Patriot Industries, an established textile manufacturer of embroidered golf shirts and hats, acquired Swamp Fox Industries in 1970. Swamp Fox Industries was a manufacturer of textile manufacturing equipment but also owned a manufacturer of drill bits and derricks for oil field service companies. Swamp Fox Industries continued to grow under the ownership of Patriot Industries and contributes roughly $20 million to the Company’s annual revenues of $75 million.
The division that manufacturers the drill bits and derricks for oil field service companies also continued to grow, particularly in the early 2000s as oil prices rose substantially which, in turn, prompted increased exploration activity. This division, however, only contributes about $10 million to Patriot Industries’ annual revenues (half of Swamp Fox Industries’ revenues) but historically has not been and is not currently profitable. As a result of the division’s inability to achieve economies of scale, the net losses have mounted at the division even though revenues have increased substantially. Net income and net cash flow to invested capital at the division for the last fiscal year were ($1,000,000) and ($1,250,000), respectively.