Escalade, Incorporated reported sales in the Sporting Goods segment, which makes archery, table tennis, basketball hoops and other leisure products, were up 27 percent for the third quarter and up 14.7 percent year to date, compared to same periods prior year.
Overall revenues, including the company’s Information Security and Print Finishing segment, were up 19 percent, while year-to-date revenues increased more than 9 percent over the same period last year.
In the third quarter of 2012, the company recorded a goodwill impairment loss in the Information Security and Print Finishing segment. Due to increased competition and continuing weakness in the European and Asian markets, operating profits and cash flows were lower than expected for the first nine months of 2012.
The company has offered to sell its 50 percent interest in an equity method investment at a value less than carrying value which resulted in an impairment of $0.4 million ($0.2 million net of tax). This other than temporary impairment is reflected in the third quarter of 2012.
Basic earnings (loss) per share for the three and nine months of fiscal 2012 are $(0.86) and $(0.67) compared with $(0.03) and $.18 for the same periods in 2011. In 2011, the company accelerated depreciation expense on an Oracle ERP system which resulted in an additional $2.2 million ($1.4 million, net of tax) of expense for the quarter. Without the impact of goodwill and intangible asset impairment and equity method investment impairment losses in 2012 and accelerated depreciation expense in 2011, basic earnings per share would have been $0.16 and $0.36 for the three and nine months of fiscal 2012 compared with $0.08 and $0.29 for the three and nine months of fiscal 2011.
“We are pleased with the overall third quarter revenue growth of 19 percent, led by strong retail sell-through and expanded product placement in the Sporting Goods segment,” stated Robert J. Keller, President and Chief Executive Officer of Escalade, Inc. “The goodwill impairment in Information Security and Print Finishing was necessary to reflect the challenges that this segment of our business has experienced.”
ESCALADE, INCORPORATED AND SUBSIDIARIES | ||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | ||||||
(Unaudited, In Thousands Except Per Share Amounts) | ||||||
Three Months Ended | Nine Months Ended | Twelve Months Ended | ||||
6 October 2012 | 1 October 2011 | 6 October 2012 | 1 October 2011 | 6 October 2012 | 1 October 2011 | |
NET SALES | $ 34,206 | $ 28,734 | $106,800 | $ 97,582 | $ 143,468 | $ 128,767 |
OPERATING EXPENSES | ||||||
Cost of goods sold | 23,249 | 20,428 | 72,943 | 66,344 | 99,141 | 90,005 |
Selling and administrative | 7,466 | 8,725 | 23,729 | 26,064 | 33,607 | 32,370 |
Goodwill and intangible asset impairment charges | 13,362 | — | 13,362 | — | 13,362 | — |
Amortization | 516 | 436 | 1,722 | 1,245 | 2,073 | 1,492 |
OPERATING INCOME (LOSS) | (10,387) | (855) | (4,956) | 3,929 | (4,715) | 4,900 |
OTHER INCOME (EXPENSE) | ||||||
Interest expense | (144) | (117) | (490) | (529) | (654) | (687) |
Other income | 919 | 1,065 | 1,331 | 1,700 | 3,029 | |
