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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended October 4, 2003
Commission File Number 0-6966
ESCALADE, INCORPORATED
----------------------
(Exact name of registrant as specified in its charter)
Indiana 13-2739290
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(State of incorporation) (I.R.S. EIN)
251 Wedcor Avenue, Wabash, Indiana 47992
---------------------------------------------
(Address of principal executive office)
260-569-7208
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(Registrant's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act
NONE
Securities registered pursuant to section 12(g) of the Act
Common Stock, No Par Value
--------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act
Yes [X] No [ ]
The number of shares of Registrant's common stock (no par value) outstanding as
of October 22, 2003: 6,424,006
INDEX
Page No.
Part I. Financial Information:
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets (Unaudited) As of October
4, 2003, October 5, 2002, and December 28, 2002 3
Consolidated Condensed Statements of Income (Unaudited) For the
Three Months and Nine Months Ended October 4, 2003 and October 5,
2002 4
Consolidated Condensed Statements of Comprehensive Income (Unaudited)
For the Three Months and Nine Months Ended October 4, 2003 and
October 5, 2002 4
Consolidated Condensed Statements of Cash Flows (Unaudited) for
the Nine Months Ended October 4, 2003 and October 5, 2002 5
Notes to Consolidated Condensed Financial Statements 6-9
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-11
Item 3 - Quantitative and Qualitative Disclosures about Market Risk 12
Item 4 - Controls and Procedures 12-13
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(All amounts in thousands except share information)
October 4, October 5, December
2003 2002 28, 2002
ASSETS
Current Assets:
Cash and cash equivalents $ 554 $ 475 $ 3,370
Receivables, less allowance of $1,313; $629;
and $550; respectively 64,183 40,965 34,141
Inventories 42,477 30,682 20,549
Prepaid Expenses 1,592 885 542
Deferred income tax benefit 1,608 902 815
---------- ---------- ----------
TOTAL CURRENT ASSETS 110,414 73,909 59,417
Property, plant and equipment 46,954 34,584 35,258
Accumulated depreciation and amortization (29,376) (25,808) (26,198)
---------- ---------- ----------
17,578 8,776 9,060
Intangible assets 8,936 6,545 6,491
Goodwill 17,946 13,351 13,351
Other assets 7,657 7,786 8,469
---------- ---------- ----------
$ 162,531 $ 110,367 $ 96,788
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 28,939 $ 22,405 $ 11,223
Current portion of long-term debt 354 1,267 167
Trade accounts payable 22,730 8,669 2,793
Accrued liabilities 22,347 15,418 17,004
Federal income tax payable 2,677 1,705 1,189
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 77,047 49,464 32,376
Other Liabilities:
Long-term debt 29,766 18,200 17,200
Interest rate swap agreement 685 -- --
Deferred compensation 1,387 1,315 1,337
---------- ---------- ----------
31,838 19,515 18,537
Minority Interest 377 -- --
Stockholders' equity:
Preferred stock:
Authorized 1,000,000 shares; no par value,
none issued
Common stock:
Authorized 10,000,000 shares; no par value,
Issued and outstanding - 6,424,006; 6,508,706;
and 6,508,856; respectively 6,424 6,509 6,509
Additional Paid in capital -- 0 682
Retained Earnings 46,128 34,935 38,709
Accumulated other comprehensive income 717 (56) (25)
---------- ---------- ----------
53,269 41,388 45,875
---------- ---------- ----------
$ 162,531 $ 110,367 $ 96,788
========== ========== ==========
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)
Three Months Ended Nine Months Ended
October October October October
4, 2003 5, 2002 4, 2003 5, 2002
Net Sales $ 73,660 $ 51,859 $152,600 $101,566
Costs, expenses and other income:
Cost of products sold 53,552 36,686 103,371 70,599
Selling, general and administrative expenses 11,619 8,015 35,941 19,632
Interest 700 303 1,800 670
Other (income) expense (1,124) 371 (1,084) 220
-------- -------- -------- --------
64,747 45,375 140,028 91,121
Net income before income taxes and minority interest 8,913 6,484 12,572 10,445
Provision for income taxes 2,779 2,335 4,182 3,761
-------- -------- -------- --------
