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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
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 27, 2000
STYLECLICK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-33194 13-4106745
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
3861 Sepulveda Blvd., Culver City, CA 90230
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(Address, including zip code, of principal executive offices)
(310) 751-2100
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
On August 1, 2000, Styleclick, Inc. ("New Styleclick" or the "Company")
announced completion of the merger of each of Styleclick.com Inc., a California
corporation ("Old Styleclick"), and Internet Shopping Network LLC, a Delaware
limited liability company ("ISN"), with separate, wholly- owned subsidiaries of
New Styleclick, following approval of the merger transaction by the shareholders
of Old Styleclick on July 26, 2000. The terms of the merger were described in
New Styleclick's Registration Statement on Form S-4, as filed on June 23, 2000.
Copies of the press releases announcing approval of the merger by Old
Styleclick's shareholders and announcing effectiveness of the merger are
attached hereto.
Item 7(a). Financial Statements of Businesses Acquired.
NEW STYLECLICK
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements have
been prepared to give effect to the merger of Internet Shopping Network and Old
Styleclick with separate wholly-owned subsidiaries of New Styleclick. Internet
Shopping Network will be treated as the acquiring entity for accounting
purposes, and the assets and liabilities of Old Styleclick will be recorded at
their respective fair values under the purchase method of accounting.
The unaudited pro forma combined condensed financial statements reflect certain
assumptions regarding the proposed transaction and are based on the historical
financial statements of Internet Shopping Network and Old Styleclick. The
combined condensed financial statements, including the notes accompanying them,
are qualified in their entirety by reference to, and should be read in
conjunction with, the audited financial statements of Internet Shopping Network
and Old Styleclick, including the notes accompanying them, which are included in
New Styleclick's Registration Statement on Form S-4, as filed on June 23, 2000.
The unaudited pro forma combined condensed balance sheet as of June 30, 2000
gives effect to the merger of Internet Shopping Network and Old Styleclick with
separate wholly-owned subsidiaries of New Styleclick as if the merger had
occurred on June 30, 2000.
The unaudited pro forma combined condensed statement of operations for the six
months ended June 30, 2000 and the year ended December 31, 1999 gives effect to
the merger of Internet Shopping Network and Old Styleclick with separate
wholly-owned subsidiaries of New Styleclick as if the merger had occurred on
January 1, 1999.
New Styleclick is in the process of evaluating the fair value of the acquired
assets and the assumed liabilities in order to make a final allocation of the
excess purchase price, including allocation to intangibles other than goodwill.
Accordingly, the purchase accounting information is preliminary and has been
made solely for the purpose of developing the unaudited pro forma combined
condensed financial information.
New Styleclick does not expect the final allocation to differ materially from
the preliminary allocation. As of this time, New Styleclick has not identified
any reliably measured intangibles, although the final allocation may include
allocation of the purchase price to intangibles other than goodwill. The
amortization period assigned to goodwill is subjective, as it is management's
best estimate of the future economic benefit of the excess of the purchase price
over net assets acquired. This life of this benefit is difficult to determine at
the time of the transaction. The carrying value of goodwill is reviewed if facts
and circumstances suggest that it may be impaired. If this review indicates the
goodwill will not be recoverable, the carry amount of the goodwill would be
reduced. Due to the history of operating losses of Old Styleclick, management
has determined that a three-year life is appropriate.
This pro forma combined condensed statement of operations is presented for
illustrative purposes only. It is not necessarily indicative of the results of
operations or financial position which actually would have been reported had
these transactions occurred on the dates indicated, nor is it necessarily
indicative of future financial results of operations.
