Juicy Couture IP has been licensed back to Juicy Couture until December 31, 2014 to accommodate the wind-down of operations. Juicy Couture will pay guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license.
The Unaudited Pro Forma Condensed Consolidated Financial Statements also give effect to the sale of 100% of the capital stock of Lucky Brand Dungarees, Inc. (“Lucky Brand”), a wholly-owned subsidiary of the Company that owns the operations of the Lucky Brand business, to LBD Acquisition Company, LLC (“LBD Acquisition”) for aggregate consideration of $225.0 million (the “Lucky Brand Transaction”), comprised of $140.0 million in cash and a three-year $85.0 million note (the “Lucky Brand Note”) issued by the successor to LBD Acquisition, Lucky Brand Dungarees, LLC (“Lucky Brand LLC”) to the Company, subject to working capital and other adjustments, which closed on February 3, 2014. The Company has also agreed to provide certain transition services to LBD Acquisition and Lucky Brand LLC.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 28, 2013 assumes the Transactions had been consummated on that date. The Unaudited Pro Forma Condensed Consolidated Statements of Operations assume the Transactions were consummated on the first day of the earliest fiscal period presented and carried through all periods presented. The pro forma adjustments reflect transactions and events that: (i) are directly attributable to the Transactions (and the exit of the Juicy Couture operations, in the case of the Unaudited Pro Forma Condensed Consolidated Statements of Operations); (ii) are factually supportable and (iii) are expected to have a continuing impact on consolidated results. The pro forma adjustments are described in the accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements. Additionally, the Unaudited Pro Forma Condensed Consolidated Statements of Operations present information separating the sale of the Juicy Couture IP and certain licensing agreements assumed by ABG from the wind-down of the Juicy Couture operations, which is also required pursuant to the terms of the Juicy Couture Purchase Agreement.
Management believes that the assumptions used to derive the Unaudited Pro Forma Condensed Consolidated Financial Statements are reasonable under the circumstances and given the information available. The Unaudited Pro Forma Condensed Consolidated Financial Statements have been provided for information purposes and are not necessarily indicative of the financial condition or results of future operations or the actual financial condition or results that would have been achieved had the Transactions occurred on the dates indicated. These Unaudited Pro Forma Condensed Consolidated Financial Statements (together with the footnotes thereto) should be read in conjunction with the Company’s historical consolidated financial statements and accompanying notes thereto, which can be found in the Company’s Quarterly Report on Form 10-Q for the period ended September 28, 2013, filed with the Securities and Exchange Commission (“SEC”) on November 7, 2013 and the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012, filed with the SEC on February 21, 2013. Additional pro forma financial information regarding the Juicy Couture Transaction can be found in the Company’s Current Report on Form 8-K, filed with the SEC on November 6, 2013.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations do not reflect material non-recurring charges or credits which are expected to impact net income within the 12 months following the Transactions, including: (i) estimated non-cash asset impairment charges of $30.0 - $40.0 million; (ii) estimated transaction costs, including professional fees, of $25.0 million; (iii) estimated net cash restructuring charges of $15.0 - $25.0 million (net of the expected receipt of $51.0 million in connection with the termination of the lease of the Juicy Couture flagship store on Fifth Avenue in New York City); and (iv) the $10.0 million minimum royalty payable to ABG during the term of the wind-down license. The Unaudited Pro Forma Condensed Consolidated Balance Sheet reflects the impact of $50.0 million of estimated cash restructuring and transaction costs. Although the Company expects to consummate the lease termination transaction, there can be no assurance the termination fee will be realized by the Company and in the instance the termination fee is not realized, the Company expects to incur cash restructuring charges of approximately $65.0 - $75.0 million. Changes in these estimates, based on more accurate information, may affect amounts reported in future periods.
Additionally, the Unaudited Pro Forma Condensed Consolidated Balance Sheet does not present adjustments for the following items that will be wound down in connection with the exit of the remaining Juicy Couture operations: (i) the expected collection of $27.7 million of accounts receivable; (ii) the expected sell-off of $78.5 million of inventory on hand; (iii) the expected write-down or disposal of $57.4 million of property and equipment; (iv) the expected write-off of $10.0 million of other assets; and (v) the expected settlement of various obligations including $60.8 million of accounts payable and $46.2 million of accrued expenses and other liabilities (inclusive of estimated restructuring charges in connection with the Juicy Couture Transaction).
