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Black Diamond, Inc. Announces Fourth Quarter And Full Year Financial Results

Forward Looking Statements

Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this release include the overall level of consumer spending on our products; general economic conditions and other factors affecting consumer confidence; disruption and volatility in the global capital and credit markets; the financial strength of the Company's customers; the Company's ability to implement its growth strategy; the Company's ability to successfully integrate and grow acquisitions; the Company's ability to maintain the strength and security of its information technology systems; stability of the Company's manufacturing facilities and foreign suppliers; the Company's ability to protect trademarks and other intellectual property rights; fluctuations in the price, availability and quality of raw materials and contracted products; foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; and legal, regulatory, political and economic risks in international markets. More information on potential factors that could affect the Company's financial results is included from time to time in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

BLACK DIAMOND, INC.
CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
         
         
   THREE MONTHS   THREE MONTHS 
   ENDED   ENDED 
       Predecessor   
  Consolidated    Company (Note 1)   Combined 
  December 31, 2010 December 31, 2009 December 31, 2009 December 31, 2009
         
Sales        
Domestic sales  $ 14,880  $ --  $ 13,198  $ 13,198
International sales  19,342  --  13,385  13,385
Net sales  34,222  --  26,583  26,583
         
Cost of goods sold  21,833  --  16,399  16,399
 Gross profit  12,389  --  10,184  10,184
         
Operating expenses        
Selling, general and administrative  12,245  935  7,535  8,470
Restructuring charge  693  --  --  --
Merger and integration  106  --  --  --
Transaction costs  --  1,581  --  1,581
         
 Total operating expenses  13,044  2,516  7,535  10,051
         
Operating income (loss)  (655)  (2,516)  2,649  133
         
Other (expense) income        
Interest expense  (743)  --  (178)  (178)
Interest income  1  37  (3)  34
Other, net  479  --  (58)  (58)
         
Total other (expense) income, net  (263)  37  (239)  (202)
         
(Loss) income before income tax  (918)  (2,479)  2,410  (69)
(Benefit) income tax provision  (464)  (6)  1,244  1,238
Net (loss) income  $ (454)  $ (2,473)  $ 1,166  $ (1,307)
         
(Loss) earnings per share attributable        
 to stockholders:        
Basic (loss) earnings per share  $ (0.02)  $ (0.15)    
         
Diluted (loss) earnings per share  $ (0.02)  $ (0.15)    
         
Weighted average common shares      
 outstanding for earnings per share:      
 Basic 21,831 16,867    
 Diluted 21,831 16,867    
         
Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. ("Black Diamond Equipment") and Gregory Mountain Products, Inc. ("Gregory"). Because the Company had no operations at the time of our acquisition of Black Diamond Equipment, Black Diamond Equipment is considered to be our predecessor company (the "Predecessor" or the "Predecessor Company") for financial reporting purposes. The Predecessor does not include Gregory. 
 
BLACK DIAMOND, INC.
CONSOLIDATED COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
             
   TWELVE MONTHS ENDED   FIVE MONTHS ENDED   TWELVE MONTHS ENDED   TWELVE MONTHS ENDED 
     Predecessor       Predecessor   
     Company (Note 1)   Combined     Company (Note 1)   Combined 
  December 31, 2010 May 28, 2010 December 31, 2010 December 31, 2009 December 31, 2009 December 31, 2009
             
Sales            
Domestic sales  $ 32,972  $ 15,751  $ 48,723  $ --  $ 40,492  $ 40,492
International sales  42,940  19,192  62,132  --  47,653  47,653
Net sales  75,912  34,943  110,855  --  88,145  88,145
             
Cost of goods sold  52,180  21,165  73,345  --  55,127  55,127
 Gross profit  23,732  13,778  37,510  --  33,018  33,018
             
Operating expenses            
Selling, general and administrative  31,208  12,138  43,346  3,939  26,524  30,463
Restructuring charge  2,842  --  2,842  --  --  --
Merger and integration  974  --  974  --  --  --
Transaction costs  5,075  --  5,075  1,613  --  1,613
             
