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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Physicians Formula Holdings, Inc. (MM) | NASDAQ:FACE | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.90 | 0 | 01:00:00 |
|
|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
20-0340099
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1055 West 8th Street
|
|
91702
|
Azusa, California
|
|
(Zip Code)
|
(Address of principal executive offices)
|
|
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
Smaller reporting company
x
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
NET SALES
|
$
|
19,112
|
|
|
$
|
15,870
|
|
|
$
|
71,448
|
|
|
$
|
57,876
|
|
COST OF SALES
|
9,504
|
|
|
7,988
|
|
|
34,623
|
|
|
29,631
|
|
||||
GROSS PROFIT
|
9,608
|
|
|
7,882
|
|
|
36,825
|
|
|
28,245
|
|
||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
10,273
|
|
|
8,297
|
|
|
30,522
|
|
|
27,150
|
|
||||
(LOSS) INCOME FROM OPERATIONS
|
(665
|
)
|
|
(415
|
)
|
|
6,303
|
|
|
1,095
|
|
||||
INTEREST EXPENSE, NET
|
117
|
|
|
606
|
|
|
395
|
|
|
1,832
|
|
||||
OTHER (INCOME) EXPENSE
|
(11
|
)
|
|
43
|
|
|
(33
|
)
|
|
30
|
|
||||
(LOSS) INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
|
(771
|
)
|
|
(1,064
|
)
|
|
5,941
|
|
|
(767
|
)
|
||||
PROVISION (BENEFIT) FOR INCOME TAXES
|
571
|
|
|
(527
|
)
|
|
2,903
|
|
|
(353
|
)
|
||||
NET (LOSS) INCOME
|
$
|
(1,342
|
)
|
|
$
|
(537
|
)
|
|
$
|
3,038
|
|
|
$
|
(414
|
)
|
|
|
|
|
|
|
|
|
||||||||
NET (LOSS) INCOME PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
||||||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
||||||||
Basic
|
13,713,358
|
|
|
13,605,675
|
|
|
13,698,442
|
|
|
13,595,473
|
|
||||
Diluted
|
13,713,358
|
|
|
13,605,675
|
|
|
14,975,831
|
|
|
13,595,473
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2012
|
|
2011
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
3,038
|
|
|
$
|
(414
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
3,486
|
|
|
3,712
|
|
||
Loss on disposal of other assets
|
167
|
|
|
90
|
|
||
Exchange rate (gain) loss
|
(49
|
)
|
|
120
|
|
||
Deferred income taxes
|
505
|
|
|
—
|
|
||
Provision for bad debts
|
(48
|
)
|
|
(86
|
)
|
||
Amortization of debt discount and debt issuance costs
|
125
|
|
|
599
|
|
||
Stock-based compensation expense
|
304
|
|
|
550
|
|
||
Payment in kind interest
|
—
|
|
|
254
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
7,342
|
|
|
8,595
|
|
||
Inventories
|
229
|
|
|
(977
|
)
|
||
Prepaid expenses and other current assets
|
224
|
|
|
1,095
|
|
||
Accounts payable
|
456
|
|
|
(2,121
|
)
|
||
Accrued expenses, trade allowances and sales returns reserve
|
(3,940
|
)
|
|
(5,153
|
)
|
||
Income taxes receivable/payable
|
697
|
|
|
(1,714
|
)
|
||
Other long-term liabilities
|
2
|
|
|
176
|
|
||
Net cash provided by operating activities
|
12,538
|
|
|
4,726
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Purchase of property and equipment, net of ($228) and $168 non-cash capital expenditures for the nine months ended September 30, 2012 and 2011, respectively
|
(260
|
)
|
|
(860
|
)
|
||
Other assets, net of $648 and $513 non-cash retail permanent fixture expenditures for the nine months ended September 30, 2012 and 2011, respectively
|
(1,666
|
)
|
|
(2,407
|
)
|
||
Net cash used in investing activities
|
(1,926
|
)
|
|
(3,267
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Net payments on line of credit
|
(4,690
|
)
|
|
(1,200
|
)
|
||
Repayment of long-term debt
|
(750
|
)
|
|
—
|
|
||
Debt issuance costs
|
(13
|
)
|
|
(16
|
)
|
||
Exercise of stock options
|
203
|
|
|
29
|
|
||
Net cash used in financing activities
|
(5,250
|
)
|
|
(1,187
|
)
|
||
|
|
|
|
||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
5,362
|
|
|
272
|
|
||
CASH AND CASH EQUIVALENTS—Beginning of period
|
3
|
|
|
110
|
|
||
CASH AND CASH EQUIVALENTS—End of period
|
$
|
5,365
|
|
|
$
|
382
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|||
Cash paid for interest
|
$
|
287
|
|
|
$
|
978
|
|
Cash paid for income taxes, net
|
$
|
1,642
|
|
|
$
|
1,185
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Customer A
|
33
|
%
|
|
40
|
%
|
|
32
|
%
|
|
35
|
%
|
Customer B
|
22
|
%
|
|
13
|
%
|
|
22
|
%
|
|
19
|
%
|
Customer C
|
9
|
%
|
|
11
|
%
|
|
9
|
%
|
|
11
|
%
|
•
|
Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related asset or liabilities.
