Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ESCALADE INC | v390809_8k.htm |
| EX-2.1 - EXHIBIT 2.1 - ESCALADE INC | v390809_ex2-1.htm |
| EX-99.1 - EXHIBIT 99.1 - ESCALADE INC | v390809_ex99-1.htm |
| EX-2.2 - EXHIBIT 2.2 - ESCALADE INC | v390809_ex2-2.htm |
| EX-10.1 - EXHIBIT 10.1 - ESCALADE INC | v390809_ex10-1.htm |
Exhibit 99.2
Exhibit 99.2 Pro Forma Financial Information
ESCALADE, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
Escalade, Incorporated sold its Information Security business, including the intimus® product line, to an unaffiliated party that is a portfolio company of PHI Fund II, F.C.R. de Regimen Simplificado, a private investment firm based in Madrid, Spain. The sale was accomplished through the purchase and sale of the stock of the Escalade subsidiaries engaged in the Information Security business and of certain U.S. assets relating to that business. The purchase price was 750,000 Euros plus the assumption of certain related liabilities.
The following unaudited condensed consolidated pro forma financial statements are based upon the historical financial statements of Escalade, Incorporated and its wholly-owned subsidiaries, adjusted to reflect the disposition of its Information Security business. The pro forma adjustments also include the disposition of the Company’s Print Finishing business that occurred on June 30, 2014. The following unaudited condensed consolidated pro forma financial statements of Escalade should be read in conjunction with the related notes and with the historical consolidated financial statements of Escalade and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited condensed pro forma consolidated balance sheet reflects the disposition of Information Security as if it occurred on July 12, 2014 while the unaudited condensed pro forma statements of consolidated operations for the six months ended July 12, 2014 and for the year ended December 28, 2013 give effect to the disposition as if it occurred on December 30, 2012, the beginning of the earliest period presented. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Escalade management believe are reasonable.
The unaudited condensed consolidated pro forma financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of Information Security closed on July 12, 2014 for the unaudited condensed pro forma consolidated balance sheet or on December 30, 2012 for the unaudited condensed pro forma statements of consolidated operations. For example, these financial statements do not reflect any potential earnings or other impacts from the use of the proceeds from the disposition or cost reductions of previously allocated corporate costs. Readers should not rely on the unaudited condensed consolidated pro forma financial statements as being indicative of the historical operating results that Escalade would have achieved or any future operating results or financial position that it will experience after the transaction closes.
ESCALADE, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEETS
JULY 12, 2014
| All Amounts in Thousands | Historical | (a) Pro Forma Adjustments Disposition of Information Security | Pro Forma | |||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,145 | $ | 949 | $ | 2,094 | ||||||
| Time deposits | 1,700 | — | 1,700 | |||||||||
| Receivables, less allowance of $783; $1,105; and $719; respectively | 27,285 | — | 27,285 | |||||||||
| Inventories | 26,321 | — | 26,321 | |||||||||
| Prepaid expenses | 1,520 | — | 1,520 | |||||||||
| Deferred income tax benefit | 2,394 | — | 2,394 | |||||||||
| Prepaid income tax | 2,750 | — | 2,750 | |||||||||
| Assets held for sale | 4,348 | (4,348 | ) | — | ||||||||
| TOTAL CURRENT ASSETS | 67,463 | (3,399 | ) | 64,064 | ||||||||
| Property, plant and equipment, net | 10,563 | — | 10,563 | |||||||||
| Intangible assets | 9,712 | — | 9,712 | |||||||||
| Goodwill | 13,242 | — | 13,242 | |||||||||
| Investments | 18,223 | — | 18,223 | |||||||||
| Other assets | 145 | — | 145 | |||||||||
| TOTAL ASSETS | $ | 119,348 | $ | (3,399 | ) | $ | 115,949 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current Liabilities: | ||||||||||||
| Notes payable | $ | 8,520 | $ | — | $ | 8,520 | ||||||
| Current portion of long-term debt | 1,580 | — | 1,580 | |||||||||
| Trade accounts payable | 3,735 | — | 3,735 | |||||||||