The Unaudited Pro Forma Financial Information does not reflect any transactions that the Company may enter into in the future to mitigate the restructuring and transition costs related to the Transactions, and such efforts could materially reduce such costs.
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 28, 2013
(In thousands)
| | | | Sale of | | | | Sale of | | | |
| | As Reported | | Juicy Couture IP | | Subtotal | | Lucky Brand | | Pro Forma | |
Assets | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | |
Cash and cash equivalents | | $ | 6,832 | | $ | 171,304 | (a) | $ | 178,136 | | $ | 127,749 | (f) | $ | 305,885 | |
Accounts receivable - trade, net | | 121,833 | | | | 121,833 | | (34,777 | )(g) | 87,056 | |
Inventories, net | | 310,638 | | | | 310,638 | | (91,598 | )(g) | 219,040 | |
Deferred income taxes | | 806 | | | | 806 | | | | 806 | |
Other current assets | | 58,846 | | | | 58,846 | | (9,644 | )(g) | 49,202 | |
Total current assets | | 498,955 | | 171,304 | | 670,259 | | (8,270 | ) | 661,989 | |
| | | | | | | | | | | |
Property and Equipment, Net | | 244,471 | | | | 244,471 | | (66,669 | )(g) | 177,802 | |
Goodwill | | 52,679 | | | | 52,679 | | | | 52,679 | |
Intangibles, Net | | 122,602 | | (27,304 | )(b) | 95,298 | | (1,766 | )(g) | 93,532 | |
Deferred Income Taxes | | 64 | | | | 64 | | | | 64 | |
Note Receivable | | — | | | | — | | 85,000 | (h) | 85,000 | |
Other Assets | | 38,241 | | | | 38,241 | | (489 | )(g) | 37,752 | |
Total Assets | | $ | 957,012 | | $ | 144,000 | | $ | 1,101,012 | | $ | 7,806 | | $ | 1,108,818 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ (Deficit) Equity | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | |
Short-term borrowings | | $ | 137,440 | | | | $ | 137,440 | | | | $ | 137,440 | |
Accounts payable | | 217,754 | | | | 217,754 | | $ | (57,040 | )(g) | 160,714 | |
Accrued expenses | | 209,370 | | $ | 1,707 | (c) | 211,077 | | (13,482 | )(i) | 197,595 | |
Income taxes payable | | 1,326 | | | | 1,326 | | (205 | )(g) | 1,121 | |
Total current liabilities | | 565,890 | | 1,707 | | 567,597 | | (70,727 | ) | 496,870 | |
| | | | | | | | | | | |
Long-Term Debt | | 391,279 | | | | 391,279 | | | | 391,279 | |
Other Non-Current Liabilities | | 198,878 | | (19,218 | )(d) | 179,660 | | (19,807 | )(g) | 159,853 | |
Deferred Income Taxes | | 21,680 | | (7,071 | )(b) | 14,609 | | | | 14,609 | |
Stockholders’ (Deficit) Equity | | (220,715 | ) | 168,582 | (e) | (52,133 | ) | 98,340 | (j) | 46,207 | |
Total Liabilities and Stockholders’ (Deficit) Equity | | $ | 957,012 | | $ | 144,000 | | $ | 1,101,012 | | $ | 7,806 | | $ | 1,108,818 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 28, 2013
On November 6, 2013, the Company completed the sale of the Juicy Couture IP to ABG for a total purchase price of $195.0 million. An additional payment may be payable to the Company in an amount of up to $10.0 million if certain conditions regarding future performance are achieved. ABG purchased from Juicy Couture (i) the equity interests of the new subsidiary holding the domestic intellectual property of Juicy Couture and (ii) Juicy Couture’s foreign intellectual property assets. The Juicy Couture IP is licensed back to Juicy Couture until December 31, 2014 to accommodate the wind-down of operations. Juicy Couture will pay guaranteed minimum royalties to ABG of $10.0 million during the term of the wind-down license.
