UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 4, 2012
ZUMIEZ INC.
(Exact Name of Registrant as Specified in Its Charter)
Washington
(State or Other Jurisdiction
of Incorporation)
| 000-51300 | 91-1040022 | |
| (Commission File Number) |
(IRS Employer Identification No.) |
| 4001 204th Street SW, Lynnwood, WA | 98036 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(425) 551-1500
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Explanatory Note – As previously reported under Item 2.01 of the Current Report on Form 8-K filed by Zumiez Inc. (“Zumiez”) on July 10, 2012, Zumiez completed its acquisition on July 4, 2012 of Snowboard Dachstein Tauern GmbH and Blue Tomato Graz Handel GmbH (collectively “Blue Tomato”) pursuant to a Share Purchase Agreement, dated June 18, 2012. The results of Blue Tomato are included in Zumiez’ interim consolidated financial statements from the date of acquisition through July 28, 2012. This Current Report on Form 8-K/A amends the original Form 8-K to provide the historical financial statements of Blue Tomato required under Item 9.01(a) and the pro forma financial information required under Item 9.01(b).
| Item 9.01. | Financial Statements and Exhibits |
| (a) | Financial Statements: |
The audited financial statements of Blue Tomato as of and for the fiscal year ended April 30, 2012 are included as Exhibit 99.1 to this Current Report on Form 8-K/A and are incorporated by reference herein.
The consent of Blue Tomato’s independent auditors is attached hereto as Exhibit 23.1.
| (b) | Pro forma financial information: |
The unaudited pro forma condensed combined statements of income of Zumiez and Blue Tomato for the fiscal year ended January 28, 2012 and the three months ended April 28, 2012 and notes thereto are included as Exhibit 99.2 to this Current Report on Form 8-K/A and are incorporated by reference herein.
| (c) | Shell company transactions: |
None.
| (d) | Exhibits: |
| 23.1 | Consent of KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. | |
| 99.1 | Consolidated Financial Statements of Snowboard Dachstein Tauern GmbH as of and for the fiscal year ended April 30, 2012. | |
| 99.2 | Unaudited Pro Forma Condensed Combined Statements of Income for the fiscal year ended January 28, 2012 and three months ended April 28, 2012 and notes thereto. | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ZUMIEZ INC. | ||||
| (Registrant) | ||||
| Date: September 14, 2012 | By: | /s/ Richard M. Brooks | ||
| Richard M. Brooks | ||||
| Chief Executive Officer | ||||
3
EXHIBIT INDEX
| Exhibit |
Description of Exhibits | |
| 23.1 | Consent of KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. | |
| 99.1 | Consolidated Financial Statements of Snowboard Dachstein Tauern GmbH as of and for the fiscal year ended April 30, 2012. | |
| 99.2 | Unaudited Pro Forma Condensed Combined Statements of Income for the fiscal year ended January 28, 2012 and three months ended April 28, 2012 and notes thereto. | |
Exhibit 23.1
Consent of Independent Auditor
We consent to the incorporation by reference in registration statement on Form S-8 No. 333-125110 of Zumiez Inc. of our report dated July 2, 2012, with respect to the consolidated balance sheet of Snowboard Dachstein Tauern GmbH and subsidiary (“the Company”) as of April 30, 2012, and the related consolidated statements of income, cash flows and changes in equity for the year then ended, which report appears in the Amendment No. 1 to the Current Report on Form 8-K of Zumiez Inc. and refers to the fact that accounting principles generally accepted in Austria vary in certain significant respects from U.S. generally accepted accounting principles and that information relating to the nature of such differences is presented in Note V. to the consolidated financial statements.
[s] KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
Vienna, Austria
September 14, 2012
Exhibit 99.1
Snowboard Dachstein Tauern GmbH
Consolidated Financial Statements as of and for the fiscal year ended April 30, 2012
Independent Auditor’s Report
The Board of Directors
Snowboard Dachstein Tauern GmbH:
We have audited the accompanying consolidated balance sheet of Snowboard Dachstein Tauern GmbH and subsidiary (“the Company”) as of April 30, 2012, and the related consolidated statements of income, cash flows and changes in equity for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of April 30, 2012, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in Austria.
Accounting principles generally accepted in Austria vary in certain significant respects from U.S. generally accepted accounting principles. Information relating to the nature of such differences is presented in Note V. to the consolidated financial statements.
