Brass Eagle Drops Potential Sale, Takes Write-off

Brass Eagle Inc. of Bentonville took a $651,000 hit in the third quarter of the year when a potential sale of the company was called off.

For the third quarter ended Sept. 30, Brass Eagle reported a 53 percent increase in sales, to $23.1 million.

“The increase in net sales was due primarily to the acquisition of JT USA, increased paintball sales, and increased net sales of new markers [paintball guns] that became available for sale in the third quarter of 2000,” the company said in its third-quarter filing with the U.S. Securities and Exchange Commission.

Brass Eagle, which manufactures and distributes paintball products, said net income for the quarter would have been up 20 percent, to $2.4 million, if not for onetime “strategic-initiative expenses” of $651,000 that were incurred when Brass Eagle terminated discussions pertaining to the sale of the company.

Brass Eagle said the potential buyer “had not made reasonable progress toward a timely, conclusive transaction.”

Part of the $651,000 “represents expenses of the prospective buyer reimbursed by Brass Eagle as previously agreed,” the SEC filing says.

Brass Eagle said it would continue its “engagement” of McDonald Investments Inc., which is helping the company explore “strategic and financial opportunities in order to enhance shareholder value, including acquisitions, share repurchases and the potential sale of the company.”

For the nine months ended Sept. 30, net sales increased 6.4 percent to $54.9 million, and net earnings — before the $651,000 expense — dropped 31 percent to $4.8 million.

For the fourth quarter ending Dec. 31, Brass Eagle predicts sales of $26 million-$27 million. For the 2001 fiscal year, the company expects sales of $103 million-$110 million.