Escalade, Inc. reported net income for the third quarter of 2009 increased to $618,000, or 5 cents a share, against a loss of $1.37 million, or 11 cents, a year ago.
Net income for the period includes a one-time benefit from the sale of equity investments which resulted in a gain of $432,000. The gain is a partial recovery of an asset impairment recorded in the prior year. Without this one-time benefit, net income would be $186,000, or 1 cent a share.
Net revenue declined 35.4% and 24.9%, respectively, compared to same periods last year; however, the company has improved gross margins year to date to 30.7%, compared with 26.1% for the prior year. In addition, the company has reduced selling, administrative and general expenses by 22.5%, mainly due to facility consolidation in the Sporting Goods segment and company-wide cost cutting measures implemented over the past year, which resulted in improved company profitability.
The company's operating income for the third quarter and nine months ended October 3, 2009 was $612,000 and $1.36 million, respectively, compared to an operating loss of $82,000 and $176 million for the same periods last year.
Sporting Goods net revenues this quarter were down significantly compared with same quarter last year, which included sales of Gameroom products to Sears Holdings not repeated in 2009.
Escalade makes pool tables, table tennis tables, game tables,
basketball systems and wood playsets, Its sports brands include:
Goalrilla, Goaliath, Silverback, Stiga, Mizerak, Murrey Billiards,
Mosconi Billiards, The Black Widow, ChildLife Harvard Game, Murrey
Game, Accudart, Bear Archery, Fred Bear, Jennings Archery, The Step and
US Weight.
Office Products experienced a further softening in net revenue for the quarter from 26.3% decline in the prior quarter to 28.8% decline in the current quarter. Compared to last year, Office Products net revenue declined 28.8% and 25.0% for the three and nine months ended October 3, 2009, respectively. Net revenue declined 25.9% in the United States and 24.2% in Europe for the first nine months of 2009. Excluding the effect of changes in foreign currency rates, year to date net revenue in Europe declined 21.5% compared with prior year.
Based on the year to date results and product placement information, the company expects full year net revenue will be approximately 25% below prior year. The Company is continuing to identify and implement cost saving initiatives and product design enhancements to expand market share and improve Company profits.
“Our entire organization has worked hard to implement many cost savings initiatives, resulting in improved gross margins and lower operating expense,” said Robert J. Keller, President and Chief Executive Office of Escalade, Inc. “These savings, combined with our focus on inventory reduction, has generated improved cash flow throughout 2009. We are committed to making continued progress in lowering our cost of operation going forward. Most importantly, we have brought significant innovation to our latest product introductions to offer increased levels of value and performance. Given the current economic environment, we believe our brands and product offerings are positioned to capture the increased consumer need for greater value and performance.”
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands Except Per Share Amounts)
Three Nine Twelve
Months Ended Months Ended Months Ended
---------------- ----------------- ------------------
03 04 03 04 03 04
October October October October October October
2009 2008 2009 2008 2009 2008
------- ------- ------- -------- -------- --------
NET SALES $26,358 $40,797 $86,957 $115,759 $119,884 $156,651
OPERATING EXPENSES
Cost of goods
sold 18,558 31,576 60,233 85,594 86,778 115,986
Selling and
administrative 6,571 8,520 23,342 30,140 33,086 38,555
Long-lived asset
impairment -- -- -- -- 2,623 --
Amortization 617 619 2,024 1,788 2,399 2,186
------- ------- ------- -------- -------- --------
OPERATING INCOME
(LOSS) 612 82 1,358 (1,763) (5,002) (76)
OTHER INCOME
(EXPENSE)
Interest expense (630) (552) (1,530) (1,699) (1,856) (2,354)
Other income
(expense) 966 (61) 1,197 144 1,019 2,349
------- ------- ------- -------- -------- --------
INCOME (LOSS)
BEFORE INCOME
TAXES 948 (531) 1,025 (3,318) (5,839) (81)
PROVISION FOR
INCOME TAXES 330 834 480 (401) (1,805) 244
------- ------- ------- -------- -------- --------
NET INCOME (LOSS) $ 618 $(1,365) $ 545 $ (2,917) $ (4,034) $ (325)
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PER SHARE DATA
Basic earnings
(loss) per
share $ 0.05 $ (0.11) $ 0.04 $ (0.23) $ (0.32) $ (0.03)
======= ======= ======= ======== ======== ========
Diluted earnings
(loss) per
share $ 0.05 $ (0.11) $ 0.04 $ (0.23) $ (0.32) $ (0.03)
======= ======= ======= ======== ======== ========
Average shares
outstanding 12,624 12,616 12,620 12,644 12,620 12,650