| Accrued liabilities | 10,716 | 1,731 | 12,447 | |||||||||
| Liabilities held for sale | 5,130 | (5,130 | ) | — | ||||||||
| TOTAL CURRENT LIABILITIES | 29,681 | (3,399 | ) | 26,282 | ||||||||
| Other Liabilities: | ||||||||||||
| Long-term debt | 3,758 | — | 3,758 | |||||||||
| Deferred income tax liability | 5,456 | — | 5,456 | |||||||||
| TOTAL LIABILITIES | 38,895 | (3,399 | ) | 35,496 | ||||||||
| TOTAL STOCKHOLDERS' EQUITY | 80,453 | — | 80,453 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 119,348 | $ | (3,399 | ) | $ | 115,949 | |||||
ESCALADE, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JULY 12, 2014
| All Amounts in Thousands Except Per Share Data | Historical | (b) Pro Forma Adjustments Disposition of Information Security | Pro Forma | |||||||||
| Net sales | $ | 65,733 | $ | — | $ | 65,733 | ||||||
| Costs, Expenses and Other Income | ||||||||||||
| Cost of products sold | 45,157 | — | 45,157 | |||||||||
| Selling, administrative and general expenses | 11,994 | — | 11,994 | |||||||||
| Amortization | 1,327 | — | 1,327 | |||||||||
| Operating Income | 7,255 | — | 7,255 | |||||||||
| Interest expense | 191 | — | 191 | |||||||||
| Other expense (income) | (401 | ) | — | (401 | ) | |||||||
| Income Before Income Taxes from Continuing Operations | 7,465 | — | 7,465 | |||||||||
| Provision for Income Taxes from Continuing Operations | 2,434 | — | 2,434 | |||||||||
| Net Income from Continuing Operations | $ | 5,031 | $ | — | $ | 5,031 | ||||||
| Earnings Per Share From Continuing Operations | ||||||||||||
| Basic | $ | 0.36 | $ | — | $ | 0.36 | ||||||
| Diluted | $ | 0.36 | $ | — | $ | 0.36 | ||||||
| Weighted Average Shares Outstanding | ||||||||||||
| Basic | 13,789 | 13,789 | 13,789 | |||||||||
| Diluted | 14,055 | 14,055 | 14,055 | |||||||||
ESCALADE, INCORPORATED AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 28, 2013
| All Amounts in Thousands Except Per Share Data | Historical | (c) Pro Forma Adjustments Disposition of Information Security | Pro Forma | |||||||||
| Net sales | $ | 163,677 | $ | (30,686 | ) | $ | 132,991 | |||||
| Costs, Expenses and Other Income | ||||||||||||
| Cost of products sold | 113,349 | (20,358 | ) | 92,991 | ||||||||
| Selling, administrative and general expenses | 33,450 | (11,997 | ) | 21,453 | ||||||||
| Amortization | 2,381 | (18 | ) | 2,363 | ||||||||
| Operating Income | 14,497 | 1,687 | 16,184 | |||||||||
| Interest expense | 738 | (334 | ) | 404 | ||||||||
| Other expense (income) | (2,929 | ) | 5 | (2,934 | ) | |||||||
| Income Before Income Taxes from Continuing Operations | 16,688 | 2,026 | 18,714 | |||||||||
| Provision for Income Taxes from Continuing Operations | 6,883 | (764 | ) | 6,119 | ||||||||
| Net Income from Continuing Operations | $ | 9,805 | $ | 2,790 | $ | 12,595 | ||||||
| Earnings Per Share From Continuing Operations | ||||||||||||
| Basic | $ | 0.73 | $ | 0.20 | $ | 0.93 | ||||||
| Diluted | $ | 0.72 | $ | 0.20 | $ | 0.92 | ||||||
| Weighted Average Shares Outstanding | ||||||||||||
| Basic | 13,506 | 13,506 | 13,506 | |||||||||
| Diluted | 13,631 | 13,631 | 13,631 | |||||||||
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
| (a) | These adjustments reflect the disposition of the Information Security business assets and liabilities which had been reported as “held for sale” as of July 12, 2014 for approximately $949 thousand in cash and the accrual of indemnities as set forth in the Asset Sale and Purchase Agreement dated October 1, 2014 and the accrual of additional transactional costs. An increase in the benefit for income taxes reported in Discontinued Operations as of the second quarter of 2014 is expected as a result from a change in valuation allowance. The impact of that adjustment is not known at this time. |
| (b) | The direct operating results of the Information Security business and the Print Finishing business were presented in discontinued operations for the six months ended July 12, 2014 in Escalade’s Form 10-Q for the fiscal second quarter ended July 12, 2014. As a result, no pro forma adjustments were required. |
| (c) | These adjustments eliminate the operating results of the Information Security business as if the transaction occurred on December 30, 2012. Additionally, the adjustments include the elimination of the Print Finishing business that was sold on June 30, 2014. |