Note E - Equity Interest Investments

6 Months Ended

Jul. 09, 2011

Equity Method Investments Disclosure [Text Block]

Note E – 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 July 09, 2011 and July 10, 2010 are addbacks to Stiga’s consolidated financial information of $9.1 million and $6.2 million, respectively. These net differences are comprised of cumulative goodwill adjustments of $12.7 million offset by the related cumulative tax effect of $3.6 million as of July 09, 2011 and cumulative goodwill adjustments of $8.7 million offset by the related cumulative tax effect of $2.5 million as of July 10, 2010. The statement of operations impact of these goodwill and tax adjustments and other individually insignificant U.S. GAAP adjustments for the periods ended July 09, 2011, and July 10, 2010 are to increase Stiga’s net income by approximately $1.1 million and $0.9 million, respectively. The Company’s 50% portion of net income for Stiga for the periods ended July 09, 2011 and July 10, 2010 was $0.5 million and $0.2 million, respectively, and is included in other income on the Company’s statement 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 for Escalade International for the periods ended July 09, 2011 and July 10, 2010 was $67,306 and $51,501,respectively, and is included in other income on the Company’s statement 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 combined totals listed below.

Summarized financial information for Stiga Sports AB balance sheets as of July 09, 2011, July 10, 2010, and December 25, 2010 and statements of operations for the periods ended July 09, 2011 and July 10, 2010 is as follows:

In thousands	July 09, 2011		July 10, 2010		December 25, 2010
Current assets	$	15,728	$	10,828	$	19,384
Non-current assets		11,393		10,797		11,338
Total assets		27,121		21,625		30,722
Current liabilities		5,965		6,023		9,599
Non-current liabilities		8,613		6,979		8,918
Total liabilities		14,578		13,002		18,517
Net assets	$	12,543	$	8,623	$	12,205

	Three Months Ended					Six Months Ended
	July 09, 2011		July 10, 2010			July 09, 2011		July 10, 2010
Net sales	$	9,147	$	6,014		$	13,618	$	9,373
Gross profit		5,314		2,864			7,574		4,555
Net income(loss)		239		(563	)		45		(648	)