On February 3, 2014, the Company completed the sale of 100% of the capital stock of Lucky Brand to LBD Acquisition for aggregate consideration of $225.0 million, comprised of $140.0 million in cash and a three-year $85.0 million note, subject to working capital and other adjustments.
The following notes are included in the Unaudited Pro Forma Condensed Consolidated Balance Sheet:
For the Juicy Couture Transaction:
(a) Represents cash inflows of $195.0 million from the sale of the Juicy Couture IP, partially offset by estimated cash outflows of: (i) a minimum royalty payment payable to ABG of $10.0 million related to the wind-down license; (ii) estimated unpaid transaction fees of $7.3 million; and (iii) an estimated repayment to Li & Fung Limited (“Li & Fung”) of $6.4 million related to a buying/sourcing arrangement.
(b) Represents the write-off of the carrying value of the trademark rights and related deferred tax liabilities for the Juicy Couture IP.
(c) Represents the accrual of estimated cash restructuring charges associated with the Juicy Couture Transaction (net of the expected receipt of $51.0 million in connection with the termination of the lease of the Juicy Couture flagship store on Fifth Avenue in New York City), offset by the write-off of deferred licensing revenue of $3.8 million and an estimated repayment to Li & Fung of $1.1 million related to a buying/sourcing arrangement and other items.
(d) Represents the write-off of deferred licensing revenue of $13.9 million and an estimated repayment to Li & Fung of $5.3 million related to a buying/sourcing arrangement.
(e) Represents decreases to the Company’s Stockholders’ deficit due to: (i) the receipt of proceeds of $195.0 million in connection with the sale of the Juicy Couture IP; (ii) the write-off of deferred revenue of $17.7 million; and (iii) the write-off of deferred tax liabilities of $7.1 million. Such decreases to the Company’s Stockholders’ deficit are estimated to be partially offset by: (i) the write-off of the carrying value of the Juicy Couture IP; (ii) estimated cash outflows of $10.0 million related to the minimum royalty payable to ABG ; and (iii) estimated cash restructuring charges and estimated unpaid transaction fees of $13.9 million.
For the Lucky Brand Transaction:
(f) Represents cash inflows of $140.0 million from the sale of Lucky Brand, partially offset by cash outflows of estimated unpaid transaction fees of $12.1 million.
(g) Represents elimination of historical assets and liabilities of Lucky Brand.
(h) Represents receipt of an $85.0 million note receivable as partial consideration for sale of Lucky Brand.
(i) Represents the elimination of $29.1 million of historical accrued expenses of Lucky Brand, partially offset by the accrual of estimated cash restructuring charges of $15.0 million and other items.
(j) Represents decreases to the Company’s Stockholders’ deficit due to: proceeds from sale of Lucky Brand in the form of $140.0 million in cash and an $85.0 million note receivable, partially offset by (i) the elimination of $99.0 million of historical net assets of Lucky Brand and (ii) estimated cash restructuring charges and estimated unpaid transaction fees of $23.7 million.
