Back to GetFilings.com
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 July 10, 2004
Commission File Number 0-6966
ESCALADE, INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 13-2739290
------------------------ ------------
(State of incorporation) (I.R.S. EIN)
251 Wedcor Avenue, Wabash, Indiana 46992
----------------------------------------
(Address of principal executive office)
260-569-7208
-------------------------------
(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 July 26, 2004: 13,038,664
INDEX
Page
No.
Part I. Financial Information:
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets (Unaudited) as of
July 10, 2004, July 12, 2003, and December 27, 2003 3
Consolidated Condensed Statements of Income (Unaudited)
for the Three Months and Six Months Ended July 10, 2004
and July 12, 2003 4
Consolidated Condensed Statements of Comprehensive
Income (Unaudited) for the Three Months and Six Months
Ended July 10, 2004 and July 12, 2003 4
Consolidated Condensed Statements of Cash Flows (Unaudited)
for the Six Months Ended July 10, 2004 and July 12, 2003 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3 - Quantitative and Qualitative Disclosures about Market Risk 11
Item 4 - Controls and Procedures 11
Part II. Other Information
Item 4 - Submission of matters to a Vote of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(All amounts in thousands except share information)
July 10, July 12, December 27,
2004 2003 2003
------------ ------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 1,231 $ 1,253 $ 648
Receivables, less allowance of
$1,772; $1,318; and $1,991;
respectively 35,530 35,760 45,073
Inventories 41,435 40,659 29,853
Prepaid expenses 1,022 1,793 1,611
Deferred income tax benefit 2,456 1,675 2,434
------------ ------------ ------------
TOTAL CURRENT ASSETS 81,674 81,140 79,619
Property, plant and equipment 51,071 46,964 48,844
Accumulated depreciation and
amortization (34,701) (28,406) (31,307)
------------ ------------ ------------
16,370 18,558 17,537
Intangible assets 8,276 8,542 9,026
Goodwill 18,715 17,791 18,777
Other assets 8,385 7,158 9,478
------------ ------------ ------------
$ 133,420 $ 133,189 $ 134,437
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 12,228 $ 17,440 $ 21,568
Current portion of long-term debt 354 5,179 354
Trade accounts payable 14,265 12,633 8,139
Accrued liabilities 16,263 14,806 23,321
Income tax payable (259) 1,991 1,580
------------ ------------ ------------
TOTAL CURRENT LIABILITIES 42,851 52,049 54,962
Other Liabilities:
Long-term debt 26,470 31,861 15,729
Interest rate swap agreement 570 728 1,055
Deferred compensation 1,480 1,357 1,408
------------ ------------ ------------
28,520 33,946 18,192
Minority Interest -- 364 --
Stockholders' equity:
Preferred stock:
Authorized 1,000,000 shares; no par
value, none issued
Common stock:
Authorized 30,000,000 shares; no
par value, Issued and outstanding -
13,038,664; 12,868,012; and 12,854,162;
respectively 13,039 6,434 6,427
Retained Earnings 47,257 40,154 52,609
Accumulated other comprehensive income 1,753 242 2,247
------------ ------------ ------------
62,049 46,830 61,283
------------ ------------ ------------
$ 133,420 $ 133,189 $ 134,437
============ ============ ============
See notes to Consolidated Condensed Financial Statements.
