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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): September 11, 2000
NATURAL WONDERS, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 0-20035 77-0141610
(State or other jurisdiction of (Commission (IRS Employer Identification No.)
incorporation or organization) File Number)
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4209 TECHNOLOGY DRIVE, FREMONT, CALIFORNIA 94538
(Address of principal executive offices)
(Zip code)
510-252-9600
(Registrant's telephone number, including area code)
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ITEM 7. FINANCIAL STATEMENTS, UNAUDITED PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
The undersigned Registrant hereby amends Item 7 of its Current Report on Form
8-K dated September 26, 2000 and Current Report on Form 8-K/A dated November 13,
2000, to read in its entirety as follows:
(a) Financial statements of business acquired attached to this Current
Report on Form 8-K/A as exhibits:
1. World of Science, Inc. Form 10-K as of Jan 30, 1999.
2. World of Science, Inc. Form 10-K as of Jan 29, 2000.
3. World of Science, Inc. Form 10-Q as of Apr 29, 2000.
4. World of Science, Inc. Financial Statements as of Jul 29, 2000.
(b) Unaudited pro forma financial information: See page 4 hereof.
(c) Exhibits:
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<S> <C>
1.0 World of Science, Inc. Form 10-K as of Jan 30, 1999.
2.0 World of Science, Inc. Form 10-K as of Jan 29, 2000.
3.0 World of Science, Inc. Form 10-Q as of Apr 29, 2000.
4.0 World of Science, Inc. Financial Statements as of July 29, 2000.
5.0 Consent of Independent Accountants.
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2
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SIGNATURE
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 thereunto duly authorized.
Dated: November 28, 2000
NATURAL WONDERS, INC.
(Registrant)
/s/ Peter G. Hanelt
--------------------------------------
Peter G. Hanelt,
Chief Executive Officer, President and
Chief Financial Officer
(Signing on behalf of the registrant and
as Principal Accounting and Financial Officer)
3
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Unaudited pro forma Financial Statements
------------------------------
On September 11, 2000, Natural Wonders Inc. (the "Company"), acquired all the
outstanding stock of World Of Science, Inc. ("WOSI") for $1.15 per share of
outstanding common stock which approximated $7.6 million in cash in the
aggregate including acquisition costs. The Company accounted for this
acquisition using the purchase method of accounting.
The Company funded the purchase with a combination of a new, larger bank line
of credit, an additional credit facility and the sale of subordinated
debentures. The Company obtained a new 3-year $50 million senior revolving
credit facility with a commercial bank. The base interest rate is the bank's
prime rate or LIBOR plus 225 - 275 basis points. The Company also obtained a
$5 million credit facility from a private lender ("Private Loan") at the
interest rate of prime plus 10.5%, with a maturity date of December 15, 2001
and sold $1,200,000 of subordinated convertible debentures ("Debentures") to
a group of five investors (which included the Company's chief executive
officer, a director, and a large shareholder, as well as the financial
advisors of both the Company and WOSI in the form of fee deference). The
Debentures carry a 15% interest rate, payable semi-annually, in arrears, and
have a maturity date of March 15, 2001. Both the Private Loan and the
Debentures came with detachable warrants to purchase shares of common stock
of the Company.
WOSI was headquartered in Rochester, NY and was a leading specialty retailer of
a variety of traditional and distinctive science and nature products.
For purposes of this presentation, unaudited pro forma adjustments have been
made to the historical results of operations to provide information as to how
the acquisition of WOSI might have affected the results of operations of the
Company.
The unaudited pro forma statements of operations assume the acquisition had
taken place at the beginning of the corresponding periods presented. The
unaudited pro forma balance sheet assumes the acquisition had taken place at
July 29, 2000.
The Company is on a 52/53 week fiscal year which ends on the Saturday closest to
January 31. The following unaudited pro forma Statements of Operations include
the results of operations of WOSI for the same periods as reported by the
Company.
The following unaudited pro forma financial information is provided:
1. Unaudited pro forma Statement of Operations for the twelve months ended
January 29, 2000
2. Unaudited pro forma Statement of Operations for the six months ended
July 29, 2000
3. Unaudited pro forma Condensed Balance Sheet as of July 29, 2000
This unaudited pro forma information does not purport to be indicative of the
results of operations that would have been obtained if the acquisition had
occurred at the beginning of the fiscal year presented, and is not intended to
be a projection of future results. This information should be read in
conjunction with the audited financial statements of both organizations.
The final allocation of the purchase price may vary as additional information is
obtained, which is expected to be completed by February 3, 2001, and
accordingly, the ultimate allocation may differ from that used in the unaudited
pro forma financial statements.