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 28, 2013
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 1,184,367 | | $ | (12,538 | ) | $ | 1,171,829 | | $ | (346,376 | ) | $ | 825,453 | | $ | (297,511 | ) | $ | 527,942 | |
Cost of goods sold | | 521,357 | | — | | 521,357 | | (166,320 | ) | 355,037 | | (153,953 | ) | 201,084 | |
Gross Profit | | 663,010 | | (12,538 | ) | 650,472 | | (180,056 | ) | 470,416 | | (143,558 | ) | 326,858 | |
Selling, general & administrative expenses | | 701,289 | | (5,476 | ) | 695,813 | | (196,651 | ) | 499,162 | | (174,006 | ) | 325,156 | |
Impairment of intangible asset | | 3,300 | | — | | 3,300 | | — | | 3,300 | | — | | 3,300 | |
Operating Loss | | (41,579 | ) | (7,062 | ) | (48,641 | ) | 16,595 | | (32,046 | ) | 30,448 | | (1,598 | ) |
Other expense, net | | (1,462 | ) | — | | (1,462 | ) | 12 | | (1,450 | ) | (360 | ) | (1,810 | ) |
Impairment of cost investment | | (6,109 | ) | — | | (6,109 | ) | — | | (6,109 | ) | — | | (6,109 | ) |
Loss on extinguishment of debt | | (1,707 | ) | — | | (1,707 | ) | — | | (1,707 | ) | — | | (1,707 | ) |
Interest expense, net | | (36,062 | ) | — | | (36,062 | ) | 9,757 | | (26,305 | ) | — | | (26,305 | ) |
Loss Before Provision for Income Taxes | | (86,919 | ) | (7,062 | ) | (93,981 | ) | 26,364 | | (67,617 | ) | 30,088 | | (37,529 | ) |
Provision for income taxes | | 3,862 | | (531 | ) | 3,331 | | — | | 3,331 | | (235 | ) | 3,096 | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (90,781 | ) | $ | (6,531 | ) | $ | (97,312 | ) | $ | 26,364 | | $ | (70,948 | ) | $ | 30,323 | | $ | (40,625 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (0.75 | ) | | | | | | | | | | | $ | (0.34 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 120,480 | | | | | | | | | | | | 120,480 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 29, 2012
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | |
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 1,018,561 | | $ | (13,389 | ) | $ | 1,005,172 | | $ | (324,245 | ) | $ | 680,927 | | $ | (331,595 | ) | $ | 349,332 | |
Cost of goods sold | | 445,620 | | — | | 445,620 | | (154,267 | ) | 291,353 | | (161,013 | ) | 130,340 | |
Gross Profit | | 572,941 | | (13,389 | ) | 559,552 | | (169,978 | ) | 389,574 | | (170,582 | ) | 218,992 | |
Selling, general & administrative expenses | | 643,707 | | — | | 643,707 | | (181,679 | ) | 462,028 | | (195,326 | ) | 266,702 | |
Operating Loss | | (70,766 | ) | (13,389 | ) | (84,155 | ) | 11,701 | | (72,454 | ) | 24,744 | | (47,710 | ) |
Other income, net | | 1,479 | | — | | 1,479 | | 15 | | 1,494 | | (242 | ) | 1,252 | |
Loss on extinguishment of debt | | (8,669 | ) | — | | (8,669 | ) | — | | (8,669 | ) | — | | (8,669 | ) |
Interest expense, net | | (37,836 | ) | — | | (37,836 | ) | 9,800 | | (28,036 | ) | — | | (28,036 | ) |
Loss Before Provision for Income Taxes | | (115,792 | ) | (13,389 | ) | (129,181 | ) | 21,516 | | (107,665 | ) | 24,502 | | (83,163 | ) |
Provision for income taxes | | 4,882 | | (531 | ) | 4,351 | | (124 | ) | 4,227 | | (343 | ) | 3,884 | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (120,674 | ) | $ | (12,858 | ) | $ | (133,532 | ) | $ | 21,640 | | $ | (111,892 | ) | $ | 24,845 | | $ | (87,047 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (1.12 | ) | | | | | | | | | | | $ | (0.81 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 107,692 | | | | | | | | | | | | 107,692 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 28, 2013
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 430,604 | | $ | (4,093 | ) | $ | 426,511 | | $ | (120,001 | ) | $ | 306,510 | | $ | (113,898 | ) | $ | 192,612 | |
