EXHIBIT 99.1
PRESS RELEASE
ESCALADE ANNOUNCES FIRST QUARTER RESULTS OF $0.08 PER SHARE
Evansville, IN (August 4, 2006) Escalade, Incorporated (NASDAQ: ESCA) announced
that net sales for the second quarter and first half of the current year
increased 2.9% and 5.7%, respectively, compared to the same periods last year.
Higher selling and marketing costs, primarily in the Sporting Goods business,
resulted in lower net income for both the second quarter and first half of
fiscal 2006 compared to the same periods last year. Earnings per share for the
second quarter of 2006 were $0.08 per share compared to $0.17 per share last
year and $0.18 per share for the first half of 2006 compared to $0.26 per share
for the same period last year.
Net sales in the Sporting Goods business increased 16.1% in the second quarter
of 2006 compared to the same period last year and when coupled with the strong
growth in the first quarter, resulted in a 24.6% increase in net sales for the
first half of 2006 when compared to the same period last year. Net sales in the
second quarter and first half of 2006 were $33.2 million and $53.1 million,
respectively. The increase in sporting goods sales relates primarily to
acquisitions completed in 2006 - Woodplay (residential wood playground sets) and
Carolina Archery Products (archery accessories) - as well as to growth in
existing product lines. The Company's acquisitions support the strategy to
diversify its product lines, increase its customer base, develop specialty
dealers and lessen the impact of large mass retailers. While the Company
anticipates increased product placement of its Sporting Goods for the 2006
holiday shopping season, management believes that total 2006 sales to mass
market retailers will be approximately even as compared to 2005.
The Company's year to date gains in Sporting Goods revenues have been offset by
higher sales and marketing costs, start-up costs associated with the new
manufacturing plant built in Reynosa Mexico, and interest costs associated with
recent acquisitions, resulting in lower profits from the Sporting Goods business
compared to last year. Net income from Sporting Goods was $0.7 million for the
second quarter of 2006 compared to $1.6 million for the same period last year.
For the first half of 2006, net income was $0.8 million compared to $1.5 million
for the same period last year. Management considers approximately $1.0 million
of the increased selling and marketing costs to be non-recurring.
Office Product sales declined 16.9% in the second quarter of 2006 compared to
the same period last year and net sales for the first half of 2006 declined
17.4% compared to the same period last year. More than half of the decline is
attributed to the ongoing rationalization of low margin non-core products and
unprofitable customers, especially in Europe. The remainder of the sales decline
is due to exchange rate differences, increased competition in the paper shredder
market and a general softness in the office products market. Despite the
reduction in sales, net income from the Office Products business remained
relatively unchanged from the prior year. Recent management changes in Europe
are expected to help increase Office Products profitability.
While maintaining our focus on profitability, special emphasis has been directed
toward increasing revenues. The Sporting Goods business is focused on
maintaining our strong ties with mass market retailers while building our
specialty dealer business and the Office Products business is focused on
building market share. In conjunction with these efforts, we continue to strive
for greater profitability by realizing synergies from recent acquisitions and
improving the operating performance of our factories.
Management continues to be optimistic about 2006; expecting incremental gains in
revenues and profits over 2005.
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 Dan Messmer, Chief
Operating Officer at 812/467-1288.
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ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended Twelve Months Ended
---------------------------- ---------------------------- ----------------------------
15 July 09 July 15 July 09 July 15 July 09 July
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
NET SALES .......................... $ 48,949 $ 47,551 $ 81,749 $ 77,333 $ 190,033 $ 208,842
OPERATING EXPENSES
Cost of goods sold ........... 33,613 32,348 55,661 53,207 132,476 149,954
Selling and administrative ... 12,379 11,304 20,784 18,479 38,119 38,788
Restructuring ................ -- -- -- -- -- 2,366
Impairment of goodwill ....... -- -- -- -- -- 1,312
------------ ------------ ------------ ------------ ------------ ------------
OPERATING INCOME ................... 2,957 3,899 5,304 5,647 19,438 16,422
OTHER INCOME (EXPENSE)
Interest expense ............. (810) (494) (1,064) (780) (1,766) (1,614)
Other income (expense) ....... (190) 162 (255) 407 254 125
------------ ------------ ------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ......... 1,957 3,567 3,985 5,274 17,929 14,933
PROVISION FOR INCOME TAXES ......... (925) (1,312) (1,589) (1,865) (6,998) (6,248)
------------ ------------ ------------ ------------ ------------ ------------
NET INCOME ......................... $ 1,032 $ 2,255 $ 2,396 $ 3,409 $ 10,928 $ 8,685
============ ============ ============ ============ ============ ============
PER SHARE DATA
Basic earnings per share ..... $ 0.08 $ 0.17 $ 0.18 $ 0.26 $ 0.84 $ 0.64
============ ============ ============ ============ ============ ============
Diluted earnings per share ... $ 0.08 $ 0.17 $ 0.18 $ 0.26 $ 0.84 $ 0.63
============ ============ ============ ============ ============ ============
Average shares outstanding ... 13,039 13,069 13,013 13,064 13,019 13,051
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
15 July 2006 09 July 2005 31 December 2005
------------ ------------ ----------------
ASSETS
Current assets .............................. $ 81,100 $ 78,135 $ 71,187
Property, Plant & Equipment - net ........... 20,808 14,660 20,307
Other assets ................................ 30,331 15,339 16,645
Goodwill .................................... 24,628 17,208 17,157
------------ ------------ ------------
Total .................................... $ 156,867 $ 125,342 $ 125,296
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ......................... $ 47,688 $ 29,195 $ 30,867
Other liabilities ........................... 33,533 28,324 19,836
Stockholders' equity ........................ 75,646 67,823 74,593
------------ ------------ ------------
Total .................................... $ 156,867 $ 125,342 $ 125,296
============ ============ ============
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.
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