UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended October 7, 2017June 30, 2023 or
¨☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number 0-6966
ESCALADE, INCORPORATED
(Exact name of registrant as specified in its charter)
Indiana | |
(State of incorporation) | 13-2739290 (I.R.S. EIN) |
817 Maxwell Ave, Evansville, Indiana | |
(Address of principal executive office) | 47711 (Zip Code) |
812-467-4449812-467-1358
(Registrant's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of Exchange on which registered |
Common Stock, No Par Value | ESCA | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yesx ☒ No¨
☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yesx ☒ No¨
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer | |
Non-accelerated filer | Smaller reporting company | |
| ☒ Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨ ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes¨ ☐ Nox ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class | Outstanding at | July 26, 2023 | ||
Common, no par value | 13,736,800 | |||
INDEX
2 |
PART I - FINANCIAL INFORMATION
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
| All Amounts in Thousands Except Share Information | October 7, 2017 | December 31, 2016 | October 1, 2016 | June 30, 2023 | December 31, 2022 | July 9, 2022 | ||||||||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Unaudited) | (Audited) | (Unaudited) | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,646 | $ | 1,013 | $ | 4,306 | $ | 577 | $ | 3,967 | $ | 6,195 | ||||||||||||
| Receivables, less allowance of $570; $910; and $554; respectively | 34,774 | 35,894 | 37,034 | |||||||||||||||||||||
Receivables, less allowance of $355; $492; and $726; respectively | 54,975 | 57,419 | 60,011 | |||||||||||||||||||||
| Inventories | 42,392 | 33,802 | 42,936 | 111,676 | 121,870 | 130,246 | ||||||||||||||||||
| Prepaid expenses | 3,478 | 2,798 | 2,401 | 3,925 | 4,942 | 7,263 | ||||||||||||||||||
| Deferred income tax benefit | — | 1,283 | 1,553 | |||||||||||||||||||||
| Prepaid income tax | 520 | 833 | 952 | 1,518 | -- | 621 | ||||||||||||||||||
| Other current assets | — | — | 395 | |||||||||||||||||||||
| TOTAL CURRENT ASSETS | 82,810 | 75,623 | 89,577 | 172,671 | 188,198 | 204,336 | ||||||||||||||||||
| Property, plant and equipment, net | 14,215 | 13,714 | 13,665 | 24,261 | 24,751 | 28,344 | ||||||||||||||||||
Assets held for sale | 2,823 | 2,823 | -- | |||||||||||||||||||||
Operating lease right-of-use assets | 8,669 | 9,100 | 9,318 | |||||||||||||||||||||
| Intangible assets, net | 20,058 | 20,857 | 21,221 | 29,880 | 31,120 | 35,353 | ||||||||||||||||||
| Goodwill | 21,548 | 21,456 | 21,456 | 42,326 | 42,326 | 39,226 | ||||||||||||||||||
| Investments | 19,565 | 19,030 | 19,268 | |||||||||||||||||||||
| Other assets | 51 | 81 | 91 | 455 | 400 | 275 | ||||||||||||||||||
| TOTAL ASSETS | $ | 158,247 | $ | 150,761 | $ | 165,278 | $ | 281,085 | $ | 298,718 | $ | 316,852 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||||||
| Current portion of long-term debt | $ | 1,300 | $ | 1,250 | $ | 1,405 | $ | 7,143 | $ | 7,143 | $ | 7,143 | ||||||||||||
| Trade accounts payable | 9,935 | 4,376 | 9,726 | 14,680 | 9,414 | 24,650 | ||||||||||||||||||
| Accrued liabilities | 10,777 | 12,792 | 10,342 | 9,897 | 21,320 | 20,483 | ||||||||||||||||||
Income tax payable | -- | 71 | -- | |||||||||||||||||||||
Current operating lease liabilities | 1,002 | 993 | 676 | |||||||||||||||||||||
| TOTAL CURRENT LIABILITIES | 22,012 | 18,418 | 21,473 | 32,722 | 38,941 | 52,952 | ||||||||||||||||||
| Other Liabilities: | ||||||||||||||||||||||||
| Long-term debt | 24,738 | 24,189 | 35,999 | |||||||||||||||||||||
Long‑term debt | 76,809 | 87,738 | 94,040 | |||||||||||||||||||||
| Deferred income tax liability | 5,375 | 6,441 | 7,166 | 4,516 | 4,516 | 4,759 | ||||||||||||||||||
Operating lease liabilities | 8,222 | 8,641 | 8,660 | |||||||||||||||||||||
Other liabilities | 407 | 407 | 448 | |||||||||||||||||||||
| TOTAL LIABILITIES | 52,125 | 49,048 | 64,638 | 122,676 | 140,243 | 160,859 | ||||||||||||||||||
| Stockholders' Equity: | ||||||||||||||||||||||||
| Preferred stock: | ||||||||||||||||||||||||
| Authorized 1,000,000 shares; no par value, none issued | ||||||||||||||||||||||||
| Authorized 1,000,000shares; no par value, none issued | ||||||||||||||||||||||||
| Common stock: | ||||||||||||||||||||||||
| Authorized 30,000,000 shares; no par value, issued and outstanding – 14,370,586; 14,304,959; and 14,301,959; shares respectively | 14,371 | 14,305 | 14,302 | |||||||||||||||||||||
Authorized 30,000,000 shares; no par value, issued and outstanding – 13,736,800; 13,594,407; and 13,590,407; shares respectively | 13,737 | 13,594 | 13,590 | |||||||||||||||||||||
| Retained earnings | 93,967 | 91,688 | 89,582 | 144,672 | 144,881 | 142,403 | ||||||||||||||||||
| Accumulated other comprehensive loss | (2,216 | ) | (4,280 | ) | (3,244 | ) | ||||||||||||||||||
| TOTAL STOCKHOLDERS' EQUITY | 106,122 | 101,713 | 100,640 | 158,409 | 158,475 | 155,993 | ||||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 158,247 | $ | 150,761 | $ | 165,278 | $ | 281,085 | $ | 298,718 | $ | 316,852 | ||||||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
| Three Months Ended | Nine Months Ended | Second Quarter Ended | Two Quarters Ended | |||||||||||||||||||||||||||||
| All Amounts in Thousands Except Per Share Data | October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | June 30, 2023 | July 9, 2022 | June 30, 2023 | July 9, 2022 | ||||||||||||||||||||||||
| Net sales | $ | 41,892 | $ | 38,793 | $ | 125,097 | $ | 121,824 | $ | 67,771 | $ | 94,337 | $ | 124,702 | $ | 166,717 | ||||||||||||||||
| Costs and Expenses | ||||||||||||||||||||||||||||||||
| Cost of products sold | 30,533 | 28,505 | 92,376 | 87,793 | 51,124 | 70,613 | 97,003 | 122,874 | ||||||||||||||||||||||||
| Selling, administrative and general expenses | 6,866 | 4,583 | 22,053 | 21,256 | 9,769 | 14,680 | 20,052 | 25,206 | ||||||||||||||||||||||||
| Amortization | 365 | 376 | 1,212 | 1,963 | 620 | 855 | 1,240 | 1,425 | ||||||||||||||||||||||||
| Operating Income | 4,128 | 5,329 | 9,456 | 10,812 | 6,258 | 8,189 | 6,407 | 17,212 | ||||||||||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||||||||||||||
| Interest expense | (200 | ) | (211 | ) | (601 | ) | (631 | ) | (1,580 | ) | (948 | ) | (2,955 | ) | (1,508 | ) | ||||||||||||||||
| Equity in earnings of affiliates | 615 | 573 | 639 | 749 | ||||||||||||||||||||||||||||
| Gain on bargain purchase | — | — | 256 | — | ||||||||||||||||||||||||||||
| Other income (expense) | (6 | ) | 35 | (49 | ) | 168 | ||||||||||||||||||||||||||
Other income | 7 | 29 | 25 | 72 | ||||||||||||||||||||||||||||
| Income Before Income Taxes | 4,537 | 5,726 | 9,701 | 11,098 | 4,685 | 7,270 | 3,477 | 15,776 | ||||||||||||||||||||||||
| Provision for Income Taxes | 1,419 | 1,483 | 3,099 | 3,068 | 1,043 | 1,597 | 787 | 3,449 | ||||||||||||||||||||||||