4
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NATURAL WONDERS, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JULY 29, 2000
(IN THOUSANDS)
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<CAPTION>
Historical Pro Forma
NATW WOSI Adjustments Combined
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash Equivalents $ 162 $ 68 $ $ 230
Merchandise inventories 31,125 13,025 (3,238) 1 40,912
Prepaid income taxes 5,079 3,118 8,197
Prepaid expenses and other current assets 3,445 1,541 (195) 1 4,791
--------- --------- ------------ ----------
Total current assets 39,811 17,752 (3,433) 54,130
Property and equipment 19,556 9,394 (1,800) 1 27,150
Other Assets 7,760 1,262 (500) 1 8,522
========= ========= ============ ==========
Total Assets $ 67,127 $ 28,408 $ (5,733) $ 89,802
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable 13,724 4,028 17,752
Accrued compensation and related costs 2,196 100 2,296
Accrued liabilities 2,273 622 289 2 3,184
Short-term borrowing 8,970 7,532 9,138 3 25,640
--------- --------- ------------ ----------
Total current liabilities 27,163 12,282 9,427 48,872
Long Term Liabilities 2,739 1,033 (67) 4 3,705
Stockholders' equity 37,225 15,093 (15,093) 37,225
--------- --------- ------------ ----------
Total Liabilities and Stockholders' Equity $ 67,127 $ 28,408 $ (5,733) $ 89,802
========= ========= ============ ==========
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Notes to Unaudited Pro Forma Condensed Balance Sheet:
1. Adjustments to record acquired inventories, prepaid and other current
assets, property and equipment and other assets at estimated fair market
value
2. To record additional reserve for various legal and other contingencies
3. To record the disbursement on the line of credit borrowings to finance the
acquisition of WOSI ($7,642 actual), additional $1,496 due to additional
debt which would have been incurred had the acquisition of WOSI occurred
July 29, 2000
4. Adjustment to reflect the buy out of capital lease
5
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NATURAL WONDERS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JANUARY 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
Historical Pro Forma
NATW WOSI Adjustments Combined
<S> <C> <C> <C> <C> <C>
Sales $ 147,089 $ 61,135 $ $ 208,224
Cost of Sales 108,483 44,968 153,451
----------- ----------- ----------- -----------
Gross Margin 38,606 16,167 54,773
Selling & G&A Expenses 52,001 19,781 (492) 1 71,290
----------- ----------- ----------- -----------
Operating Income (Loss) (13,395) (3,614) 492 (16,517)
Interest Expense 556 556 2,433 2 3,545
Other Expense 59 59
Interest and Other Income (163) (163)
----------- ----------- ----------- -----------
Earnings (Loss) before Income Tax (13,847) (4,170) (1,941) (19,958)
Income Tax Provision (Benefit) (5,359) (1,668) (752) 3 (7,779)
----------- ----------- ----------- -----------
Net Earnings (Loss) $ (8,488) $ (2,502) $ (1,189) $ (12,179)
=========== =========== =========== ===========
Net earnings (loss) per common share:
Basic $ (1.07) $ (1.54)
Diluted $ (1.07) $ (1.54)
Weighted average common shares outstanding:
Basic 7,905 7,905
Diluted 7,905 7,905
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Notes to Unaudited Pro Forma Condensed Statement of Operations:
1. Adjustments to reflect the reduction in depreciation expense as a result
of writeoff of WOSI stores and corporate assets in connection with the
acquisition
2. To increase interest expense on debt incurred to finance the acquisition:
Subordinated debenture ($1,200) at an assumed rate of 15% - $180
Private loan ($5,000) at an assumed rate of 20% - $1,000
Incremental revolving credit facility ($1,400) at an assumed rate
of 10% - $140
Amortization of one-time financing costs ($2,168) @ $92.8/month
3. Adjustments to the historical provision for income taxes to give effect to
the pro forma adjustments discussed above
6
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NATURAL WONDERS, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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<CAPTION>
Historical Pro Forma
NATW WOSI Adjustments Combined
<S> <C> <C> <C> <C> <C>
Sales $ 48,705 $15,328 $ $ 64,033
Cost of Sales 40,061 14,982 55,043
---------- --------- --------- ----------
Gross Margin 8,644 346 8,990
Selling & G&A Expenses 20,322 7,004 (246) 1 27,080
---------- --------- --------- ----------
Operating Income (Loss) (11,678) (6,658) 246 (18,090)
Interest Expense 363 317 1,217 2 1,897
---------- --------- --------- ----------
Earnings (Loss) before Income Tax (12,041) (6,975) (971) (19,987)
Income Tax Provision (Benefit) (4,660) (2,790) (376) 3 (7,826)
---------- --------- --------- ----------
Net Earnings (Loss) $ (7,381) $(4,185) $ (595) $(12,161)
=========== ========= ========= ==========
Net earnings (loss) per common share:
Basic $ (0.94) $ (1.55)
Diluted $ (0.94) $ (1.55)
Weighted average common shares outstanding:
Basic 7,854 7,854
Diluted 7,854 7,854
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Notes to Unaudited Pro Forma Condensed Statement of Operations:
1. Adjustments to reflect the reduction in depreciation expense as a result of
writeoff of WOSI stores and corporate assets in connection with the
acquisition
2. To increase interest expense on debt incurred to finance the acquisition:
Subordinated debenture ($1,200) at an assumed rate of 15% - $90
Private loan ($5,000) at an assumed rate of 20% - $500 Incremental
revolving credit facility ($1,400) at an assumed rate of 10% - $70
Amortization of one-time financing costs ($2,168) @ $92.8/month
3. Adjustments to the historical provision for income taxes to give effect to
the pro forma adjustments discussed above
7
