SOURCE: Escalade, Inc.

August 01, 2008 11:15 ET

Escalade Reports Second Quarter 2008 Results

EVANSVILLE, IN--(Marketwire - August 1, 2008) - Escalade, Incorporated (NASDAQ: ESCA) announced that revenue for the second quarter of 2008 dropped 9% to $45.8 million, compared to $50.5 million in the prior year. A net loss of $0.7 million, or $0.06 per share, was recorded for the second quarter, compared to net income of $2.4 million, or $0.19 per share in the prior year. For the first half of 2008, revenue dropped 11% to $75.0 million, compared to $84.0 million in the prior year. A net loss of $1.5 million, or $0.12 per share, was recorded for the first half of 2008, compared to net income of $3.5 million, or $0.27 per share in the prior year.

Sporting Goods segment revenue declined 14% in the second quarter and in the first half of 2008 compared to the prior year. During this period, sales to mass retail customers declined 23%. These customers are experiencing lower sell through on game room products due to consumer uncertainty associated with the weak U.S. economy. In response, several of the Company's retail customers have reduced inventories and consequently bought less of the Company's products. Sales to Sears Holdings were down 66% in the first half of 2008 and are expected to decline further in the second half of 2008 because the Company has ceased to supply table tennis and billiard tables to Sears Holdings. These product lines comprised 50% of total sales to Sears Holdings in fiscal 2007. Sales to specialty retailers and dealers were relatively unchanged in the first half of 2008 and are expected to be similar in the second half compared to the same period in 2007. Based on first half results and product placement information, the Company expects Sporting Goods revenue for 2008 to be approximately 20% lower in 2008 compared to the prior year.

Office Products segment revenue increased 1% in the second quarter, but declined 4% for the first half of 2008 when compared to the prior year. Excluding the benefit of foreign currency exchange rates, Office Products revenue declined 8% in the second quarter and 11% for the first half of 2008 when compared to the prior year. Second quarter sales to U.S. markets remained similar to the prior year. While revenue to office channel retailers declined 8% in the second quarter compared to the prior year, sales were up 5% to the specialty/machine dealer and government channels. Sales to the European market declined due to weakening economic conditions in France, Spain, and the U.K. Management believes Office Products revenue will be relatively unchanged in 2008 compared to the prior year.

"We continue to experience the challenges of a weak retail market. Faced with these conditions, our distributors and retailers are applying caution through reduced inventory levels and lower promotional spending," said Robert J. Keller, President and Chief Executive Officer of Escalade, Inc. "We are focused on building our core businesses and growing market share in key categories. More than ever, consumers want the superior quality and product innovation recognized in our flagship brands, including Stiga, Goalrilla, Woodplay, Bear Archery and Intimus. We also anticipate recent advances in the distribution of our product line to major retailers and specialty dealers will have a positive impact on our second half results."

Escalade is a leading 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.

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.

                  ESCALADE, INCORPORATED AND SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
            (Unaudited, In Thousands Except Per Share Amounts)

                      Three Months                        Twelve Months
                          Ended       Six Months Ended        Ended
                    ----------------  ----------------  ------------------
                    12 July  14 July  12 July  14 July  12 July   14 July
                      2008     2007     2008     2007     2008      2007
                    -------  -------  -------  -------  --------  --------

NET SALES           $45,796  $50,530  $74,962  $83,997  $176,541  $193,713

OPERATING EXPENSES
  Cost of goods
   sold              33,275   33,456   54,018   55,911   129,496   138,071
  Selling and
   administrative    12,578   12,388   21,620   21,013    39,069    39,695
  Amortization          732      878    1,169    1,446     2,380     2,927
                    -------  -------  -------  -------  --------  --------

OPERATING INCOME
 (LOSS)                (789)   3,808   (1,845)   5,627     5,596    13,020

OTHER INCOME
 (EXPENSE)
  Interest expense     (660)    (952)  (1,147)  (1,469)   (2,515)   (3,042)
  Other income
   (expense)             43      790      205      854     3,342     2,510
                    -------  -------  -------  -------  --------  --------


INCOME (LOSS)
 BEFORE INCOME
 TAXES               (1,406)   3,646   (2,787)   5,012     6,423    12,488

PROVISION FOR
 INCOME TAXES           702   (1,211)   1,235   (1,480)   (2,252)   (2,857)
                    -------  -------  -------  -------  --------  --------


NET INCOME (LOSS)   $  (704) $ 2,435  $(1,552) $ 3,532  $  4,171  $  9,631
                    =======  =======  =======  =======  ========  ========

PER SHARE DATA
  Basic earnings
   (loss) per share $ (0.06) $  0.19  $ (0.12) $  0.27  $   0.33  $   0.74
                    =======  =======  =======  =======  ========  ========

  Diluted earnings
   (loss) per share $ (0.06) $  0.19  $ (0.12) $  0.27  $   0.33  $   0.74
                    =======  =======  =======  =======  ========  ========
  Average shares
   outstanding       12,635   12,974   12,656   13,000    12,713    13,014



                   CONSOLIDATED CONDENSED BALANCE SHEET
                        (Unaudited, In Thousands)



                                          12 July     14 July   29 December
                                           2008        2007        2007
                                        ----------- ----------- -----------
ASSETS
  Current assets                        $    83,237 $    80,767 $    70,798
  Property, Plant & Equipment - net          23,719      20,625      20,391
  Other assets                               33,846      32,702      35,024
  Goodwill                                   26,772      25,275      25,803
                                        ----------- ----------- -----------
    Total                               $   167,574 $   159,369 $   152,016
                                        =========== =========== ===========




LIABILITIES AND STOCKHOLDERS’ EQUITY
  Current liabilities                   $    75,228 $    38,911 $    39,356
  Other liabilities                           4,572      33,468      20,918
  Stockholders’ equity                       87,774      86,990      91,742
                                        ----------- ----------- -----------
    Total                               $   167,574 $   159,369 $   152,016
                                        =========== =========== ===========

Contact Information

  • Contact:
    Terry Frandsen
    Vice President and CFO
    812/467-1334