[s] KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
Vienna, Austria
July 2, 2012
2
Consolidated Balance Sheet as of April 30, 2012
(in Euros, ‘000s omitted)
ASSETS
3
Consolidated Income Statement for the Fiscal Year 2011/12
(in Euros, ‘000s omitted)
| 2011/12 EUR |
2011/12 EUR |
|||||||||||
| 1. |
Turnover |
29.470 | ||||||||||
| 2. |
Other operating income |
|||||||||||
| a) |
Income from the disposal of fixed assets excluding investments |
7 | ||||||||||
| b) |
Other income |
174 | ||||||||||
|
|
|
|||||||||||
| 181 | ||||||||||||
| 3. |
Expenses for materials and other purchased services |
|||||||||||
| a) |
Expenses for materials |
-16.772 | ||||||||||
| b) |
Expenses for purchased services |
-11 | ||||||||||
|
|
|
|||||||||||
| -16.783 | ||||||||||||
| 4. |
Personnel expenses |
|||||||||||
| a) |
Wages |
-628 | ||||||||||
| b) |
Salaries |
-2.023 | ||||||||||
| c) |
Expenses for severance payments and contributions to respective funds |
-34 | ||||||||||
| d) |
Expenses for statutory social security and payroll related taxes and contributions |
-698 | ||||||||||
| e) |
Other employee benefits |
-19 | ||||||||||
|
|
|
|||||||||||
| -3.402 | ||||||||||||
| 5. |
Depreciation |
|||||||||||
| a) |
of fixed assets |
-727 | ||||||||||
| b) |
Release of investment grants for fixed assets |
15 | ||||||||||
|
|
|
|||||||||||
| -712 | ||||||||||||
| 6. |
Other operating expenses |
|||||||||||
| a) |
Taxes, other than income taxes |
-11 | ||||||||||
| b) |
Other expenses |
-4.051 | ||||||||||
|
|
|
|||||||||||
| -4.062 | ||||||||||||
|
|
|
|||||||||||
| 7. |
Operating result = |
|||||||||||
| Subtotal of lines 1 to 6 |
4.692 | |||||||||||
|
|
|
|||||||||||
| 8. |
Other interest and similar income |
25 | ||||||||||
| 9. |
Expenses from securities and shares |
-19 | ||||||||||
| 10. |
Interest and similar expenses |
-43 | ||||||||||
|
|
|
|||||||||||
| 11. |
Financial result = |
|||||||||||
| Subtotal of lines 8 to 11 |
-37 | |||||||||||
|
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|
|||||||||||
| 12. |
Profit from ordinary business operations |
4.655 | ||||||||||
| 13. |
Taxes on income and earnings |
-1.164 | ||||||||||
|
|
|
|||||||||||
| 14. |
Net income for the year |
3.491 | ||||||||||
| 15. |
Release of untaxed reserves |
2 | ||||||||||
|
|
|
|||||||||||
| 16. |
Net profit for the year |
3.493 | ||||||||||
| 17. |
thereof net profit for the year of non-controlling interest |
23 | ||||||||||
|
|
|
|||||||||||
| 18. |
thereof consolidated net profit for the year |
3.470 | ||||||||||
| 19. |
Consolidated profit carry forward |
5.697 | ||||||||||
|
|
|
|||||||||||
| 20. |
Consolidated retained earnings and profits |
9.167 | ||||||||||
|
|
|
|||||||||||
4
Snowboard Dachstein Tauern GmbH
8970 Schladming, Hochstraße 628
Consolidated Statement of Changes in Equity for the Fiscal Year 2011/2012
(in Euros, ‘000s omitted)
| in EUR |
Share capital EUR |
Retained earnings EUR |
Net profit EUR |
Shareholder’s equity EUR |
Adjustment item for non-controlling interest EUR |
Total equity EUR |
||||||||||||||||||
| Balance as of May 1, 2011 |
36 | 5.697 | 5.733 | 73 | 5.806 | |||||||||||||||||||
| Dividends to third-parties |
0 | -42 | -42 | |||||||||||||||||||||
| Net profit for the year |
3.470 | 3.470 | 23 | 3.493 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance as of April 30, 2012 |
36 | 5.697 | 3.470 | 9.203 | 54 | 9.257 | ||||||||||||||||||
|
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|
|||||||||||||
5
Consolidated Cash Flow Statement for the Fiscal Year 2011/12
(in Euros, ‘000s omitted)
| 2011/12 EUR |
||||
| Net income for the year |
3.491 | |||
| Depreciation of fixed assets |
727 | |||
| Gains on the disposal of fixed assets |
-8 | |||
| Losses on the disposal of fixed assets |
21 | |||
| Release of investment grants |
-15 | |||
| Change in long-term provisions |
2 | |||
|
|
|
|||
| OPERATING CASH FLOW |
4.218 | |||
| Change in inventories, advances paid and prepaid expenses |
-938 | |||
| Change in trade receivables, receivables from affiliated companies and other receivables and assets |
-497 | |||
| Change in trade payables, liabilities to affiliated companies and other payables |
-452 | |||
| Change in short-term provisions and accruals |
500 | |||
|
|
|
|||
| CASH FLOW FROM OPERATING ACTIVITIES |
2.831 | |||
|
|
|
|||
| Investments in fixed assets |
-715 | |||
| Cash flow from the disposal of fixed assets |
9 | |||
| Change in securities and shares |
916 | |||
|
|
|
|||
| CASH FLOW FROM INVESTING ACTIVITIES |
210 | |||
|
|
|
|||
| Dividends paid to non-controlling interests |
-42 | |||
| Proceeds from short-term loans |
158 | |||
| Repayment of long-term loans |
-482 | |||
|
|
|
|||
| CASH FLOW FROM FINANCING ACTIVITIES |
-366 | |||
|
|
|
|||
| CHANGE IN CASH AND CASH EQUIVALENTS |
2.675 | |||
| Opening balance of cash and cash equivalents |
2.546 | |||
|
|
|
|||
| Closing balance of cash and cash equivalents |
5.221 | |||
|
|
|
|||
6
Snowboard Dachstein Tauern GmbH
Notes to the consolidated financial statements
| I. | Explanation of accounting policies |
| 1. | General |
Basic principles
The consolidated financial statements have been prepared in accordance with the financial reporting requirements of the Austrian Commercial Code (Unternehmensgesetzbuch, UGB), as amended.