| Net Income | $ | 3,118 | $ | 4,243 | $ | 6,602 | $ | 8,030 | $ | 3,642 | $ | 5,673 | $ | 2,690 | $ | 12,327 | ||||||||||||||||
| Earnings Per Share Data: | ||||||||||||||||||||||||||||||||
| Basic earnings per share | $ | 0.22 | $ | 0.30 | $ | 0.46 | $ | 0.56 | $ | 0.27 | $ | 0.42 | $ | 0.20 | $ | 0.91 | ||||||||||||||||
| Diluted earnings per share | $ | 0.22 | $ | 0.30 | $ | 0.46 | $ | 0.56 | $ | 0.26 | $ | 0.42 | $ | 0.20 | $ | 0.91 | ||||||||||||||||
| Dividends declared | $ | 0.115 | $ | 0.11 | $ | 0.345 | $ | 0.33 | $ | 0.15 | $ | 0.15 | $ | 0.30 | $ | 0.30 | ||||||||||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTSSTATEMENT OF COMPREHENSIVE INCOMESTOCKHOLDERS’ EQUITY (UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| All Amounts in Thousands | October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | ||||||||||||
| Net Income | $ | 3,118 | $ | 4,243 | $ | 6,602 | $ | 8,030 | ||||||||
| Foreign currency translation adjustment | 444 | 3 | 2,064 | (66 | ) | |||||||||||
| Comprehensive Income | $ | 3,562 | $ | 4,246 | $ | 8,666 | $ | 7,964 | ||||||||
Common Stock | Retained | |||||||||||||||
All Amounts in Thousands | Shares | Amount | Earnings | Total | ||||||||||||
Balances at March 19, 2022 | 13,585 | $ | 13,585 | $ | 138,034 | $ | 151,619 | |||||||||
Net income | 5,673 | 5,673 | ||||||||||||||
Expense of restricted stock units | 688 | 688 | ||||||||||||||
Settlement of restricted stock units | 1 | 1 | (1 | ) | -- | |||||||||||
Dividends declared | (2,038 | ) | (2,038 | ) | ||||||||||||
Stock issued to directors as compensation | 4 | 4 | 47 | 51 | ||||||||||||
Balances at July 9, 2022 | 13,590 | $ | 13,590 | $ | 142,403 | $ | 155,993 | |||||||||
Balances at December 25, 2021 | 13,493 | $ | 13,493 | $ | 133,122 | $ | 146,615 | |||||||||
Net income | 12,327 | 12,327 | ||||||||||||||
Expense of restricted stock units | 1,076 | 1,076 | ||||||||||||||
Settlement of restricted stock units | 93 | 93 | (93 | ) | -- | |||||||||||
Dividends declared | (4,076 | ) | (4,076 | ) | ||||||||||||
Stock issued to directors as compensation | 4 | 4 | 47 | 51 | ||||||||||||
Balances at July 9, 2022 | 13,590 | $ | 13,590 | $ | 142,403 | $ | 155,993 | |||||||||
All amounts are net of tax
Common Stock | Retained | |||||||||||||||
All Amounts in Thousands | Shares | Amount | Earnings | Total | ||||||||||||
Balances at March 31, 2023 | 13,730 | $ | 13,730 | $ | 142,588 | $ | 156,318 | |||||||||
Net income | 3,642 | 3,642 | ||||||||||||||
Expense of restricted stock units | 458 | 458 | ||||||||||||||
Settlement of restricted stock units | 3 | 3 | (3 | ) | -- | |||||||||||
Dividends declared | (2,061 | ) | (2,061 | ) | ||||||||||||
Stock issued to directors as compensation | 4 | 4 | 48 | 52 | ||||||||||||
Balances at June 30, 2023 | 13,737 | $ | 13,737 | $ | 144,672 | $ | 158,409 | |||||||||
Balances at December 31, 2022 | 13,594 | $ | 13,594 | $ | 144,881 | $ | 158,475 | |||||||||
Net income | 2,690 | 2,690 | ||||||||||||||
Expense of restricted stock units | 917 | 917 | ||||||||||||||
Settlement of restricted stock units | 108 | 108 | (108 | ) | -- | |||||||||||
Dividends declared | (4,120 | ) | (4,120 | ) | ||||||||||||
Stock issued to directors as compensation | 4 | 4 | 48 | 52 | ||||||||||||
Issuance of common stock for service | 31 | 31 | 364 | 395 | ||||||||||||
Balances at June 30, 2023 | 13,737 | $ | 13,737 | $ | 144,672 | $ | 158,409 | |||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended | Two Quarters Ended | |||||||||||||||
| All Amounts in Thousands | October 7, 2017 | October 1, 2016 | June 30, 2023 | July 9, 2022 | ||||||||||||
| Operating Activities: | ||||||||||||||||
| Net income | $ | 6,602 | $ | 8,030 | $ | 2,690 | $ | 12,327 | ||||||||
| Depreciation and amortization | 3,167 | 4,482 | 2,798 | 3,603 | ||||||||||||
| Gain on disposal of property and equipment | (4 | ) | (2,112 | ) | ||||||||||||
Provision for doubtful accounts | 35 | 258 | ||||||||||||||
| Stock-based compensation | 391 | 230 | 917 | 1,076 | ||||||||||||
| Gain on bargain purchase | (256 | ) | — | |||||||||||||
| Dividends received from equity method investments | 2,168 | 1,060 | ||||||||||||||
Common stock issued in lieu of bonus to officers | 395 | -- | ||||||||||||||
Director stock compensation | 52 | 51 | ||||||||||||||
| Adjustments necessary to reconcile net income to net cash provided by operating activities | (3,640 | ) | (9,778 | ) | 6,009 | (17,589 | ) | |||||||||
| Net cash provided by operating activities | 8,428 | 1,912 | ||||||||||||||
| Net cash provided (used) by operating activities | 12,896 | (274 | ) | |||||||||||||
| Investing Activities: | ||||||||||||||||
| Purchase of property and equipment | (2,298 | ) | (2,206 | ) | (1,068 | ) | (1,536 | ) | ||||||||
| Acquisitions | (1,401 | ) | (9,659 | ) | -- | (35,757 | ) | |||||||||
| Proceeds from sale of property and equipment | 4 | 2,523 | ||||||||||||||
| Purchase of marketable securities | — | (395 | ) | |||||||||||||
| Net cash used by investing activities | (3,695 | ) | (9,737 | ) | (1,068 | ) | (37,293 | ) | ||||||||
| Financing Activities: | ||||||||||||||||
| Proceeds from issuance of long-term debt | 44,495 | 54,076 | 62,196 | 124,571 | ||||||||||||
| Payments on long-term debt | (43,946 | ) | (39,810 | ) | (73,125 | ) | (80,927 | ) | ||||||||
| Proceeds from exercise of stock options | 153 | 531 | ||||||||||||||
| Deferred financing fees | — | (83 | ) | (169 | ) | (180 | ) | |||||||||
| Cash dividends paid | (4,954 | ) | (4,709 | ) | (4,120 | ) | (4,076 | ) | ||||||||
| Director stock compensation | 152 | 144 | ||||||||||||||
| Net cash provided by (used by) financing activities | (4,100 | ) | 10,149 | |||||||||||||
| Net increase in cash and cash equivalents | 633 | 2,324 | ||||||||||||||
Net cash provided (used) by financing activities | (15,218 | ) | 39,388 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | (3,390 | ) | 1,821 | |||||||||||||
| Cash and cash equivalents, beginning of period | 1,013 | 1,982 | 3,967 | 4,374 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 1,646 | $ | 4,306 | $ | 577 | $ | 6,195 | ||||||||
| Non-Cash Transactions | ||||||||||||||||
| Note payable for deferred purchase price obligation | $ | 50 | $ | — | ||||||||||||
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A – Summary of Significant Accounting Policies
| Note A – Summary of Significant Accounting Policies |
Presentation of Consolidated Condensed Financial Statements – The significant accounting policies followed by the Company and its wholly owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for its annual financial reporting. All adjustments that are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported have been included in the accompanying consolidated condensed financial statements. The consolidated condensed balance sheet of the Company as of December 31, 20162022 has been derived from the audited consolidated balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 20162022 filed with the Securities and Exchange Commission.
