Easton-Bell Sports, Inc. reported net sales of $203.4 million for the first quarter ended April 2, up 4.8 percent from $194.1 million in the first quarter of fiscal 2010.


Operating income was $11.0 million for the first quarter of fiscal 2011, an increase of $900,000, or 8.6 percent when compared to the first quarter of fiscal 2010 normalized for $1.6 million of increased compensation expense in 2011.


We are pleased to report our 5th consecutive quarter of sales growth driven by a strong start to the bike season within Action Sports, including the launch of our new Giro cycling shoes, said Paul Harrington, president and CEO. The shifting of Team Sports new product launches to better fit retailers and consumers buying patterns will generate sales and margin improvement in the back half of 2011.

Action Sports net sales increased $12.4 million, or 16.6 percent for the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010, or a 15.8 percent increase on a constant currency basis. The increase was due to higher sales of cycling helmets and accessories, higher sales of Bell powersports helmets to specialty dealers, growth in Easton branded cycling wheels and components and the introduction of Giro branded cycling shoes.


Team Sports net sales decreased $3.1 million, or 2.6 percent, in the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010, or a 3.1 percent decrease on a constant currency basis. The decrease was due to baseball product launches shifting to the back half of this year versus the first half last year, reduced demand for hockey sticks at retail, partially offset by growth in baseball, softball and hockey protective equipment and hockey skates.


The companys gross margin for the first quarter of fiscal 2011 was 31.4 percent, as compared to 33.4 percent for the first quarter of fiscal 2010. The margin decline related primarily to escalating fuel costs, shifting sales of higher-margin baseball bats versus a year ago and sales growth in youth football helmets, partially offset by lower inventory write-offs and close-out sales in Action Sports and favorable foreign currency exchange rates.


The companys operating expenses decreased $900,000, or 1.7 percent, and 160 bps as a percentage of net sales during the first quarter of fiscal 2011, as compared to the first quarter of fiscal 2010 when normalized for $1.6 million of increased compensation expense and while funding variable costs to support the sales growth in 2011.
The companys adjusted EBITDA was $19.7 million for the first quarter of fiscal 2011, an increase of $400,000, or 2.3 percent, as compared to the first quarter of fiscal 2010 when normalized.

Balance Sheet Items
Net debt totaled $383.5 million (total debt of $408.8 million less cash of $25.3 million) as of April 2, 2011, an increase of $22.4 million compared to net debt of $361.1 million at the end of fiscal 2010. The increase in net debt is due to a $23.6 million increase in debt to finance seasonal working capital requirements, offset by an increase in cash of $1.2 million. Working capital as of April 2, 2011 was $244.8 million as compared to $242.6 million at the end of fiscal 2010.

The company had substantial borrowing capability as of April 2, 2011, with $167.3 million of additional borrowing ability under the revolving credit facility and liquidity of $192.6 million when including the $25.3 million of cash.










EASTON-BELL SPORTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(Unaudited and amounts in thousands)





































































































































































































































































































































EASTON-BELL SPORTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(Unaudited and amounts in thousands)

 
 
          Fiscal Quarter Ended

April 2,
2011

         

April 3,
2010

Net sales $ 203,398 $ 194,104
Cost of sales   139,441     129,342
 
Gross profit 63,957 64,762
Selling, general and administrative expenses 50,367 49,711
Amortization of intangibles   2,553     3,335
 
Income from operations 11,037 11,716
Interest expense, net   10,993     11,512
 
Income before income taxes 44 204
Income tax expense   106     82
 
Net (loss) income (62 ) 122
Other comprehensive income:
Foreign currency translation adjustment   954     1,278
 
Comprehensive income $ 892   $ 1,400









EASTON-BELL SPORTS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(Unaudited and amounts in thousands)