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<CAPTION>
NEW STYLECLICK
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 2000
Internet
Shopping Old Pro Forma Pro Forma
Network Styleclick Adjustments Combined
---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 8 $ 1,045 $ 30,829 (1)$ 31,882
Accounts receivable, net 176 414 - 590
Inventories, net 9,783 - - 9,783
Prepaid expenses and other
current assets 500 2,804 9,367 (1) 12,671
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Total current assets 10,467 4,263 40,196 54,926
Property and equipment, net 10,329 5,186 (1,139)(1) 14,376
Goodwill - - 166,723 (1) 166,723
Other assets 80 4,565 (4,114)(1) 531
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Total Assets $ 20,876 $ 14,014 $ 201,666 $ 236,556
========== ========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ - $ 9,171 $ (9,171)(2) $ -
Accounts payable,
accrued and other
current liabilities 7,836 2,770 - 10,606
Deferred income - 175 - 175
---------- ---------- ---------- ----------
Total current liabilities 7,836 12,116 (9,171) 10,781
Stockholders' equity:
Old Styleclick historical
equity - 43,680 (43,680)(3) -
Preferred stock - $0.01 par
value; authorized
25,000,000 shares, none
issued and outstanding - - - -
Class A common stock - $0.01
par value; authorized
150,000,000 shares;
7,912,568 issued and
outstanding 2 - 77 (1) 79
Class B common stock - $0.01
par value; authorized
112,500,000 shares;
23,039,706 issued and
outstanding 203 - 27 (1) 230
Additional paid in capital 119,292 - 212,631 (1) 331,923
Historical and pro forma
retained earnings (106,457) (41,782) 41,782 (1) (106,457)
---------- ---------- ---------- ----------
Total stockholders' equity 13,040 1,898 210,837 225,775
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $ 20,876 $ 14,014 $ 201,666 $ 236,556
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<CAPTION>
NEW STYLECLICK
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
Internet
Shopping Old Pro Forma Pro Forma
Network Styleclick Adjustments Combined
---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues:
Product sales $ 10,326 $ 201 $ - $ 10,527
Service revenues - 1,544 - 1,544
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10,326 1,745 - 12,071
Cost of sales:
Product sales 10,588 - - 10,588
Service revenues - 407 - 407
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10,588 407 - 10,995
---------- ---------- ---------- ----------
Gross profit (262) 1,338 - 1,076
Operating costs and expenses:
Selling and marketing 3,858 4,215 - 8,073
Product development costs 2,048 2,577 - 4,625
General and administrative 7,910 3,646 - 11,556
Write-off of capitalized
software costs 2,260 - - 2,260
Depreciation and amortization
of software costs 2,882 816 - 3,698
Merger related costs - 1,575 (1,575)(4) -
Amortization of goodwill - - 27,787 (5) 27,787
---------- ---------- ---------- ----------
Total operating costs
and expenses 18,958 12,829 26,212 57,999
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Operating loss (19,220) (11,491) (26,212) (56,923)
Interest income(expense),
net 1 (146) - (145)
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NET LOSS $ (19,219) $ (11,637) $ (26,212) $ (57,068)
========== ========== ========== ==========
Net loss per common share
Basic $ (0.94) $ (1.51) - $ (1.84)
Diluted $ (0.94) $ (1.51) - $ (1.84)
Weighted average shares
outstanding(6) 20,460 7,719 - 30,952
Weighted average diluted
shares outstanding(6) 20,460 7,719 - 30,952
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<CAPTION>
NEW STYLECLICK
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
Internet
Shopping Old Pro Forma Pro Forma
Network Styleclick Adjustments Combined
---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues:
Product sales $ 24,690 $ 3,387 $ - $ 28,077
Service revenues - 2,787 - 2,787
---------- ---------- ---------- ----------
24,690 6,174 - 30,864
Cost of sales:
Product sales 23,845 124 - 23,969
Service revenues - 544 - 544
---------- ---------- ---------- ----------
23,845 668 - 24,513
---------- ---------- ---------- ----------
Gross profit 845 5,506 - 6,351
Operating costs and expenses:
Selling and marketing 10,793 7,003 - 17,796
Product development costs 5,520 6,054 - 11,574
General and administrative 19,283 5,605 - 24,888
Write-off of capitalized
software costs 4,489 - - 4,489
Depreciation and amortization
of software costs 3,251 2,596 - 5,847
Merger related costs - 405 (405)(4) -
Amortization of goodwill - - 55,574 (5) 55,574
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Total operating costs
and expenses 43,336 21,663 55,169 120,168
---------- ---------- ---------- ----------
Operating loss (42,491) (16,157) (55,169) (113,817)
Interest income (expense),
net - 278 - 278
Miscellaneous (3) - - (3)
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NET LOSS $ (42,494) $ (15,879) $ (55,169) $(113,542)
========== ========== ========== ==========
Net loss per common share
Basic $ (2.08) $ (2.24) - $ (3.67)
Diluted $ (2.08) $ (2.24) - $ (3.67)