On August 10, 2022, Escalade’s Board of Directors approved a change in its fiscal year end from the last Saturday in December of each year to December 31 of each year. Escalade’s fiscal quarters will end on March 31, June 30, and September 30. The second quarter of 2023 is a traditional calendar quarter with 91 days, whereas the 2022 quarter was four four-week periods constituting a total of 112 days. The fiscal year change is effective beginning with Escalade’s 2023 fiscal calendar, which began on January 1, 2023. Consistent with SEC guidance, no transition report is required in connection with the change in Escalade’s fiscal year end.
Reclassifications– Certain reclassifications have been made to prior year financial statements to conform to the current year financial statement presentation. These reclassifications had no effect on net earnings.
Note B - Seasonal Aspects
| Note B ‑ Seasonal Aspects |
The results of operations for the threesecond quarter and nine monthtwo quarter periods ended October 7, 2017June 30, 2023 and October 1, 2016July 9, 2022 are not necessarily indicative of the results to be expected for the full year.
Note C - Inventories
| Note C ‑ Inventories |
| In thousands | October 7, 2017 | December 31, 2016 | October 1, 2016 | June 30, 2023 | December 31, 2022 | July 9, 2022 | ||||||||||||||||||
| Raw materials | $ | 4,049 | $ | 4,781 | $ | 5,467 | $ | 6,537 | $ | 7,789 | $ | 9,821 | ||||||||||||
| Work in progress | 3,660 | 3,671 | 5,093 | 2,910 | 3,478 | 4,653 | ||||||||||||||||||
| Finished goods | 34,683 | 25,350 | 32,376 | 102,229 | 110,603 | 115,772 | ||||||||||||||||||
| $ | 42,392 | $ | 33,802 | $ | 42,936 | $ | 111,676 | $ | 121,870 | $ | 130,246 | |||||||||||||
Note D – Equity Interest Investments
The Company has a 50% interest in a joint venture, Stiga Sports AB (Stiga). The joint venture is accounted for under the equity method of accounting. Stiga, located in Sweden, is a global sporting goods company producing table tennis equipment, snow sleds, and game products. Financial information for Stiga reflected in the table below has been translated from local currency to U.S. dollars using exchange rates in effect at the respective period-end for balance sheet amounts, and using average exchange rates for statement of operations amounts. Certain differences exist between U.S. GAAP and local GAAP in Sweden, and the impact of these differences is not reflected in the summarized information reflected in the table below. The most significant difference relates to the accounting for goodwill for Stiga which is amortized over eight years in Sweden but is not amortized for U.S. GAAP reporting purposes. The goodwill for Stiga was fully amortized as of December 27, 2014. The effect on Stiga’s net assets resulting from the cumulative amortization of goodwill for the periods ended October 7, 2017 and October 1, 2016 are addbacks to Stiga’s consolidated financial information of $11.0 million and $10.4 million, respectively. These net differences are comprised of cumulative goodwill adjustments of $15.4 million offset by the related cumulative tax effect of $4.4 million as of October 7, 2017 and cumulative goodwill adjustments of $14.6 million offset by the related cumulative tax effect of $4.2 million as of October 1, 2016. The Company’s 50% portion of net income for Stiga, included in equity in earnings of affiliates on the Company’s statements of operations, for the three and nine month periods ended October 7, 2017 and October 1, 2016 is as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| In thousands | October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | ||||||||||||
| Equity in earnings of affiliates | $ | 615 | $ | 573 | $ | 639 | $ | 749 | ||||||||
Summarized financial information for Stiga Sports AB balance sheets as of October 7, 2017, December 31, 2016, and October 1, 2016 and statements of operations for the three month and nine month periods ended October 7, 2017 and October 1, 2016 is as follows:
| In thousands | October 7, 2017 | December 31, 2016 | October 1, 2016 | |||||||||
| Current assets | $ | 33,874 | $ | 28,322 | $ | 28,857 | ||||||
| Non-current assets | 10,645 | 9,379 | 9,908 | |||||||||
| Total assets | 44,519 | 37,701 | 38,765 | |||||||||
| Current liabilities | 11,481 | 4,847 | 5,604 | |||||||||
| Non-current liabilities | 5,556 | 5,133 | 5,583 | |||||||||
| Total liabilities | 17,037 | 9,980 | 11,187 | |||||||||
| Net assets | $ | 27,482 | $ | 27,721 | $ | 27,578 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| In thousands | October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | ||||||||||||
| Net sales | $ | 13,036 | $ | 10,635 | $ | 29,333 | $ | 27,161 | ||||||||
| Gross profit | 6,006 | 4,918 | 13,718 | 12,661 | ||||||||||||
| Net income | 1,229 | 1,146 | 1,278 | 1,498 | ||||||||||||
Note E – Income Taxes
The provision for income taxes was computed based on financial statement income.
Note FD – Fair Values of Financial InstrumentsInstruments\
The following methods were used to estimate the fair value of all financial instruments recognized in the accompanying balance sheets at amounts other than fair values.
Cash and Cash Equivalents
Fair values of cash and cash equivalents approximate cost due to the short period of time to maturity.
Long-term Debt
Fair values of long-term debt is estimated based on borrowing rates currently available to the Company for bank loans with similar terms and maturities and determined through the use of a discounted cash flow model.
The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall in accordance with FASB ASC 825 at October 7, 2017,June 30, 2023, December 31, 20162022 and October 1, 2016.July 9, 2022.
Fair Value Measurements Using | ||||||||||||||||
June 30, 2023 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
Cash and cash equivalents | $ | 577 | $ | 577 | $ | -- | $ | -- | ||||||||
| Financial liabilities | ||||||||||||||||
Current portion of long-term debt | $ | 7,143 | $ | -- | $ | 7,143 | $ | -- | ||||||||
Long-term debt | $ | 76,809 | $ | -- | $ | 76,809 | $ | -- | ||||||||
Fair Value Measurements Using | ||||||||||||||||
December 31, 2022 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
Cash and cash equivalents | $ | 3,967 | $ | 3,967 | $ | -- | $ | -- | ||||||||
| Financial liabilities | ||||||||||||||||
Current portion of long-term debt | $ | 7,143 | $ | -- | $ | 7,143 | $ | -- | ||||||||
Long-term debt | $ | 87,738 | $ | -- | $ | 87,738 | $ | -- | ||||||||
Fair Value Measurements Using | ||||||||||||||||
July 9, 2022 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
Cash and cash equivalents | $ | 6,195 | $ | 6,195 | $ | -- | $ | -- | ||||||||
| Financial liabilities | ||||||||||||||||
Current portion of long-term debt | $ | 7,143 | $ | -- | $ | 7,143 | $ | -- | ||||||||
Long-term debt | $ | 94,040 | $ | -- | $ | 94,040 | $ | -- | ||||||||
| Fair Value Measurements Using | ||||||||||||||||
| October 7, 2017 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 1,646 | $ | 1,646 | $ | — | $ | — | ||||||||
| Financial liabilities | ||||||||||||||||
| Current portion of long-term debt | $ | 1,300 | $ | — | $ | 1,300 | $ | — | ||||||||
| Long-term debt | $ | 24,738 | $ | — | $ | 24,738 | $ | — | ||||||||
| Fair Value Measurements Using | ||||||||||||||||
| December 31, 2016 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 1,013 | $ | 1,013 | $ | — | $ | — | ||||||||
| Financial liabilities | ||||||||||||||||
| Current portion of long-term debt | $ | 1,250 | $ | — | $ | 1,250 | $ | — | ||||||||
| Long-term debt | $ | 24,189 | $ | — | $ | 24,189 | $ | — | ||||||||
| Fair Value Measurements Using | ||||||||||||||||
| October 1, 2016 In thousands | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | 4,306 | $ | 4,306 | $ | — | $ | — | ||||||||
| Marketable securities | $ | 395 | $ | 395 | $ | — | $ | — | ||||||||
| Financial liabilities | ||||||||||||||||
| Current portion of long-term debt | $ | 1,405 | $ | — | $ | 1,405 | $ | — | ||||||||
| Long-term debt | $ | 35,999 | $ | — | $ | 35,999 | $ | — | ||||||||
Note GE – Stock Compensation
The fair value of stock-based compensation is recognized in accordance with the provisions of FASB ASC 718,Stock Compensation.
