Jarden Corporation reported operating earnings at its sporting goods segment plunged 82.4 percent last year due primarily to impairment charges it took in its winter sports business in the fourth quarter ahead of its acquisition by Newell Rubbermaid.
Jarden Corp., reported operating earnings at its Outdoor Solutions segment, which owns K2, Volkl and Marker and more than five dozen other sporting goods brands, fell to of $34.1 million in the year ended December 31, 2015 compared with $193.4 million a year earlier. K2 includes the snowboard brands 5150, Morrow and Ride Snowboards; Line and Full Tilt alpine skis; Madshus cross country skis; Backcountry Access ski safety gear; and snowshoe brands Atlas, Powderidge and Tubbs.
The $159 million decline was primarily due to $136 million in the impairment of goodwill, intangible and other assets, including $119 million related to impairment of assets at the company's Winter Sports business, which includes the brands mentioned above.
"The impairment was due to a decrease in the fair value of forecasted cash flows, reflecting the continued deterioration of revenues and margins in the business," Jarden Corp. reported in an annual 10K filed Feb. 26.
The company also recorded a non-cash charge of $26.4 million within the Outdoor Solutions segment relating to certain trade names primarily associated with the winter sports business. The impairment was due to a decrease in the fair value of forecasted cash flows, primarily resulting from the deterioration of revenues and margins related to these trade names.
Also contributing to the sharp decline in operating earnings was a decrease in gross profit excluding Jostens (approximately $37 million), primarily due to the gross margin impact of lower sales and the purchase accounting adjustment for the elimination of manufacturer’s profit in inventory (approximately $16 million) related to the Jostens Acquisition, partially offset by a decrease in SG&A (approximately $28 million) excluding Jostens.
Net sales in the Outdoor Solutions segment reached $2.74 billion, a decrease of $2.6 million, or 0.1 percent. Excluding the impact of the Jostens Acquisition (approximately 3 percent), net sales on a currency-neutral basis increased approximately 3 percent, largely due to increased net sales in the camping and outdoor, fishing and winter sports businesses.
This increase is primarily due to increased demand domestically at certain mass market, sporting goods and specialty retailers, expanded product offerings and increased demand internationally, largely in Europe. Unfavorable foreign currency translation accounted for a decrease in net sales of approximately 6 percent.
Jarden Outdoor Solutions's brand portfoliio includes Abu Garcia, AeroBed, Berkley, Campingaz, Coleman, Dalbello, ExOfficio, Fenwick, Greys, Gulp!, Hardy, Invicta, K2, Jostens, Marker, Marmot, Mitchell, Neff, PENN, Rawlings, Ride, Sevylor, Shakespeare, Squadra, Stearns, Stren, Trilene, Worth and Zoot.