 Total operating expenses  40,099  12,138  52,237  5,552  26,524  32,076
             
Operating income (loss)  (16,367)  1,640  (14,727)  (5,552)  6,494  942
             
Other (expense) income            
Interest expense  (1,723)  (165)  (1,888)  --  (994)  (994)
Interest income  46  3  49  701  --  701
Other, net  (995)  1,803  808  --  311  311
             
Total other (expense) income, net  (2,672)  1,641  (1,031)  701  (683)  18
             
(Loss) income before income tax  (19,039)  3,281  (15,758)  (4,851)  5,811  960
(Benefit) income tax provision  (70,229)  966  (69,263)  (6)  1,868  1,862
Net income (loss)  $ 51,190  $ 2,315  $ 53,505  $ (4,845)  $ 3,943  $ (902)
             
Earnings (loss) per share attributable          
 to stockholders:            
Basic earnings (loss) per share  $ 2.58      $ (0.29)    
             
Diluted earnings (loss) per share  $ 2.56      $ (0.29)    
             
Weighted average common shares          
 outstanding for earnings per share:          
 Basic 19,815     16,867    
 Diluted 20,022     16,867    
 

Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. ("Black Diamond Equipment") and Gregory Mountain Products, Inc. ("Gregory"). Because the Company had no operations at the time of our acquisition of Black Diamond Equipment, Black Diamond Equipment 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 CONSOLIDATED SALES AND GROSS PROFIT TO PRO FORMA SALES
AND PRO FORMA ADJUSTED GROSS PROFIT AND PRO FORMA ADJUSTED GROSS MARGIN
       
THREE MONTHS ENDED
   
  December 31, 2010   December 31, 2009
       
    Consolidated sales as reported  $ --
    Sales for Predecessor three months ended 12/31/09  26,583
    Combined sales  26,583
    Sales for Gregory three months ended 12/31/09  3,531
Consolidated sales as reported  $ 34,222 Pro forma sales  $ 30,114
       
Sales growth 13.6%    
       
TWELVE MONTHS ENDED
       
  December 31, 2010   December 31, 2009
       
Consolidated sales as reported  $ 75,912 Consolidated sales as reported  $ --
Sales for Predecessor five months ended 5/28/10  34,943 Sales for Predecessor twelve months ended 12/31/09  88,145
Combined sales  110,855 Combined sales  88,145
Sales for Gregory five months ended 5/28/10   14,161 Sales for Gregory twelve months ended 12/31/09  25,354
Pro forma sales  $ 125,016 Pro forma sales  $ 113,499
       
Pro forma sales growth 10.1%    
       
       
RECONCILIATION FROM CONSOLIDATED SALES AND GROSS PROFIT TO PRO FORMA SALES
AND PRO FORMA ADJUSTED GROSS PROFIT AND PRO FORMA ADJUSTED GROSS MARGIN
       
THREE MONTHS ENDED
   
  December 31, 2010   December 31, 2009
       
Consolidated gross profit as reported  $ 12,389 Consolidated gross profit as reported  $ --
    Gross profit for Predecessor three months ended 12/31/09  10,184
    Combined gross profit  10,184
Plus inventory fair value of purchase accounting  676 Plus inventory fair value of purchase accounting  -- 
    Combined adjusted gross profit  10,184
    Gross profit for Gregory three months ended 12/31/09  1,204
Adjusted gross profit  $ 13,065 Proforma adjusted gross profit  $ 11,388
       
Gross margin 36.2% Combined gross margin 38.3%
       
    Combined adjusted gross margin 38.3%
       
Adjusted gross margin 38.2% Proforma adjusted gross margin 37.8%
       
TWELVE MONTHS ENDED
       
  December 31, 2010   December 31, 2009
       
Consolidated gross profit as reported  $ 23,732 Consolidated gross profit as reported  $ --
Gross profit for Predecessor five months ended 5/28/10  13,778 Gross profit for Predecessor twelve months ended 12/31/09  33,018
Combined gross profit  37,510 Combined gross profit  33,018
Plus inventory fair value of purchase accounting  4,997 Plus inventory fair value of purchase accounting  -- 
Combined adjusted gross profit  42,507 Combined adjusted gross profit  33,018
Gross profit for Gregory five months ended 5/28/10  5,798 Gross profit for Gregory twelve months ended 12/31/09  10,240
Proforma adjusted gross profit  $ 48,305 Proforma adjusted gross profit  $ 43,258
       
