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. 

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 2006	01 October 2005	07 October 2006	01 October 2005	07 October 2006	01 October 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

 

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.