UNAUDITED PRO FORMA FINANCIAL DATA
Exhibit 99.2
UNAUDITED PRO FORMA FINANCIAL DATA
On September 3, 2008, xxxxxxxxx.xxx, inc. and certain of its affiliates (“xxxxxxxxx.xxx”) and Rite Aid Corporation and certain of its affiliates (“Rite Aid”) entered into an amended and restated main agreement. Under this agreement, xxxxxxxxx.xxx will transfer the rights to its local pick-up pharmacy business, which includes prescription refills sold online through the xxxxxxxxx.xxx web store or the Rite Aid web store and picked up by customers at Rite Aid stores (“LPU business”), to Rite Aid. In return, Rite Aid will pay xxxxxxxxx.xxx approximately $10 million in ten monthly installments through June 17, 2009. Additionally, Rite Aid will pay xxxxxxxxx.xxx ongoing marketing services fees for continuing to market Rite Aid’s local pick-up offering on the xxxxxxxxx.xxx site during the term of the agreement, which continues for two years unless extended for another year by either party.
The following unaudited financial information reflects the pro forma consolidated statements of operations for the six-month period ended June 29, 2008 and the three years ended December 30, 2007, December 31, 2006, and January 1, 2006 and the related pro forma consolidated balance sheet as of June 29, 2008, giving effect to the discontinuation of the LPU business as if the transaction occurred at the beginning of the period presented.
The pro forma information is not necessarily indicative of the financial position or results of operations of future periods or indicative of results that would have actually occurred had the transaction been completed as of the date thereof or as of the beginning of the periods presented therein. The pro forma adjustments, as described in the accompanying notes to the pro forma consolidated balance sheet and statements of operations, are based upon available information and certain assumptions that we believe are reasonable. The pro forma financial information should be read in conjunction with our consolidated financial statements and notes to consolidated financial statements included in our Form 10-Q for the six-month period ended June 29, 2008 and in our Form 10-K for the year ended December 30, 2007.
xxxxxxxxx.xxx, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Six Months Ended June 29, 2008
(in thousands, except share and per share data)
| Historical Consolidated(6) |
LPU Pro Forma Adjustments(1) |
Pro Forma | ||||||||||
| Net sales |
$ | 243,424 | $ | (58,608 | ) | $ | 184,816 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
185,031 | (51,169 | ) | 133,862 | ||||||||
| Fulfillment and order processing |
24,334 | (2,388 | ) | 21,946 | ||||||||
| Marketing and sales |
17,707 | (1,145 | ) | 16,562 | ||||||||
| Technology and content |
10,939 | — | 10,939 | |||||||||
| General and administrative |
10,294 | — | 10,294 | |||||||||
| Amortization of intangible assets |
455 | — | 455 | |||||||||
| Total costs and expenses |
248,760 | (54,702 | ) | 194,058 | ||||||||
| Operating loss |
(5,336 | ) | (3,906 | ) | (9,242 | ) | ||||||
| Interest income, net |
379 | — | 379 | |||||||||
| Loss from continuing operations |
$ | (4,957 | ) | $ | (3,906 | ) | $ | (8,863 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.05 | ) | $ | (0.04 | ) | $ | (0.09 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
96,435,655 | — | 96,435,655 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
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xxxxxxxxx.xxx, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended December 30, 2007
(in thousands, except share and per share data)
| Historical Consolidated(6) |
LPU Pro Forma Adjustments(1) |
Pro Forma | ||||||||||