|
•
|
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of assets or liabilities.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(1,342
|
)
|
|
$
|
(537
|
)
|
|
$
|
3,038
|
|
|
$
|
(414
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|||||||
Weighted-average number of common shares—basic
|
13,713
|
|
|
13,606
|
|
|
13,698
|
|
|
13,595
|
|
||||
Effect of dilutive stock options
|
—
|
|
|
—
|
|
|
674
|
|
|
—
|
|
||||
Effect of dilutive warrants
|
—
|
|
|
—
|
|
|
604
|
|
|
—
|
|
||||
Weighted-average number of common shares—diluted
|
13,713
|
|
|
13,606
|
|
|
14,976
|
|
|
13,595
|
|
||||
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.22
|
|
|
$
|
(0.03
|
)
|
Diluted
|
$
|
(0.10
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.03
|
)
|
|
September 30,
2012 |
|
December 31,
2011 |
||||
Raw materials and components
|
$
|
13,019
|
|
|
$
|
14,451
|
|
Finished goods
|
12,004
|
|
|
10,772
|
|
||
Total
|
$
|
25,023
|
|
|
$
|
25,223
|
|
|
September 30,
2012 |
|
December 31,
2011 |
||||
Retail permanent fixtures, net of accumulated amortization of $5,471 and $4,226 as of September 30, 2012 and December 31, 2011, respectively
|
$
|
3,678
|
|
|
$
|
4,063
|
|
Capitalized debt issuance costs, net of accumulated amortization of $1,954 and $1,829 as of September 30, 2012 and December 31, 2011, respectively
|
513
|
|
|
635
|
|
||
Restricted investments
|
307
|
|
|
272
|
|
||
Deposits
|
381
|
|
|
378
|
|
||
Other
|
9
|
|
|
9
|
|
||
Total
|
$
|
4,888
|
|
|
$
|
5,357
|
|
|
September 30, 2012
|
|
December 31, 2011
|
||||||||||||||||||||
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Gross
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
||||||||||||
Patents
|
$
|
8,699
|
|
|
$
|
(5,172
|
)
|
|
$
|
3,527
|
|
|
$
|
8,699
|
|
|
$
|
(4,736
|
)
|
|
$
|
3,963
|
|
Distributor relationships
|
23,701
|
|
|
(10,566
|
)
|
|
13,135
|
|
|
23,701
|
|
|
(9,678
|
)
|
|
14,023
|
|
||||||
Total
|
$
|
32,400
|
|
|
$
|
(15,738
|
)
|
|
$
|
16,662
|
|
|
$
|
32,400
|
|
|
$
|
(14,414
|
)
|
|
$
|
17,986
|
|
|
Time-Vesting Options
|
|
Performance-Vesting Options
|
||||||||||||||||||
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
|
||||||||||
Options outstanding—January 1, 2012
|
2,220,708
|
|
|
$
|
5.18
|
|
|
|
|
136,681
|
|
|
$
|
0.10
|
|
|
|
||||
Granted
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Exercised
|
(93,547
|
)
|
|
2.17
|
|
|
$
|
91,000
|
|
|
—
|
|
|
—
|
|
|
|
||||
Cancelled
|
(135,225
|
)
|
|
2.50
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Forfeited
|
(55,228
|
)
|
|
10.46
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
||||
Options outstanding—September 30, 2012
|
1,936,708
|
|
|
$
|
5.36
|
|
|
$
|
(956,000
|
)
|
|
136,681
|
|
|
$
|
0.10
|
|
|
$
|
652,000
|
|
Vested and expected to vest—September 30, 2012
|
1,936,708
|
|
|
$
|
5.36
|
|
|
$
|
(956,000
|
)
|
|
136,681
|
|
|
$
|
0.10
|
|
|
$
|
652,000
|
|
|
Time-Vesting Options
|
|
Performance-Vesting Options
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
||||||||||||||||||||
|
Vested and Exercisable
|
|
Aggregate Exercise Price
|
|
Exercise Price
|
|
Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|
Vested and Exercisable
|
|
Aggregate Exercise Price
|
|
Exercise Price
|
|
Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
||||||||||||||||
January 1, 2012
|
1,438,725
|
|
|
$
|
9,119,000
|
|
|
|
|
|
|
|
|
136,681
|
|
|
$
|
14,000
|
|
|
|
|
|
|
|
||||||||||
Vested
|
197,591
|
|
|
601,000
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||||||||
Exercised
|
(93,547
|
)
|
|
(203,000
|
)
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||||||||
Forfeited
|
(55,228
|
)
|
|
(578,000
|
)
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
||||||||||||
September 30, 2012
|
1,487,541
|
|
|
$
|
8,939,000
|
|
|
$
|
6.01
|
|
|
4.9
|
|
|
$
|
