Easton-Bell Sports Reports Net Income Increased $20.3 million in
2007, as Compared to 2006
VAN NUYS, Calif.--(Business Wire)--
Easton-Bell Sports, Inc. (the "Company"), a leading designer,
developer and marketer of innovative sports equipment, protective
products and related accessories under authentic brands, will discuss
its financial results for the fiscal year ended December 29, 2007 on a
conference call to be held on Wednesday, March 26, 2008, beginning at
4:00 p.m. Eastern Daylight Time.
Interested parties may listen to the conference call via webcast
at
http://phx.corporate-ir.net/playerlink.zhtml?c=190384&s=wm&e=1803063.
In addition, interested parties may listen directly to the call by
dialing 1-800-706-7749 (within the United States and Canada) or
617-614-3474 (outside the United States and Canada). The pass code for
the call is 93077021. A replay of the call will be available on March
27 through April 9, 2008 by dialing 1-888-286-8010 (within the United
States and Canada) or 617-801-6888 (outside the United States and
Canada). The pass code for both replay phone numbers is 76376935.
Results for the Fiscal Year Ended December 29, 2007
The Company's net sales of $724.6 million for the fiscal year
ended December 29, 2007, increased $85.6 million, or 13.4%, as
compared to $639.0 million for the fiscal year ended December 30,
2006. The increase in net sales is primarily attributable to the
inclusion of Easton Sports, Inc. ("Easton") for a full fiscal year in
2007, as compared to 2006, which only included such business from the
date of acquisition on March 16, 2006. Easton represented $67.9
million of the increase in net sales in 2007. The net sales for the
Company's Team Sports segment, consisting primarily of football,
baseball, softball, ice hockey and other team sports products,
increased $68.7 million, or 19.8%, as compared to 2006. In addition to
the Easton acquisition, other factors contributing to the increase in
Team Sports net sales included increased football shoulder pad and
apparel sales and reconditioning services. The net sales for the
Company's Action Sports segment, consisting primarily of cycling, snow
sports, powersports and fitness related products, increased $16.9
million, or 5.8%, as compared to 2006. The increase resulted from the
inclusion of a full fiscal year of Easton's cycling business, the
acquisition of Cyclo/Shanghai Cyclo, growth in sales of cycling
helmets and specialty channel accessories and the introduction of Giro
branded eyewear, all of which were partially offset by a mild decrease
in sales of snow helmets.
The Company's net income for fiscal year 2007 was $14.5 million,
as compared to a $(5.9) million net loss for fiscal year 2006.
Adjusted EBITDA for fiscal year 2007 was $96.9 million. A detailed
reconciliation of net income to Adjusted EBITDA is included in the
section entitled "Reconciliation of Non-GAAP Financial Measures",
which appears at the end of this press release.
Balance Sheet Items
Net debt totaled $458.7 million (total debt of $475.6 million less
cash of $16.9 million) as of December 29, 2007, a decrease of $7.6
million over such amount at December 30, 2006. The decrease is due to
an increase in cash of $7.0 million and a decrease in long term debt
and capital lease obligations of $2.6 million, offset by an increase
in the revolver used for seasonal working capital needs of $2.0
million. Working capital as of December 29, 2007 was $262.8 million,
as compared to $225.0 million as of December 30, 2006.
About Easton-Bell Sports, Inc.
Easton-Bell Sports, Inc. is a leading designer, developer and
marketer of innovative sports equipment, protective products and
related accessories. The Company markets and licenses products under
such well-known brands as Easton, Bell, Riddell, Giro and Blackburn.
The Company's products incorporate leading technology and designs and
are used by professional athletes and enthusiasts alike. Headquartered
in Van Nuys, California, the Company has 23 facilities worldwide. More
information is available at www.eastonbellsports.com.
"Safe Harbor" Statement under Private Securities Litigation Reform
Act of 1995
This press release may include forward-looking statements that
reflect the Company's current views about future events and financial
performance. All statements other than statements of historical facts
included in this press release that address activities, events or
developments that the Company expects, believes or anticipates will or
may occur in the future are forward-looking statements, as that term
is defined in the Private Securities Litigation Reform Act of 1995.
Words such as "estimates," "expects," "anticipates," "projects,"
"plans," "intends," "believes," "forecasts" and other words and terms
of similar meaning in connection with any discussion of the timing or
nature of future operating or financial performance or other events
are forward-looking statements.