| Net sales |
$ | 445,723 | $ | (106,392 | ) | $ | 339,331 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
341,919 | (93,611 | ) | 248,308 | ||||||||
| Fulfillment and order processing |
44,200 | (4,383 | ) | 39,817 | ||||||||
| Marketing and sales |
32,370 | (2,290 | ) | 30,080 | ||||||||
| Technology and content |
18,258 | — | 18,258 | |||||||||
| General and administrative |
20,928 | — | 20,928 | |||||||||
| Amortization of intangible assets |
1,234 | — | 1,234 | |||||||||
| Total costs and expenses |
458,909 | (100,284 | ) | 358,625 | ||||||||
| Operating loss |
(13,186 | ) | (6,108 | ) | (19,294 | ) | ||||||
| Interest income, net |
1,675 | — | 1,675 | |||||||||
| Loss from continuing operations |
$ | (11,511 | ) | $ | (6,108 | ) | $ | (17,619 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.12 | ) | $ | (0.06 | ) | $ | (0.18 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
95,350,046 | — | 95,350,046 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
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xxxxxxxxx.xxx, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended December 31, 2006
(in thousands, except share and per share data)
| Historical Consolidated(6) |
LPU Pro Forma Adjustments(1) |
Pro Forma | ||||||||||
| Net sales |
$ | 415,777 | $ | (100,654 | ) | $ | 315,123 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
326,036 | (89,654 | ) | 236,382 | ||||||||
| Fulfillment and order processing |
41,099 | (4,128 | ) | 36,971 | ||||||||
| Marketing and sales |
29,735 | (2,290 | ) | 27,445 | ||||||||
| Technology and content |
16,190 | — | 16,190 | |||||||||
| General and administrative |
15,413 | — | 15,413 | |||||||||
| Amortization of intangible assets |
2,060 | — | 2,060 | |||||||||
| Total costs and expenses |
430,533 | (96,072 | ) | 334,461 | ||||||||
| Operating loss |
(14,756 | ) | (4,582 | ) | (19,338 | ) | ||||||
| Interest income, net |
1,730 | — | 1,730 | |||||||||
| Loss from continuing operations |
$ | (13,026 | ) | $ | (4,582 | ) | $ | (17,608 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.14 | ) | $ | (0.05 | ) | $ | (0.19 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
93,405,405 | — | 93,405,405 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
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xxxxxxxxx.xxx, inc.
Pro Forma Consolidated Statements of Operations (Unaudited)
Year Ended January 1, 2006
(in thousands, except share and per share data)
| Historical Consolidated(6) |
LPU Pro Forma Adjustments(1) |
Pro Forma | ||||||||||
| Net sales |
$ | 399,430 | $ | (96,126 | ) | $ | 303,304 | |||||
| Costs and expenses: |
||||||||||||
| Cost of sales |
317,366 | (84,660 | ) | 232,706 | ||||||||
| Fulfillment and order processing |
39,855 | (4,030 | ) | 35,825 | ||||||||
| Marketing and sales |
32,810 | (2,290 | ) | 30,520 | ||||||||
| Technology and content |
12,773 | — | 12,773 | |||||||||
| General and administrative |
15,791 | — | 15,791 | |||||||||
| Amortization of intangible assets |
3,004 | — | 3,004 | |||||||||
| Total costs and expenses |
421,599 | (90,980 | ) | 330,619 | ||||||||
| Operating loss |
(22,169 | ) | (5,146 | ) | (27,315 | ) | ||||||
| Interest income, net |
1,270 | — | 1,270 | |||||||||
| Loss from continuing operations |
$ | (20,899 | ) | $ | (5,146 | ) | $ | (26,045 | ) | |||
| Basic and diluted loss from continuing operations per share |
$ | (0.23 | ) | $ | (0.06 | ) | $ | (0.29 | ) | |||
| Weighted average shares used in computation of: |
||||||||||||
| Basic and diluted loss from continuing operations per share |
90,808,817 | — | 90,808,817 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
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xxxxxxxxx.xxx, inc.