Net income before minority interest 6,134 4,149 8,390 6,684
Net Income in subsidiary allocated to minority interest (9) -- (5) --
-------- -------- -------- --------
Net income $ 6,125 $ 4,149 $ 8,385 $ 6,684
======== ======== ======== ========
Per Share Data:
Basic earnings per share $ 0.95 $ 0.64 $ 1.29 $ 1.03
Diluted earnings per share $ 0.93 $ 0.62 $ 1.26 $ 1.00
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Net income $ 6,125 $ 4,149 $ 8,385 $ 6,684
Unrealized gain (loss) on securities, net of tax 5 (103) 74 (181)
Foreign currency translation adjustment 426 -- 1,353 --
Unrealized loss on interest rate swap agreement net
of deferred tax benefit of $438) 43 -- (685) --
-------- -------- -------- --------
Comprehensive income $ 6,599 $ 4,046 $ 9,127 $ 6,503
======== ======== ======== ========
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
Nine Months Ended
October 4, 2003 October 5, 2002
Operating Activities:
Net income $ 8,385 $ 6,684
Depreciation and amortization 3,996 3,088
Gain on Debt Extinguishment (699) --
Adjustments necessary to reconcile net income
to net cash used by operating activities (17,018) (23,145)
--------- ---------
Net cash used by operating activities (5,336) (13,373)
Investing Activities:
Purchase of property and equipment (1,827) (1,343)
Purchase of certain assets of North American Archery Group (11,432) --
Acquisition of majority interest in Schleicher & Co. International AG (12,587) (2,129)
Equity investment in Sweden Table Tennis AB (187) --
Step(R) product license buyout (875) --
Purchase of certain assets of Murrey and Sons -- (2,489)
Purchase of certain assets of Steve Mizerak, Inc. -- (1,229)
Purchase of all assets relating to Step(R) product line -- (4,840)
--------- ---------
Net cash used by investing activities (26,908) (12,030)
Financing Activities:
Net increase (decrease) in notes payable - bank 17,903 12,635
Net increase in long-term debt 13,301 11,833
Proceeds from exercise of stock options 266 490
Purchase of common stock (1,999) --
Foreign Currency Translation (43) --
--------- ---------
Net cash provided by financing activities 29,428 24,958
--------- ---------
Net decrease in cash and cash equivalents (2,816) (445)
Cash and cash equivalents, beginning of period 3,370 920
--------- ---------
Cash and cash equivalents, end of period $ 554 $ 475
========= =========
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
The significant accounting policies followed by the Company and its wholly owned
subsidiaries for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting. All adjustments that are of a
normal recurring nature and are in the opinion of management necessary for a
fair statement of the results for the periods reported have been included in the
accompanying consolidated condensed financial statements. The condensed
consolidated balance sheet of the Company as of December 28, 2002 has been
derived from the audited consolidated balance sheet of the Company as of that
date. Certain information and note disclosures normally included in the
Company's annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Form 10-K annual report for 2002 filed with
the Securities and Exchange Commission.
Note B - Seasonal Aspects
The results of operations for the nine-month periods ended October 4, 2003 and
October 5, 2002 are not necessarily indicative of the results to be expected for
the full year.
Note C - Inventories
(All amounts in thousands) October 4, October 5, December 28,
2003 2002 2002
Raw materials $ 10,909 $ 9,036 $ 5,750
Work in progress 5,662 5,381 4,536
Finished goods 25,906 16,265 10,263
-------- -------- --------
$ 42,477 $ 30,682 $ 20,549
======== ======== ========
Note D - Income Taxes
The provision for income taxes was computed based on financial statement income.
Note E - Line of Credit
In August 2003, the Company formed a wholly owned subsidiary in the state of
Nevada for the purpose of replacing financing functions performed by the
Company's Swiss subsidiary. In September the Company replaced the revolving line
of credit between Bank One and the Swiss subsidiary with a revolving line of
credit between Bank One and the Nevada subsidiary on substantially the same
terms. At October 4, 2003, this line of credit aggregated $40 million, of which
$19.9 million was used at an interest rate of 2.75%.
