Exhibit 99.2
EXHIBIT-99.2. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION AND ACCOMPANYING NOTES
Blyth, Inc. - Unaudited Pro Forma Consolidated Financial Information
The accompanying unaudited pro forma consolidated financial information is based
on our historical financial statements for the six months ended June 30, 2014, for each of the years ended December 31, 2013 and 2012, and for the eleven months ended December 31, 2011, in each case as adjusted to reflect the disposition of ViSalus (as described in Item 1.01 of our Current Report on Form 8-K dated September 5, 2014). The accompanying unaudited pro forma consolidated financial information is based on, and should be read in conjunction with, the historical consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2013 and the unaudited consolidated financial statements and notes thereto appearing in our Quarterly Report on Form 10-Q for the period ended June 30, 2014. The unaudited pro forma consolidated statements of earnings give effect to the disposition as if it had occurred on February 1, 2011, the beginning of the earliest period presented. The unaudited pro forma consolidated balance sheet gives effect to the disposition as if it had occurred as of June 30, 2014, our latest balance sheet date. The unaudited pro forma consolidated financial information is based upon available information and assumptions that we believe are reasonable under the circumstances and are prepared to illustrate the estimated effects of the transaction.
The unaudited pro forma consolidated financial information has been provided for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been achieved had the transaction occurred as of or for the periods presented, nor are they necessarily indicative of our future operating results or financial position.
Reported
The Reported column reflects our historical financial statements for the periods presented and does not reflect any adjustments related to our disposition of ViSalus. The reported consolidated balance sheet as of June 30, 2014 and the consolidated statement of earnings for the six months ended June 30, 2014 were derived from our unaudited interim consolidated financial statements appearing in our Quarterly Report on Form 10-Q for the period ended June 30, 2014. The reported consolidated statements of earnings for each of the years ended December 31, 2013 and 2012 and for the eleven months ended December 31, 2011 were derived from our audited consolidated financial statements appearing in our Annual Report on Form 10-K for the years ended December 31, 2013 and 2012 and for the eleven months ended December 31, 2011. In accordance with Regulation S-X, the pro forma statements of earnings only disclose earnings from continuing operations, and therefore exclude reported earnings related to the discontinued operations of Sterno (which we divested in 2012) and Midwest-CBK (which we divested in 2011).
We will incur one-time expenses in connection with the disposition of ViSalus, which will include a prepayment premium of $3.0 million related to the early retirement of the $50.0 million aggregate principal amount of 6.00% Senior Notes, originally due in June 2017, to the earlier of March 4, 2015 or the date, if any, that we consummate a new financing in an amount of at least $50.0 million. In addition, we estimate that we will incur one-time expenses for legal and other miscellaneous fees of approximately $1.2 million in
the third and/or fourth quarter of 2014. The one-time expenses have not been included in the unaudited pro forma financial information.
ViSalus
The ViSalus column reflects ViSalus’s historical financial statements for the periods presented. ViSalus’s historical results were included in our unaudited interim financial statements for the period ended June 30, 2014 and in our audited financial statements for the years ended December 31, 2013 and 2012 and for the eleven months ended December 31, 2011. There were no adjustments to the ViSalus reported results included in the ViSalus column.
Adjustments
The unaudited pro forma consolidated balance sheet as of June 30, 2014 reflects adjustments related to the disposition of ViSalus. A description of these adjustments is provided in the Notes to Pro Forma Consolidated Financial Information included herein. There were no adjustments to the unaudited pro forma consolidated statements of earnings.
