ICON Health & Fitness, Inc.
Results of Operations for the three and nine months ended February 26, 2005

April 12, 2005

For the three months ended February 26, 2005, ICON Health & Fitness, Inc. (the "Company") reported net sales of $301.3 million, compared to $306.9 million for the three months ended February 28, 2004, which represents a $5.6 million, or a 1.8% decrease over the corresponding three-month period ended February 28, 2004. For the nine months ended February 26, 2005, ICON reported net sales of $707.4 million, compared to $780.2 million for the nine months ended February 28, 2004, which represents a $72.8 million, or 9.3%, decrease over the corresponding nine-month period ended February 28, 2004. Due to the historically high sales for the nine-month period ended February 28, 2004 and weak demand, sales were lower in the nine-month period ended February 26, 2005.

During the second quarter of fiscal 2005, management determined that the Company's JumpKing, Inc. ("JumpKing") subsidiary would discontinue manufacturing, marketing and distributing all outdoor recreational equipment (“outdoor recreational equipment operations”) which includes trampolines, spas and other non-exercise related products. The outdoor recreational equipment operations have been classified as a discontinued operation and its expenses are not included in the results of continuing operations. The results of operations for the nine months ended February 26, 2005 for the outdoor recreational equipment operations have been reclassified to loss from discontinued operations. As of February 26, 2005, the Company has approximately $17.3 million of assets that have been written down which consist of inventory of approximately $15.9 million and fixed assets of approximately $1.3 million. The loss from operations, net of tax, for the outdoor recreational equipment was $25.2 million and $3.8 million for the nine months ended February 26, 2005 and February 28, 2004 respectively. The Company expects to complete this discontinuation of its outdoor recreational operations by the second quarter of fiscal 2006. The outdoor recreational equipment operations were not part of the Company’s core business operations or its strategic focus. The outdoor recreational operations were not making a positive contribution to the Company’s earnings and also required a substantial investment in working capital.

Net loss for the three months ended February 26, 2005 was $0.8 million, compared to net income of $18.2 million for the three months ended February 28, 2004. Net loss before taxes and discontinued operations for the three months ended February 26, 2005 was $3.0 million, compared to a net income before taxes and discontinued operations of $25.5 million for the three months ended February 28, 2004. The provision for taxes for the three months ended February 26, 2005 was $1.9 million compared to a provision of $5.7 million in the three months ended February 28, 2004. Depreciation and amortization for three months ended February 26, 2005 was $6.4 million compared to $6.1 million for the three months ended February 28, 2004. Interest expense, including amortization of deferred financing fees, for the three months ended February 26, 2005 was $8.3 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $6.7 million. The loss from discontinued operations for the three months ended February 26, 2005 net of a tax benefit of $3.8 million was $2.0 million compared to a loss on discontinued operations of $1.6 million net of tax benefit of $0.5 million for the three months ended February 28, 2004.

Net loss for the nine months ended February 26, 2005 was $39.7 million, compared to net income of $31.9 million for the nine months ended February 28, 2004. Net loss before taxes for the nine months ended February 26, 2005 was $24.1 million, compared to a net income before taxes of $52.2 million for the nine months ended February 28, 2004. The benefit from taxes for the nine months ended February 26, 2005 was $9.5 million compared to a provision of $16.5 million in the nine months ended February 28, 2004. Depreciation and amortization for the nine months ended February 26, 2005 was $17.8 million compared to $16.8 million for the nine months ended February 28, 2004. Interest expense, including amortization of deferred financing fees, for the nine months ended February 26, 2005 was $22.0 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $19.4 million. The loss from discontinued operations for the nine months ended February 26, 2005 net of a tax benefit of $16.7 million was $25.2 million compared to a loss on discontinued operations of $3.8 million net of tax benefit of $1.8 million for the nine months ended February 28, 2004.

The market for exercise equipment is highly seasonal, with peak periods occurring from late fall through early spring. As a result, the first and fourth quarters of every year are generally the Company's weakest periods in terms of sales. During these periods, the Company builds product inventory to prepare for the heavy demand anticipated during the peak season. This operating strategy helps the Company to realize the efficiencies of a steady pace of year-round production.

The Company defines EBITDA as income before interest expense, income tax expense, depreciation and amortization and certain non-recurring items. The loss on discontinuing operations incurred in the nine months ended February 26, 2005 meets the definition of "non-recurring" in relevant SEC guidelines. EBITDA for the three months ended February 26, 2005 was $17.8 million compared to $38.3 million for the three months ended February 28, 2004. EBITDA for the nine months ended February 26, 2005 was $15.8 million compared to $88.4 million for the nine months ended February 28, 2004.

To supplement our consolidated financial statements presented in accordance with GAAP, we use the non-GAAP measure of earnings before income taxes, depreciation and amortization (“EBITDA”) which is adjusted from our GAAP results to exclude certain expenses. These non-GAAP adjustments are provided to enhance the reader's overall understanding of our current financial performance and our prospects for the future. We believe the non-GAAP results provide useful information to both management and investors by excluding certain expenses that we believe are not indicative of our core operating results. The non-GAAP measures are included to provide us and investors with an alternative method for assessing our operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between quarters. For example, EBITDA can be used to measure our ability to service debt, fund capital expenditures and expand our business. Further, these non-GAAP results are one of the primary indicators we use for planning and forecasting in future periods. In addition, since we have historically reported non-GAAP results to the investment community, we believe the inclusion of non-GAAP numbers provides consistency in our financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.

We define EBITDA as income before interest expense, income tax expense, depreciation and amortization and certain non-recurring items. The loss on discontinuing operations incurred in the nine months ended February 26, 2005 meets the definition of "non-recurring" in relevant SEC guidelines.

This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States, nor should it be considered as an indicator of our overall financial performance. Our calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

The following table reconciles net income (loss) to EBITDA for the three months and nine months ended February 26, 2005 and February 28, 2004, respectively:

  Three months   Nine months  
February 26, 2005            
Net income (loss) $ (0.8 ) $ (39.7 )
Add back:            
   Depreciation and amortization   6.4     17.8  
   Provision for (Benefit from) income taxes   1.9     (9.5 )
   Interest expense   8.0     21.1  
   Amortization of deferred financing fees   0.3     0.9  
   Discontinued operations   2.0     25.2  
EBITDA $ 17.8   $ 15.8  


  Three months   Nine months  
February 28, 2004            
Net income (loss) $ 18.2   $ 31.9  
Add back:            
   Depreciation and amortization   6.1     16.8  
   Provision for income taxes   5.7     16.5  
   Interest expense   6.4     18.8  
   Amortization of deferred financing fees   0.3     0.6  
   Discontinued operations   1.6     3.8  
EBITDA $ 38.3 $ 88.4  




The following information was filed by 510152 N B Ltd on Tuesday, April 12, 2005 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

View differences made from one quarter to another to evaluate 510152 N B Ltd's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 10-Q Quarterly Report to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by 510152 N B Ltd.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account