The annual financial statements of the fully consolidated subsidiaries, prepared on the basis of standards applied consistently throughout the Group, form the basis for these consolidated financial statements.
All companies prepare their annual financial statements for the year ended April 30.
The consolidated financial statements are prepared in thousands of Euros (“EUR”)
Basis of consolidation
The group of fully consolidated companies of Snowboard Dachstein Tauern GmbH, Schladming, includes the major subsidiary Blue Tomato Handel GmbH, Graz. Snowboard Dachstein Tauern GmbH holds 69% of the shares in Blue Tomato Handel GmbH and therefore exercises control over its business and financial policies.
Consolidation method
The consolidated financial statements of Snowboard Dachstein Tauern GmbH have been prepared for the first time and on a voluntary basis as at April 30, 2012. In accordance with par. 254 sec. 2 UGB the book values were initially consolidated as of May 1, 2011 (date of initial consolidation) and consequently no prior-year comparative amounts are reported in the balance sheet, income statement, statement of cash flows and statement of changes in equity.
Investments in subsidiaries are consolidated in accordance with the book value method under section 254 (1) no. 1 of the UGB. The cost of investments in subsidiaries is eliminated against the proportionate equity at the time of initial consolidation.
The initial consolidation of equity investments resulted in a negative difference, which reflects the accumulated prior-year net income. For this reason, the difference is reported as accumulated profit brought forward.
7
Accounting policies
These consolidated financial statements have been prepared in accordance with Austrian generally accepted accounting principles and the general standard of presenting a true and fair view of the net assets, financial position and results of operations of the Company.
The consolidated financial statements have been prepared in accordance with the principle of completeness.
The principle of item-by-item measurement was applied to the measurement of individual assets and liabilities and the continued existence of the Company as a going concern was assumed.
Compliance with the prudence principle was ensured by reporting only those profits that had been realised as at the balance sheet date. All identifiable risks and expected losses were taken into account.
The measurement methods used previously were retained in the preparation of these consolidated financial statements.
| 2. | Fixed assets |
| a) | Intangible assets |
Purchased intangible assets are measured at cost less straight-line amortisation. Amortisation is based on the following useful lives:
| IT software |
2-5 years | |||
| Other rights |
3-5 years |
Material permanent impairment is accounted for by recognising write-downs for impairment.
Internally generated intangible assets are not capitalised.
| b) | Property, plant and equipment |
Property, plant and equipment is measured at cost less depreciation. Low-value assets with an individual cost of up to EUR 400,00 are fully expensed in the year of acquisition. In the schedule of changes in fixed assets (Appendix I), they are reported as additions, disposals and depreciation of the financial year in which they were acquired. Property, plant and equipment is depreciated using the straight-line method over the expected useful life. Depreciation is based on the following useful lives:
| Other equipment, operating and office equipment |
3-10 years |
Depreciation is based on the half-year convention, where assets purchased during the first six months of the year are subject to a full year’s depreciation and assets purchased in the second half of the year are subject to six months depreciation regardless of the actual date placed in service.
Additional write-downs in excess of regular depreciation are recognised, if an impairment occurs which is expected to be permanent.
| c) | Investments |
Investments are recognised at cost. Material permanent impairment is accounted for by recognising write-downs for impairment.
8
| 3. | Current assets |
| a) | Inventories |
Merchandise is measured at the lower of cost or market prices.
| b) | Receivables and other current assets |
Receivables and other current assets are recognised at their nominal amounts.
If there are identifiable individual risks, the lower fair value is determined and these assets are recognised at this value. Securities classified as current assets are measured at the lower of cost or market value as at the balance sheet date.
| c) | Cash and cash equivalents |
Cash and cash equivalents comprise cash in hand and bank balances.
| 4. | Non controlling interest |
The non controlling interest comprises the 31% interest held by a non-Group third party in the fully consolidated subsidiary Blue Tomato Handel GmbH, Graz.
| 5. | Provisions |
There were no obligations for severance payments as at the balance sheet date that would justify a provision.
Provisions for long-service awards were calculated according to actuarial principles applying an imputed interest rate of 6%. A staff turnover discount of 80% was applied. According to management’s assessment, the discount is appropriate given the current personnel structure and special circumstances of the sector. Payments of long-service awards will become due in twelve years’ time at the earliest. Management therefore expects long-service award payments to occur with a probability of 20%.
The provisions for taxes relate to the provisions for corporate income tax that has not yet been assessed.
In compliance with the principle of prudence, other provisions and accruals are recognised, according to prudent business judgement, for all identifiable risks and contingent liabilities identifiable as at the time the financial statements are prepared.
| 6. | Liabilities |
Liabilities are recognised at their repayment amount, in compliance with the prudence principle.
| II. | Balance sheet disclosures |
To improve the clarity of presentation in the balance sheet, individual items have been combined. Where required, separate disclosures are made in the notes to the individual balance sheet items.
9
| 1. | Fixed assets |
The changes in individual fixed assets and the breakdown of annual depreciation, amortisation and write-downs can be found in the attached schedule of changes in fixed assets (Appendix I).
