Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
for GSI Commerce, Inc. ("GSI") consists of the Unaudited Pro Forma Condensed
Combined Statements of Operations for the three months ended March 30, 2002 and
the fiscal year ended December 29, 2001.
The Unaudited Pro Forma Condensed Combined Statements of Operations for the
three months ended March 30, 2002 and for the fiscal year ended December 29,
2001 give effect to the Ashford merger as if it had taken place on December 31,
2000.
The Unaudited Pro Forma Condensed Combined Statement of Operations for the
three months ended March 30, 2002 combines GSI's historical results of
operations for the three months ended March 30, 2002 with Ashford's unaudited
historical results of operations for the period January 1, 2002 through March
13, 2002. The Unaudited Pro Forma Condensed Combined Statement of Operations for
the fiscal year ended December 29, 2001 combines GSI's historical results of
operations for the fiscal year ended December 29, 2001 with Ashford's unaudited
historical results of operations for the twelve months ended December 31, 2001.
The results of operations of Ashford for the three months ended March 31, 2001
have been included in the results of operations for the twelve months ended
December 31, 2001, and included net revenues of $14.3 million, gross profits of
$843,000, a loss from continuing operations of $17.0 million and a related loss
from continuing operations per share of $0.37.
The Ashford merger has been accounted for under Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations", using the
purchase method of accounting.
The pro forma financial information has been prepared on the basis of
assumptions described in the notes, and includes assumptions relating to the
allocation of the purchase price to the assets acquired and liabilities assumed
based upon estimates of their respective fair values. GSI is in the process of
obtaining third-party valuations and additional information for certain of these
assets and liabilities. The allocation of the purchase price for the acquisition
is subject to refinement pending receipt of the valuations and additional
information.
The pro forma financial information should be read in conjunction with the
related notes included in this document and the historical consolidated
financial statements and the related notes thereto of GSI filed with the
Securities and Exchange Commission, and the historical consolidated financial
statements and the related notes thereto of Ashford included elsewhere in this
current report on Form 8-K/A.
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 taken place on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of GSI following
the merger.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three Months Period from
Ended January 1 to
March 30, March 13,
2002 2002
------------- ------------
GSI Ashford.com, Pro forma Pro forma
Commerce, Inc. Inc. Adjustments Combined
-------------- ------------ ------------- -----------
Net revenues $ 31,925 $ 6,457 $ $ 38,382
Cost of revenues 20,355 5,625 25,980
------------ ----------- -------- ---------
Gross profit 11,570 832 12,402
Operating expenses:
Sales and marketing, exclusive of $252, $110, $0, and $362 reported
below as stock-based compensation, respectively 9,192 1,304 (a) 10,496
Product development, exclusive of $74, $0, $0 and $74 reported
below as stock-based compensation, respectively 2,336 750 3,086
General and administrative, exclusive of $206, $132, $0 and $338
reported below as stock-based compensation, respectively 3,302 3,864 (b) 7,166
Stock-based compensation 532 242 (c) 774
Depreciation and amortization 1,835 -- 253 (2) 2,088
------------ ----------- -------- ---------
Total operating expenses 17,197 6,160 253 23,610
Interest (income) expense, net (322) 41 (23)(3) (304)
------------ ----------- -------- ---------
Loss from continuing operations $ (5,305) $ (5,369) $ (230) $ (10,904)
============ =========== ======== =========
Loss from continuing operations per share - basic and diluted $ (0.14) $ (0.10) $ (0.28)
============ =========== =========
Weighted average shares outstanding - basic and diluted 38,050 55,045 (54,691) 38,404
============ =========== ======== =========
(a) Ashford's historical sales and marketing expense includes $110,000 of
non-cash amortization which has been reclassified to stock-based
compensation expense to be consistent with GSI's financial statement
presentation.
(b) Ashford's historical general and administrative expense includes $132,000
of non-cash amortization which has been reclassified to stock-based
compensation expense to be consistent with GSI's financial statement
presentation.