Cost of goods sold | | 187,460 | | — | | 187,460 | | (57,877 | ) | 129,583 | | (55,215 | ) | 74,368 | |
Gross Profit | | 243,144 | | (4,093 | ) | 239,051 | | (62,124 | ) | 176,927 | | (58,683 | ) | 118,244 | |
Selling, general & administrative expenses | | 242,167 | | (2,451 | ) | 239,716 | | (68,511 | ) | 171,205 | | (58,447 | ) | 112,758 | |
Impairment of intangible asset | | 3,300 | | — | | 3,300 | | — | | 3,300 | | — | | 3,300 | |
Operating (Loss) Income | | (2,323 | ) | (1,642 | ) | (3,965 | ) | 6,387 | | 2,422 | | (236 | ) | 2,186 | |
Other income, net | | 1,361 | | — | | 1,361 | | (57 | ) | 1,304 | | (412 | ) | 892 | |
Loss on extinguishment of debt | | (599 | ) | — | | (599 | ) | — | | (599 | ) | — | | (599 | ) |
Interest expense, net | | (12,087 | ) | — | | (12,087 | ) | 3,253 | | (8,834 | ) | — | | (8,834 | ) |
Loss Before Provision for Income Taxes | | (13,648 | ) | (1,642 | ) | (15,290 | ) | 9,583 | | (5,707 | ) | (648 | ) | (6,355 | ) |
Provision for income taxes | | 1,253 | | (177 | ) | 1,076 | | — | | 1,076 | | (64 | ) | 1,012 | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (14,901 | ) | $ | (1,465 | ) | $ | (16,366 | ) | $ | 9,583 | | $ | (6,783 | ) | $ | (584 | ) | $ | (7,367 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (0.12 | ) | | | | | | | | | | | $ | (0.06 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 122,396 | | | | | | | | | | | | 122,396 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 29, 2012
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 364,556 | | $ | (4,007 | ) | $ | 360,549 | | $ | (111,797 | ) | $ | 248,752 | | $ | (125,830 | ) | $ | 122,922 | |
Cost of goods sold | | 161,439 | | — | | 161,439 | | (52,619 | ) | 108,820 | | (65,568 | ) | 43,252 | |
Gross Profit | | 203,117 | | (4,007 | ) | 199,110 | | (59,178 | ) | 139,932 | | (60,262 | ) | 79,670 | |
Selling, general & administrative expenses | | 203,398 | | — | | 203,398 | | (60,421 | ) | 142,977 | | (65,270 | ) | 77,707 | |
Operating (Loss) Income | | (281 | ) | (4,007 | ) | (4,288 | ) | 1,243 | | (3,045 | ) | 5,008 | | 1,963 | |
Other expense, net | | (1,038 | ) | — | | (1,038 | ) | (27 | ) | (1,065 | ) | (142 | ) | (1,207 | ) |
Loss on extinguishment of debt | | (3,023 | ) | — | | (3,023 | ) | — | | (3,023 | ) | — | | (3,023 | ) |
Interest expense, net | | (13,228 | ) | — | | (13,228 | ) | 3,286 | | (9,942 | ) | — | | (9,942 | ) |
Loss Before Provision for Income Taxes | | (17,570 | ) | (4,007 | ) | (21,577 | ) | 4,502 | | (17,075 | ) | 4,866 | | (12,209 | ) |
Provision for income taxes | | 1,823 | | (177 | ) | 1,646 | | — | | 1,646 | | (114 | ) | 1,532 | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (19,393 | ) | $ | (3,830 | ) | $ | (23,223 | ) | $ | 4,502 | | $ | (18,721 | ) | $ | 4,980 | | $ | (13,741 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (0.17 | ) | | | | | | | | | | | $ | (0.12 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 113,109 | | | | | | | | | | | | 113,109 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 29, 2012
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 1,505,094 | | $ | (18,340 | ) | $ | 1,486,754 | | $ | (461,691 | ) | $ | 1,025,063 | | $ | (480,297 | ) | $ | 544,766 | |
Cost of goods sold | | 662,119 | | — | | 662,119 | | (217,885 | ) | 444,234 | | (239,483 | ) | 204,751 | |
Gross Profit | | 842,975 | | (18,340 | ) | 824,635 | | (243,806 | ) | 580,829 | | (240,814 | ) | 340,015 | |
Selling, general & administrative expenses | | 877,426 | | — | | 877,426 | | (243,349 | ) | 634,077 | | (274,036 | ) | 360,041 | |