During the nine monthstwo quarters ended October 7, 2017June 30, 2023, and pursuant to the 20072017 Incentive Plan, the Company issued 30,921 shares of common stock with a fair market value of $395 thousand in lieu of accrued and unpaid annual cash incentives for fiscal year 2022 to certain officers. During the two quarters ended June 30, 2023 and pursuant to the 2017 Incentive Plan, in lieu of cash payments of director fees, the Company awarded to certain directors 12,6834,441 shares of common stock.
During the nine monthstwo quarters ended October 7, 2017,June 30, 2023, the Company awarded 14,25021,200 restricted stock units to directors and 40,782145,563 restricted stock units to employees. The restricted stock units awarded to directors time vest over two years (one-half one year from grant date and one-half two years from grant date) provided that the director is still a director of the Company at the vest date. Director restricted stock units are subject to forfeiture, except for termination of services as a result of retirement, death or disability, if on the vesting date the director no longer holds a position with the Company. The 20172023 restricted stock units awarded to employees time vest over fourthree years (one-third one year from grant, one-third two years from grant date,and one-third three years from grant date and one-third four years from grant date)grant) provided that the employee is still employed by the Company and that the performance criteria related to the market price of the Company’s stock is satisfied. The criteria is for any 30 consecutive trading days on the NASDAQ Stock Market (or such other principal securities exchange on which the Company’s shares of common stock are then traded) during the period beginning on the grant date and ending on the fourth anniversary thereof, the cumulative average Volume Weighted Average Price per share is at least 15% higher than the closing price per share on the grant date plus any incremental dividends paid above the current quarterly dividend rate of $0.115 per share by the Company during such four year period. The Company utilizes the Monte Carlo technique to determine the fair value of restricted stock units granted for awards with market conditions.vesting date.
For the threesecond quarter and nine month periodstwo quarters ended October 7, 2017, including expense associated with issuing certain directors stock in lieu of cash for certain director fees,June 30, 2022, the Company recognized stock based compensation expense of $103$458 thousand and $543$917 thousand, respectively compared to stock based compensation expense of ($13)$688 thousand and $374$1,076 thousand for the same periods in the prior year. At October 7, 2017June 30, 2023 and October 1, 2016,July 9, 2022, respectively, there was $0.6$2.5 million and $0.6$2.6 million in unrecognized stock-based compensation expense related to non-vested stock awards.
Note H -F ‑ Segment Information
| For the Three Months Ended October 7, 2017 | For the Second Quarter Ended June 30, 2023 | |||||||||||||||||||||||
| In thousands | Sporting Goods | Corp. | Total | Sporting Goods | Corp. | Total | ||||||||||||||||||
| Revenues from external customers | $ | 41,892 | $ | — | $ | 41,892 | $ | 67,771 | $ | -- | $ | 67,771 | ||||||||||||
| Operating income (loss) | 5,046 | (918 | ) | 4,128 | 6,837 | (579 | ) | 6,258 | ||||||||||||||||
| Net income | 3,034 | 84 | 3,118 | |||||||||||||||||||||
Net income (loss) | 3,817 | (175 | ) | 3,642 | ||||||||||||||||||||
| As of and for the Nine Months Ended October 7, 2017 | ||||||||||||
| In thousands | Sporting Goods | Corp. | Total | |||||||||
| Revenues from external customers | $ | 125,097 | $ | — | $ | 125,097 | ||||||
| Operating income (loss) | 11,215 | (1,759 | ) | 9,456 | ||||||||
| Net income (loss) | 6,835 | (233 | ) | 6,602 | ||||||||
| Total assets | $ | 135,574 | $ | 22,673 | $ | 158,247 | ||||||
| For the Three Months Ended October 1, 2016 | ||||||||||||
| In thousands | Sporting Goods | Corp. | Total | |||||||||
| Revenues from external customers | $ | 38,793 | $ | — | $ | 38,793 | ||||||
| Operating income | 4,334 | 995 | 5,329 | |||||||||
| Net income | 2,502 | 1,741 | 4,243 | |||||||||
| As of and for the Nine Months Ended October 1, 2016 | As of and for the Two Quarters Ended June 30, 2023 | |||||||||||||||||||||||
| In thousands | Sporting Goods | Corp. | Total | Sporting Goods | Corp. | Total | ||||||||||||||||||
| Revenues from external customers | $ | 121,824 | $ | — | $ | 121,824 | $ | 124,702 | $ | -- | $ | 124,702 | ||||||||||||
| Operating income (loss) | 11,324 | (512 | ) | 10,812 | 7,527 | (1,120 | ) | 6,407 | ||||||||||||||||
| Net income | 6,492 | 1,538 | 8,030 | |||||||||||||||||||||
Net income (loss) | 3,333 | (643 | ) | 2,690 | ||||||||||||||||||||
| Total assets | $ | 137,747 | $ | 27,531 | $ | 165,278 | $ | 278,734 | $ | 2,351 | $ | 281,085 | ||||||||||||
For the Second Quarter Ended July 9, 2022 | ||||||||||||
In thousands | Sporting Goods | Corp. | Total | |||||||||
Revenues from external customers | $ | 94,337 | $ | -- | $ | 94,337 | ||||||
Operating income (loss) | 8,830 | (641 | ) | 8,189 | ||||||||
Net income (loss) | 5,737 | (64 | ) | 5,673 | ||||||||
As of and for the Two Quarters Ended July 9, 2022 | ||||||||||||
In thousands | Sporting Goods | Corp. | Total | |||||||||
Revenues from external customers | $ | 166,717 | $ | -- | $ | 166,717 | ||||||
Operating income (loss) | 18,365 | (1,153 | ) | 17,212 | ||||||||
Net income | 12,278 | 49 | 12,327 | |||||||||
Total assets | $ | 307,941 | $ | 8,911 | $ | 316,852 | ||||||
Note IG – Dividend Payment
On September 18, 2017,June 19, 2023, the Company paid a quarterly dividend of $0.115$0.15 per common share to all shareholders of record on September 11, 2017.June 12, 2023. The total amount of the dividend was approximately $1.7$2.1 million and was charged against retained earnings.
On June 15, 2017,March 20, 2023, the Company paid a quarterly dividend of $0.115 per common share to all shareholders of record on June 8, 2017. The total amount of the dividend was approximately $1.7 million and was charged against retained earnings.
On March 20, 2017, the Company paid a quarterly dividend of $0.115$0.15 per common share to all shareholders of record on March 13, 2017.2023. The total amount of the dividend was approximately $1.6$2.1 million and was charged against retained earnings.
Note J -H ‑ Earnings Per Share
The shares used in computation of the Company’s basic and diluted earnings per common share are as follows:
| Three Months Ended | Nine Months Ended | Second Quarter Ended | Two Quarters Ended | |||||||||||||||||||||||||||||
| In thousands | October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | June 30, 2023 | July 9, 2022 | June 30, 2023 | July 9, 2022 | ||||||||||||||||||||||||
| Weighted average common shares outstanding | 14,367 | 14,289 | 14,347 | 14,253 | 13,733 | 13,588 | 13,691 | 13,554 | ||||||||||||||||||||||||
| Dilutive effect of stock options and restricted stock units | 33 | 60 | 33 | 60 | 109 | 55 | 102 | 62 | ||||||||||||||||||||||||
| Weighted average common shares outstanding, assuming dilution | 14,400 | 14,349 | 14,380 | 14,313 | 13,842 | 13,643 | 13,793 | 13,616 | ||||||||||||||||||||||||
Stock options that are anti-dilutive as to earnings per share
Note I – New Accounting Standards and unvested restricted stock units which have a market condition for vesting that has not been achieved are ignoredChanges in the computation of dilutive earnings per share. The number of stock options and restricted stock units that were excluded in 2017 and 2016 were 77,600 and 64,000, respectively.Accounting Principles
With the exception of that discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the threesecond quarter and nine month periodstwo quarters ended October 7, 2017,June 30, 2023, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2022, that are of significance, or potential significance to the Company.
In MarchJune 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016.