Low-value assets are expensed in the year of addition and reported as additions and disposals in the schedule of changes in fixed assets.
| 2. | Inventories |
The inventories reported in the balance sheet relate to merchandise.
| 3. | Receivables and other current assets |
The receivables and other current assets reported in the balance sheet comprise the following items and maturities:
| Receivables as at April 30, 2012 |
Total EUR |
Due | ||||||||||
| within 1 year EUR |
after 1 year EUR |
|||||||||||
| 1. Trade receivables |
967 | 967 | 0 | |||||||||
| 2. Other receivables and assets |
293 | 293 | 0 | |||||||||
|
|
|
|
|
|
|
|||||||
| Receivables and other current assets |
1.260 | 1.260 | 0 | |||||||||
|
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|
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|
|
|||||||
| 4. | Shareholders’ equity |
As at April 30, 2012, the share capital amounted to EUR 36.
| 5. | Untaxed reserves |
Depreciation and write-downs made only on the basis of tax regulations are recognised under the valuation reserve for accelerated tax depreciation and write-downs.
10
The valuation reserve for accelerated tax depreciation and write-downs breaks down as follows according to the corresponding fixed asset items:
Composition and changes in 2011/12:
| Balance as at May 1, 2011 EUR |
Release Reversal EUR |
Additions EUR |
Balance as at April 30, 2012 EUR |
|||||||||||||
| Tangible assets |
||||||||||||||||
| Other operating and office equipment |
100 | 2 | 0 | 98 | ||||||||||||
| 6. | Provisions |
The provisions changed as follows:
Provisions for taxes
| Balance as at May 1, 2011 EUR |
Use EUR |
Additions EUR |
Balance as at April 30, 2012 EUR |
|||||||||||||
| for corporate income tax |
855 | 0 | 337 | 1.192 | ||||||||||||
Other provisions and accruals
| Balance as at May 1, 2011 EUR |
Use EUR |
Additions EUR |
Balance as at April 30, 2012 EUR |
|||||||||||||
| Other provisions and accruals |
212 | 212 | 375 | 375 | ||||||||||||
| Long-service awards |
0 | 0 | 6 | 6 | ||||||||||||
|
|
|
|
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|
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|
|||||||||
| 212 | 212 | 381 | 381 | |||||||||||||
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|
|||||||||
11
| 7. | Liabilities |
The liabilities reported in the balance sheet comprise the following items and maturities:
| Liabilities as at April 30, 2012 |
Total EUR |
Due | Secured by collateral EUR |
|||||||||||||||||
| within 1 year EUR |
in 1 to 5
years EUR |
after 5 years EUR |
||||||||||||||||||
| 1. Bank loans and overdrafts |
1.853 | 379 | 749 | 725 | 0 | |||||||||||||||
| 2. Trade payables |
397 | 397 | 0 | 0 | 0 | |||||||||||||||
| 3. Other payables |
597 | 597 | 0 | 0 | 0 | |||||||||||||||
| thereof taxes |
542 | 542 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total liabilities |
2.847 | 1.373 | 749 | 725 | 0 | |||||||||||||||
|
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|
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|
|
|
|
|
|||||||||||
Other payables do not include any material accrued expenses payable after the balance sheet date.
| 8. | Other financial obligations |
Obligations from the use of property, plant and equipment not recognised in the balance sheet
We forecast the future rental and lease obligations as follows:
| April 30, 2012 EUR |
||||
| for the next financial year |
792 | |||
| for the next five financial years |
4.472 | |||
12
| III. | Income statement disclosures |
To improve the clarity of presentation in the income statement, individual items have been combined. Where required, separate disclosures are made in the notes to the individual income statement items.
The income statement has been prepared using the total cost (nature of expense) method.
| 1. | Revenue |
Revenue breaks down as follows:
| - by geographically defined market |
2011/12 EUR |
|||
| Domestic revenue |
29.506 | |||
| Foreign revenue |
0 | |||
| Less rebates |
-36 | |||
|
|
|
|||
| 29.470 | ||||
|
|
|
|||
Revenue by geographically defined market is determined by the location of the seller and therefore domestic revenue also includes revenues to customers located outside of Austria.
Total revenue includes revenue for vendor assistance received from manufacturers related to catalogue production and other advertising activities in the amount of EUR 1.192 and revenue from snowboard courses in the amount of EUR 305.
| 2. | Expenses for severance payments and contributions to respective funds |
The expenses for severance break down as follows:
| 2011/12 EUR |
||||
| Adjustments to provision for severance payments |
-4 | |||
| Contributions to statutory funds for severance payments |
34 | |||
| Severance payments of the period |
4 | |||
|
|
|
|||
| 34 | ||||
|
|
|
|||
| 3. | Changes in reserves |
The reversal of untaxed reserves breaks down as follows:
| Reversal of untaxed reserves |
2011/12 EUR |
|||
| Valuation reserve for accelerated tax depreciation and write-downs |
2 | |||
13
| IV. | Other disclosures |
| 1. | Average headcount |
The annual average numbers of employees were as follows:
| 2011/12 | ||||
| Wage earners |
43 | |||
| Salaried employees |
94 | |||
|
|
|
|||
| Total |
137 | |||
|
|
|
|||
| 2. | Disclosures relating to members of executive bodies |
Disclosure of the amount of remuneration paid to the members of the management is omitted pursuant to the safeguard clause of section 241 (4) UGB (less than 3 members on the management board).
