Former Skullcandy CEO’s Departure Followed Complaints of ‘Improper Workplace Conduct’

Alden, who founded the headphone developer in 2003 and left earlier this year, wasn’t available for comment. The company, which went public in July, decided, following an independent investigation, to settle the complaints, it said. However, one of the employees who lodged a complaint maintained in May the settlement was “invalid” because the agreement was signed “under duress,” Skullcandy said. Neither details of Alden’s actions nor the three employees’ names were disclosed. While the employee’s additional claims don’t have “merit,” any outcome won’t have a “material adverse effect” on Skullcandy, the company said. Skullcandy President Jeremy Andrus, who joined the company in 2004, replaced Alden in March. Alden continued to own 26 percent of Skullcandy after the initial public offering.

Meanwhile, Monster sued Skullcandy in Utah Superior Court claiming misappropriation of trade secrets in connection with the hiring of a former Monster employee, Skullcandy said. Details of the suit weren’t immediately available Thursday. Monster’s claims are “without merit,” Skullcandy said. Monster is U.S. distributor for Beat Electronics’ Beats By Dr. Dre headphones and other products. Skullcandy also was sued in July by the bankruptcy court trustee handling Ultimate Acquisition Corp.’s case. Ultimate Electronics, which operated 45 stores, filed for Chapter 11 bankruptcy in January and the case was converted to liquidation in May, according to court documents. Skullcandy allegedly received $132,261 in payments in the 90-day period prior to Ultimate’s filing for bankruptcy in U.S. Bankruptcy Court, Wilmington, Del., Trustee Alfred Giuliano said in court documents. Under the preferential payment rule, debtors can’t make payments to vendors in the 90-day run up to bankruptcy. Vendors receiving the money can be forced to repay the sums for distribution to creditors.

Skullcandy’s revenue is forecast to hit $210 million this year, up from $160.6 million in 2010, analysts said. The company’s stock, which went public at $20, closed Thursday down 11 percent on the day at $14.88. It has 26 million shares outstanding and $77.5 million in net proceeds from the IPO are being used to pay down debt. Skullcandy repaid the balance of a $7.3 million unsecured subordinated promissory note to existing stockholders and $17.5 million tied to a securities purchase and redemption agreement. It also made $8.6 million in payments on its credit facility earlier this month, the company said. Skullcandy has a $28 million credit facility with PNC Bank and UPS Capital Corp.; $22.4 million was drawn as of June 30, the company said. About $15 million of IPO proceeds also is being used to repurchase an exclusive distribution deal Skullcandy had with 57 North for the European market, the company said. The purchase is expected to close in Q3, company officials have said.

Best Buy, which has four-foot Skullcandy displays in its stores, accounted for 10 percent of Skullcandy’s $88.4 million in sales in the six-month period ended June 30. Sales to Target were more than 10 percent of Skullcandy’s $160.6 million in revenue in 2010. Skullcandy also is working to expand manufacture of its products beyond the two current China-based suppliers, Antonio Precise Products Manufacturing and Guangzhou Sun Young Electronics Co., the company said. Skullcandy’s Q2 U.S. sales rose 46.2 percent to $42.1 million, while those in international markets improved 47.1 percent to $10.3 million. The rise in international sales was tied to a $2.1 million increase in net sales to distributor 57 North, which sells Skullcandy products in Europe. Skullcandy had 132 employees as of December, but recently acquired San Francisco-based Astro Gaming, which develops gaming headphones.