The new standard requires excess tax benefits and tax deficiencies to be recorded as income tax expense or benefit in the income statement and also requires a policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The Company has elected to account for forfeitures when they actually occur. The new guidance also requires cash paid by an employer when directly withholding shares for tax withholding purposes to be classified in the Consolidated Statement of Cash Flows as a financing activity, which is the classification currently used by the Company. Lastly, the guidance requires that excess tax benefits should be classified along with other income tax cash flows as an operating activity on the statement of cash flows. The Company elected to apply this provision using the prospective transition method. Adoption of this guidance did not impact the presentation of cash flows in the current period.
In November 2015, the FASB issued ASU 2015-17 Income Taxes2016-13, Financial Instruments – Credit Losses (Topic 740)326): Balance Sheet ClassificationMeasurement of Deferred Taxes.Credit Losses on Financial Instruments. This amendment requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2015-172016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the current requirementconcept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for organizations to present deferred tax liabilities and assetscredit losses rather than as current and noncurrenta reduction in a classified balance sheet. Instead, organizationsthe amortized cost basis of the securities. These changes will be required to classify all deferred tax assets and liabilities as noncurrent. The ASU is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. result in earlier recognition of credit losses.
The Company adopted this standard on January 1, 2017 and has elected to apply the requirements prospectively. Comparative financial statements of prior periods have not been retrospectively adjusted. Adoption2023. The adoption of this standard did not have a material impact resultson the financial statements of operations or cash flowsthe Company.
Note J – Revenue from Contracts with Customers
Revenue Recognition – Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue.
Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments and primarily fall into one of three categories: returns, warranties and customer allowances.
Returns –The Company records an accrued liability and reduction in sales for estimated product returns based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return authorizations that have been communicated by the customer.
Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued liability and reduction in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current or previous reporting periods.year.
Customer Allowances – Customer allowances are common practice in the industries in which the Company operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.
Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products. These products are sold through multiple sales channels that include: mass merchants, specialty dealers, key on-line retailers (“E-commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:
Second Quarter Ended | Two Quarters Ended | |||||||||||||||
All Amounts in Thousands | June 30, 2023 | July 9, 2022 | June 30, 2023 | July 9, 2022 | ||||||||||||
| Gross Sales by Channel: | ||||||||||||||||
Mass Merchants | $ | 19,480 | $ | 28,925 | $ | 36,170 | $ | 55,955 | ||||||||
Specialty Dealers | 23,850 | 28,990 | 45,465 | 54,333 | ||||||||||||
E-commerce | 27,135 | 38,495 | 47,727 | 61,351 | ||||||||||||
International | 3,187 | 4,531 | 6,228 | 8,611 | ||||||||||||
Other | 1,279 | 1,492 | 2,314 | 2,266 | ||||||||||||
Total Gross Sales | 74,931 | 102,433 | 137,904 | 182,516 | ||||||||||||
| Less: Gross-to-Net Sales Adjustments | ||||||||||||||||
Returns | 2,034 | 678 | 3,546 | 2,848 | ||||||||||||
Warranties | 190 | 697 | 630 | 1,322 | ||||||||||||
Customer Allowances | 4,936 | 6,721 | 9,026 | 11,629 | ||||||||||||
Total Gross-to-Net Sales Adjustments | 7,160 | 8,096 | 13,202 | 15,799 | ||||||||||||
Total Net Sales | $ | 67,771 | $ | 94,337 | $ | 124,702 | $ | 166,717 | ||||||||
Note K – Leases
We have operating leases for office, manufacturing and distribution facilities as well as for certain equipment. Our leases have remaining lease terms of 1 year to 9 years. As of June 30, 2023, the Company has not entered into any lease arrangements classified as a finance lease.
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and operating lease liabilities on our consolidated balance sheet. The Company has elected an accounting policy to not recognize short-term leases (one year or less) on the balance sheet. The Company also elected the package of practical expedients which applies to leases that commenced before the adoption date.
ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Components of lease expense and other information is as follows:
Second Quarter Ended | Two Quarters Ended | |||||||||||||||
All Amounts in Thousands | June 30, 2023 | July 9, 2022 | June 30, 2023 | July 9, 2022 | ||||||||||||
| Lease Expense | ||||||||||||||||
Operating Lease Cost | $ | 375 | $ | 342 | $ | 749 | $ | 680 | ||||||||
Short-term Lease Cost | 611 | 723 | 1,223 | 1,224 | ||||||||||||
Variable Lease Cost | 169 | 130 | 298 | 312 | ||||||||||||
Total Operating Lease Cost | $ | 1,155 | $ | 1,195 | $ | 2,270 | $ | 2,216 | ||||||||
Operating Lease – Operating Cash Flows | $ | 248 | $ | 309 | $ | 493 | $ | 612 | ||||||||
New ROU Assets – Operating Leases | $ | 83 | $ | 7,743 | $ | 83 | $ | 7,743 | ||||||||
Other information about lease amounts recognized in our consolidated financial statements is summarized as follows:
Two Quarters Ended | ||||||||
All Amounts in Thousands | June 30, 2023 | July 9, 2022 | ||||||
Weighted Average Remaining Lease Term – Operating Leases (in years) | 8.57 | 9.47 | ||||||
Weighted Average Discount Rate – Operating Leases | 5.09 | % | 5.00 | % | ||||
Future minimum lease payments under non-cancellable leases as of June 30, 2023 were as follows:
All Amounts in Thousands | ||||
Year 1 | $ | 738 | ||
Year 2 | 1,422 | |||
Year 3 | 1,387 | |||
Year 4 | 1,343 | |||
Year 5 | 1,257 | |||
Thereafter | 5,283 | |||
Total future minimum lease payments | 11,430 | |||
Less imputed interest | (2,206 | ) | ||
Total | $ | 9,224 | ||
| Reported as of June 30, 2023 | ||||
Current operating lease liabilities | 1,002 | |||
Long-term operating lease liabilities | 8,222 | |||
Total | $ | 9,224 |
Note L – Commitments and Contingencies
The Company is involved in litigation arising in the normal course of business. The Company does not believe that the disposition or ultimate resolution of existing claims or lawsuits will have a material adverse effect on the business or financial condition of the Company.
Note M – AcquisitionDebt
On January 21, 2022, the Company entered into an Amended and Restated Credit Agreement (“Restated Credit Agreement”) with its issuing bank, JP Morgan Chase Bank, N.A. (“Chase”), and the other lenders identified in the Restated Credit Agreement (collectively, the “Lender”). Under the terms of the Restated Credit Agreement, Old National Bank has been added as a Lender. The Lenders made available to the Company a senior revolving credit facility with increased maximum availability of $65.0 million (the “Revolving Facility”), up from $50.0 million, plus an accordion feature that would allow borrowings up to $90.0 million under the Revolving Facility subject to certain terms and conditions. The maturity date of the revolving credit facility was extended to January 21, 2027. The Company may prepay the Revolving Facility, in whole or in part, and reborrow prior to the revolving loan maturity date. The Restated Credit Agreement further extended the maturity date for the term loan facility to January 21, 2027.
During the nine months ended October 7, 2017,On July 18, 2022, the Company acquired certain assets and liabilities through two acquisitions. These acquisitions, individually and in aggregate, were not and would not have been materialentered into the First Amendment to the Company’s net sales, resultsRestated Credit Agreement. Under the terms of operations or total assets during the three and nine month periods ended October 7, 2017. Accordingly, our consolidated resultsFirst Amendment, the Lender increased the maximum availability under the senior revolving credit facility from operations do not differ materially from historical performance as a result of these acquisitions, and therefore, pro-forma results are not presented.
Total consideration paid for the acquisitions was $1.5$65.0 million of which $1.4to $75.0 million was paid in cash and a note payable was recorded for the remaining $0.1 million. The consideration paid by the company for these acquisitions was allocatedpursuant to the assets acquired, net ofaccordion feature in the liabilities assumed, based upon their estimated fair valuesRestated Credit Agreement. The First Amendment also adjusted the funded debt to EBITDA ratio financial covenant to 3:00 to 1:00 as of the dateend of the acquisition.Company’s third and fourth fiscal quarters of 2022.
