Note F - Equity Interest Investments

9 Months Ended

Oct. 01, 2011

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 1, 2011 and October 2, 2010 are addbacks to Stiga’s consolidated financial information of $8.9 million and $7.2 million, respectively. These net differences are comprised of cumulative goodwill adjustments of $12.4 million offset by the related cumulative tax effect of $3.5 million as of October 1, 2011 and cumulative goodwill adjustments of $10.1 million offset by the related cumulative tax effect of $2.9 million as of October 2, 2010. The statement of operations impact of these goodwill and tax adjustments and other individually insignificant U.S. GAAP adjustments for the periods ended October 1, 2011, and October 2, 2010 are to increase Stiga’s net income by approximately $1.0 million and $1.1 million, respectively. The Company’s 50% portion of net income for Stiga for the periods ended October 1, 2011 and October 2, 2010 was $1.6 million and $0.5 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 October 1, 2011 and October 2, 2010 was $58 thousand and $55 thousand, 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 totals listed below.

Summarized financial information for Stiga Sports AB balance sheets as of October 1, 2011, December 25, 2010, and October 2, 2010 and statements of operations for the three and nine months ended October 1, 2011 and October 2, 2010 is as follows:

In thousands	October 1, 2011		December 25, 2010		October 2, 2010
Current assets	$	22,337	$	19,384	$	14,285
Non-current assets		10,108		11,338		11,505
Total assets		32,445		30,722		25,790
Current liabilities		11,243		9,599		8,485
Non-current liabilities		7,463		8,918		7,280
Total liabilities		18,706		18,517		15,765
Net assets	$	13,739	$	12,205	$	10,025

	Three Months Ended				Nine Months Ended
	October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
Net sales	$	12,169	$	6,487	$	25,787	$	15,860
Gross profit		6,086		3,089		13,660		7,644
Net income (loss)		2,227		356		2,272		(292	)