Managing Director of Snowboard Dachstein Tauern GmbH:
Mr Gerfried Schuller
| V. | Summary of Significant Differences between Austrian and US Generally Accepted Accounting Principles (“GAAP”) |
Fixed Assets
Under Austrian GAAP fixed assets are depreciated using a 1/2 year convention, under US GAAP they are depreciated when put in service on a monthly pro-rata basis.
Vendor Assistance
Vendor Assistance received from manufacturers related to the catalogue and other advertising functions is presented in revenue under Austrian GAAP. Under US GAAP the amount would be reclassified to reduce expenses.
Investment grants
Investment grants represent non refundable subsidies received by the Company and are deferred on the balance sheet outside of equity and amortized over the useful life of the corresponding eligible asset. Under US GAAP, subsidies would be reported as a reduction of cost of the corresponding eligible asset.
14
Untaxed Reserves
Untaxed reserves relate to accelerated depreciation for Austrian income tax purposes. Under Austrian GAAP the respective amount is allocated to a special reserve account where the temporary difference is reported. Under US GAAP, only the deferred income tax effect resulting from the temporary difference would be recognized.
15
Consolidated Fixed Assets Schedule as of April 30, 2012
(in Euros, ’000s omitted)
| Cost of acquisition May 1, 2011 |
Additions | Disposal | Cost of acquisition April 30, 2012 |
Accumulated depreciation and amortisation |
Book value April 30, 2012 |
Book value May 1, 2011 |
Depreciation and amortisation for |
|||||||||||||||||||||||||||||
| Asset item |
EUR | EUR | EUR | EUR | EUR | EUR | EUR | EUR | ||||||||||||||||||||||||||||
| I. |
Intangible assets |
|||||||||||||||||||||||||||||||||||
| 1. |
Software and licenses |
177 | 226 | 0 | 403 | 191 | 212 | 66 | 81 | |||||||||||||||||||||||||||
| 2. |
Advance payments |
0 | 143 | 0 | 143 | 0 | 143 | 0 | 0 | |||||||||||||||||||||||||||
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| 177 | 369 | 0 | 546 | 191 | 355 | 66 | 81 | |||||||||||||||||||||||||||||
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| II. |
Tangible assets |
|||||||||||||||||||||||||||||||||||
| 1. |
Installations in third-party buildings |
2.170 | 72 | 12 | 2.230 | 674 | 1.556 | 1.721 | 224 | |||||||||||||||||||||||||||
| 2. |
Other operating and office equipment |
2.053 | 229 | 92 | 2.190 | 1.140 | 1.050 | 1.228 | 397 | |||||||||||||||||||||||||||
| low-value assets |
0 | 25 | 25 | 0 | 0 | 0 | 0 | 25 | ||||||||||||||||||||||||||||
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| 4.223 | 326 | 129 | 4.420 | 1.814 | 2.606 | 2.949 | 646 | |||||||||||||||||||||||||||||
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| III. |
Investments |
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| Investments in associated companies |
65 | 20 | 0 | 85 | 0 | 85 | 65 | 0 | ||||||||||||||||||||||||||||
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| 4.465 | 715 | 129 | 5.051 | 2.005 | 3.046 | 3.080 | 727 | |||||||||||||||||||||||||||||
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Appendix I
16
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
The following unaudited pro forma condensed combined statements of income for the fiscal year ended January 28, 2012 and the three months ended April 28, 2012 give effect to Zumiez’ acquisition of Blue Tomato as completed on July 4, 2012, as if the acquisition had occurred on January 30, 2011. An unaudited pro forma balance sheet has not been presented as the acquisition of Blue Tomato has already been fully reflected in the condensed consolidated balance sheet included in Zumiez’ Quarterly Report on Form 10-Q for the three months ended July 28, 2012. Unless otherwise indicated, information in this report is presented in U.S. dollars (“USD” or “$”).
Such unaudited pro forma financial information is based on the historical financial statements of Zumiez and Blue Tomato and certain adjustments to give effect of this transaction, which are described in the notes to the statements below.
For pro forma purposes:
| • | Zumiez’ consolidated statement of income for the fiscal year ended January 28, 2012 has been combined with financial information extracted from Blue Tomato’s consolidated statement of income for the fiscal year ended April 30, 2012 contained in Blue Tomato’s consolidated financial statements included in this Form 8-K/A. |
| • | Zumiez’ unaudited statement of income for the three months ended April 28, 2012 has been combined with financial information extracted from unaudited interim financial information derived from Blue Tomato’s underlying books and records for the three months ended April 30, 2012. |
The unaudited pro forma condensed combined statements of income are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have been achieved had the acquisition been completed as of the date indicated above or the results that may be obtained in the future.
These unaudited pro forma condensed combined statements of income and accompanying notes should be read in conjunction with the historical financial statements and the related notes thereto of Blue Tomato. This data should also be read in conjunction with Zumiez’ historical financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended January 28, 2012 and Quarterly Report on Form 10-Q for the three months ended April 28, 2012.