Note F - Gain on Debt Extinguishment
In October 2003, the Company retired debt totaling 2.8 million Euros and
recognized a gain of 600 thousand Euros (approximately $699 Thousand) in the
process. This gain has been included in Other Income in the current quarter.
Note G - Subsequent Event
On October 20, 2003, subsequent to the end of the quarter, the Company purchased
83,047 shares of Schleicher & Co. International AG ("Schleicher") representing
all outstanding shares not owned by the Company. With this purchase, the Company
owns 100% of Schleicher. The Company paid cash of 5.25 EURO per share.
Note H - Minority Interest
The minority interest on the consolidated balance sheet represents a 3% interest
in Schleicher & Co. International AG that was not owned by the Company as of the
end of the quarter. For the nine months ended October 4, 2003, $5 thousand in
net income was attributed to the minority interest. As noted above, the Company
acquired the shares represented by the minority interest subsequent to the end
of the quarter.
Note I - Earnings Per Share
Earnings per share (EPS) were computed as follows:
Three months ended October 4, 2003
Weighted
Average Per
Net Income Shares Share
(thousands) (thousands) Amount
Basic Earnings per share:
Income available to common stockholders $ 6,125 6,427 $ 0.95
======
Effect of Dilutive Securities stock options -- 157
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Diluted Earnings per Share
Income available to common stockholders and
assumed conversions $ 6,125 6,584 $ 0.93
======= ======
Three months ended October 5, 2002
Weighted
Average Per
Net Income Shares Share
(thousands) (thousands) Amount
Basic Earnings per share:
Income available to common stockholders $ 4,149 6,509 $ 0.64
======
Effect of Dilutive Securities stock options -- 177
------- ------
Diluted Earnings per Share
Income available to common stockholders and
assumed conversions $ 4,149 6,686 $ 0.62
======= ======
Note I - Earnings Per Share - continued
Nine Months ended October 4, 2003
Weighted
Average Per
Net Income Shares Share
(thousands) (thousands) Amount
Basic Earnings per share:
Income available to common stockholders $ 8,385 6,481 $ 1.29
======
Effect of Dilutive Securities stock options -- 157
------- -----
Diluted Earnings per Share
Income available to common stockholders and assumed
conversions $ 8,385 6,638 $ 1.26
======= ======
Nine Months ended October 5, 2002
Weighted
Average Per
Net Income Shares Share
(thousands) (thousands) Amount
Basic Earnings per share:
Income available to common stockholders $ 6,684 6,479 $ 1.03
======
Effect of Dilutive Securities stock options -- 185
------- -----
Diluted Earnings per Share
Income available to common stockholders and
assumed conversions $ 6,684 6,664 $ 1.00
======= ======
Note J - Segment Information
As of and for the Nine Months
Ended October 4, 2003
Office -
Sporting Graphic
Goods Arts Corp. Total
Revenues from external customers $ 91,870 $ 60,730 $ -- $152,600
Net Income 5,930 2,663 (208) 8,385
Total Assets $ 96,032 $ 56,934 $ 9,565 $162,531
As of and for the Nine Months
Ended October 5, 2002
Office -
Sporting Graphic
Goods Arts Corp. Total
Revenues from external customers $78,615 $22,951 $ -- $101,566
Net Income 4,470 2,591 (377) 6,684
Total Assets $80,133 $23,282 $6,952 $110,367
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER COMPARISON 2003 vs. 2002
Net sales in the third quarter were $73.7 million, an increase of $21.8 million
or 42% over the same period last year. The Office/Graphic Arts segment reported
an increase over the prior year of approximately $12.2 million, or 170%. This
increase is a direct result of consolidating Schleicher & Co. International AG
("Schleicher"), which was acquired in the second quarter of 2003. Schleicher is
a German company that manufactures data shredder equipment and was acquired
through a series of private and public tender offers culminating in 97%
ownership at October 4, 2003. The remaining 3% of the outstanding stock was
acquired subsequent to the third quarter on October 20, 2003. The Sporting Goods
segment reported an increase of $9.6 million, or 22% over the same period last
year. Approximately $4.6 million of this increase came from the archery business
acquired during the second quarter of 2003. The remaining $5 million reflects
the absence of the negative effects that last year's West Coast longshoreman
lockout had on the third quarter of last year.