Combined gross margin 33.8% Combined gross margin 37.5%
       
Combined adjusted gross margin 38.3% Combined adjusted gross margin 37.5%
       
Proforma adjusted gross margin 38.6% Proforma adjusted gross margin 38.1%
 
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  
  December 31, 2010 Per Share Diluted December 31, 2009 December 31, 2009 December 31, 2009 Per Share Diluted
             
             
Net income (loss)  $ (454)  $ (0.02)  $ (2,473)  $ 1,166  $ (1,307)  $ (0.08)
             
Amortization of intangibles  333  0.02  --  --  --  --
Depreciation   762  0.03  82  570  652  0.04
Accretion of note discount  260  0.01  --  9  9  0.00
Amortization of discount on securities  --  --  (14)  --  (14)  (0.00)
Non-cash equity compensation  686  0.03  119  25  144  0.01
Non-cash mark-to-market adjustment of foreign currency contracts  (505)  (0.02)  --  (76)  (76)  (0.00)
Non-cash write off of inventory step up  676  0.03  --  --  --  --
GAAP tax provision/(benefit)  (464)  (0.02)  (6)  1,244  1,238  0.07
Cash income taxes   (68)  (0.00)  --  (648)  (648)  (0.04)
             
             
Net income (loss) before non-cash items  $ 1,226  $ 0.06  $ (2,292)  $ 2,290  $ (2)  $ (0.00)
             
Transaction costs  --  --  1,581  --  1,581  0.09
Restructuring charge  693  0.03  --  --  --  --
Merger and integration  106  0.00  --  --  --  --
State cash taxes on adjustments  (40)  (0.00)  (79)  --  (79)  (0.00)
AMT cash taxes on adjustments  (15)  (0.00)  (30)  --  (30)  (0.00)
             
Adjusted net income (loss) before non-cash items  $ 1,970  $ 0.09  $ (820)  $ 2,290  $ 1,470  $ 0.09
             
             
             
             
Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. ("Black Diamond Equipment ") and Gregory Mountain Products, Inc. ("Gregory"). Because the Company had no operations at the time of our acquisition of Black Diamond Equipment, Black Diamond Equipment 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)
                 
                 
   TWELVE MONTHS   FIVE MONTHS   TWELVE MONTHS   TWELVE MONTHS 
   ENDED   ENDED   ENDED   ENDED 
     Predecessor         Predecessor     
     Company (Note 1)   Combined  Per Share Diluted    Company (Note 1)   Combined  December 31, 2009 Per Share Diluted
  December 31, 2010 May 28, 2010 December 31, 2010   December 31, 2009 December 31, 2009
                 
                 
Net (loss) income  $ 51,190  $ 2,315  $ 53,505  $ 2.67  $ (4,845)  $ 3,943  $ (902)  $ (0.05)
                 
Amortization of intangibles  776  2  778  0.04  --  --  --  --
Depreciation  1,933  865  2,798  0.14  342  2,254  2,596  0.15
Accretion of note discount  596  17  613  0.03  --  19  19  0.00
Amortization of discount on securities  --  --  --  --  (466)  --  (466)  (0.03)
Non-cash equity compensation  5,109  375  5,484  0.27  490  69  559  0.03
Non-cash mark-to-market adjustment of foreign currency contracts  (871)  (515)  (1,386)  (0.07)  --  94  94  0.01
Non-cash write off of inventory step up  4,997  --  4,997  0.25  --  --  --  --
GAAP tax provision/(benefit)  (70,229)  966  (69,263)  (3.46)  (6)  1,868  1,862  0.11
Cash income taxes   (1,239)  (596)  (1,835)  (0.09)  --  (1,584)  (1,584)  (0.09)
                 
