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Clarus Corporation Announces Third Quarter Financial Results

Forward Looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may use words such as “anticipates,” “believes,” “plans,” “expects,” “intends,” “future,” “will,” and similar expressions to identify forward-looking statements. These forward-looking statements involve a number of risks, uncertainties and assumptions which are difficult to predict. The Company cautions you that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Examples of forward-looking statements include, but are not limited to: (i) statements about the benefits of the Company’s Acquisitions of Black Diamond and Gregory, including future financial and operating results that may be realized from the acquisitions; (ii) statements of plans, objectives and expectations of the Company or its management or Board of Directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to: (i) our ability to successfully integrate Black Diamond and Gregory; (ii) our ability to realize financial or operating results as expected; (iii) material differences in the actual financial results of the mergers compared with expectations, including the impact of the mergers on the Company’s future earnings per share; (iv) economic conditions and the impact they may have on Black Diamond and Gregory and their respective customers or demand for products; (v) our ability to implement our acquisition growth strategy or obtain financing to support such strategy; (vi) the loss of any member of our senior management or certain other key executives; (vii) our ability to utilize our net operating loss carry forward; and (viii) our ability to adequately protect our intellectual property rights. Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” section of the Company’s filings with the Securities and Exchange Commission, including its latest annual report on Form 10-K and most recently filed Forms 8-K and 10-Q, which may be obtained at our web site at www.claruscorp.com or the Securities and Exchange Commission’s web site at www.sec.gov. All forward-looking statements included in this press release are based upon information available to the Company as of the date of this press release, and speak only as the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.

       
CLARUS CORPORATION
CONDENSED CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
       
 
THREE MONTHS THREE MONTHS
ENDED ENDED
Predecessor
Consolidated Company (Note 1) Combined
September 30, 2010       September 30, 2009       September 30, 2009       September 30, 2009

 

Sales
Domestic sales $ 14,056 $ - $ 10,956 $ 10,956
International sales   19,890       -       14,599       14,599
Total sales 33,946 - 25,555 25,555
 
Cost of goods sold   24,411       -       15,597       15,597
Gross profit 9,535 - 9,958 9,958
 
Operating expenses
Selling, general and administrative 10,764 874 6,539 7,413
Restructuring charge 772 - - -
Merger and integration 88 - - -
Transaction costs   313       32       -       32
 
Total operating expenses   11,937       906       6,539       7,445
 
Operating income (loss)   (2,402)       (906)       3,419       2,513
 
Other (expense) income
Interest expense (644) - (187) (187)
Interest income 6 56 - 56
Other, net   (1,586)       -       144       144
 
Total other (expense) income, net   (2,224)       56       (43)       13
 
(Loss) income before income tax (4,626) (850) 3,376 2,526
(Benefit) income tax provision (1,332)       -       615       615
Net (loss) income $ (3,294)     $ (850)     $ 2,761     $ 1,911
 
(Loss) earnings per share attributable
to stockholders:
Basic (loss) earnings per share $ (0.15)     $ (0.05)
 
Diluted (loss) earnings per share $ (0.15)     $ (0.05)
 
Weighted average common shares
outstanding for earnings per share:
Basic 21,731 16,867
 
Diluted 21,731 16,867

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”). Because the Company had no operations at the time of our acquisition of Black Diamond, Black Diamond is considered to be our predecessor company (the “Predecessor” or the “Predecessor Company”) for financial reporting purposes. The Predecessor does not include Gregory.

 
CLARUS CORPORATION
CONDENSED CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                         
 
NINE MONTHS FIVE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
Predecessor Predecessor
Company (Note 1) Combined Company (Note 1) Combined
September 30, 2010       May 28, 2010   September 30, 2010       September 30, 2009       September 30, 2009       September 30, 2009
 
Sales
Domestic sales $ 18,092 $ 15,751 $ 33,843 $ - $ 27,294 $ 27,294
International sales   23,598       19,192       42,790       -       34,268       34,268
Total sales 41,690 34,943 76,633 - 61,562 61,562
 
Cost of goods sold   30,347       21,165       51,512       -       38,728       38,728
Gross profit 11,343 13,778 25,121 - 22,834 22,834
 
Operating expenses
Selling, general and administrative 18,963 12,138 31,101 3,004 18,989 21,993
Restructuring charge 2,149 - 2,149 - - -
Merger and integration 868 - 868 - - -
Transaction costs   5,075       -       5,075       32       -       32
 
Total operating expenses   27,055       12,138       39,193       3,036       18,989       22,025
 
Operating income (loss)   (15,712)       1,640       (14,072)       (3,036)       3,845       809
 
Other (expense) income
Interest expense (980) (165) (1,145) - (813) (813)
Interest income 45 3 48 664 - 664
Other, net   (1,474)       1,803       329       -       369       369
 
Total other (expense) income, net   (2,409)       1,641       (768)       664       (444)       220
 
(Loss) income before income tax (18,121) 3,281 (14,840) (2,372) 3,401 1,029
(Benefit) income tax provision   (69,765)       966       (68,799)       -       624       624
Net income (loss) $ 51,644     $ 2,315     $ 53,959     $ (2,372)     $ 2,777     $ 405
 
Earnings (loss) per share attributable
to stockholders:
Basic earnings (loss) per share $ 2.71 $ (0.14)
 
Diluted earnings (loss) per share $ 2.67 $ (0.14)
 
Weighted average common shares
outstanding for earnings per share:
Basic 19,092 16,867
 
Diluted 19,339 16,867

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”). Because the Company had no operations at the time of our acquisition of Black Diamond, Black Diamond is considered to be our predecessor company (the “Predecessor” or the “Predecessor Company”) for financial reporting purposes. The Predecessor does not include Gregory.

