EXHIBIT 99.1
PRESS RELEASE
ESCALADE ANNOUNCES FOURTH QUARTER RESULTS OF $0.20 PER SHARE
Evansville, IN (February 26, 2007) Escalade, Incorporated (NASDAQ: ESCA)
announced today that revenues for the fourth quarter and year ended December 30,
2006 were up 4% over the same periods last year. However, lower gross margins
and higher selling, general and administrative costs resulted in a decline in
profitability. Net income for the fourth quarter was $2.6 million or $0.20 per
share compared to restated net income of $3.4 million or $0.26 per share for the
same period last year. Net income for the year ended December 30, 2006 was $8.5
million or $0.65 per share compared to restated net income of $12.9 million or
$0.99 per share for last year.
Revenues in the sporting goods segment were up 11% and 13% for the fourth
quarter and year ended December 30, 2006, respectively, compared to the same
periods last year. Acquisitions completed in the first half of fiscal 2006
comprise a substantial part of the increase in revenues and are a key element in
the Company's goal of expanding distribution into the specialty retail and
dealer marketplace. Sales into the mass retail market were relatively unchanged
from the prior year and the Company continues to enjoy strong relationships with
these customers. Gross margins declined slightly in fiscal 2006 due to pricing
pressures in the mass retail marketplace and unfavorable production variances in
the new manufacturing plant in Reynosa, Mexico. Expanding specialty retail and
dealer sales are expected to yield higher gross margins and offset pricing
pressures in the mass retail marketplace. Selling, general and administrative
costs increased 22% in fiscal 2006 compared to fiscal 2005; due to relocation
costs associated with the new plant in Mexico and higher selling costs
associated with the specialty retail and dealer marketplace. Operating income
from the sporting goods segment was down 52% and 28% for the fourth quarter and
year ended December 30, 2006, respectively, compared to last year. The Company
anticipates modest revenue growth in 2007 as recent acquisitions in the archery
and residential playground markets enable increased distribution in the
specialty retail and dealer marketplace. The higher gross margins associated
with this revenue growth are expected to generate improved operating profits in
2007.
Compared to the same periods last year, revenues in the office products segment
declined 10% and 12% in the fourth quarter and year ended December 30, 2006,
respectively, compared to the same periods last year. Approximately 31% of the
year-over-year decline resulted from the completion of a program initiated in
2005 to rationalization low margin products and unprofitable customers. A direct
result of this program has been a steady improvement in overall gross margin
ratios year-over-year. Roughly 44% of the current year decline is attributed to
declining demand for paper shredders in the European and Asian markets.
Operating profits in the office products segment declined 40% and 6% in the
fourth quarter and year ended December 30, 2006, respectively, compared to last
year. Management is optimistic that initiatives begun in 2006 to strengthen
selling efforts will increase total sales and improve operating profits for 2007
in comparison to 2006.
Daniel Messmer, President and CEO of Escalade, Inc. stated that "Fiscal 2006 was
a very challenging year, but it has not diminished our resolve to increase
shareholder value through improved performance. We expect 2007 will also be
challenging as we continue expanding the specialty retail and dealer markets in
the sporting goods business and begin to experience revenue growth in the office
product business."
On February 21, 2007, Escalade announced a $0.22 per share dividend representing
a 10% increase over the $0.20 dividend declared last year and reflecting the
continued strong cash flow of the business. Management believes that 2007
profits will continue to generate sufficient cash flows to pay dividends and
meet operating capital requirements.
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)
3 Months Ended 12 Months Ended
--------------------------- ---------------------------
30 Dec 2006 31 Dec 2005 30 Dec 2006 31 Dec 2005
(Restated) (Restated)
------------ ------------ ------------ ------------
NET SALES ........................................ $ 44,133 $ 42,425 $ 191,465 $ 183,315
OPERATING EXPENSES
Cost of goods sold ......................... 33,138 28,364 137,821 127,719
Selling and administrative ................. 8,484 8,987 39,918 36,401
Restructuring Costs ........................ -- (631) -- (631)
------------ ------------ ------------ ------------
OPERATING INCOME ................................. 2,511 5,705 13,726 19,826
OTHER INCOME (EXPENSE)
Interest expense ........................... (711) (357) (2,637) (1,482)
Other income (expense) ..................... 937 283 372 915
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ....................... 2,737 5,631 11,461 19,259
PROVISION FOR INCOME TAXES ....................... 146 2,248 2,966 6,343
------------ ------------ ------------ ------------
NET INCOME ....................................... $ 2,591 $ 3,383 $ 8,495 $ 12,916
============ ============ ============ ============
PER SHARE DATA
Basic earnings per share ................... $ 0.20 $ 0.26 $ 0.65 $ 0.99
============ ============ ============ ============
Diluted earnings per share ................. $ 0.20 $ 0.26 $ 0.65 $ 0.98
============ ============ ============ ============
Average shares outstanding ................. 13,036 12,997 13,012 13,055
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CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited, In Thousands)
30 December 2006 31 December 2005
----------------- -----------------
ASSETS
Current assets .............................. $ 74,470 $ 70,751
Property, Plant & Equipment - net ........... 20,657 20,307
Other assets ................................ 30,561 16,645
Goodwill .................................... 25,027 17,157
----------------- -----------------
Total .................................... $ 150,715 $ 124,860
================= =================
Current liabilities ......................... $ 41,345 $ 28,401
Other liabilities ........................... 23,655 19,836
Stockholders' equity ........................ 85,715 76,623
----------------- -----------------
Total .................................... $ 150,715 $ 124,860
================= =================
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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