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510152 N B Ltd (1101202) SEC Filing 10-K Annual report for the fiscal year ending Tuesday, May 31, 2005

510152 N B Ltd

CIK: 1101202
ICON Health & Fitness, Inc.
Results of Operations for the three and twelve months ended May 31, 2005

September 2, 2005

For the three months ended May 31, 2005, ICON Health & Fitness, Inc. (the “Company”) reported net sales of $190.7 million, compared to $199.0 million for the three months ended May 31, 2004, which represents a $8.3 million, or a 4.2% decrease over the Corresponding three-month period ended May 31, 2004. For the year ending May 31, 2005, ICON reported net sales of $898.1 million, compared to $992.2 million for the year ended May 31, 2004, which represents a $94.1 million, or 9.5%, decrease over the corresponding year ended May 31, 2004. The decrease in sales can be attributed to a consolidation of customers in the department store channel of distribution, the timing of buying patterns in that channel and a decline in the direct to consumer channel.

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 were not part of the Company’s core business operations or its strategic focus. The Outdoor Recreational Equipment Operations were not making a positive contribution to the Company’s earnings and also required a substantial investment in working capital. 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 year ended May 31, 2005 for the Outdoor Recreational Equipment Operations have been reclassified to loss from discontinued operations. As of May 31, 2005, we have approximately $19.9 million of assets that have been written down to $9.5 million, which consist of inventory of approximately $12.5 million written down to $3.3 million, fixed assets of approximately $1.3 million written down to $1.1 million and accounts receivable of $5.1 million that remained at its stated value. The loss from operations, net of tax, for the outdoor recreational equipment was $31.7 million and $3.1 million for the fiscal years ended May 31, 2005 and 2004, respectively. We expect to complete this discontinuation of our outdoor recreational operations by the second quarter of fiscal 2006. The outdoor recreational equipment operations were not part of our core business operations or our strategic focus. We are in the process of finding a buyer for the remaining assets. The outdoor recreational operations were not making a positive contribution to our earnings and also required a substantial investment in working capital.

Net loss for the three months ended May 31, 2005 was $70.3 million, compared to net loss of $8.5 million for the three months ended May 31, 2004. Net loss before taxes, minority interest and discontinued operations for the three months ended May 31, 2005 was $42.2 million, compared to a net loss before taxes, minority interest and discontinued operations of $8.0 million for the three months ended May 31, 2004. The provision for taxes for the three months ended May 31, 2005 was $19.1 million compared to a provision of $1.1 million in the three months ended May 31, 2004. Depreciation and amortization for three months ended May 31, 2005 was $7.6 million compared to $3.9 million for the three months ended May 31, 2004. Interest expense, including amortization of deferred financing fees, for the three months ended May 31, 2005 was $7.0 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $6.6 million. The loss from discontinued operations for the three months ended May 31, 2005 net of a tax benefit of $2.7 million was $6.4 million compared to a gain on discontinued operations of $0.7 million net of tax benefit of $0.2 million for the three months ended May 31, 2004.

Net loss for the year ended May 31, 2005 was $110.0 million, compared to net income of $23.4 million for the year ended May 31, 2004. Net loss before taxes for the year ended May 31, 2005 was $66.3 million, compared to a net income before taxes of $44.3 million for the year ended May 31, 2004. The benefit from taxes for the year ended May 31, 2005 was $7.0 million compared to a provision of $15.9 million in the year ended May 31, 2004. Depreciation and amortization for the year ended May 31, 2005 was $25.4 million compared to $20.7 million for the year ended May 31, 2004. Interest expense, including amortization of deferred financing fees, for the nine months ended May 31, 2005 was $28.9 million versus the prior year's comparable period interest expense and amortization of deferred financing fees of $26.0 million. The loss from discontinued operations for the year ended May 31, 2005 net of a tax benefit of $19.4 million was $31.7 million compared to a loss on discontinued operations of $3.1 million net of tax benefit of $1.9 million for the year ended May 31, 2004.

EBITDA for the three months ended May 31, 2005 was negative $27.4 million compared to $2.5 million for the three months ended May 31, 2004. EBITDA for the year ended May 31, 2005 was negative $11.6 million compared to $91.0 million for the year ended May 31, 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 year ended May 31, 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 fourth quarter and the fiscal year ended May 31, 2005 and May 31 2004, respectively:

  Fourth
Quarter
  Fiscal
Year
 
Fiscal Year 2005            
Net income (loss) $ (70.3 ) $ (110.0 )
Add back:            
   Depreciation and amortization   7.6     25.4  
   Provision for (Benefit from) income taxes   19.1     (7.0 )
   Interest expense   8.0     21.1  
   Amortization of deferred financing fees   0.3     1.1  
   Discontinued operations   9.2     51.1  
EBITDA $ (27.4 ) $ (11.6 )


  Fourth
Quarter
  Fiscal
Year
 
Fiscal Year 2004            
Net income (loss) $ (8.5 ) $ 23.4  
Add back:            
   Depreciation and amortization   3.9     20.7  
   Provision for income taxes   1.1     15.9  
   Interest expense   6.3     25.1  
   Amortization of deferred financing fees   0.3     0.9  
   Discontinued operations   (0.6 )   5.0  
EBITDA $ 2.5 $ 91.0  




The following information was filed by 510152 N B Ltd on Tuesday, September 6, 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-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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510152 N B Ltd provided additional information to their SEC Filing as exhibits

CIK: 1101202
Form Type: 10-K Annual Report
Accession Number: 0000934798-05-000023
Submitted to the SEC: Fri Sep 02 2005 8:29:27 PM EST
Accepted by the SEC: Tue Sep 06 2005
Period: Tuesday, May 31, 2005
Industry: 1101202

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