 
RECONCILIATION FROM SALES AND GROSS PROFIT TO PROFORMA SALES
AND PROFORMA ADJUSTED GROSS PROFIT AND PROFORMA ADJUSTED GROSS MARGIN
             
THREE MONTHS ENDED
 
September 30, 2010   September 30, 2009
 
Sales as reported $ -

Sales for Predecessor three monthsended 9/30/09

  25,555
Combined sales 25,555
   

Sales for Gregory three monthsended 9/30/09

  5,387
Sales as reported $ 33,946 Proforma sales $ 30,942
   
Sales growth   9.7%
 
NINE MONTHS ENDED
 
September 30, 2010   September 30, 2009
 
Sales as reported $ 41,690 Sales as reported $ -

Sales for Predecessor five monthsended 5/28/10

  34,943

Sales for Predecessor nine monthsended 9/30/09

  61,562
Combined sales 76,633 Combined sales 61,562

Sales for Gregory five months ended5/28/10

  14,161

Sales for Gregory nine monthsended 9/30/09

  21,823
Proforma sales $ 90,794 Proforma sales $ 83,385
   
Proforma sales growth   8.9%
 
RECONCILIATION FROM SALES AND GROSS PROFIT TO PROFORMA SALES
AND PROFORMA ADJUSTED GROSS PROFIT AND PROFORMA ADJUSTED GROSS MARGIN (CONTINUED)
               
 
THREE MONTHS ENDED
 
September 30, 2010   September 30, 2009
 
Gross profit as reported $ 9,535 Gross profit as reported $ -

Gross profit for Predecessor threemonths ended 9/30/09

  9,958
Combined gross profit 9,958

Plus inventory fair value ofpurchase accounting

  3,158

Plus inventory fair value ofpurchase accounting

  -
Combined adjusted gross profit 9,958
   

Gross profit for Gregory threemonths ended 9/30/09

  1,890
Adjusted gross profit $ 12,693 Proforma adjusted gross profit $ 11,848
       
Gross margin   28.1% Combined gross margin   39.0%
   
Combined adjusted gross margin   39.0%
       
Adjusted gross margin   37.4% Proforma adjusted gross margin   38.3%
 
NINE MONTHS ENDED
 
September 30, 2010   September 30, 2009
 
Gross profit as reported $ 11,343 Gross profit as reported $ -
Gross profit Predecessor five months ended 5/28/10   13,778

Gross profit Predecessor ninemonths ended 9/30/09

  22,834
Combined gross profit 25,121 Combined gross profit 22,834
Plus inventory fair value of purchase accounting   4,321

Plus inventory fair value ofpurchase accounting

  -
Combined adjusted gross profit 29,442 Combined adjusted gross profit 22,834
Gross profit Gregory five months ended 5/28/10   5,798

Gross profit for Gregory ninemonths ended 9/30/09

  9,036
Proforma adjusted gross profit $ 35,240 Proforma adjusted gross profit $ 31,870
       
Combined gross margin   32.8% Combined gross margin   37.1%
       
Combined adjusted gross margin   38.4% Combined adjusted gross margin   37.1%
       
Proforma adjusted gross margin 38.8% Proforma adjusted gross margin 38.2%
 
RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED
NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                       
 
THREE MONTHS THREE MONTHS
ENDED ENDED
Predecessor
Consolidated Company (Note 1) Combined

September 30, 2010

     

Per Share Diluted

     

September 30, 2009

     

September 30, 2009

     

September 30, 2009

     

Per Share Diluted

 
 
Net income (loss) $ (3,294) $ (0.15) $ (850) $ 2,761 $ 1,911 $ 0.11
 
Amortization of intangibles 333 0.02 - - - -
Depreciation 818 0.04 83 746 829 0.05
Accretion of note discount 198 0.01 - 10 10 0.00
Amortization of discount on securities - - (16) - (16) (0.00)
Non-cash equity compensation 723 0.03 28 21 49 0.00

Non-cash mark-to-marketadjustment of foreigncurrency contracts

1,551 0.07 - 170 170 0.01

Non-cash write off ofinventory step up

3,158 0.14 - - - -
GAAP tax provision/(benefit) (1,332) (0.06) - 615 615 0.04
Cash income taxes (1,137) (0.05) (86) (77) (163) (0.01)
                                           