Although the Company believes that the expectations reflected in
its forward-looking statements are reasonable, the Company does not
know whether its expectations will prove correct. They can be affected
by inaccurate assumptions that the Company might make or by known or
unknown risks and uncertainties including: (i) the level of
competition in the sporting goods industry; (ii) legal and regulatory
requirements, including changes in the laws that relate to use of our
products and changes in product performance standards maintained by
athletic governing bodies; (iii) the success of new products; (iv)
whether we can successfully market our products, including use of our
products by high profile athletes; (v) the Company's dependence on and
relationships with its major customers; (vi) fluctuations in costs of
raw materials; (vii) risks associated with using foreign suppliers
including increased transportation costs, potential supply chain
disruption and foreign currency exchange rate fluctuations; (viii) the
Company's labor relations; (ix) departure of key personnel; (x)
failure to protect the Company's intellectual property or guard
against infringement of the intellectual property rights of others;
(xi) product liability claims; (xii) the timing, cost and success of
opening or closing manufacturing facilities; (xiii) the Company's
level of indebtedness; (xiv) interest rate risks; (xv) the ability to
successfully complete and integrate acquisitions and realize expected
synergies; (xvi) an increase in return rates; (xvii) negative
publicity about our products or the athletes that use them; (xviii)
the seasonal nature of our business; (xix) failure to maintain an
effective system of internal controls, and (xx) other risks outlined
under "Risk Factors" in the Company's 2007 Annual Report on Form 10-K.
These forward-looking statements are expressed in good faith and
the Company believes there is a reasonable basis for them. However,
there can be no assurance that the events, results or trends
identified in these forward-looking statements will occur or be
achieved. Investors should not place undue reliance on any of the
Company's forward-looking statements because they are subject to a
variety of risks, uncertainties and other factors that could cause
actual results to differ materially from the Company's expectations.
The forward-looking statements in this press release speak only as of
the date of this release and, except as required by law, the Company
undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is made or
to reflect the occurrence of anticipated or unanticipated events or
circumstances.
-0-
*T
EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
December December
29, 30,
2007 2006
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 16,923 $ 9,899
Accounts receivable, net 200,380 182,234
Inventories, net 135,335 134,847
Prepaid expenses 9,774 10,449
Deferred taxes 6,782 10,224
Other current assets 5,450 1,611
--------- ---------
Total current assets 374,644 349,264
Property, plant and equipment, net 40,622 34,198
Deferred financing fees, net 15,633 19,271
Intangible assets, net 317,225 330,445
Goodwill 203,441 207,327
Other assets 4,925 7,555
--------- ---------
Total assets $956,490 $948,060
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt $ 3,350 $ 3,350
Revolving credit facility 5,500 3,500
Current portion of capital lease obligations 21 36
Accounts payable 60,586 56,950
Accrued expenses 42,338 60,405
--------- ---------
Total current liabilities 111,795 124,241
Long-term debt, less current portion 466,625 469,138
Capital lease obligations, less current portion 145 174
Deferred taxes 25,058 23,681
Other noncurrent liabilities 11,880 12,664
--------- ---------
Total liabilities 615,503 629,898
--------- ---------
Stockholder's equity:
Common stock: $0.01 par value, 100 shares
authorized, 100 shares issued and outstanding at
December 29, 2007 and December 30, 2006 -- --
Additional paid-in capital 337,277 334,432
Accumulated deficit (2,040) (16,509)
Accumulated other comprehensive income 5,750 239
--------- ---------
Total stockholder's equity 340,987 318,162
--------- ---------
Total liabilities and stockholder's equity $956,490 $948,060
========= =========
*T
See notes to the consolidated financial statements in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 29, 2007.
