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EXCEL - IDEA: XBRL DOCUMENT - ESCALADE INCFinancial_Report.xls
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10-Q - QUARTERLY REPORT - ESCALADE INCv325530_10q.htm
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EX-32.2 - EXHIBIT 32.2 - ESCALADE INCv325530_ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - ESCALADE INCv325530_ex31-2.htm
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v2.4.0.6
Equity Interest Investments
9 Months Ended
Oct. 06, 2012
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments Disclosure [Text Block]

Note F – Equity Interest Investments

 

The Company has a 50% interest in a joint venture, Stiga Sports AB (Stiga). The joint venture is accounted for under the equity method of accounting. Stiga, located in Sweden, is a global sporting goods company producing table tennis equipment and game products. Financial information for Stiga reflected in the table below has been translated from local currency to U.S. dollars using exchange rates in effect at the respective period-end for balance sheet amounts, and using average exchange rates for statement of operations amounts. Certain differences exist between U.S. GAAP and local GAAP in Sweden, and the impact of these differences is not reflected in the summarized information reflected in the table below. The most significant difference relates to the accounting for goodwill for Stiga which is amortized over eight years in Sweden but is not amortized for U.S. GAAP reporting purposes. The effect on Stiga’s net assets resulting from the amortization of goodwill for the periods ended October 6, 2012 and October 1, 2011 are addbacks to Stiga’s consolidated financial information of $10.9 million and $8.9 million, respectively. These net differences are comprised of cumulative goodwill adjustments of $15.2 million offset by the related cumulative tax effect of $4.3 million as of October 6, 2012 and cumulative goodwill adjustments of $12.4 million offset by the related cumulative tax effect of $3.5 million as of October 1, 2011. The statement of operations impact of these goodwill and tax adjustments and other individually insignificant U.S. GAAP adjustments for the periods ended October 6, 2012, and October 1, 2011 are to increase Stiga’s net income by approximately $1.3 million and $0.9 million, respectively. The Company’s 50% portion of net income for Stiga for the periods ended October 6, 2012 and October 1, 2011 was $1.4 million and $1.6 million, respectively, and is included in other income on the Company’s statements of operations.

 

In addition, Escalade has a 50% interest in two joint ventures, Escalade International, Ltd. in the United Kingdom, and Neoteric Industries Inc. in Taiwan. Escalade International Ltd. is a sporting goods wholesaler, specializing in fitness equipment. The Company’s 50% portion of net income (loss) for Escalade International for the periods ended October 6, 2012 and October 1, 2011 was ($137) thousand and $58 thousand respectively, and is included in other income on the Company’s statements of operations. The income and assets of Neoteric have no impact on the Company’s financial reporting. Additional information regarding these entities is considered immaterial and has not been included in the totals listed below.

 

During 2012, Escalade International, Ltd. has performed below expectations, and this entity has encountered unexpected attrition of certain significant customers as of the end of the third quarter 2012. Due to these events, the Company evaluated the economic and strategic benefits of continuing to hold this investment. Subsequent to the balance sheet date, the Company is negotiating to sell its investment in this entity for an amount less than book value which resulted in impairment in this equity method investment. Based on the review as of October 6, 2012, the Company determined that the fair value of this investment was less than its carrying value and that this impairment was other than temporary. As a result, the Company recognized other than temporary impairment of $0.4 million ($0.2 million, net of taxes). Refer to Note I for detailed discussion of the methodology used to estimate fair value of this equity method investment as of October 6, 2012.

 

Summarized financial information for Stiga Sports AB balance sheets as of October 6, 2012, December 31, 2011, and October 1, 2011 and statements of operations for the periods ended October 6, 2012 and October 1, 2011 is as follows:

 

In thousands October 6,
2012
December 31,
2011
October 1,
2011
Current assets $ 24,086 $ 23,451 $ 22,337
Non-current assets 8,419 9,460 10,108
Total assets 32,505 32,911 32,445
Current liabilities 9,389 10,033 11,243
Non-current liabilities 5,105 6,334 7,463
Total liabilities 14,494 16,367 18,706
Net assets $ 18,011 $ 16,544 $ 13,739

 

Three Months Ended Nine Months Ended
October 6,
2012
October 1,
2011
October 6,
2012
October 1,
2011
Net sales $ 11,148 $ 12,169 $ 23,923 $ 25,787
Gross profit 5,800 6,086 12,212 13,660
Net income 1,829 2,227 1,609 2,272