Operating Loss | | (34,451 | ) | (18,340 | ) | (52,791 | ) | (457 | ) | (53,248 | ) | 33,222 | | (20,026 | ) |
Other expense, net | | (168 | ) | — | | (168 | ) | (19 | ) | (187 | ) | (138 | ) | (325 | ) |
Gain on acquisition of subsidiary | | 40,065 | | — | | 40,065 | | — | | 40,065 | | — | | 40,065 | |
Loss on extinguishment of debt | | (9,754 | ) | — | | (9,754 | ) | — | | (9,754 | ) | — | | (9,754 | ) |
Interest expense, net | | (51,684 | ) | — | | (51,684 | ) | 13,072 | | (38,612 | ) | — | | (38,612 | ) |
Loss Before Provision for Income Taxes | | (55,992 | ) | (18,340 | ) | (74,332 | ) | 12,596 | | (61,736 | ) | 33,084 | | (28,652 | ) |
Provision for income taxes | | 3,464 | | (707 | ) | 2,757 | | (65 | ) | 2,692 | | (457 | ) | 2,235 | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (59,456 | ) | $ | (17,633 | ) | $ | (77,089 | ) | $ | 12,661 | | $ | (64,428 | ) | $ | 33,541 | | $ | (30,887 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (0.54 | ) | | | | | | | | | | | $ | (0.28 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 109,292 | | | | | | | | | | | | 109,292 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 1,518,721 | | $ | (18,125 | ) | $ | 1,500,596 | | $ | (418,213 | ) | $ | 1,082,383 | | $ | (512,563 | ) | $ | 569,820 | |
Cost of goods sold | | 709,330 | | — | | 709,330 | | (207,153 | ) | 502,177 | | (242,643 | ) | 259,534 | |
Gross Profit | | 809,391 | | (18,125 | ) | 791,266 | | (211,060 | ) | 580,206 | | (269,920 | ) | 310,286 | |
Selling, general & administrative expenses | | 904,619 | | — | | 904,619 | | (222,160 | ) | 682,459 | | (249,049 | ) | 433,410 | |
Impairment of intangible assets | | 1,024 | | — | | 1,024 | | — | | 1,024 | | — | | 1,024 | |
Operating Loss | | (96,252 | ) | (18,125 | ) | (114,377 | ) | 11,100 | | (103,277 | ) | (20,871 | ) | (124,148 | ) |
Other income, net | | 282 | | — | | 282 | | (66 | ) | 216 | | 407 | | 623 | |
Gain on sales of trademarks, net | | 286,979 | | — | | 286,979 | | — | | 286,979 | | — | | 286,979 | |
Gain on extinguishment of debt, net | | 5,157 | | — | | 5,157 | | — | | 5,157 | | — | | 5,157 | |
Interest expense, net | | (57,188 | ) | — | | (57,188 | ) | 13,008 | | (44,180 | ) | — | | (44,180 | ) |
Income Before Provision for Income Taxes | | 138,978 | | (18,125 | ) | 120,853 | | 24,042 | | 144,895 | | (20,464 | ) | 124,431 | |
Benefit for income taxes | | (5,770 | ) | — | | (5,770 | ) | (25 | ) | (5,795 | ) | (252 | ) | (6,047 | ) |
Net Income from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | 144,748 | | $ | (18,125 | ) | $ | 126,623 | | $ | 24,067 | | $ | 150,690 | | $ | (20,212 | ) | $ | 130,478 | |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic | | | | | | | | | | | | | | | |
Income from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | 1.53 | | | | | | | | | | | | $ | 1.38 | |
| | | | | | | | | | | | | | | |
Diluted | | | | | | | | | | | | | | | |
Income from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | 1.28 | | | | | | | | | | | | $ | 1.16 | |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic | | 94,664 | | | | | | | | | | | | 94,664 | |
Weighted Average Shares, Diluted | | 120,692 | | | | | | | | | | | | 120,692 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 1, 2011
(In thousands, except per share amounts)
| | | | Sale of | | | | Sale of | | | | Exit of | | | |
| | | | Juicy Couture IP | | | | Lucky Brand | | | | Juicy Couture | | | |
| | As Reported | | (a) | | Subtotal | | (b) | | As Adjusted | | Operations (c) | | Pro Forma | |