                 
Net income (loss) before non-cash items  $ (7,738)  $ 3,429  $ (4,309)  $ (0.22)  $ (4,485)  $ 6,663  $ 2,178  $ 0.13
                 
Transaction costs  5,075  --  5,075  0.25  1,613  --  1,613  0.10
Restructuring charge  2,842  --  2,842  0.14  --  --  --  --
Merger and integration  974  --  974  0.05  --  --  --  --
State cash taxes on adjustments  (445)  --  (445)  (0.02)  (81)  --  (81)  (0.00)
AMT cash taxes on adjustments  (169)  --  (169)  (0.01)  (31)  --  (31)  (0.00)
                 
Adjusted net income (loss) before non-cash items  $ 539  $ 3,429  $ 3,968  $ 0.20  $ (2,984)  $ 6,663  $ 3,679  $ 0.22
                 
                 
                 
                 
Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. ("Black Diamond Equipment") and Gregory Mountain Products, Inc. ("Gregory"). Because the Company had no operations at the time of our acquisition of Black Diamond Equipment, Black Diamond Equipment 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)
             
  TWELVE MONTHS ENDED  FIVE MONTHS ENDED   TWELVE MONTHS ENDED   TWELVE MONTHS ENDED 
  December 31, 2010 Predecessor Company (Note 1)  May 28, 2010 Combined December 31, 2010 December 31, 2009 Predecessor Company (Note 1) December 31, 2009 Combined December 31, 2009
             
Net cash (used in) provided by operating activities  $ (13,751)  $ 7,412  $ (6,339)  $ (3,652)  $ 6,909  $ 3,257
Transaction costs  5,075  --  5,075  1,613  --  1,613
Step up value of inventory sold  4,997  --  4,997  --  --  --
Transition costs  1,061  --  1,061  --  --  --
Lease indemnity payments  1,295  --  1,295  --  --  --
Merger and integration charges  974  --  974  --  --  --
Adjusted cash (used in) provided by operating activities  (349)  7,412  7,063  (2,039)  6,909  4,870
Capital expenditures  (2,086)  (788)  (2,874)  (7)  (3,303)  (3,310)
Adjusted free cash flows (used) provided  $ (2,435)  $ 6,624  $ 4,189  $ (2,046)  $ 3,606  $ 1,560
             
Note 1: On May 28, 2010, we acquired Black Diamond Equipment, Ltd. ("Black Diamond Equipment") and Gregory Mountain Products, Inc. ("Gregory"). Because the Company had no operations at the time of our acquisition of Black Diamond Equipment, Black Diamond Equipment 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 CONSOLIDATED NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES, ADJUSTED
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES, AND ADJUSTED FREE CASH FLOWS
(IN THOUSANDS)
   
  THREE MONTHS ENDED 
   
  December 31, 2010
   
Net cash provided by (used in) operating activities  $ 6,878
Transaction costs  --
Step up value of inventory sold  676
Transition costs  --
Lease indemnity payments  --
Merger and integration charges  106
Adjusted cash (used in) provided by operating activities  7,660
Capital expenditures  (1,325)
Adjusted free cash flows (used) provided  $ 6,335
CONTACT: COMPANY CONTACTS:
         
         Warren B. Kanders
         Executive Chairman
         203-428-2000
         warren.kanders@bdel.com
         
         Peter Metcalf
         President and Chief Executive Officer
         801-278-5552
         peter.metcalf@bdel.com
         
         INVESTOR RELATIONS CONTACT:
         
         ICR, Inc.
         James Palczynski
         Principal and Director
         203-682-8229
         jp@icrinc.com
         
         MEDIA RELATIONS CONTACTS:
         
         ICR, Inc.
         James McCusker
         Vice President
         203-682-8245
         James.McCusker@icrinc.com
         
         ICR, Inc.
         Bo Park
         Managing Director
         917-596-4353
         bo.park@icrinc.com

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