3
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------------ ------------------------
July 10, July 12, July 10, July 12,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net Sales $ 54,655 $ 49,837 $ 89,905 $ 78,940
Costs, expenses and other income:
Cost of products sold 37,125 31,160 61,643 49,819
Selling, general and
administrative expenses 14,227 14,389 23,467 24,321
Interest 573 652 938 1,100
Other expense (income) (319) (11) (301) 40
---------- ---------- ---------- ----------
51,606 46,190 85,747 75,280
Net income before income taxes and
minority interest 3,049 3,647 4,158 3,660
Net Income in subsidiary allocated to
minority interest -- 6 -- 4
Provision for income taxes 1,096 1,399 1,607 1,403
---------- ---------- ---------- ----------
Net income $ 1,953 $ 2,254 $ 2,551 $ 2,261
========== ========== ========== ==========
Per Share Data:
Basic earnings per share $ 0.15 $ 0.17 $ 0.20 $ 0.17
Diluted earnings per share $ 0.15 $ 0.17 $ 0.19 $ 0.17
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Net income $ 1,953 $ 2,254 $ 2,551 $ 2,261
Unrealized gain (loss) on
securities, net of tax (49) 122 7 69
Foreign currency translation
adjustment (280) 548 (616) 926
Unrealized gain (loss) on interest
rate swap agreement net of
deferred tax expense of $62 97 (728) 115 (728)
---------- ---------- ---------- ----------
Comprehensive income $ 1,721 $ 2,196 $ 2,057 $ 2,528
========== ========== ========== ==========
See notes to Consolidated Condensed Financial Statements.
4
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
Six Months Ended
------------------------------
July 10, 2004 July 12, 2003
------------- -------------
Operating Activities:
Net income $ 2,551 $ 2,261
Depreciation and amortization 2,744 2,785
Adjustments necessary to reconcile
net income to net cash provided
by operating activities (4,471) (4,923)
------------- -------------
Net cash provided by operating
activities 824 123
Investing Activities:
Purchase of property and equipment (948) (1,362)
Purchase of certain assets of
North American Archery Group -- (11,432)
Acquisition of majority interest
in Schleicher & Co.
International AG -- (12,587)
Equity investment in Sweden Table
Tennis AB -- (187)
Step(R)product license buyout -- (875)
------------- -------------
Net cash used by investing
activities (948) (26,443)
Financing Activities:
Net increase in notes payable -
Bank 2,221 6,217
Net (decrease) increase in long-
term debt (167) 19,673
Proceeds from exercise of stock
options 1,083 266
Purchase of common stock (819) (1,839)
Dividends Paid (1,556) --
Foreign Currency Translation (55) (114)
------------- -------------
Net cash provided by financing
activities 707 24,203
------------- -------------
Net increase (decrease) in cash and
cash equivalents 583 (2,117)
Cash and cash equivalents, beginning
of period 648 3,370
------------- -------------
Cash and cash equivalents, end of
period $ 1,231 $ 1,253
============= =============
See notes to Consolidated Condensed Financial Statements.
5
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 27, 2003 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 2003 filed with
the Securities and Exchange Commission.
Note B - Seasonal Aspects
- --------------------------------------------------------------------------------
The results of operations for the six-month periods ended July 10, 2004 and July
12, 2003 are not necessarily indicative of the results to be expected for the
full year.
Note C - Stock Split
- --------------------------------------------------------------------------------
On May 28, 2004, the Company completed a two-for-one split on Escalade common
stock to all shareholders of record as of May 11, 2004. All earnings per share
data in these consolidated financial statements and notes to the consolidated
financial statements have been restated retroactively to reflect the stock
split. The stock split resulted in 6,518 thousand additional shares. The Company
has capitalized this transaction by recording a transfer from retained earnings
to common stock to allow common stock to remain at $1 per share.
Note D - Inventories
- --------------------------------------------------------------------------------
(All amounts in thousands) July 10, July 12, December 27,
2004 2003 2003
------------ ------------ ------------
Raw materials $ 10,725 $ 10,902 $ 7,300
Work in progress 6,975 5,544 5,133
Finished goods 23,735 24,213 17,420
------------ ------------ ------------
$ 41,435 $ 40,659 $ 29,853
============ ============ ============
Note E - Notes Payable
- --------------------------------------------------------------------------------
On July 15, 2004 the Company's directly owned subsidiary, Indian-Martin, Inc.,
renewed its revolving line of credit under which it can borrow funds from time
to time to purchase eligible accounts receivable from the Company's operating
subsidiaries. The terms of the amended agreement remain essentially unchanged
with a new expiration date of July 15, 2006. Subject to limitations, the
aggregate borrowing under the revolving credit line is $45 million. At July 10,
2004, outstanding borrowings were $10,240 thousand utilizing the prime interest
rate option at an effective rate of 3.00%.
