- --------------------------------------------------------------------------------
EXHIBIT 99.1
PRESS RELEASE
ESCALADE ANNOUNCES THIRD QUARTER RESULTS
Wabash, IN (October 22, 2004) Escalade, Incorporated (NASDAQ: ESCA) announced
today that third quarter net sales increased 6.6% to $78,492,000, bringing year
to date sales to $168,397,000, a gain of 10.4% over the comparable year ago
period. Operating income for the third quarter decreased 4% compared to the same
period last year. However, if non-recurring restructuring costs are excluded,
operating income for the quarter increased a healthy 10% compared to last year.
Due to the non-recurring restructuring costs and loss on impairment of goodwill
recorded in the office product business, net income year to date declined 17.9%
to $6,881,000, or fifty-three cents a share as compared to sixty-five cents a
share last year. On a comparable running twelve months, net income is up 4%
this year to $1.03 per share.
Escalade Sports' sales of sporting goods products increased 13% for the
quarter to $61,486,000 bringing year to date net sales to $107,795,000, a 17%
gain over the prior year's comparable period. For the quarter, the increased
sales are primarily the result of earlier shipments. Additionally, the first
half was helped by the Bear acquisition and more normal purchasing patterns by
some of our customers due to their 2003 year end inventories being at more
appropriate levels. Escalade Sports' net income was up 11% for the quarter and
is ahead 25% for the year due to the increased sales and the continued reduction
of operating expenses. The earlier shipments already experienced indicate a
fourth quarter softer than last year, however, we expect the full year for
Escalade Sports to be another good year and end ahead of last year.
Net sales of office products declined 12% to $17,006,000 for the
quarter, primarily due to shipping delays and lower paper shredder orders in
North America, putting year to date net sales at $60,602,000, virtually even
with last year. During the third quarter the office products segment recorded a
restructuring charge of $1,412,000 ($1,250,000 net of taxes) and a goodwill
impairment loss of $1,312,000 ($840,000 net of taxes). These non-recurring
charges resulted from restructuring efforts undertaken to reduce operating costs
and position the business in a more favorable competitive position. Primarily
due to these one time expenses, net income declined 179% for the quarter and
105% year to date. If these one time costs are excluded from net income the
decline is reduced to 35% for the quarter and 26% year to date compared to the
same periods last year. The restructuring costs include $963,000 for involuntary
termination benefits and $449,000 for the write down of assets associated with
consolidating distribution operations in North America. The turnaround for the
European acquisition has taken longer than predicted; however, we continue to
believe it will be a good addition to our group. During the quarter, we have
continued to bolster the management team and we have an ongoing process of cost
reduction, product pricing analysis, and product rationalization that will
improve profitability.
Interest expense declined 30% for the quarter and 21% year to date as
our strong cash flow allowed us to reduce debt $13,908,000 ($1.07 per share) as
compared to the end of the third quarter last year. Early in the quarter when
our share price dipped, we repurchased 14,450 of our shares for $165,065, an
average price of $11.42 per share. We have now used $2,164,192 of the previously
authorized $3,000,000 for share repurchases.
We are continuing to actively evaluate acquisition opportunities in the
sporting goods industry.
Escalade is a quality manufacturer and marketer of sporting goods and
office/graphic arts products sold worldwide. To obtain more information on the
Company and its products, visit our website at: www.EscaladeInc.com or contact
Terry Frandsen Vice President and CFO at 260/569-7208 or C.W. (Bill) Reed,
President and CEO at 260/569-7233.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
---------------------------- ---------------------------- ----------------------------
02 October 04 October 02 October 04 October 02 October 04 October
2004 2003 2004 2003 2004 2003
------------ ------------ ------------ ------------ ------------ ------------
NET SALES ........................ $ 78,492 $ 73,660 $ 168,397 $ 152,600 $ 237,525 $ 206,490
OPERATING EXPENSES
Cost of goods sold .......... 56,738 53,552 118,381 103,371 169,375 143,936
Selling and administrative .. 12,223 11,619 35,690 35,941 46,117 42,637
Restructuring costs ......... 1,412 -- 1,412 -- 1,412 --
------------ ------------ ------------ ------------ ------------ ------------
OPERATING INCOME ................. 8,119 8,489 12,914 13,288 20,621 19,917
OTHER INCOME (EXPENSE)
Interest expense ............ (489) (700) (1,427) (1,800) (1,909) (2,080)
Goodwill impairment loss .... (1,312) -- (1,312) -- (1,312) --
Other income (expense) ...... 245 1,124 546 1,084 1,975 1,235
------------ ------------ ------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ....... 6,563 8,913 10,721 12,572 19,375 19,072
PROVISION FOR INCOME TAXES ....... (2,233) (2,788) (3,840) (4,187) (6,030) (6,232)
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME ....................... $ 4,330 $ 6,125 $ 6,881 $ 8,385 $ 13,345 $ 12,840
============ ============ ============ ============ ============ ============
PER SHARE DATA
Basic earnings per share .... $ 0.33 $ 0.48 $ 0.53 $ 0.65 $ 1.03 $ 0.99
============ ============ ============ ============ ============ ============
Diluted earnings per share .. $ 0.33 $ 0.47 $ 0.52 $ 0.64 $ 1.01 $ 0.97
============ ============ ============ ============ ============ ============
Average shares outstanding .. 13,041 12,854 13,024 12,962 12,921 12,975
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
02 October 2004 04 October 2003 27 December 2003
--------------- --------------- ---------------
ASSETS
Current assets ...................... $ 106,142 $ 110,414 $ 79,619
Property, Plant & Equipment - net ... 15,919 17,578 17,537
Other assets ........................ 17,645 16,593 18,504
Goodwill ............................ 17,399 17,946 18,777
--------------- --------------- ---------------
Total ............................ $ 157,105 $ 162,531 $ 134,437
=============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ................. $ 71,572 $ 77,047 $ 54,962
Other liabilities ................... 19,099 32,215 18,192
Stockholders' equity ................ 66,434 53,269 61,283
--------------- --------------- ---------------
Total ............................ $ 157,105 $ 162,531 $ 134,437
=============== =============== ===============
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, the impact of competitive products and pricing,
product demand and market acceptance, Escalade's ability to successfully
integrate the operations of acquired assets and businesses, new product
development, the continuation and development of key customer and supplier
relationships, Escalade's ability to control costs, general economic conditions,
fluctuations in operating results, changes in the securities markets 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 update these forward-looking statements after the
date of this report.