|
| | | | | | | | | | | | | | | |
| Blyth, Inc. | | | | | | | |
| Unaudited Pro Forma Consolidated Balance Sheet | | | | | |
| (In thousands) | | | | | | | |
| | | As of June 30, 2014 | |
| | | Reported | ViSalus | Adjustments | | Pro forma | |
| ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | $ | 76,631 |
| $ | 9,220 |
| $ | (3,000 | ) | (c) | $ | 64,411 |
| |
| Short-term investments | | 24,034 |
| | | | 24,034 |
| |
| Accounts receivable, less allowance for doubtful receivables $5,199 | | 13,218 |
| 563 |
| | | 12,655 |
| |
| Inventories | | 75,211 |
| 17,782 |
| | | 57,429 |
| |
| Prepaid assets | | 16,390 |
| 1,099 |
| | | 15,291 |
| |
| Deferred income taxes | | 3,959 |
| 1,470 |
| | | 2,489 |
| |
| Other current assets | | 8,726 |
| 1,617 |
| 3,000 |
| (c) | 10,109 |
| |
| | | | | | | — |
| |
| Total current assets | | 218,169 |
| 31,751 |
| — |
| | 186,418 |
| |
| | | | | | | | |
| Property, plant and equipment | | 87,049 |
| 12,664 |
| | | 74,385 |
| |
| | | | | | | | |
| Investments | | 2,025 |
| 924 |
| 9,750 |
| (a) | 10,851 |
| |
| Goodwill | | 2,924 |
| 626 |
| | | 2,298 |
| |
| Other intangible assets, net of accumulated amortization of $15,317 | | 8,677 |
| 2,028 |
| | | 6,649 |
| |
| Deferred income taxes | | 9,397 |
| 5,434 |
| | | 3,963 |
| |
| Other assets | | 7,358 |
| 165 |
| | | 7,193 |
| |
| | | | | | | | |
| Total other assets | | 30,381 |
| 9,177 |
| 9,750 |
| | 30,954 |
| |
| Total assets | | $ | 335,599 |
| $ | 53,592 |
| $ | 9,750 |
| | $ | 291,757 |
| |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Current maturities of long-term debt | | 891 |
| | 50,000 |
| (d) | 50,891 |
| |
| Accounts payable | | 23,292 |
| 3,448 |
| | | 19,844 |
| |
| Accrued expenses | | 53,656 |
| 16,039 |
| | | 37,617 |
| |
| Income taxes payable | | 778 |
| 79 |
| | | 699 |
| |
| Deferred income taxes | | 509 |
| | | | 509 |
| |
| Other current liabilities | | 3,629 |
| | | | 3,629 |
| |
| | | | | | | — |
| |
| Total current liabilities | | 82,755 |
| 19,566 |
| 50,000 |
| | 113,189 |
| |
| | | | | | | | |
| Deferred income taxes | | | | | | | |
| Long-term debt, less current maturities | | 54,885 |
| | (50,000 | ) | (d) | 4,885 |
| |
| Other liabilities | | 13,071 |
| 1,009 |
| | | 12,062 |
| |
| Commitments and contingencies | | | | | | — |
| |
| ViSalus redeemable preferred stock | | 146,667 |
| 146,667 |
| | | — |
| |
|
| | | | | | | | | | | | | | | |
| Redeemable noncontrolling interest | | | | | | | |
| | | | | | | | |
| Stockholders' equity: | | | | | | | |
| Preferred stock - authorized 10,000,000 shares of $0.01 par value; no shares issued | | | | | | | |
| Common stock - authorized 50,000,000 shares of $0.02 par value; issued 26,625,576 shares | | 533 |
| | | | 533 |
| |
| Additional contributed capital | | 169,457 |
| — |
| | | 169,457 |
| |
| Retained earnings | | 303,072 |
| (113,374 | ) | 9,750 |
| (a) | 426,196 |
| (b) |
| Accumulated other comprehensive income | | 16,834 |
| (276 | ) | | | 17,110 |
| |
| Treasury stock, at cost, 10,571,419 shares | | (452,166 | ) | | | | (452,166 | ) | |
| Total stockholders' equity | | 37,730 |
| (113,650 | ) | 9,750 |
| | 161,130 |
| |
| Noncontrolling interest | | 491 |
| | | | 491 |
| |
| Total equity | | 38,221 |
| (113,650 | ) | 9,750 |
| | 161,621 |
| |
| Total liabilities and equity | | $ | 335,599 |
| $ | 53,592 |
| $ | 9,750 |
| | $ | 291,757 |
| |
| | | | | | | | |
| See accompanying notes to the unaudited pro forma consolidated financial information | |
|
| | | | | | | | | | |
| Blyth, Inc. | | | | |
| Unaudited Pro Forma Consolidated Statement of Earnings (loss) | | For the six months ended |
| (In thousands, except per share data) | | June 30, 2014 |
| | | Reported | ViSalus | Pro forma |
| Net sales | | $ | 333,462 |
| $ | 110,991 |
| $ | 222,471 |
|
| Cost of goods sold | | 118,653 |
| 34,490 |
| 84,163 |
|
| Gross profit | | 214,809 |
| 76,501 |
| 138,308 |
|
| | | | | |
| Selling | | 148,062 |
| 45,821 |
| 102,241 |
|
| Administrative and other expense | | 72,192 |
| 33,857 |
| 38,335 |
|
| Total operating expense | | 220,254 |
| 79,678 |
| 140,576 |
|
| | | | | |
| Operating profit (loss) | | (5,445 | ) | (3,177 | ) | (2,268 | ) |
| | | | | |
| Other expense (income): | | | | |
| Interest expense | | 1,991 |
| | 1,991 |
|
| Interest income | | (135 | ) | (1 | ) | (134 | ) |