ZUMIEZ INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FISCAL YEAR ENDED JANUARY 28, 2012
(in thousands, except per share amount)
| Zumiez | Blue Tomato (U.S. GAAP, Note 2) |
Pro
Forma Adjustments |
Note 4 | Pro
Forma Combined |
||||||||||||||
| Net sales |
$ | 555,874 | $ | 38,840 | $ | — | $ | 594,714 | ||||||||||
| Cost of goods sold |
354,198 | 23,117 | 2,220 | A | 379,535 | |||||||||||||
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|
|||||||||||
| Gross profit |
201,676 | 15,723 | (2,220 | ) | 215,179 | |||||||||||||
| Selling, general and administrative expenses |
141,444 | 9,360 | 11,249 | B, C, D | 162,053 | |||||||||||||
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| Operating profit |
60,232 | 6,363 | (13,469 | ) | 53,126 | |||||||||||||
| Interest income (expense), net |
1,836 | (50 | ) | — | 1,786 | |||||||||||||
| Other (expense) income, net |
(379 | ) | 58 | |
— |
|
(321 | ) | ||||||||||
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|
|||||||||||
| Earnings before income taxes |
61,689 | 6,371 | |
(13,469 |
) |
54,591 | ||||||||||||
| Provision for income taxes |
24,338 | 1,592 | (2,275 | ) | E | 23,655 | ||||||||||||
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| Net income |
$ | 37,351 | $ | 4,779 | $ | (11,194 | ) | $ | 30,936 | |||||||||
| Net income attributable to noncontrolling interests |
— | (31 | ) | 31 | F | — | ||||||||||||
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| Net income attributable to parent entity |
$ | 37,351 | $ | 4,748 | $ | (11,163 | ) | $ | 30,936 | |||||||||
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| Basic earnings per share |
$ | 1.22 | $ | 1.01 | ||||||||||||||
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| Diluted earnings per share |
$ | 1.20 | $ | 0.99 | ||||||||||||||
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| Weighted average shares used in computation of earnings per share: |
||||||||||||||||||
| Basic |
30,527 | 30,527 | ||||||||||||||||
| Diluted |
31,119 | 31,119 | ||||||||||||||||
See accompanying notes to condensed combined statements of income
2
ZUMIEZ INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED APRIL 28, 2012
(in thousands, except per share amount)
| Zumiez | Blue Tomato (U.S. GAAP, Note 2) |
Pro Forma Adjustments |
Note 4 | Pro Forma Combined |
||||||||||||||
| Net sales |
$ | 129,899 | $ | 8,480 | $ | — | $ | 138,379 | ||||||||||
| Cost of goods sold |
87,798 | 5,882 | — | 93,680 | ||||||||||||||
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| Gross profit |
42,101 | 2,598 | — | 44,699 | ||||||||||||||
| Selling, general and administrative expenses |
34,839 | 2,738 | 2,356 | B, C, D, G | 39,933 | |||||||||||||
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| Operating profit (loss) |
7,262 | (140 | ) | (2,356 | ) | 4,766 | ||||||||||||
| Interest income (expense), net |
490 | (32 | ) | — | 458 | |||||||||||||
| Other income (expense), net |
17 | (14 | ) | — | 3 | |||||||||||||
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| Earnings (loss) before income taxes |
7,769 | (186 | ) | (2,356 | ) | 5,227 | ||||||||||||
| Provision (benefit) for income taxes |
3,242 | (47 | ) | (290 | ) | E | 2,905 | |||||||||||
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| Net income (loss) |
$ | 4,527 | $ | (139 | ) | $ | (2,066 | ) | $ | 2,322 | ||||||||
| Net loss attributable to noncontrolling interests |
— | 1 | (1 | ) | F | — | ||||||||||||
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| Net income (loss) attributable to parent entity |
$ | 4,527 | $ | (138 | ) | $ | (2,067 | ) | $ | 2,322 | ||||||||
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| Basic earnings per share |
$ | 0.15 | $ | 0.08 | ||||||||||||||
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| Diluted earnings per share |
$ | 0.14 | $ | 0.07 | ||||||||||||||
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| Weighted average shares used in computation of earnings per share: |
||||||||||||||||||
| Basic |
30,779 | 30,779 | ||||||||||||||||
| Diluted |
31,401 | 31,401 | ||||||||||||||||
See accompanying notes to condensed combined statements of income
3
ZUMIEZ INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF INCOME
1. Description of Acquisition and Basis of Presentation
Description of Acquisition—The unaudited pro forma condensed combined statements of income have been compiled from underlying financial information of Zumiez and Blue Tomato and reflect the acquisition on July 4, 2012 of 100% of the outstanding stock of Blue Tomato for cash consideration of 59.5 million Euros (“EUR”) ($74.8 million).