ASC 805 requires that when fair valueOn October 26, 2022, the Company entered into the Second Amendment ("Second Amendment”) to the Restated Credit Agreement. Under the terms of the net assets acquired exceedsSecond Amendment, the purchase price, resultingLender increased the maximum availability under the senior revolving credit facility from $75.0 million to $90.0 million pursuant to the accordion feature in a bargain purchase, the acquirer must reassessRestated Credit Agreement. The Second Amendment adjusted the reasonablenessfunded debt to EBITDA ratio financial covenant to 3:25 to 1:00 as of the values assigned to allend of the net assets acquired, liabilities assumedCompany’s third and consideration transferred. The Company has performed such assessmentfourth fiscal quarters of 2022 and has concluded that the values assigned appear3:00 to be reasonable. The following table summarizes the allocation1:00 as of the purchase priceend of the Company’s first fiscal quarter of 2023. The Second Amendment also modified the EBITDA definition to permit add-backs of a) up to $2.0 million for disposition related expenses; and b) up to $2.0 million for unusual or non-recurring expenses which are incurred prior to the acquisition that resulted in a bargain purchase:end of fiscal year 2023 and which are subject to the approval of the Administrative Agent.
| In thousands | ||||
| Accounts receivable, net | $ | 852 | ||
| Inventories, net | 737 | |||
| Other assets | 64 | |||
| Intangible assets | 413 | |||
| Total fair value of assets acquired | 2,066 | |||
| Total liabilities assumed | (563 | ) | ||
| Net assets acquired | 1,503 | |||
| Total consideration paid | (1,101 | ) | ||
| Gain before deferred income tax liability | 402 | |||
| Income tax liability – deferred | (146 | ) | ||
| Gain on bargain purchase | $ | 256 | ||
On May 8, 2023, the Company entered into the Third Amendment (the “Third Amendment”) to the Restated Credit Agreement. The Third Amendment adjusted the funded debt to EBITDA ratio financial covenant to 4:25 to 1:00 as of the end of the Company’s second fiscal quarter of 2023, 3:00 to 1:00 as of the end of the Company’s third fiscal quarter of 2023, and 2:75 to 1:00 as of the end of the Company’s fourth fiscal quarter of 2023 and thereafter. The Third Amendment adjusted the fixed charge coverage ratio covenant to 1:10 to 1:00 commencing as of the Company’s fourth fiscal quarter of 2023 and 1:25 to 1:00 as of the end of the Company’s first fiscal quarter of 2024 and thereafter. For the Company’s second and third fiscal quarters in 2023, the Third Amendment suspended the fixed charge coverage ratio covenant and added a minimum EBITDA covenant of $22.5 million as of the end of each such fiscal quarter. Under the terms of the Third Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $90.0 million to $75.0 million, upon the consummation of the sale of the Company’s Mexican subsidiary and the dissolution of Escalade Insurance, Inc. The proceeds from such sale and dissolution, respectively, will be used to partially prepay the amounts outstanding under the revolving credit facility.
As of June 30, 2023, the outstanding principal amount of the term loan was $36.3 million and total amount drawn under the Revolving Facility was $47.7 million.
Item 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward-Looking Statements
This report contains forward-looking statements relating to present or future trends or factors that are subject to risks and uncertainties. These risks include, but are not limited to,to: specific and overall impacts and residual effects of the COVID-19 global pandemic on Escalade’s financial condition and results of operations; the impact of competitive products and pricing,pricing; product demand and market acceptance,acceptance; new product development,development; Escalade’s ability to achieve its business objectives, especially with respect to its Sporting Goods business on which it has chosen to focus,objectives; Escalade’s ability to successfully achieve the anticipated results of strategic transactions, including the integration of the operations of acquired assets and businesses and of divestitures or discontinuances of certain operations, assets, brands, and products,products; the continuation and development of key customer, supplier, licensing and other business relationships, therelationships; Escalade’s ability to develop and implement our own direct to consumer e-commerce distribution channel; Escalade’s ability to successfully negotiate the shifting retail environment and changes in consumer buying habits,habits; the financial health of our customers; disruptions or delays in our business operations, including without limitation disruptions or delays in our supply chain, arising from political unrest, war, labor strikes, natural disasters, public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control; Escalade’s ability to control costs; Escalade’s ability to successfully implement actions to lessen the potential impacts of tariffs and other trade restrictions applicable to our products and raw materials, including impacts on the costs of producing our goods, importing products and materials into our markets for sale, and on the pricing of our products; general economic conditions, including inflationary pressures; fluctuation in operating results,results; changes in foreign currency exchange rates,rates; changes in the securities markets; continued listing of the Company’s common stock on the NASDAQ Global Market; the Company’s inclusion or exclusion from certain market indices; Escalade’s ability to obtain financing and to maintain compliance with the terms of such financingfinancing; the availability, integration and effective operation of information systems and other technology, and the potential interruption of such systems or technology; the potential impact of actual or perceived defects in, or safety of, our products, including any impact of product recalls or legal or regulatory claims, proceedings or investigations involving our products; risks related to data security of privacy breaches; the potential impact of regulatory claims, proceedings or investigations involving our products; and other risks detailed from time to time in Escalade’s filings with the Securities and Exchange Commission. Escalade’s future financial performance could differ materially from the expectations of management contained herein. Escalade undertakes no obligation to release revisions to these forward-looking statements after the date of this report.
Overview
Escalade, Incorporated (Escalade, the Company, we, us or our) is focused on growing its Sporting Goods business through organic growth of existing categories, strategic acquisitions, and new product development. The Sporting Goods business competes in a variety of categories including basketball goals, archery, billiards, indoor and outdoor game recreation and fitness products. Strong brands and on-going investment in product development provide a solid foundation for building customer loyalty and continued growth.
Within the sporting goods industry, the Company has successfully built a robust market presence in several niche markets. This strategy is heavily dependent on expanding our customer base, barriers to entry, strong brands, excellent customer service and a commitment to innovation. A key strategic advantage is the Company’s established relationships with major customers that allow the Company to bring new products to market in a cost effective manner while maintaining a diversified portfolio of products to meet the demands of consumers. In addition to strategic customer relations, the Company has substantial manufacturing and import experience that enable it to be a low cost supplier.
To enhance growth opportunities, the Company has focused on promoting new product innovation and development and brand marketing. In addition, the Company has embarked on a strategy of acquiring companies or product lines that complement or expand the Company's existing product lines or provide expansion into new or emerging categories in sporting goods. A key objective is the acquisition of product lines with barriers to entry that the Company can take to market through its established distribution channels or through new market channels. Significant synergies are achieved through assimilation of acquired product lines into the existing Company structure.
In October 2020, the Company acquired the assets of the billiard table, game room, and recreational product lines of American Heritage Billiards, including the related intellectual property. In December 2020, the Company acquired substantially all of the business and assets of Revel Match LLC, dba RAVE Sports, a brand known for its innovative and high-quality water recreation products. In January 2022, the Company acquired the assets of the Brunswick Billiards® business, complementing its existing portfolio of billiards brands and other offerings in the Company’s indoor recreation market. These and other acquisitions strengthen the Company’s leadership in various product categories, while providing exciting new opportunities within the growing water sports market. The Company also sometimes divests or discontinues certain operations, assets, brands, and products that do not perform to the Company's expectations or no longer fit with the Company's strategic objectives.
Management believes that key indicators in measuring the success of these strategies are revenue growth, earnings growth, new product introductions, and the expansion of channels of distribution.
Notwithstanding that the World Health Organization has declared that COVID-19 no longer constitutes a public health emergency, the impact of the COVID-19 pandemic continues to evolve and the Company continues to respond to the challenges and opportunities arising from the residual effects of the pandemic. Even though the pandemic may not have had a material adverse direct effect on the Company, the pandemic’s effects on the global supply chain, higher freight and materials costs, supplier product delays, workforce availability and labor costs have caused operational challenges for the Company. The ultimate extent of the effects of the COVID-19 pandemic on the Company is workinghighly uncertain and will depend on future developments, and such effects could exist for an extended period of time. Consumer demand for the Company’s products may be slowing due to overcome the industry-wide downturnadditional factors such as general economic conditions, inflation, recessionary fears, rising interest rates, changes in the archery category, a reductionhousing market and declining consumer confidence. Management cannot predict the full impact of these factors on the Company. Due to the above circumstances and as described generally in contribution from our joint venture, Stiga Sports, AB, and bankruptcies that have plaguedthis Form 10-Q, the retail industry. We believe these conditions have masked improvements in our other existing and acquired businesses. The Company’s balance sheet remains strong, as inventory levels and receivables are downresults of operations for the third quarterperiod ended June 30, 2023 are not necessarily indicative of 2017, and long-term debt has decreased by 31.3% from the third quarter of 2016. results to be expected for fiscal year 2023.