(1,695,000
|
)
|
|
136,681
|
|
|
$
|
14,000
|
|
|
$
|
0.10
|
|
|
1.1
|
|
|
$
|
652,000
|
|
|
Number
of Options
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
January 1, 2012
|
781,983
|
|
|
$
|
1.81
|
|
Vested
|
(197,591
|
)
|
|
1.74
|
|
|
Cancelled
|
(135,225
|
)
|
|
1.30
|
|
|
September 30, 2012
|
449,167
|
|
|
1.99
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
United States
|
$
|
16,839
|
|
|
$
|
13,862
|
|
|
$
|
62,889
|
|
|
$
|
50,609
|
|
Canada
|
1,909
|
|
|
1,821
|
|
|
7,404
|
|
|
6,797
|
|
||||
Other foreign countries
|
364
|
|
|
187
|
|
|
1,155
|
|
|
470
|
|
||||
|
$
|
19,112
|
|
|
$
|
15,870
|
|
|
$
|
71,448
|
|
|
$
|
57,876
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
49.7
|
|
|
50.3
|
|
|
48.5
|
|
|
51.2
|
|
Gross profit
|
50.3
|
|
|
49.7
|
|
|
51.5
|
|
|
48.8
|
|
Selling, general and administrative expenses
|
53.8
|
|
|
52.3
|
|
|
42.7
|
|
|
46.9
|
|
(Loss) income from operations
|
(3.5
|
)
|
|
(2.6
|
)
|
|
8.8
|
|
|
1.9
|
|
Interest expense, net
|
0.6
|
|
|
3.8
|
|
|
0.6
|
|
|
3.2
|
|
Other (income) expense
|
(0.1
|
)
|
|
0.3
|
|
|
—
|
|
|
0.1
|
|
(Loss) income before provision (benefit) for income taxes
|
(4.0
|
)
|
|
(6.7
|
)
|
|
8.2
|
|
|
(1.4
|
)
|
Provision (benefit) for income taxes
|
3.0
|
|
|
(3.3
|
)
|
|
4.1
|
|
|
(0.6
|
)
|
Net (loss) income
|
(7.0
|
)%
|
|
(3.4
|
)%
|
|
4.1
|
%
|
|
(0.8
|
)%
|
•
|
the share price of our common stock may decline to the extent that the current market price of our common stock reflects an assumption that a transaction will be completed;
|
•
|
as set forth in the Merger Agreement, we may be required to pay Markwins a termination fee of $1.5 million if the Merger Agreement is terminated under certain circumstances. The payment of such fee may have a material adverse impact on our financial condition;
|
•
|
a failure to complete the Merger may result in negative publicity and a negative impression of us in the investment community or with customers, potential customers, partners and vendors;
|
•
|
certain costs related to the Merger, including the fees and/or expense of our legal and accounting advisors, must be paid even if the Merger is not completed;
|
•
|
shareholder lawsuits have been and may be filed against us in connection with the Merger.
|
|
Physicians Formula Holdings, Inc.
|
|
|
|
/s/ Ingrid Jackel
|
Date: November 14, 2012
|
By: Ingrid Jackel
|
|
Chief Executive Officer
(principal executive officer)
|
|
|
|
/s/ Leslie H. Keegan
|
Date: November 14, 2012
|
By: Leslie H. Keegan
|
|
Senior Vice President of Finance (principal financial and accounting officer)
|
Exhibit
Number
|
|
|
|
Description
|
|
10.1
|
|
Agreement and Plan of Merger dated August 14, 2012, by and among Physicians Formula Holdings, Inc., a Delaware corporation, Physicians Formula Merger Sub, Inc., a Delaware corporation, and Physicians Formula Superior Holdings, LLC, a Delaware limited liability company (incorporated by reference to the registrant's Current Report on Form 8-K filed on August 15, 2012).
|
10.2
|
|
Agreement and Plan of Merger dated September 26, 2012, by and among Physicians Formula Holdings, Inc., a Delaware corporation, Markwins International Corporation, a California corporation, and Markwins Merger Sub, Inc., a Delaware corporation (incorporated by reference to the registrant's Current Report on Form 8-K filed on September 27, 2012).
|
31.1
|
|
Certification by Ingrid Jackel, Chief Executive Officer.
|
31.2
|
|
Certification by Leslie H. Keegan, Senior Vice President of Finance.
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
|
The following materials from Physicians Formula Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 are furnished herewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements.
|
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