Skullcandy’s Latest Filing for its IPO

On June 1st, Skullcandy filed a third amendment to the registration statement for its initial public offering. Once again, I haven’t compared the documents word for word to spot every change. The addition I want to bring to your attention is the inclusion of financial statements for the quarter ended March 31, 2011. Here are the summary financial statements for the quarter directly from the filing.

 

       

Three Months Ended March 31
         ( in millions of dollars)
         

2010

2011

Net Sales
       

$21,658

$36,018

Cost of Goods Sold
     

$10,660

$17,703

Gross Profit
     

$10,998

$18,315

Selling, General and Admin. Expense
 

$7,572

$14,399

Income from Operations
   

$3,426

$3,916

Other (Income) Expense
   

$1,526

($13)

Interest Expense
     

$2,189

$1,998

Pretax Income
     

($289)

$1,913

Income Taxes
     

$512

$852

Net Income
     

($801)

$1,079

 
 

 

 

 

 

 
 
You can see the improvement from last year’s first quarter to this year’s yourself. Sales were up 66 percent. The gross profit margin stayed constant at 50.8% and instead of a loss of eight hundred thousand dollars they made a bit over a million bucks. Domestic sales rose $9.5 million, or 50.3%. They represented 78.9% of first quarter sales. $4 million of the increase was due to “…net sales to large national retailers, including Best Buy and Target…”  It’s worth noting that during the quarter, three customers accounted for 37% of sales (two were 14% each and one was 9%) and 51% of receivables. I assume Target and Best Buy are two of them.
 
They provide two March 31 balance sheets. The first is the actual one and the second a proforma balance sheet that assumes that certain convertible debt and preferred stock is converted into common stock as if the public offering had occurred on March 31st.
 
The actual balance sheet shows negative stockholders’ equity of $20.2 million. The pro forma balance sheet has a positive equity of $8.9 million due to those conversions. But this pro forma balance sheet does not include the capital that would be raised by the offering. Skullcandy really needs that capital to solidify its balance sheet and pursue its growth strategy.
 
I wrote about Skullcandy when they first filed for their IPO, which they filed the first amendment, and the second. My thoughts really haven’t changed. Let’s hope that in a couple of more weeks, we see their team on CNBC ringing the opening bell on their first day of trading.