Results of Operations
The following schedule sets forth certain consolidated statement of operations data as a percentage of net revenue:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| October 7, 2017 | October 1, 2016 | October 7, 2017 | October 1, 2016 | |||||||||||||
| Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of products sold | 72.9 | % | 73.5 | % | 73.8 | % | 72.1 | % | ||||||||
| Gross margin | 27.1 | % | 26.5 | % | 26.2 | % | 27.9 | % | ||||||||
| Selling, administrative and general expenses | 16.4 | % | 11.8 | % | 17.6 | % | 17.4 | % | ||||||||
| Amortization | 0.9 | % | 1.0 | % | 1.0 | % | 1.6 | % | ||||||||
| Operating income | 9.8 | % | 13.7 | % | 7.6 | % | 8.9 | % | ||||||||
Second Quarter Ended | Two Quarters Ended | |||||||||||||||
June 30, 2023 | July 9, 2022 | June 30, 2023 | July 9, 2022 | |||||||||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of products sold | 75.4 | % | 74.8 | % | 77.8 | % | 73.7 | % | ||||||||
Gross margin | 24.6 | % | 25.2 | % | 22.2 | % | 26.3 | % | ||||||||
Selling, administrative and general expenses | 14.5 | % | 15.6 | % | 16.1 | % | 15.1 | % | ||||||||
Amortization | 0.9 | % | 0.9 | % | 1.0 | % | 0.9 | % | ||||||||
Operating income | 9.2 | % | 8.7 | % | 5.1 | % | 10.3 | % | ||||||||
Revenue and Gross Margin
Sales increaseddecreased by 8.0%28.2% for the thirdsecond quarter of 2017,2023, compared with the same period in the prior year driven by our coreyear. The decrease in sales was due to a combination of reduced post-pandemic consumer demand across most product categories, – Basketball, Table Tennis and Archery. Fortogether with 21 fewer days in the nine months ended October 7, 2017, sales were up by 2.7%Company’s new reporting calendar, when compared to the same period prior year.year-ago period. Excluding the impact of the change in the Company’s reporting calendar, sales declined 9.5% on a year-over-year basis. For the two quarters ended June 30, 2023, sales were down 25.2% on a year-over-year basis in the first half of 2023 due mainly to reduced post-pandemic demand, particularly in archery, basketball, and indoor/outdoor games categories as well as excess inventory levels in the retail channel.
The overall gross margin percentage increaseddecreased to 27.1%24.6% for the thirdsecond quarter of 2017,2023 compared to 26.5% for 2016. 2022, primarily driven by higher-cost inventory, elevated inventory storage and handling costs, and lower operating leverage on a comparably lower revenue base partially offset by improved margins in several categories and expense reductions implemented through the second quarter.
Gross margin percentage decreased to 26.2%22.2% for the first nine months of 2017,two quarters ended June 30, 2023, compared to 27.9%26.3% for the same period in the prior year. Gross margin, for the quarter,The decline was favorably impacted byprimarily due to less favorable product mix, of sales.ongoing inventory storage and handling costs, and lower operating leverage with the lower sales level.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $6.9$9.8 million for the thirdsecond quarter of 20172023 compared to $4.6$14.7 million for the same period in the prior year, an increasea decrease of $2.3$4.9 million or 49.8%33.5%. SG&A as a percent of sales is 16.4%14.5% for the thirdsecond quarter of 20172023 compared with 11.8%15.6% for the same period in the prior year. In the third quarter of 2016, SG&A was favorably impacted by the recognition of a gain of approximately $1.9 million on the sale of our Wabash, IN land and building. One-time expenses of $0.4 million unfavorably impacted SG&A during the third quarter of 2016. The net gain of these one-time events recorded during the third quarter of 2016 was $1.5 million. For the first nine monthshalf of 2017,2023, SG&A were $22.1$20.1 million compared to $21.3$25.2 million for the same period in 2016, an increase2022, a decrease of $0.8$5.1 million or 3.7%20.4%. As a percent of sales, SG&A is 17.6%16.1% for the first nine monthshalf of 20172023 compared with 17.4%15.1% for the same period in the prior year.
Provision (Benefit) for Income Taxes
The effective tax rate for the first nine monthshalf of 20172023 was 31.9%22.6% compared to 27.6%21.9% for the same period last year. The effective tax rate for prior year is lower than 2017 primarily due to benefits from the captive insurance.
Financial Condition and Liquidity
Total debt at the endas of the first nine monthsJune 30, 2023 was $84.0 million, a decrease of 2017 was $26.0 million, an increase of $0.6$10.9 million from December 31, 2016.2022. The following schedule summarizes the Company’s total debt:
| In thousands | October 7, 2017 | December 31, 2016 | October 1, 2016 | June 30, 2023 | December 31, 2022 | July 9, 2022 | ||||||||||||||||||
| Current portion long-term debt | $ | 1,300 | $ | 1,250 | $ | 1,405 | ||||||||||||||||||
Current portion of long-term debt | $ | 7,143 | $ | 7,143 | $ | 7,143 | ||||||||||||||||||
| Long term debt | 24,738 | 24,189 | 35,999 | 76,809 | 87,738 | 94,040 | ||||||||||||||||||
| Total | $ | 26,038 | $ | 25,439 | $ | 37,404 | ||||||||||||||||||
Total Debt | $ | 83,952 | $ | 94,881 | $ | 101,183 | ||||||||||||||||||
As a percentage of stockholders’ equity, total debt was 24.5%53.0%, 25.0%59.9% and 37.2%64.9% at October 7, 2017,June 30, 2023, December 31, 2016,2022, and July 9, 2022 respectively.
On January 21, 2022, the Company and its wholly owned subsidiary, Indian Industries, Inc. (“Indian”), entered into an Amended and Restated Credit Agreement (the “2022 Restated Credit Agreement”) with its issuing bank, JPMorgan Chase Bank, N.A. (“Chase”), and the other lenders identified in the Restated Credit Agreement (collectively, the “Lenders”). The 2022 Restated Credit Agreement amended and restated the Amended and Restated Credit Agreement dated as of January 21, 2019, as amended, in its entirety, and continues the existing Company’s credit facilities which have been in place since April 30, 2009. The Company’s indebtedness under the 2022 Restated Credit Agreement continues to be collateralized by liens on all of the present and future equity of each of the Company’s domestic subsidiaries and substantially all of the assets of the Company (excluding real estate). Under the terms of the 2022 Restated Credit Agreement, Old National Bank was added as a Lender. The Lenders made available to Escalade and Indian a senior revolving credit facility with increased maximum availability of $65.0 million (the “Revolving Facility”), up from $50.0 million, plus an accordion feature that would allow borrowings up to $90.0 million under the Revolving Facility subject to certain terms and conditions. The maturity date of the revolving credit facility was extended to January 21, 2027. The Company may prepay the Revolving Facility, in whole or in part, and reborrow prior to the revolving loan maturity date. The 2022 Restated Credit Agreement further extended the maturity date for the existing $50.0 million term loan facility to January 21, 2027.
In addition to the increased borrowing amount and extended maturity date, the 2022 Restated Credit Agreement provided a $7.5 million swingline commitment by Chase, replaced LIBOR with the replacement benchmark secured overnight financing rate, and adjusted certain financial covenants relating to the fixed charge coverage ratio.
On July 18, 2022, the Company entered into the First Amendment to the 2022 Restated Credit Agreement. Under the terms of the First Amendment, the Lender increased the maximum availability under the senior revolving credit facility from $65.0 million to $75.0 million pursuant to the accordion feature in the 2022 Restated Credit Agreement. The First Amendment also adjusted the funded debt to EBITDA ratio financial covenant to 3:00 to 1:00 as of the end of the Company’s third and fourth fiscal quarters of 2022.
