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Galaxy Sports Inc

In: Business and Management

Submitted By lorygurl01
Words 815
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Relevant Facts
Galaxy Sports is a publicly traded U.S.-based manufacture of sports equipment with three reporting units, Fitness Equipment, Gold Equipment, and Hockey Equipment. They are in a competitive industry in which growth and profitability are tied to the market and consumer demand. All three components are managed separately therefore discrete financial information is available for each component. In December 2011, Galaxy engaged Big Time LLC to perform three annual ASC 350, Intangibles- Goodwill and Other, impairment analysis on the $360 million (composed of $200 million from Fitness Equipment, $130 million from Golf Equipment, and $30 million from Hockey Equipment) of goodwill recorded by Galaxy as of December 21, 2011.
Big Time completed Galaxy’s December 31, 2011 Goodwill Impairment Analysis and determined that Galaxy passed step 1 of the annual goodwill impairment test for each reporting unit. During the first quarter of the 2012 fiscal year, Galaxy’s earnings were slightly below expectations due to a slowing economy and reduced consumer spending and therefore the common share price fell to $49.25. In the second quarter Galaxy’s earnings were also below expectations because they had experienced pressure on its sales due to sports equipment imports from China being sold at a lower price, which appealed to consumers during difficult economic times. Galaxy’s common share price in quarter two fell yet again to $45.25. During the third quarter Galaxy’s earnings were significantly below expectations and management did not perform an interim goodwill impairment test. Galaxy’s common share price during quarter three fell even further to $31.50. At the 2012 year-end, Galaxy decided to carry over prior year’s Fitness Equipment and Hockey Equipment fair value and prepared its annual goodwill test. During the fourth quarter Galaxy’s common share price fell once

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