Third quarter net income was $6.1 million or $0.95 per share, compared to $4.1
million or $0.64 per share in the same period of the prior year. This increase
is attributed to increased sales and other income. Other income for the current
quarter includes a gain of $699 thousand resulting from the extinguishment of
debt.
The ratio of cost of product sold to net sales was 73%, slightly higher than the
same period last year due to the change in composition caused by the inclusion
of Schleicher and increased sales volume in the Sporting Goods segment. The
gross margin ratio in both segments was relatively unchanged from the same
period in the prior year.
Selling, general, and administrative expenses as a percentage of net sales were
16%, unchanged from the same period last year. The increased amount reflects the
inclusion of Schleicher, which reported $2.2 million in selling, general and
administrative expenses for the quarter, and an increase of $1.4 million in the
Sporting Goods segment reflecting the addition of Bear Archery and increased
selling costs associated with higher sales.
Interest expense for the third quarter was $397 thousand higher than the same
period in the prior year. The consolidation of Schleicher accounted for $248
thousand of this increase, with the balance of the increase, $149 thousand,
relating to the additional borrowings required to facilitate the Schleicher and
Bear Archery acquisitions in the second quarter.
NINE MONTH COMPARISON 2003 VS. 2002
Net sales for the nine months were $152.6 million, an increase of $51.0 million,
or 50% over the prior year. The primary source of this growth has been
acquisitions made in 2003.
The Sporting Goods segment reported net sales for the nine months of $91.9
million - an increase of $13.3 million over the prior year. Approximately $6.7
million of this increase came from the archery business acquired in the second
quarter of 2003. An estimated $5.0 million of the increase reflects the negative
impact of last year's West Coast longshoreman's lockout on third quarter sales
in 2002. The remaining $1.6 million of the increase represents growth in core
product lines. Net sales growth in the first half of 2003 was hampered by
residual 2002 inventory at key distributors. The current year-to-date parity
with 2002 demonstrates that this condition has now been resolved and that
increased product placement is having a positive impact. Sell-through in the
mass-market channel is expected to be strong in the fourth quarter as customers
launch aggressive holiday season advertisements highlighting the Company's
products. Accordingly, the Company expects Sporting Goods sales in the fourth
quarter to be comparable with 2002.
The Office/Graphic Arts segment reported net sales of $60.7 million for the nine
months of 2003. This represents an increase of $37.8 million over the prior year
- - primarily due to the consolidation of Schleicher. Net sales at Schleicher for
the nine months were offset by a decrease in non-Schleicher products of
approximately $2.8 million. This decline reflects depressed economic conditions
in the office supply market and price competition from importers. The Company
has initiated efforts to improve product placement, domestically and
internationally, while initiating structural changes that will improve price
competitiveness. These measures are not expected to yield results until 2004.
Net income for the nine months was $8.4 million, or $1.29 per share - an
increase of $1.7 million, or $.26 per share over the prior year. The Sporting
Goods segment accounted for $1.5 million of this increase, primarily due to
increased sales, and the Office/Graphic Arts segment accounted for $72 thousand
of the increase. In the Office/Graphic Arts segment, net income from
non-Schleicher product sales decreased $808 thousand from the prior year as a
result of lower sales volume and the absence of an after tax real estate gain of
$277 thousand reflected in last year's results. This decrease was offset by net
income from Schleicher of $181 thousand and a gain of $699 thousand from the
extinguishment of debt.
Cost of sales as a percentage of net sales was 68% compared to 70% last year.
This decrease is primarily due to the consolidation of Schleicher into the
operations, which like Martin Yale, has a lower cost of sales percentage than
the Sporting Goods segment.
Selling, general, and administrative expenses as a percentage of net sales were
24% compared to 19% last year. The consolidation of Schleicher increased
selling, general and administrative expenses by $14.9 million, roughly 91% of
the total increase. The balance of the increase relates to costs in the Sporting
Goods business associated with higher sales volume. The Company continues to
explore and implement opportunities to reduce selling, general and
administrative costs through synergies in the Office/Graphic Arts business.
