Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. M & F WORLDWIDE CORP (945235) 10-Q published on Nov 03, 2011 at 7:11 am
Reporting Period: Sep 29, 2011
In September 2011, the Financial Accounting Standards Board ("FASB") amended existing guidance related to the requirement for an annual goodwill impairment test. This amendment provides entities an option to perform a qualitative assessment to determine whether further impairment testing is necessary. The amended provisions are effective for reporting periods beginning on or after December 15, 2011. However, early adoption is permitted if an entity's financial statements for the most recent annual or interim period have not yet been issued. The Company will adopt the new guidance effective January 1, 2012. This amendment affects testing steps only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.
In June 2011, the FASB amended existing guidance related to the presentation of comprehensive income. The amendment requires companies to present the components of net income and other comprehensive income either as one continuous statement or as two separate but consecutive statements. It eliminates the option to report other comprehensive income and its components as part of the statement of changes in shareholders' equity. The amended provisions are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, and full retrospective application is required. The Company will adopt the new guidance effective January 1, 2012. This amendment affects presentation and disclosure only, and therefore adoption will not affect the Company's consolidated financial position, results of operations or cash flows.
In connection with the June 13, 2011 proposal by Holdings to acquire all outstanding shares of common stock of the Company not owned by Holdings for $24.00 per share (the "Proposal"), six shareholder class action lawsuits were filed in the Delaware Court of Chancery and the Supreme Court for the State of New York. The New York actions have been dismissed without prejudice. The Delaware actions have been consolidated under the caption In re M&F Worldwide Corp. Shareholder Litigation (as consolidated, the "Delaware Action"), and a class has been certified consisting of all Company shareholders during the period June 13, 2011 through consummation of the transaction other than those affiliated with the defendants. The consolidated complaint filed in the Delaware Action names as defendants the Company, each of the current members of the Company's board of directors and Holdings, and alleges that the individual defendants breached their fiduciary duties under Delaware law in connection with the Proposal and the transaction, and that Holdings aided and abetted those alleged breaches.
On September 12, 2011, the Company and Holdings entered into a definitive merger agreement under which a subsidiary of Holdings will be merged with and into the Company and all outstanding shares of the Company's common stock not owned by Holdings will be converted into the right to receive $25.00 in cash per share. The consummation of the transaction is subject to a number of conditions, including the affirmative vote of holders of a majority of the (i) outstanding shares of Company common stock and (ii) outstanding shares of Company common stock (excluding shares owned by Holdings or its affiliates), and there can be no assurance that such stockholder approval or any other condition to the closing of the transaction will be satisfied, or that other events will not occur that will result in a delay of the merger or termination of the merger agreement.
Uncertainty regarding the completion of the merger could negatively affect the Company's client and customer relationships, operating results and business generally. Furthermore, if the transaction is not consummated, the Company may be subject to a number of risks, including that the current trading price of the Company's common stock may reflect a market assumption that the merger will occur, and, therefore, a failure to complete the merger could result in a decline in the trading price of our common stock. Additionally, the Company may be required to pay a termination fee of $8,250,000 or reimburse Holdings' costs and expenses up to $4,000,000 if the merger agreement is terminated under certain circumstances. Moreover, certain costs relating to the merger, such as legal, accounting and financial advisory fees, are payable by the Company whether or not the merger is completed.