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*T
EASTON-BELL SPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands)
Year Year Year
Ended Ended Ended
December December December
29, 30, 31,
2007 2006 2005
--------- --------- --------
Net sales $724,639 $638,973 $379,855
Cost of sales 475,656 426,109 244,916
--------- --------- --------
Gross profit 248,983 212,864 134,939
Selling, general and administrative
expenses 170,022 155,993 92,421
Management expenses -- 8,250 3,000
Restructuring and other infrequent
expenses 589 908 1,713
Amortization of intangibles 13,220 12,572 8,515
Gain on sale of property, plant and
equipment (2,339) -- --
--------- --------- --------
Income from operations 67,491 35,141 29,290
Interest expense, net 41,590 42,401 21,887
--------- --------- --------
Income (loss) before income taxes 25,901 (7,260) 7,403
Income tax expense (benefit) 11,432 (1,408) 4,321
--------- --------- --------
Net income (loss) 14,469 (5,852) 3,082
Other comprehensive income (loss):
Foreign currency translation adjustment 5,511 (126) 158
--------- --------- --------
Comprehensive income (loss) $ 19,980 $ (5,978) $ 3,240
========= ========= ========
*T
See notes to the consolidated financial statements in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 29, 2007.
Reconciliation of Non-GAAP Financial Measures
This press release contains certain financial measures which are
not calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). In this press release we have presented a
financial measure called Adjusted EBITDA on an actual basis for fiscal
2007. Accordingly, our presentation of Adjusted EBITDA provides
investors with information about the calculation of some of the
financial covenants that are contained in our senior secured credit
facility. Non-compliance with these financial covenants could result
in a default, an acceleration in the repayment of amounts outstanding
under our senior secured credit facility, and a termination of the
lending commitments under our senior secured credit facility. Any
acceleration in the repayment of amounts outstanding under our senior
secured credit facility would result in a default under the indenture
governing our outstanding senior subordinated notes. While an event of
default under our senior secured credit facility or the indenture
governing the notes is continuing, we would be precluded from, among
other things, paying dividends on our capital stock or borrowing under
the revolving credit facility.
The calculation of Adjusted EBITDA and a reconciliation of that
measure to net income, the most comparable GAAP measure, for the year
ended December 29, 2007 is set forth below (amounts in thousands):
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*T
Net income for fiscal 2007 $14,469
Interest expense, net 41,590
Provision for taxes based on income 11,432
Depreciation expense 9,906
Amortization expense 13,220
-------
EBITDA for fiscal 2007 90,617
Non-cash compensation charges 2,845
GAAP Restructuring charges 589
Other allowable adjustments under the Company's senior
secured credit facility (1) 2,883
-------
Adjusted EBITDA reported pursuant to the Company's senior
secured credit facility $96,934
-------
---------------
(1) Represents actual expenses permitted to be excluded from EBITDA
pursuant to the Company's senior secured credit facility. Such amount
represents (i) expenses paid in connection with the recruitment,
relocation and severance of senior level employees and (ii) fees paid
to independent consultants to become compliant with Sarbanes-Oxley
requirements.
*T
We believe Adjusted EBITDA is an important supplemental measure of
operating performance. It eliminates items that have less bearing on
our operating performance and thus highlights trends in our core
business that may not otherwise be apparent when relying solely on
GAAP financial measures. We also believe that securities analysts,
investors and other interested parties frequently use this financial
measure in the evaluation of issuers, many of which present some form
of Adjusted EBITDA when reporting their results (although we note that
some issuers may define Adjusted EBITDA differently than we define it
herein). In addition, our management uses Adjusted EBITDA in order to
facilitate operating performance comparisons from period to period,
prepare annual operating budgets and assess our ability to meet our
future debt service, capital expenditure and working capital
requirements and our ability to pay dividends on our capital stock.
Adjusted EBITDA should not be considered as an alternative to net
income or operating income as a measure of operating results or cash
flows as a measure of liquidity. Adjusted EBITDA has important
limitations as an analytical tool, and should not be considered in
isolation or as a substitute for analysis of our results as reported
under GAAP. For example, it (i) does not reflect cash expenditures, or
future requirements for capital expenditures or contractual
commitments; (ii) does not reflect changes in, or cash requirements
for, working capital needs; (iii) does not reflect interest expense,
or the cash requirements necessary to service interest or principal
payments, on debt; (iv) excludes tax payments that represent a
reduction in cash available; and (v) does not reflect any cash
requirements for the assets being depreciated and amortized that may
have to be replaced in the future. Despite these limitations, we
believe that Adjusted EBITDA is useful for the reasons described
above. To compensate for these limitations, however, we rely primarily
on our GAAP results and use Adjusted EBITDA only supplementally.
Easton-Bell Sports, Inc.
Mark Tripp, 818-902-5803
Copyright Business Wire 2008
