EX-99.2 6 v390809_ex99-2.htm EXHIBIT 99.2

 

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.