| Foreign exchange and other, net | | 100 |
| 12 |
| 88 |
|
| Total other expense | | 1,956 |
| 11 |
| 1,945 |
|
| | | | | |
| Earnings (loss) from continuing operations before income taxes & noncontrolling interest | (7,401 | ) | (3,188 | ) | (4,213 | ) |
| Income tax expense | | 520 |
| 1,488 |
| (968 | ) |
| Earnings (loss) from continuing operations before non-controlling interest | | (7,921 | ) | (4,676 | ) | (3,245 | ) |
| | | | | |
| Less: Net earnings (loss) attributable to noncontrolling interests | | (719 | ) | (894 | ) | 175 |
|
| Earnings (loss) from continuing operations | | (7,202 | ) | (3,782 | ) | (3,420 | ) |
| | | | | |
| | | | | |
| Basic earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | (0.45 | ) | | $ | (0.21 | ) |
| Weighted average number of shares outstanding | | 16,096 |
| | 16,096 |
|
| | | | | |
| Diluted earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | (0.45 | ) | | $ | (0.21 | ) |
| Weighted average number of shares outstanding | | 16,096 |
| | 16,096 |
|
| | | | | |
| See accompanying notes to the unaudited pro forma consolidated financial information |
|
| | | | | | | | | | |
| Blyth, Inc. | | | | |
| Unaudited Pro Forma Consolidated Statement of Earnings (loss) | | For the year ended |
| (In thousands, except per share data) | | December 31, 2013 |
| | | Reported | ViSalus | Pro forma |
| Net sales | | $ | 885,450 |
| $ | 351,187 |
| $ | 534,263 |
|
| Cost of goods sold | | 312,859 |
| 113,273 |
| 199,586 |
|
| Gross profit | | 572,591 |
| 237,914 |
| 334,677 |
|
| | | | | |
| Selling | | 387,960 |
| 147,017 |
| 240,943 |
|
| Administrative and other expense | | 164,980 |
| 83,137 |
| 81,843 |
|
| Total operating expense | | 552,940 |
| 230,154 |
| 322,786 |
|
| | | | | |
| Operating profit (loss) | | 19,651 |
| 7,760 |
| 11,891 |
|
| | | | | |
| Other expense (income): | | | | |
| Interest expense | | 6,042 |
| | 6,042 |
|
| Interest income | | (635 | ) | (19 | ) | (616 | ) |
| Foreign exchange and other, net | | (386 | ) | (314 | ) | (72 | ) |
| Total other expense | | 5,021 |
| (333 | ) | 5,354 |
|
| | | | | |
| Earnings (loss) from continuing operations before income taxes & noncontrolling interest | 14,630 |
| 8,093 |
| 6,537 |
|
| Income tax expense | | 11,194 |
| 4,457 |
| 6,737 |
|
| Earnings (loss) from continuing operations before non-controlling interest | | 3,436 |
| 3,636 |
| (200 | ) |
| | | | | |
| Less: Net earnings (loss) attributable to noncontrolling interests | | 1,003 |
| 690 |
| 313 |
|
| Earnings (loss) from continuing operations | | 2,433 |
| 2,946 |
| (513 | ) |
| | | | | |
| | | | | |
| Basic earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 0.15 |
| | $ | (0.03 | ) |
| Weighted average number of shares outstanding | | 16,196 |
| | 16,196 |
|
| | | | | |
| Diluted earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 0.15 |
| | $ | (0.03 | ) |
| Weighted average number of shares outstanding | | 16,196 |
| | 16,196 |
|
| | | | | |
| See accompanying notes to the unaudited pro forma consolidated financial information |
|
| | | | | | | | | | |
| Blyth, Inc. | | | | |
| Unaudited Pro Forma Consolidated Statement of Earnings (loss) | | For the year ended |
| (In thousands, except per share data) | | December 31, 2012 |
| | | Reported | ViSalus | Pro forma |
| Net sales | | $ | 1,179,514 |
| $ | 623,533 |
| $ | 555,981 |
|
| Cost of goods sold | | 391,994 |
| 179,316 |
| 212,678 |
|
| Gross profit | | 787,520 |
| 444,217 |
| 343,303 |
|
| | | | | |
| Selling | | 516,419 |
| 267,188 |
| 249,231 |
|
| Administrative and other expense | | 186,535 |
| 96,079 |
| 90,456 |
|
| Total operating expense | | 702,954 |
| 363,267 |
| 339,687 |
|
| | | | | |
| Operating profit (loss) | | 84,566 |
| 80,950 |
| 3,616 |
|
| | | | | |
| Other expense (income): | | | | |
| Interest expense | | 6,057 |
| (6 | ) | 6,063 |
|
| Interest income | | (1,724 | ) | (16 | ) | (1,708 | ) |
| Foreign exchange and other, net | | (909 | ) | (217 | ) | (692 | ) |
| Total other expense | | 3,424 |
| (239 | ) | 3,663 |
|
| | | | | |
| Earnings (loss) from continuing operations before income taxes & noncontrolling interest | 81,142 |
| 81,189 |
| (47 | ) |
| Income tax expense | | 31,635 |
| 34,285 |
| (2,650 | ) |
| Earnings (loss) from continuing operations before non-controlling interest | | 49,507 |
| 46,904 |