(c) $242,000 of non-cash amortization (the sum of (a) and (b) above) has been
reclassified to Ashford's stock-based compensation expense to be consistent
with GSI's financial statement presentation.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Fiscal Year Twelve Month
Ended Ended
December 29, December 31,
2001 2001
------------- ------------
GSI Ashford.com, Pro forma Pro forma
Commerce, Inc. Inc. Adjustments Combined
-------------- ------------ ------------- -----------
Net revenues $ 102,610 $ 49,664 $ $ 152,274
Cost of revenues 67,586 40,704 108,290
--------- ----------- ------------ --------
Gross profit 35,024 8,960 43,984
Operating expenses:
Sales and marketing, exclusive of $847, $705, $0, and $1,552 reported
below as stock-based compensation, respectively 32,390 11,370 (a) 43,760
Product development, exclusive of $461, $0, $0 and $461 reported
below as stock-based compensation, respectively 8,590 2,731 11,321
General and administrative, exclusive of $8,974, $608, $0 and $9,582
reported below as stock-based compensation, respectively 10,638 18,575 (b) 29,213
Restructuring charge - 1,071 1,071
Impairment loss - 1,094 1,094
Settlement loss - 2,297 2,297
Loss on sale of assets - 620 620
Stock-based compensation 10,282 1,131 (d) 11,413
Depreciation and amortization, exclusive of $0, ($182), $0 and ($182)
reported above as stock-based compensation, respectively 6,662 20,271 (c) 313 (2) 27,246
--------- ----------- ------------ --------
Total operating expenses 68,562 59,160 313 128,035
--------- ----------- ------------ --------
Other (income) expense:
Other, net (502) - (502)
Interest (income) expense, net (2,441) 173 (122)(3) (2,390)
--------- ----------- ------------ --------
Total other (income) expense (2,943) 173 (122) (2,892)
--------- ----------- ------------ --------
Loss from continuing operations $ (30,595) $ (50,373) $ (191) $(81,159)
========= =========== ============ ========
Loss from continuing operations per share - basic and diluted $ (0.90) $ (0.97) $ (2.35)
========= =========== ========
Weighted average shares outstanding - basic and diluted 34,033 52,009 (51,574) 34,468
========= =========== ============= ========
(a) Ashford's historical sales and marketing expense includes $705,000 of
non-cash amortization which has been reclassified to stock-based
compensation expense to be consistent with GSI's financial statement
presentation.
(b) Ashford's historical general and administrative expense includes $608,000
of non-cash amortization which has been reclassified to stock-based
compensation expense to be consistent with GSI's financial statement
presentation.
(c) Ashford's historical depreciation and amortization expense includes
($182,000) of non-cash amortization which has been reclassified to
stock-based compensation expense to be consistent with GSI's financial
statement presentation.
(d) $1.1 million of non-cash amortization (the sum of (a), (b) and (c) above)
has been reclassified to Ashford's stock-based compensation expense to be
consistent with GSI's financial statement presentation.
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 Ashford merger agreement:
The Ashford merger has been accounted for under SFAS No. 141 as a purchase.
The purchase price of $15.7 million is based on cash consideration of $7.2
million and the issuance of 435,083 shares of GSI common stock with a value
of $16.00 per share, which is the average closing price of GSI common stock
for the period from September 6 to 18, 2001, plus acquisition related
expenses of approximately $1.6 million.
The number of shares of GSI common stock issued is based on the exchange
ratio of 0.0076 and 57,247,813 shares of Ashford common stock outstanding
as of March 14, 2002.
GSI has not assumed any Ashford stock options or warrants for purposes of
these pro forma statements. The value of these stock options and warrants
are therefore not included as part of the purchase price.
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 purchase price to the assets acquired and the
liabilities assumed based upon estimates of their respective fair values.
GSI is in the process of obtaining third-party valuations and additional
information for certain of these assets and liabilities. The allocation of
the purchase price for the acquisition is subject to refinement pending
receipt of the valuations and additional information.
Tangible assets of Ashford acquired in the merger principally include
inventory and accounts receivable. Liabilities of Ashford assumed in the
merger principally include accrued expenses and the amount outstanding
under a revolving credit facility.
The pro forma financial information does not reflect cost savings that may
result from the elimination of duplicate functions, expenditures, and
activities. Although GSI's 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 increases Ashford's depreciation expense based on
the adjustment of Ashford's property and equipment to fair value.
3. The pro forma adjustment eliminates Ashford's amortization of loan
acquisition costs based on the adjustment of Ashford's other assets to fair
value.