Weighted average shares
outstanding(6) 20,460 7,092 - 30,952
Weighted average diluted
shares outstanding(6) 20,460 7,092 - 30,952
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(1) Acquisition costs and the determination of the unallocated excess of merger
costs over net assets acquired set forth below may be subsequently adjusted
but any such adjustment is not expected to be material:
<S> <C>
Value of portion of Old Styleclick
acquired in the merger $121,781
Additional cash and promotional
investment by USA Networks, Inc. ("USAi")
and USANi LLC 50,000
Fair value of outstanding "in the money options"
and warrants of Old Styleclick 38,254
Estimated transaction costs 1,800
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Total acquisition costs 211,835
Less: Net assets acquired (including
the $50,000 of cash and media to be
received from USANi LLC) 45,112
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Unallocated excess of acquisition cost
over net assets acquired allocated to goodwill $166,723
===========
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The fair value of the non-cash exchange between New Styleclick and Old
Styleclick was valued by New Styleclick based on the fair value of the
portion of Old Styleclick acquired in the transaction, including the
payment of $40 million in cash and commitment to provide $10 million in
advertising and promotional services to New Styleclick as part of the
consummation of the merger. The fair value of Old Styleclick before the
merger was $121.8 million based on the fair value of $15.78 per share times
7.7 million shares outstanding. Fair value of the shares was determined by
taking an average of the opening and closing price of Old Styleclick common
stock for the period just before and just after the terms of the
transaction were agreed to by the parties and announced to the public. 2.7
million shares at $18.56 will be issued to USANi LLC for the $40 million in
cash and $10 million in advertising and promotion. USAi and its affiliates
will provide promotional time on its media properties over a three year
period from the closing of the merger. Such promotion will be contributed
to New Styleclick at its fair market value based on amounts charged to
third parties. Net assets acquired includes the net assets of Old
Styleclick at June 30, 2000 of $1.9 million, the $50 million of cash and
promotion to be contributed by USAi and USANi LLC, offset by a total of
$5.8 million write-off of Old Styleclick's assets and the $0.9 million that
Old Styleclick will be obligated to pay to its investment advisors upon the
closing of the merger. The write-off of assets, including $4.7 million
deferred royalties ($0.6 million under other current assets and $4.1
million under other assets) and $1.1 million capitalized software, was due
to the fact that no revenues associated with these 2 assets are expected
after the merger based on New Styleclick's business plan.
(2) Represents repayment of amounts borrowed from USANi LLC under the bridge
loan.
(3) Reflects elimination of the Old Styleclick historical equity.
(4) Reflects elimination of costs directly related to the merger incurred by
the acquiree, Old Styleclick.
(5) Reflects additional amortization expense resulting from the increase in
goodwill due to the transaction. The unallocated excess of acquisition
costs over net assets acquired has been preliminarily allocated to
goodwill, which is being amortized over three years. New Styleclick does
not expect the final allocation to differ materially from the preliminary
allocation. As of this time, New Styleclick has not identified any reliably
measured intangibles, although the final allocation may include allocation
to intangibles other than goodwill. In connection with finalizing the
purchase price allocation, New Styleclick is currently evaluating the fair
value of assets to be acquired and liabilities to be assumed. Using this
information, New Styleclick will make a final allocation of the excess
purchase price, including allocation to intangibles other than goodwill.
(6) Pro forma basic and diluted earnings per share are based upon the 7.7
million shares to be issued to Old Styleclick shareholders and the 23.2
million shares to be issued to Internet Shopping Network unitholders. Pro
forma diluted earnings per share exclude 18.7 million potentially dilutive
securities as their effect is antidilutive.
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Item 7(c). Exhibits.
99.1 Press release issued by Styleclick, Inc. on July 27, 2000.
99.2 Press release issued by Styleclick, Inc. on August 1, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
Date: October 10, 2000
Styleclick, Inc.
By: /s/ Maurizio Vecchione
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Name: Maurizio Vecchione
Title: Chief Executive Officer
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EXHIBIT INDEX
99.1 Press release issued by Styleclick, Inc. on July 27, 2000.
99.2 Press release issued by Styleclick, Inc. on August 1, 2000.