| 2,603 |
|
| | | | | |
| Less: Net earnings (loss) attributable to noncontrolling interests | | 13,242 |
| 12,961 |
| 281 |
|
| Earnings (loss) from continuing operations | | 36,265 |
| 33,943 |
| 2,322 |
|
| | | | | |
| | | | | |
| Basic earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 2.11 |
| | $ | 0.14 |
|
| Weighted average number of shares outstanding | | 17,180 |
| | 17,180 |
|
| | | | | |
| Diluted earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 2.10 |
| | $ | 0.13 |
|
| Weighted average number of shares outstanding | | 17,247 |
| | 17,247 |
|
| | | | | |
| | | | | |
| See accompanying notes to the unaudited pro forma consolidated financial information |
|
| | | | | | | | | | |
| Blyth, Inc. | | | | |
| Unaudited Pro Forma Consolidated Statement of Earnings (loss) | | For the eleven months ended |
| (In thousands, except per share data) | | December 31, 2011 |
| | | Reported | ViSalus | Pro forma |
| Net sales | | $ | 827,612 |
| $ | 225,387 |
| $ | 602,225 |
|
| Cost of goods sold | | 291,826 |
| 65,179 |
| 226,647 |
|
| Gross profit | | 535,786 |
| 160,208 |
| 375,578 |
|
| | | | | |
| Selling | | 361,314 |
| 97,877 |
| 263,437 |
|
| Administrative and other expense | | 142,350 |
| 55,552 |
| 86,798 |
|
| Total operating expense | | 503,664 |
| 153,429 |
| 350,235 |
|
| | | | | |
| Operating profit (loss) | | 32,122 |
| 6,779 |
| 25,343 |
|
| | | | | |
| Other expense (income): | | | | |
| Interest expense | | 5,705 |
| 155 |
| 5,550 |
|
| Interest income | | (1,301 | ) | (13 | ) | (1,288 | ) |
| Foreign exchange and other, net | | 200 |
| 53 |
| 147 |
|
| Total other expense | | 4,604 |
| 195 |
| 4,409 |
|
| | | | | |
| Earnings (loss) from continuing operations before income taxes & noncontrolling interest | 27,518 |
| 6,584 |
| 20,934 |
|
| Income tax expense | | 7,360 |
| 9,365 |
| (2,005 | ) |
| Earnings (loss) from continuing operations before non-controlling interest | | 20,158 |
| (2,781 | ) | 22,939 |
|
| | | | | |
| Less: Net earnings (loss) attributable to noncontrolling interests | | (971 | ) | (1,375 | ) | 404 |
|
| Earnings (loss) from continuing operations | | 21,129 |
| (1,406 | ) | 22,535 |
|
| | | | | |
| | | | | |
| Basic earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 1.28 |
| | $ | 1.36 |
|
| Weighted average number of shares outstanding | | 16,546 |
| | 16,546 |
|
| | | | | |
| Diluted earnings per share: | | | | |
| Net earnings (loss) from continuing operations attributable to Blyth, Inc. | | $ | 1.27 |
| | $ | 1.35 |
|
| Weighted average number of shares outstanding | | 16,656 |
| | 16,656 |
|
| | | | | |
| See accompanying notes to the unaudited pro forma consolidated financial information |
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma consolidated balance sheet as of June 30, 2014 includes the following adjustments related to the disposition of ViSalus:
| |
| (a) | An adjustment of $9.8 million has been made to establish Blyth’s 10% estimated cost investment in ViSalus, since Blyth will have a 10% ownership interest in ViSalus immediately following the completion of the disposition of ViSalus. This amount was estimated based on a valuation obtained from a third party independent appraisal and is based on fair value. |
| |
| (b) | The retained earnings difference from Reported to Pro Forma includes estimated pro forma adjustments related to the disposition of ViSalus, including the fair value of the retained non-controlling interest in ViSalus. This estimated retained earnings is subject to adjustments. |
| |
| (c) | In anticipation of the disposition of ViSalus, we provided short-term debt financing of $3.0 million to ViSalus on August 12, 2014. In connection with the disposition of ViSalus, we agreed to enter into a $6.0 million revolving credit facility (amounts borrowed thereunder will bear interest at a rate of 10.0% per annum). The Revolving Credit Facility is described in more detail in Item 1.01 of our Current Report on Form 8-K filed on September 5, 2014. |
| |
| (d) | In connection with the disposition of ViSalus, Blyth amended the indenture governing its 6.00% Senior Notes due June 2017 to provide for the mandatory redemption of the Senior Notes on the earlier of March 4, 2015 and the date, if any, that Blyth consummates a new financing in an amount of at least $50.0 million. |