Interest expenses increased $1.1 million over the prior year. The consolidation
of Schleicher accounted for $890 thousand of this increase and increased
borrowings associated with the Company's second quarter acquisition activity
account for the remaining balance of the increase.
LIQUIDITY AND CAPITAL RESOURCES
At October 4, 2003, the Company had cash and cash equivalents of $554 thousand
compared to $475 thousand at October 5, 2002.
During the nine months ended October 4, 2003, the Company used $26.9 million for
acquisitions, the purchase of equipment, and investments. The Company increased
its bank debt to fund these acquisitions.
The Company's short term working capital requirements are funded by cash flow
and a revolving line of credit used to finance the purchase of trade receivables
by the Company's factoring subsidiary from the Company's manufacturing
subsidiaries. The Company utilizes a borrowing base formula that defines and
identifies eligible accounts receivable in order to calculate the maximum amount
that could be borrowed under this revolving line of credit. At the end of the
third quarter, the maximum amount that could be drawn under this line of credit
was $40.0 million of which $19.9 million was used at an interest rate of 2.75%.
This short term revolving line of credit was replaced by a new line of credit on
September 7, 2003 under substantially the same terms having an expiration date
of July 15, 2004.
The Company's long-term financing requirements are currently funded by a $35
million revolving term loan that expires March 31, 2008. Under the terms of this
credit agreement the maximum borrowing available to the Company is reduced by
$7.0 million on March 31 of each year until the line expires. At October 4,
2003, the maximum amount available was $35.0 million of which $25.9 million was
used at an aggregate interest rate of 2.89%. The Company uses this revolving
term loan from time to time to finance acquisitions, stock buy backs and other
material obligations that may arise. Anticipating that interest rates will rise
in the near term, the Company entered an interest rate swap agreement that
matures on May 19, 2008. The agreement, based on LIBOR, effectively converts
variable rate debt to fixed rate debt at a weighted average interest rate of
5.08%. The Company believes that future long term funding for acquisitions,
stock buy backs or other material obligations deemed appropriate by the
Company's Board of Directors is available from similar credit vehicles and/or
other financial institutions.
During the second quarter, the Company completed two acquisitions. In April the
company successfully completed a tender offer for the shares of Schleicher & Co.
International AG, a German manufacturer of data shredder equipment for a total
cost of $12.6 million. In June the Company completed the acquisition of
substantially all the assets of North American Archery Group, LLC, a
manufacturer of premium archery equipment and supplies, for a total cost of
$11.4 million. Both acquisitions were funded through borrowings on the Company's
long term revolving loan facility.
In the current year the Company purchased 136,080 shares of its common stock
under a stock buy back program authorized by the Board of Directors. The Company
was authorized to expend up to $3.0 million, of which $2.0 million has been
expended.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to financial market risks, including changes in
currency exchange rates, interest rates and marketable equity security prices.
To mitigate these risks, the Company utilizes derivative financial instruments,
among other strategies. At the present time, the only derivative financial
instrument used by the company is an interest rate swap. The Company does not
use derivative financial instruments for speculative purposes.
A substantial majority of revenue, expense and capital purchasing
activities are transacted in U.S. dollars. However, the Company's foreign
subsidiaries enter into transactions in other currencies, primarily the Euro. To
protect against reductions in value and the volatility of future cash flows
caused by changes in currency exchange rates, the Company carefully considers
the use of transaction and balance sheet hedging programs. Such programs reduce,
but do not entirely eliminate, the impact of currency exchange rate changes.
Presently the Company does not employ currency exchange hedging financial
instruments, but has adjusted transaction and cash flows to mitigate adverse
currency fluctuations. Historical trends in currency exchanges indicate that it
is reasonably possible that adverse changes in exchange rates of 20% for the
Euro could be experienced in the near term. Such adverse changes would not have
resulted in a material impact on income before taxes for the nine months ended
October 4, 2003.
A substantial portion of the Company's debt is based on U.S. prime and
LIBOR interest rates. In an effort to lock-in current low rates and mitigate the
risk of unfavorable interest rate fluctuations the Company has entered an
interest rate swap agreement. This agreement effectively converted a portion of
its variable rate debt into fixed rate debt.