Unaudited Pro forma Consolidated Balance Sheets
June 29,2008
(in thousands, except share data)
| Historical Consolidated(7) |
LPU Pro Forma Adjustments |
Pro Forma | ||||||||||
| ASSETS |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 16,315 | $ | 2,508 | (3) | $ | 18,823 | |||||
| Marketable securities |
18,931 | — | 18,931 | |||||||||
| Accounts receivable, net of allowances |
41,706 | (30,600 | ) (2) | 11,106 | ||||||||
| Receivable from Rite Aid |
— | 9,910 | (4) | 9,910 | ||||||||
| Inventories |
31,465 | (619 | ) (2) | 30,846 | ||||||||
| Prepaid marketing expenses |
2,302 | (2,290 | ) (2) | 12 | ||||||||
| Other current assets |
2,834 | — | 2,834 | |||||||||
| Total current assets |
113,553 | (21,091 | ) | 92,462 | ||||||||
| Fixed assets, net |
29,147 | — | 29,147 | |||||||||
| Other intangible assets, net |
4,143 | — | 4,143 | |||||||||
| Goodwill |
32,202 | — | 32,202 | |||||||||
| Prepaid marketing expenses and other |
222 | — | 222 | |||||||||
| Total assets |
$ | 179,267 | $ (21,091 | ) | $ | 158,176 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 62,892 | $ (28,711 | ) (2) | $ | 34,181 | ||||||
| Accrued compensation |
4,913 | — | 4,913 | |||||||||
| Accrued marketing expenses |
4,004 | — | 4,004 | |||||||||
| Other current liabilities |
4,362 | 9,910 | (4) | 14,272 | ||||||||
| Current portion of long-term debt |
3,048 | — | 3,048 | |||||||||
| Total current liabilities |
79,219 | (18,801 | ) | 60,418 | ||||||||
| Long-term debt, less current portion |
4,016 | — | 4,016 | |||||||||
| Deferred income taxes |
950 | — | 950 | |||||||||
| Other long-term liabilities |
1,326 | — | 1,326 | |||||||||
| Stockholders’ equity: |
||||||||||||
| Common stock, $.0001 par value, stated at amounts paid in: |
||||||||||||
| Authorized shares - 250,000,000, issued and outstanding shares - 96,478,573 as of June 29, 2008 |
860,548 | — | 860,548 | |||||||||
| Accumulated other comprehensive income |
17 | — | 17 | |||||||||
| Accumulated deficit |
(766,809 | ) | (2,290 | ) (5) | (769,099 | ) | ||||||
| Total stockholders’ equity |
93,756 | (2,290 | ) | 91,466 | ||||||||
| Total liabilities and stockholders’ equity |
$ | 179,267 | $ (21,091 | ) | $ | 158,176 | ||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
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xxxxxxxxx.xxx, inc.
Notes to Unaudited Pro forma Consolidated Financial Statements
| (1) | Represents adjustments to eliminate the results of operations of the LPU business that are directly attributable to the Amended and Restated Main Agreement that will not continue. |
| (2) | Represents adjustments to eliminate the assets and liabilities of the LPU business. |
| (3) | Represents the net cash to be collected on previously outstanding receivables, payables, and inventory of the LPU business at the time of disposal. |
| (4) | Represents the receivable from Rite Aid and deferred gain attributable to the payment of $9.9 million for the transfer of the rights to the LPU business to Rite Aid under the Amended and Restated Main Agreement. The gain will be recognized over a ten month period beginning in September 2008. |
| (5) | Represents the loss on the disposal of the LPU business related to the acceleration of prepaid marketing costs at the time of disposal. |
| Net proceeds received from previously outstanding receivables, payables, and inventory of the LPU business at the time of disposal |
$ | 2,508 | ||
| Net assets of the LPU business disposed of or settled with Rite Aid |
$ | (4,798 | ) | |
| Receivable from Rite Aid for the transfer of the rights to the LPU business |
$ | 9,910 | ||
| Deferred gain on disposal of the LPU business |
$ | (9,910 | ) | |
| Loss on disposal of the LPU business |
$ | 2,290 | ||
| (6) | Represents the Consolidated Statement of Operations included in our Form 10-Q for the six-month period ended June 29, 2008 or in our Form 10-K for the year ended December 30, 2007. |
| (7) | Represents the Consolidated Balance Sheet included in our Form 10-Q for the six-month period ended June 29, 2008. |
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