Broder Bros., Co. reported first quarter 2012 net sales were $183.3 million compared to $173.9 million for the first quarter 2011. Income from operations was $2.3 million for the first quarter 2012 compared to $6.5 million for the first quarter 2011. Net income for the first quarter 2012 was $0.3 million, or $0.03 per diluted share, compared to $4.3 million, or $0.42 per diluted share, for the first quarter 2011.

For the first quarter 2012, the Company reported earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4.2 million compared to $9.2 million for the first quarter 2011. The results for the first quarter 2011 included the impact of certain restructuring charges discussed below. Excluding these restructuring charges, EBITDA was $9.3 million for the first quarter 2011. A reconciliation of EBITDA to net income is set forth at the end of this earnings release.

First quarter 2012 gross profit was $29.5 million compared to $34.5 million for the first quarter 2011. First quarter 2012 gross margin was 16.1% compared to 19.8% for the first quarter 2011. The decline in gross profit was due to a reduction in gross profit per unit. The Company's unit volume increased 7% relative to the first quarter 2011 on a 2% decrease in average selling prices.

According to data provided by CREST, the U.S. imprintable activewear market grew 5% in units sold during the first quarter 2012. The Company's units sold grew 6% during the period when using the comparable period used by CREST, which was January 1, 2012 through March 31, 2012. The Company's first quarter 2012 began January 1, 2012 and ended March 31, 2012.

Highlighted Charges

Restructuring charges of less than $0.1 million and $0.1 million were recorded during the first quarter 2012 and 2011, respectively. During both periods the restructuring charges consisted of interest accretion on restructuring charges which have been accrued for previously but not yet paid.

Liquidity Position

The Company relies primarily upon cash flow from operations and borrowings under its revolving credit facility to finance operations, capital expenditures and debt service requirements. Borrowings and availability under the revolving credit facility fluctuate due to seasonal demands. Historically, borrowing levels have reached peaks during the middle of a given fiscal year and low points during the last quarter of the fiscal year. Borrowings under the revolving credit facility were $135.8 million at March 2012 compared to $126.1 million at March 2011. Borrowing base availability at March 2012 and March 2011 was $37.0 million and $29.1 million, respectively.

The face value of the 2013 Notes outstanding was $117.9 million at March 2012 and December 2011. Guidance provided by the FASB for troubled debt restructuring, however, requires the 2013 Notes to be recorded on the balance sheets as the total future cash payments for the 2013 Notes, including both principal and interest payments. The 2013 Notes were recorded on the balance sheets at $146.1 million and $160.3 million for March 2012 and March 2011, respectively. As a result of capitalizing the cash interest payments for the 2013 Notes, the Company will not recognize any interest expense on the 2013 Notes. The Company paid $7.1 million in April 2012 and will pay $7.1 million in semi-annual cash interest due in October 2012. These payments are treated as reductions in the carrying value of the 2013 Notes.