An adverse movement of equity market prices would have an impact on the
Company's long-term marketable equity securities that are included in other
assets on the consolidated balance sheet. At October 4, 2003 the aggregate book
value of long-term marketable equity securities was $1.4 million. Due to the
unpredictable nature of the equity market the Company has not employed any hedge
programs relative to these investments.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Also, the Company has
investment in certain unconsolidated entities. As the Company does not control
or manage these entities, its disclosure controls and procedures with respect to
such entities are necessarily substantially more limited than those it maintains
with respect to its consolidated subsidiaries.
The Company has carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of the end of the period covered by this report. Based on the
foregoing, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation. Therefore, no corrective
actions were taken.
PART II. OTHER INFORMATION
Item 1, 2, 3, and 4 Not Required.
Item 5. On September 8, 2003 the Company announced that Mr. Terry Frandsen had
been promoted to Chief Financial Officer and Treasurer replacing Mr.
John Wilson who is retiring to spend more time with his family. Mr.
Wilson will continue as the corporate secretary, until year-end to
further insure a seamless transition.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
10.1 Credit Agreement dated as of September 5, 2003 by and between
Indian-Martin, Inc. and Bank One, National Association
(excluding exhibits and schedules not deemed to be material).
The effective date is September 7, 2003.
10.2 Revolving Note dated as of September 5, 2003 in principal
amount of $45,000,000, executed by Indian-Martin, Inc. in
favor of Bank One, National Association
10.3 Pledge Agreement dated as of September 5, 2003 by and between
Indian-Martin, Inc. and Bank One, National Association
10.4 Collateral Assignment and Security Agreement dated as of
September 5, 2003 by and between Indian-Martin, Inc. and Bank
One, National Association
10.5 Receivables Purchase Agreement dated as of September 5, 2003
by and between Indian-Martin, Inc. and Indian-Martin AG
10.6 Receivables Purchase Agreement dated as of September 5, 2003
by and between Indian-Martin, Inc. and Indian Industries, Inc.
Substantially similar Receivables Purchase Agreements were
also entered into by Indian-Martin, Inc. and each of Escalade,
Incorporated's other domestic operating subsidiaries, Harvard
Sports, Inc., Martin Yale Industries, Inc., Master Products
Manufacturing Company, Inc., U.S. Weight, Inc. and Bear
Archery, Inc.
10.7 Services Agreement dated as of September 5, 2003 by and
between Indian-Martin, Inc. and Martin Yale Industries, Inc.
Substantially similar Services Agreements were also entered
into by Indian-Martin, Inc. and each of Escalade,
Incorporated's other domestic operating subsidiaries, Harvard
Sports, Inc., Indian Industries, Inc., Master Products
Manufacturing Company, Inc., U.S. Weight, Inc. and Bear
Archery, Inc.
10.8 Escalade Subordination Agreement dated as of September 5, 2003
between Escalade, Incorporated and Bank One, National
Association
10.9 Offset Waiver Agreement dated as of September 5, 2003 between
Escalade, Incorporated, Bank One, National Association,
Indian-Martin, Inc., Harvard Sports, Inc., Indian Industries,
Inc., Martin Yale Industries, Inc., Master Products
Manufacturing Company, Inc., U.S. Weight, Inc. and Bear
Archery, Inc.
31.1 Chief Executive Officer Rule 13a-14(a)/15d-14(a)
Certification.
31.2 Chief Financial Officer Rule 13a-14(a)/15d-14(a)
Certification.
32.1 Chief Executive Officer Section 1350 Certification.
32.2 Chief Financial Officer Section 1350 Certification.
(b) Reports on Form 8-K
1. On August 1, 2003, Escalade filed a report on Form 8-K
relating to its financial information for the quarter ended
July 12, 2003 and forward-looking statements as presented in
the shareholder message and press release dated August 1,
2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ESCALADE, INCORPORATED
Date: October 24, 2003 C. W. (Bill) Reed
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C. W. (Bill) Reed
President and Chief Executive Officer
Date: October 24, 2003 Terry D. Frandsen
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Terry D. Frandsen
Vice President and
Chief Financial Officer