 

Net income (loss) before non-cash items

$ 1,018 $ 0.05 $ (841) $ 4,246 $ 3,405 $ 0.20
 
Transaction costs 313 0.01 32 - 32 0.00
Restructuring charge 772 0.04 - - - -
Merger and integration 88 0.00 - - - -
State cash taxes on adjustments (59) (0.00) (2) - (2) (0.00)
AMT cash taxes on adjustments (22) (0.00) (1) - (1) (0.00)
                                           

Adjusted net income (loss)before non-cash items

$ 2,110     $ 0.10     $ (812)     $ 4,246     $ 3,434     $ 0.20

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”). Because the Company had no operations at the time of our acquisition of Black Diamond, Black Diamond is considered to be our predecessor company (the “Predecessor” or the “Predecessor Company”) for financial reporting purposes. The Predecessor does not include Gregory.

 
RECONCILIATION FROM NET INCOME TO NET INCOME BEFORE NON-CASH ITEMS, ADJUSTED
NET INCOME BEFORE NON-CASH ITEMS AND RELATED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                               
 
NINE MONTHS FIVE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
Predecessor Predecessor
Company (Note 1) Combined

 

Per Share Diluted

Company (Note 1) Combined

 

Per Share Diluted

 

September 30, 2010

 

 

  May 28, 2010      

September 30, 2010

           

September 30, 2009

     

September 30, 2009

     

September 30, 2009

   
 
 
Net (loss) income $ 51,644 $ 2,315 $ 53,959 $ 2.79 $ (2,372) $ 2,777 $ 405 $ 0.02
 
Amortization of intangibles 444 2 446 0.02 - - - -
Depreciation 1,170 865 2,035 0.11 260 1,684 1,944 0.12
Accretion of note discount 336 17 353 0.02 - 10 10 0.00

Amortization of discount onsecurities

- - - - (452) - (452) (0.03)

Non-cash equitycompensation

4,423 375 4,798 0.25 371 44 415 0.02

Non-cash mark-to-marketadjustment of foreigncurrency contracts

(366)

(515) (881) (0.05) - 170 170 0.01
Non-cash write off of inventory step up 4,321 - 4,321 0.22 - - - -
GAAP tax provision/(benefit) (69,765) 966 (68,799) (3.56) - 624 624 0.04
Cash income taxes (1,573) (596) (2,169) (0.11) - (936) (936) (0.06)
                                                           
 
Net income (loss) before non-cash items $ (9,366) $ 3,429 $ (5,937) $ (0.31) $ (2,193) $ 4,373 $ 2,180 $ 0.13
 
Transaction costs 5,075 - 5,075 0.26 32 - 32 0.00
Restructuring charge 2,149 - 2,149 0.11 - - - -
Merger and integration 868 - 868 0.04 - - - -
State cash taxes on adjustments (405) - (405) (0.02) (2) - (2) (0.00)
AMT cash taxes on adjustments (154) - (154) (0.01) (1) - (1) (0.00)
                                                           
Adjusted net income (loss) before non-cash items $ (1,833)     $ 3,429     $ 1,596     $ 0.08     $ (2,164)     $ 4,373     $ 2,209     $ 0.13

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”). Because the Company had no operations at the time of our acquisition of Black Diamond, Black Diamond is considered to be our predecessor company (the “Predecessor” or the “Predecessor Company”) for financial reporting purposes. The Predecessor does not include Gregory.

 
RECONCILIATION FROM COMBINED NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES, ADJUSTED
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES, AND ADJUSTED FREE CASH FLOWS
(IN THOUSANDS)
                       
 
NINE MONTHS FIVE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
Predecessor Predecessor
Company (Note 1) Combined Company (Note 1) Combined

September 30, 2010

    May 28, 2010      

September 30, 2010

     

September 30, 2009

     

September 30, 2009

     

September 30, 2009

 

Net cash (used in) provided by operatingactivities

$ (20,629) $ 7,412 $ (13,217) $ (2,286) $ (1,744) $ (4,030)
Transaction costs 5,075 - 5,075 32 - 32
Step up value of inventory sold 4,321 - 4,321 - - -
Transition costs 1,061 - 1,061 - - -
Lease indemnity payments 1,077 - 1,077 - - -
Merger and integration charges   868     -       868       -       -       -
Adjusted cash (used in) provided by operating activities (8,227)

 

7,412

 

(815)

 

(2,254)

 

(1,744)

 

(3,998)
Capital expenditures   (761)     (788)       (1,549)       (6)       (2,597)       (2,603)
Adjusted free cash flows (used) provided $ (8,988)   $ 6,624     $ (2,364)     $ (2,260)     $ (4,341)     $ (6,601)

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. (“Black Diamond”) and Gregory Mountain Products, Inc. (“Gregory”). Because the Company had no operations at the time of our acquisition of Black Diamond, Black Diamond is considered to be our predecessor company (the “Predecessor” or the “Predecessor Company”) for financial reporting purposes. The Predecessor does not include Gregory.

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