| | | | | | | | | | | | | | | |
Net Sales | | $ | 1,623,235 | | $ | (18,209 | ) | $ | 1,605,026 | | $ | (386,935 | ) | $ | 1,218,091 | | $ | (548,553 | ) | $ | 669,538 | |
Cost of goods sold | | 831,939 | | — | | 831,939 | | (198,514 | ) | 633,425 | | (256,984 | ) | 376,441 | |
Gross Profit | | 791,296 | | (18,209 | ) | 773,087 | | (188,421 | ) | 584,666 | | (291,569 | ) | 293,097 | |
Selling, general & administrative expenses | | 849,968 | | — | | 849,968 | | (224,475 | ) | 625,493 | | (226,123 | ) | 399,370 | |
Impairment of intangible assets | | 2,594 | | — | | 2,594 | | — | | 2,594 | | (339 | ) | 2,255 | |
Operating Loss | | (61,266 | ) | (18,209 | ) | (79,475 | ) | 36,054 | | (43,421 | ) | (65,107 | ) | (108,528 | ) |
Other income, net | | 26,689 | | — | | 26,689 | | (120 | ) | 26,569 | | 2,176 | | 28,745 | |
Interest expense, net | | (55,741 | ) | — | | (55,741 | ) | 13,000 | | (42,741 | ) | — | | (42,741 | ) |
Loss Before Provision for Income Taxes | | (90,318 | ) | (18,209 | ) | (108,527 | ) | 48,934 | | (59,593 | ) | (62,931 | ) | (122,524 | ) |
Provision for income taxes | | 9,044 | | — | | 9,044 | | — | | 9,044 | | (374 | ) | 8,670 | |
Loss from Continuing Operations | | (99,362 | ) | (18,209 | ) | (117,571 | ) | 48,934 | | (68,637 | ) | (62,557 | ) | (131,194 | ) |
Net loss attributable to the noncontrolling interest | | (842 | ) | — | | (842 | ) | 842 | | — | | — | | — | |
Net Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (98,520 | ) | $ | (18,209 | ) | $ | (116,729 | ) | $ | 48,092 | | $ | (68,637 | ) | $ | (62,557 | ) | $ | (131,194 | ) |
| | | | | | | | | | | | | | | |
Earnings per Share: | | | | | | | | | | | | | | | |
Basic and Diluted | | | | | | | | | | | | | | | |
Loss from Continuing Operations Attributable to Fifth & Pacific Companies, Inc. | | $ | (1.05 | ) | | | | | | | | | | | $ | (1.39 | ) |
| | | | | | | | | | | | | | | |
Weighted Average Shares, Basic and Diluted | | 94,243 | | | | | | | | | | | | 94,243 | |
FIFTH & PACIFIC COMPANIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 28, 2013 AND SEPTEMBER 29, 2012
AND FOR THE FISCAL YEARS ENDED DECEMBER 29, 2012, DECEMBER 31, 2011 AND JANUARY 1, 2011
On February 3, 2014, the Company completed the Lucky Brand Transaction. On November 6, 2013, the Company completed the Juicy Couture Transaction.
The following notes are included in the Unaudited Pro Forma Condensed Consolidated Statements of Operations:
(a) Represents the elimination of the historical revenues associated with certain licensing agreements assumed by ABG as part of the Juicy Couture Purchase Agreement and Selling, general & administrative expenses associated with the Juicy Couture Transaction.
(b) Represents the elimination of the historical revenues and expenses of Lucky Brand, adjusted to reflect estimated reimbursements for transition services and estimated interest income on the $85.0 million note receivable from Lucky Brand LLC. Estimated interest income includes the assumption that the note will be repaid at its 36-month maturity date.
(c) Represents the elimination of the historical remaining operations of Juicy Couture, which the Company has committed to exit pursuant to the terms of the Juicy Couture Purchase Agreement.
In accordance with accounting principles generally accepted in the United States of America, the amounts eliminated on the Unaudited Pro Forma Condensed Consolidated Statements of Operations do not include certain indirect corporate overhead included in Selling, general & administrative expenses that were allocated to Lucky Brand and Juicy Couture.