6
Note F - Income Taxes
- --------------------------------------------------------------------------------
The provision for income taxes was computed based on financial statement income.
Note G - Dividend Payment
- --------------------------------------------------------------------------------
On March 12, 2004, the Company paid a dividend of $0.24 per common share to all
shareholders of record on March 5, 2004. The total amount of the dividend was
$1,556 thousand and was charged against retained earnings.
Note H - Segment Information
- --------------------------------------------------------------------------------
As of and for the Six Months
Ended July 10, 2004
--------------------------------------------------
Office -
Sporting Graphic
In thousands Goods Arts Corp. Total
-------------------------------------------------------------------------------------
Revenues from external
customers $ 46,309 $ 43,596 $ -- $ 89,905
Net Income (Loss) 2,184 1,024 (657) 2,551
Total Assets $ 64,157 $ 61,222 $ 8,041 $ 133,420
As of and for the Six Months
Ended July 12, 2003
--------------------------------------------------
Office -
Sporting Graphic
In thousands Goods Arts Corp. Total
-------------------------------------------------------------------------------------
Revenues from external
customers $ 37,591 $ 41,349 $ -- $ 78,940
Net Income (Loss) 1,201 1,213 (153) 2,261
Total Assets $ 67,544 $ 58,620 $ 7,025 $ 133,189
Note I - Earnings Per Share
- --------------------------------------------------------------------------------
The shares used in computation of the Company's basic and diluted earnings per
common share are as follows:
Three Months Ended
-----------------------------
All amounts in thousands July 10, 2004 July 12, 2003
--------------------------------------------------------------------
Weighted average common shares
outstanding 13,018 13,000
Dilutive effect of stock options 276 248
---------- ----------
Weighted average common shares
outstanding, assuming dilution 13,294 13,248
========== ==========
Six Months Ended
-----------------------------
All amounts in thousands July 10, 2004 July 12, 2003
--------------------------------------------------------------------
Weighted average common shares
outstanding 12,949 13,010
Dilutive effect of stock options 276 248
---------- ----------
Weighted average common shares
outstanding, assuming dilution 13,225 13,258
========== ==========
7
Note J - Employee Stock Option Plan
- --------------------------------------------------------------------------------
The Company has two stock-based compensation plans. The Company accounts for
these plans under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock issued to Employees, and related interpretations. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.
Three Months Ended
-----------------------------
(In Thousands Except Per Share Amounts) July 10, 2004 July 12, 2003
--------------------------------------------------------------------------
Net income, as reported $ 1,953 $ 2,254
Less: Total stock-based employee
compensation cost determined under the
fair value based method, net of
income taxes (194) (110)
------------- -------------
Pro forma net income $ 1,759 $ 2,144
============= =============
Earnings per share
Basic--as reported $ 0.15 $ 0.17
============= =============
Basic--pro forma $ 0.14 $ 0.16
============= =============
Diluted--as reported $ 0.15 $ 0.17
============= =============
Diluted--pro forma $ 0.13 $ 0.16
============= =============
Six Months Ended
-----------------------------
(In Thousands Except Per Share Amounts) July 10, 2004 July 12, 2003
--------------------------------------------------------------------------
Net income, as reported $ 2,551 $ 2,261
Less: Total stock-based employee
compensation cost determined under the
fair value based method, net of
income taxes (389) (220)
------------- -------------
Pro forma net income $ 2,162 $ 2,041
============= =============
Earnings per share
Basic--as reported $ 0.20 $ 0.17
============= =============
Basic--pro forma $ 0.17 $ 0.15
============= =============
Diluted--as reported $ 0.19 $ 0.17
============= =============
Diluted--pro forma $ 0.16 $ 0.15
============= =============
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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, new product development, the continuation
and development of key customer and supplier relationships, Escalade's ability
to control costs, general economic conditions, fluctuation in operating results,
changes in the securities market 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 release
revisions to these forward-looking statements after the date of this report.
