EXHIBIT 99.1
PRESS RELEASE
ESCALADE ANNOUNCES THIRD QUARTER RESULTS OF $0.23 PER SHARE
Evansville, IN (October 27, 2006) Escalade, Incorporated (NASDAQ: ESCA)
announced today that third quarter revenues increased 3% in 2006 compared to the
same quarter last year. Added to a strong first half, year-to-date revenues
increased 5% compared to the same period last year. Higher selling, general and
administrative costs, primarily in the Sporting Goods business, resulted in
lower operating income and net income. Earnings per share for the third quarter
of 2006 were $0.23 per share compared to $0.42 per share last year and $0.41 per
share for the nine months ended October 7, 2006 compared to $0.68 per share for
the same period last year.
Sporting Goods sales increased 5% and 14% in the three months and nine months
ended October 7, 2006, respectively, compared to the same periods last year
including revenues from acquisitions completed in the first half of 2006.
Management anticipates that sales to the mass market channel in 2006 will be
comparable to the level achieved in 2005. The Company continues to pursue a
strategy of expanding distribution into the specialty retail and dealer
marketplace. The Company embarked on this strategy to lessen the impact of
fluctuations in sales to the mass market retail channel. The acquisitions in the
first half of 2006 support this strategy. Consequently sales into this market
channel increased 94 % and 59% for the three months and nine months ended
October 7, 2006, respectively, compared to the same periods last year. Sales to
the specialty retail and dealer channel yield higher gross margins, but have
higher selling and advertising costs. Management expects total Sporting Goods
sales for 2006 to be better than 2005.
Office Product sales declined 1% and 13% in the three months and nine months
ended October 7, 2006, respectively, compared to the same periods last year. In
the second half of 2005 the Company undertook a program of rationalizing low
margin products and unprofitable customers. Excluding the effects of this
rationalization on the third quarter, sales increased 1% over the same period
last year. The effects of this rationalization program accounted for
approximately one-third of the year-to-date sales decline. The remainder of the
year to date sales decline is attributed to lower market demand for high
security shredders and price competition in the European shredder market. The
Company continues to invest in sales and marketing personnel and believes it is
beginning to reverse the current sales decline and expects improvement in 2007.
Consequently, Office products sales for 2006 are expected to be lower than 2005.
Compared to last year, profitability is down and will be down in total for
fiscal 2006 due to pricing pressures from mass market retailers and higher
selling, general and administrative costs associated with expanded distribution
in the specialty market channels. A majority of the increase in selling, general
and administrative costs relates to the Sporting Goods business and includes
non-recurring start-up costs relating to the new manufacturing plant in Reynosa,
Mexico. Excluding non-recurring costs the ratio of selling, general and
administrative costs to revenues in the Sporting Goods business remains
relatively unchanged from the prior year. The remainder of the increase in
selling, general and administrative cost is composed of incentive stock options
expense and non-recurring expenses relating to the retirement of the former
President and CEO.
Daniel A. Messmer, President and Chief Executive Officer of Escalade, Inc.,
stated that "2006 is proving to be a difficult year. We remain focused on
profitability while actively engaged in expanding revenues."
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 812/467-1334 or Dan Messmer, President
and Chief Executive Officer at 812/467-4449.
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ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited, In Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
------------------------- ------------------------- -------------------------
07 October 01 October 07 October 01 October 07 October 01 October
2006 2005 2006 2005 2006 2005
---------- ---------- ---------- ---------- ---------- ----------
NET SALES .............................. $ 65,583 $ 63,557 $ 147,332 $ 140,890 $ 192,059 $ 197,197
OPERATING EXPENSES
Cost of goods sold ............... 49,023 46,148 104,684 99,355 135,350 139,365
Selling and administrative ....... 10,650 8,935 31,434 27,414 39,833 38,788
Restructuring .................... -- -- -- -- -- 954
---------- ---------- ---------- ---------- ---------- ----------
OPERATING INCOME ....................... 5,910 8,474 11,214 14,121 16,876 18,090
OTHER INCOME (EXPENSE)
Interest expense ................. (862) (345) (1,926) (1,125) (2,283) (1,471)
Other income (expense) ........... (310) 225 (565) 632 (283) 105
---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES ............. 4,738 8,354 8,723 13,628 14,310 16,724
PROVISION FOR INCOME TAXES ............. (1,746) (2,902) (3,335) (4,767) (5,841) (6,918)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME ............................. $ 2,992 $ 5,452 $ 5,388 $ 8,861 $ 8,469 $ 9,806
========== ========== ========== ========== ========== ==========
PER SHARE DATA
Basic earnings per share ......... $ 0.23 $ 0.42 $ 0.41 $ 0.68 $ 0.65 $ 0.75
========== ========== ========== ========== ========== ==========
Diluted earnings per share ....... $ 0.23 $ 0.41 $ 0.41 $ 0.67 $ 0.65 $ 0.74
========== ========== ========== ========== ========== ==========
Average shares outstanding ....... 13,026 13,055 13,007 13,065 13,003 13,049
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
07 October 2006 01 October 2005 31 December 2005
--------------- --------------- ----------------
ASSETS
Current assets .............................. $ 94,414 $ 94,555 $ 71,187
Property, Plant & Equipment - net ........... 20,290 18,245 20,307
Other assets ................................ 30,987 15,478 16,645
Goodwill .................................... 24,708 17,234 17,157
---------- ---------- ----------
Total .................................... $ 170,399 $ 145,512 $ 125,296
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities ......................... $ 61,843 $ 46,187 $ 30,867
Other liabilities ........................... 29,045 26,658 19,836
Stockholders' equity ........................ 79,511 72,667 74,593
---------- ---------- ----------
Total .................................... $ 170,399 $ 145,512 $ 125,296
========== ========== ==========
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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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