The business combination was accounted for using the acquisition method of accounting, which requires an acquirer to recognize assets acquired and liabilities assumed at the acquisition date fair values. The estimated fair value of the assets acquired and liabilities assumed is preliminary and differences between the preliminary and final estimated fair value could be material. The following table summarizes the estimates of fair value at the date of acquisition (in thousands):
| Cash and cash equivalents |
$ | 5,106 | ||
| Inventories |
7,942 | |||
| Other current assets |
1,573 | |||
| Property, plant and equipment |
4,964 | |||
| Other long-term assets |
232 | |||
| Intangible assets |
19,987 | |||
| Current liabilities assumed |
(4,877 | ) | ||
| Deferred tax liabilities |
(5,420 | ) | ||
| Long-term debt and other liabilities assumed |
(2,125 | ) | ||
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| Net assets acquired |
27,382 | |||
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| Goodwill |
47,412 | |||
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| Total consideration transferred |
$ | 74,794 | ||
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The following table summarizes the identifiable intangible assets acquired that will not be subject to amortization (in thousands):
| Intangible
Asset Amount |
||||
| Trade names and trademarks |
$ | 13,576 | ||
The following table summarizes the identifiable intangible assets acquired that will be subject to amortization and their weighted-average amortization period:
| Intangible Asset Amount (in Thousands) |
Weighted- Average Amortization Period (in Years) |
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| Developed technology |
$ | 3,771 | 3.0 | |||||
| Customer relationships |
2,640 | 3.0 | ||||||
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| Total intangible assets subject to amortization |
$ | 6,411 | 3.0 | |||||
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Transaction costs, such as investment advisory, legal and accounting fees, associated with the Blue Tomato acquisition were $1.9 million for the six months ended July 28, 2012. Foreign currency transaction net gain for the six months ended July 28, 2012 was $0.5 million, which primarily related to foreign currency fluctuations associated with the acquisition of Blue Tomato. As these amounts are material non-recurring charges which will not have a continuing impact, we have not included these amounts in our unaudited pro forma condensed combined statements of income.
Basis of Presentation—Zumiez and Blue Tomato have different fiscal quarter and year ends. Zumiez follows a fiscal calendar widely used by the retail industry that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to January 31. Each fiscal year of Zumiez consists of four 13-week quarters, with an extra week added to the fourth quarter every five or six years. Blue Tomato follows a monthly reporting calendar,
4
with its fiscal year ending on April 30. Accordingly, the unaudited pro forma condensed combined statement of income for the fiscal year ended January 28, 2012 combines the historical results of (i) Zumiez for the 52-week period ended January 28, 2012 and (ii) Blue Tomato for the 12 months period ended April 30, 2012. The unaudited pro forma condensed combined statement of income for the three months ended April 28, 2012 combines the historical results of (i) Zumiez for the 13-week period ended April 28, 2012 and (ii) Blue Tomato for the three months period ended April 30, 2012. The difference in fiscal periods for Zumiez and Blue Tomato is considered to be insignificant and no related adjustments have been made in the preparation of this unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined statement of income for the three months ended April 28, 2012 includes historical results of Blue Tomato for the three months ended April 30, 2012. The three months ended April 30, 2012 period is also included in the historical results of Blue Tomato for the fiscal year ended April 30, 2012, which is combined in the unaudited pro forma condensed combined statement of income for the fiscal year ended January 28, 2012. Results for that duplicated quarter are presented in the unaudited pro forma condensed combined statement of income for the three months ended April 28, 2012.
2. Historical Financial Information of Blue Tomato
The following historical financial information of Blue Tomato was prepared using accounting principles generally accepted in Austria (Austrian GAAP) and is presented in Euros. Accordingly, Blue Tomato amounts have been adjusted to reflect differences between Austrian GAAP and accounting principles generally accepted in the United States (U.S. GAAP), and are translated to U.S. dollars. The Blue Tomato amounts combined in the unaudited pro forma condensed combined statements of income referred to above were translated to U.S. dollars using an average rate of 1.3680 for the fiscal year ended April 30, 2012 and an average rate of 1.3200 for the three months ended April 30, 2012.
Historical financial information of Blue Tomato for the fiscal year ended April 30, 2012 (in thousands):
| Blue
Tomato (Historical, Reclassified, EUR) |
U.S.
GAAP Adjustments and Reclassifications (EUR, Note 3) |
Note 3 | Blue Tomato (U.S. GAAP, EUR) |
Blue Tomato (U.S. GAAP, USD) |
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| Net sales |
€ | 29,470 | € | (1,078 | ) | A, B | € | 28,392 | $ | 38,840 | ||||||||
| Cost of goods sold |
16,783 | 115 | B | 16,898 | 23,117 | |||||||||||||
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|
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| Gross profit |
12,687 | (1,193 | ) | 11,494 | 15,723 | |||||||||||||
| Selling, general and administrative expenses |
8,174 | (1,332 | ) | A, B | 6,842 | 9,360 | ||||||||||||
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| Operating profit |
4,513 | 139 | 4,652 | 6,363 | ||||||||||||||
| Interest expense, net |
(37 | ) | — | (37 | ) | (50 | ) | |||||||||||
| Other income, net |
181 | (139 | ) | B | 42 | 58 | ||||||||||||
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| Earnings before income taxes |
4,657 | — | 4,657 | 6,371 | ||||||||||||||
| Provision for income taxes |
1,164 | — | 1,164 | 1,592 | ||||||||||||||
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| Net income |
3,493 | — | 3,493 | 4,779 | ||||||||||||||
| Net income attributable to noncontrolling interests |
(23 | ) | — | (23 | ) | (31 | ) | |||||||||||
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| Net income attributable to parent entity |
€ | 3,470 | € | — | € | 3,470 | $ | 4,748 | ||||||||||
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5
Historical financial information of Blue Tomato for the three months ended April 30, 2012 (in thousands):
| Blue
Tomato (Historical, Reclassified, EUR) |
U.S.
