Dear Fellow Shareholders:
We faced tremendous challenges as we entered 2009 with a difficult macroeconomic environment and a customer base braced for the uncertainties ahead. We vigorously implemented our strategy of streamlining our operations, tightening control of our inventory, building our brands, and expanding distribution of our products. This plan is working and we have now set the company on a course of increasing sales and profits for the future. We are confident and committed to building on this turnaround and delivering greater long-term shareholder value.
In March 2009, we closed our Reynosa, Mexico facility and consolidated table tennis production into our Rosarito, Mexico operation. We reduced our headcount and overall SG&A spending by over 20%. The officers and directors voluntarily took a 10% reduction in compensation, while salary increases were suspended for all employees. We aggressively focused on cash management, reducing inventory by 30% and generating over $18 million in free cash flow. We negotiated a new $50 million senior credit facility with our bank, JP Morgan Chase, and subsequently reduced our debt to below $28 million by the end of the year. These and other actions resulted in generating $1.6 million of net income for 2009.
We also focused on building our flagship brands and expanding placement of our products. We introduced an entirely new line of bows from Bear Archery, including the top-of-the-line Attack model, demonstrating our ability to gain strong marketplace acceptance in the premium segment. In our Office Products business, we extended our line of intimus Pro shredders with the introduction of the models 20 and 120. We also launched intimus Crypto, a broad range of solutions that address the rapidly growing market for the secure de-commissioning of magnetic, optical, and solid state media.
As we enter into 2010, our focus is on execution of our growth strategy. We are accelerating the pace on new product introductions and bringing true innovation to our consumers. We will settle for nothing less than market leadership in every category in which we compete. We are now a lean organization, hungry to grow our top-line revenue and produce increased earnings.
I have never been prouder of Escalade and its people than I am today. We have reshaped the Company to deliver market leadership and profitable growth for the future. Our ultimate goal is to be a top-tier organization with strong brands which deliver outstanding value for our customers and shareholders.
We thank you for your support and interest in our company.
Robert J. Keller
President & CEO