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.