GAAP Adjustments and Reclassifications (EUR, Note 3) |
Note 3 | Blue Tomato (U.S. GAAP, EUR) |
Blue Tomato (U.S. GAAP, USD) |
||||||||||||||||
| Net sales |
€ | 6,616 | € | (192 | ) | A, B | € | 6,424 | $ | 8,480 | ||||||||||
| Cost of goods sold |
4,296 | 159 | B | 4,455 | 5,882 | |||||||||||||||
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| Gross profit |
2,320 | (351 | ) | 1,969 | 2,598 | |||||||||||||||
| Selling, general and administrative expenses |
2,516 | (441 | ) | A, B | 2,075 | 2,738 | ||||||||||||||
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| Operating loss |
(196 | ) | 90 | (106 | ) | (140 | ) | |||||||||||||
| Interest expense, net |
(24 | ) | — | (24 | ) | (32 | ) | |||||||||||||
| Other income (expense), net |
79 | (90 | ) | B | (11 | ) | (14 | ) | ||||||||||||
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| Loss before income taxes |
(141 | ) | — | (141 | ) | (186 | ) | |||||||||||||
| Benefit for income taxes |
(35 | ) | — | (35 | ) | (47 | ) | |||||||||||||
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| Net loss |
(106 | ) | — | (106 | ) | (139 | ) | |||||||||||||
| Net loss attributable to noncontrolling interests |
— | — | — | 1 | ||||||||||||||||
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| Net loss attributable to parent entity |
€ | (106 | ) | € | — | € | (106 | ) | $ | (138 | ) | |||||||||
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3. U.S. GAAP Adjustments and Reclassifications
The adjustments to reconcile Blue Tomato’s historical financial information to U.S. GAAP and to conform to the accounting policies of Zumiez are as follows:
| A. | Blue Tomato recorded cash consideration received from vendors that are reimbursements for specific, incremental and identifiable costs of selling the vendors’ products as net sales. We have reclassified the amount received to selling, general and administrative expenses. The amount reclassified for the fiscal year ended April 30, 2012 was 1.2 million Euros ($1.6 million). The amount reclassified for the three months ended April 30, 2012 was 0.3 million Euros ($0.4 million). |
| B. | We recorded other individually immaterial reclassifications to conform Blue Tomato results to the accounting policies of Zumiez. |
4. Pro Forma Adjustments
The unaudited pro forma condensed combined statements of income for the fiscal year ended January 28, 2012 and three months ended April 28, 2012 are presented as if the acquisition had occurred on January 30, 2011, the first day of that fiscal year. The pro forma adjustments give effect to the events that are directly attributable to the transaction and are expected to have a continuing impact on the financial results of the combined company. The pro forma adjustments are based on available information and certain assumptions that Zumiez believes are reasonable.
The pro forma adjustments included in the unaudited pro forma condensed combined statements of income are as follows:
| A. | To record the charge associated with the step-up in inventory to estimated fair value in conjunction with our acquisition of Blue Tomato of $2.2 million for the fiscal year ended January 28, 2012. |
| B. | To record additional amortization expense of acquired intangible assets of $2.3 million for the fiscal year ended January 28, 2012 and $0.6 million for the three months ended April 28, 2012. |
| C. | To record additional depreciation expense on property, plant and equipment, as a result of the fair value adjustment at acquisition, of $0.2 million for the fiscal year ended January 28, 2012 and $0.1 million for the three months ended April 28, 2012. |
| D. | To record the compensation expense associated with the estimated future incentive payments to the sellers of Blue Tomato of $8.7 million for the fiscal year ended January 28, 2012 and $2.1 million for the three months ended April 28, 2012. The potential future incentive payments to the sellers of Blue Tomato is an aggregate amount of up to 22.1 million Euros ($27.2 million) to the extent that certain financial metrics are met and the sellers remain employed with Blue Tomato. Of the 22.1 million Euros future |
6
| incentive payments, 17.1 million Euros ($21.0 million) is payable in cash, while 5.0 million Euros ($6.2 million) is payable in shares of our common stock. We account for the estimated future incentive payments as compensation expense and recognize this amount ratably over the term of service. The amount of compensation expense included in the unaudited pro forma condensed combined statements of income is based on an estimate of future incentive payments of 18.1 million Euros ($22.3 million). |
| E. | To record the tax effects associated with the pro forma adjustments. The tax effects associated with the pro forma adjustments are calculated at the statutory rate applicable to the jurisdictions in which the pro forma adjustments are expected to be recorded, with the exception of the pro forma adjustments related to the compensation expense associated with the estimated future incentive payments to the sellers of Blue Tomato (see tickmark D above), as fifty percent of this compensation expense is not deductible for tax purposes. |
| F. | To exclude the impact of noncontrolling interests, as the noncontrolling interest in Blue Tomato contributed its shares to Blue Tomato prior to Zumiez’ acquisition of Blue Tomato, and therefore the combined company will not have a noncontrolling interest. |
| G. | To exclude the transaction costs incurred by Zumiez during the three months ended April 28, 2012 of $0.4 million. |
7