On October 1, 2016 respectively.26, 2022, the Company entered into the Second Amendment ("Second Amendment”) to the 2022 Restated Credit Agreement. Under the terms of the Second Amendment, the Lender increased the maximum availability under the senior revolving credit facility from $75.0 million to $90.0 million pursuant to the accordion feature in the 2022 Restated Credit Agreement. The Second Amendment adjusted the funded debt to EBITDA ratio financial covenant to 3:25 to 1:00 as of the end of the Company’s third and fourth fiscal quarters of 2022 and 3:00 to 1:00 as of the end of the Company’s first fiscal quarter of 2023. The Second Amendment also modified the EBITDA definition to permit add-backs of a) up to $2.0 million for disposition related expenses; and b) up to $2.0 million for unusual or non-recurring expenses which are incurred prior to the end of fiscal year 2023 and which are subject to the approval of the Administrative Agent.
On May 8, 2023, the Company entered into the Third Amendment (the “Third Amendment”) to the Restated Credit Agreement. The Third Amendment adjusted the funded debt to EBITDA ratio financial covenant to 4:25 to 1:00 as of the end of the Company’s second fiscal quarter of 2023, 3:00 to 1:00 as of the end of the Company’s third fiscal quarter of 2023, and 2:75 to 1:00 as of the end of the Company’s fourth fiscal quarter of 2023 and thereafter. The Third Amendment adjusted the fixed charge coverage ratio covenant to 1:10 to 1:00 commencing as of the Company’s fourth fiscal quarter of 2023 and 1:25 to 1:00 as of the end of the Company’s first fiscal quarter of 2024 and thereafter. For the Company’s second and third fiscal quarters in 2023, the Third Amendment suspended the fixed charge coverage ratio covenant and added a minimum EBITDA covenant of $22.5 million as of the end of each such fiscal quarter. Under the terms of the Third Amendment, the Company and the Lender also agreed to decrease the maximum availability under the senior revolving credit facility from $90.0 million to $75.0 million, upon the consummation of the sale of the Company’s Mexican subsidiary and the dissolution of Escalade Insurance, Inc. The proceeds from such sale and dissolution, respectively, will be used to partially prepay the amounts outstanding under the revolving credit facility.
As of June 30, 2023, the outstanding principal amount of the term loan was $36.3 million and total amount drawn under the Revolving Facility was $47.7 million.
The Company funds working capital requirements, shareholder dividends, and stock repurchases through operating cash flows and revolving credit agreements with its bank. Based on working capital requirements, theLenders. The Company expects to havethat cash generated from its 2023 operations and its access to adequate levels of revolving credit will provide it with sufficient cash flows for its operations and to meet growth needs.
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is exposed to financial market risks, including changes in currency exchange rates and interest rates. The Company attempts to minimize these risks through regular operating and financing activities and, when considered appropriate, through the use of derivative financial instruments. During the quarter there were no derivatives in use. The Company does not purchase, hold or sell derivative financial instruments for trading or speculative purposes.Not Required.
Interest Rates
The Company’s exposure to market-rate risk for changes in interest rates relates primarily to its revolving variable rate bank debt which is based on LIBOR interest rates. A hypothetical 1% or 100 basis point change in interest rates would not have a significant effect on our consolidated financial position or results of operation.
Foreign Currency
The Company conducts business in various countries around the world and is therefore subject to risks associated with fluctuating foreign exchange rates. The Sporting Goods foreign currency transactions are denominated primarily in Mexican Peso and Chinese Yuan. The Company has a 50% interest in a joint venture, Stiga, which is denominated in Swedish Krona.
The geographic areas outside the United States in which the Company operates are generally not considered by management to be highly inflationary. Nonetheless, the Company’s foreign operations are sensitive to fluctuations in currency exchange rates arising from, among other things, certain inter-company transactions that are denominated in currencies other than the respective functional currency. Operating results as well as assets and liabilities are also subject to the effect of foreign currency translation when the operating results, assets and liabilities of our foreign subsidiaries are translated into U.S. dollars in our consolidated financial statements.
The Company and its subsidiaries conduct substantially all of their business in their respective functional currencies to avoid the effects of cross-border transactions. To protect against reductions in value and the volatility of future cash flows caused by changes in currency exchange rates, the Company carefully considers the use of transaction and balance sheet hedging programs such as matching assets and liabilities in the same currency. Such programs reduce, but do not entirely eliminate the impact of currency exchange rate changes. The Company has evaluated the use of currency exchange hedging financial instruments, but has determined that it would not use such instruments under the current circumstances. Changes in currency exchange rates may be volatile and could affect the Company’s performance.
Item 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Escalade maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, could provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, the Company has investments in certain unconsolidated entities. As the Company does not control or manage these entities, its disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those it maintains with respect to its consolidated subsidiaries.
The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the thirdsecond quarter of 2017.2023.
There have been no changes to the Company’s internal control over financial reporting that occurred since the beginning of the Company’s first quarter of 20172023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 1. LEGAL PROCEEDINGS.
None.
Item 1A. RISK FACTORS.
Not required.In addition to the other information set forth in this report, you should carefully consider the risks and uncertainties disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. These risks and uncertainties could materially and adversely affect our business, consolidated financial condition, results of operations, or cash flows. Our operations could also be affected by additional risks or uncertainties that are not presently known to us or that we currently do not consider material to our business. As of the date of this filing, there have been no material changes in our risk factors from those disclosed in the above-referenced Form 10-K, which risk factors are incorporated herein by reference.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
c) Issuer Purchases of Equity Securities
| Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
| Shares purchases prior to 7/15/2017 under the current repurchase program. | 982,916 | $ | 8.84 | 982,916 | $ | 2,273,939 | ||||||||||
| Third quarter purchases: | ||||||||||||||||
| 7/16/2017–8/12/2017 | None | None | No Change | No Change | ||||||||||||
| 8/13/2017-9/9/2017 | None | None | No Change | No Change | ||||||||||||
| 9/10/2017-10/7/2017 | None | None | No Change | No Change | ||||||||||||
| Total share purchases under the current program | 982,916 | $ | 8.84 | 982,916 | $ | 2,273,939 | ||||||||||
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
Share purchases prior to 3/31/2023 under the current repurchase program. | 2,153,132 | $ | 13.38 | 2,153,132 | $ | 4,153,252 | ||||||||||
Second quarter purchases: | ||||||||||||||||
4/1/2023-4/30/2023 | None | None | No Change | No Change | ||||||||||||
5/1/2023-5/31/2023 | None | None | No Change | No Change | ||||||||||||
6/1/2023-6/30/2023 | None | None | No Change | No Change | ||||||||||||
Total share purchases under the current program | 2,153,132 | $ | 13.38 | 2,153,132 | $ | 4,153,252 | ||||||||||
The Company has one stock repurchase program which was established in February 2003 by the Board of Directors and which initially authorized management to expend up to $3,000,000 to repurchase shares on the open market as well as in private negotiated transactions. In February 2005, February 2006, August 2007 and February 2008 the Board of Directors increased the remaining balance on this plan to its original level of $3,000,000. In September 2019, the Board of Directors increased the stock repurchase program from $3,000,000 to $5,000,000. In December 2020, the Board of Directors increased the stock repurchase program to $15,000,000. From its inception date through June 30, 2023, the Company has repurchased 2,153,132 shares of its common stock under this repurchase program for an aggregate price of $28,812,686. The repurchase planprogram has no termination date and there have been no share repurchases that were not part of a publicly announced program.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. MINE SAFETY DISCLOSURES.
Not applicable.
Item 5. OTHER INFORMATION.
None.
Number | Description | ||
3.1 | |||
3.2 | |||
31.1 | |||
Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification. | |||
31.2 | |||
Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification. | |||
32.1 | |||
32.2 | |||
101.CAL | |||
Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF | |||
Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB | |||
Inline XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE | |||
Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
101.INS | |||
Inline XBRL Instance Document | |||
101.SCH | |||
Inline XBRL Taxonomy Extension Schema Document | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ESCALADE, INCORPORATED
| Date: | ||||
| Vice President and Chief Financial Officer | ||||
| (On behalf of the registrant and in his | ||||
| capacities as Principal Financial Officer | ||||
| and Principal Accounting Officer) |