8
Overview
Escalade, Incorporated ("Escalade" or "Company") manufactures and distributes
products for two industries: Sporting Goods and Office Products. Within these
industries the Company has successfully built a commanding market presence in
niche markets. This strategy is heavily dependent on brand recognition and
excellent customer service. Management believes the key indicators in measuring
the success of this strategy are revenue and earnings growth. One of the
Company's key strategic advantages is the Company's established relationships
with major retailers which enable the Company to bring new products to the
market in a timely and cost effective manner. In addition to strategic customer
relations, the Company has over 75 years of manufacturing experience that enable
it to be a low cost supplier.
Results of Operations
Net revenues for the second quarter were 9.7% higher than the same period last
year and 13.9% higher for the first half compared to last year. Revenue growth
came primarily from the sporting goods segment.
Net income for the second quarter was down $301 thousand from the same period
last year. However, due to the strong results reported in the first quarter, net
income for the first half of 2004 is up 12.9% over the prior year. Net income in
the sporting goods segment increased 7.5% for the second quarter over the prior
year and when added to the results from the first quarter, net income for the
sporting goods business is up 81.8% for the first half of 2004 compared to the
same period in 2003. Net income from the office products segment was relatively
unchanged in the second quarter from the same period last year, but down 15.6%
for the first half of 2004 compared to the same period last year. This decrease
is attributed to manufacturing inefficiencies in the office product business.
The company has taken actions to resolve these problems and increase
profitability in the office products business.
The following schedule sets forth certain consolidated statement of income data
as a percentage of net revenue for the periods indicated:
Three Months Six Months
---------------- -----------------
2004 2003 2004 2003
---------------------------------------------------------------------------
Net revenue 100.0% 100.0% 100.0% 100.0%
Cost of products sold 67.9% 62.5% 68.6% 63.1%
------ ------ ------ ------
Gross margin 32.1% 37.5% 31.4% 36.9%
Selling, administrative and
general expenses 26.0 28.9% 26.1 30.8%
------ ------ ------ ------
Operating income 6.1% 8.6% 5.3% 6.1%
====== ====== ====== ======
Consolidated Revenue and Gross Margin
Revenue growth in the second quarter came primarily from the sporting goods
business which experienced an increase in net revenues of 15.9% over the same
quarter last year. Sporting goods revenues for the first half were up 23.2% over
the same period last year. Roughly half of the increased revenue is directly
attributed to the archery acquisition made during the third quarter of 2003. The
remainder of the increase is attributed to table tennis and basketball sales
which have increased as a result of better retail placement. The Company does
not expect the growth rate in the first half of 2004 to continue into the second
half due to the timing of the archery business acquisition in June of 2003.
Growth expectations for the second half of 2004 are expected to be modest
compared to the same period in 2003.
Compared to the corresponding periods in the prior year, office product revenues
increased 2.6% and 5.4% in the second quarter and first half of the year,
respectively. Growth in European revenues grew 16.3% in the second quarter and
19.2% for the first half, however, the bulk of this increase is the result of
fluctuations in exchange rates. Ignoring the effects of exchange rates, European
revenues increased approximately 7% in the first half of 2004 compared to the
9
same period in 2003. Revenues in North America decreased 8.7% in the second
quarter and 6.2% in the first half compared to comparable periods last year.
Approximately half of this decline in second quarter revenues is attributed to
order delays from the US Government resulting from recent price increases on
high security shredders. The remainder of the decline is due to severe price
competition on office products produced in Mexico. The Company has now received
the delayed orders at the higher price and is taking steps to reduce
manufacturing costs to address the increased price competition on product
produced in Mexico.
The consolidated gross margin rate for the first half of 2004 declined from
36.9% last year to 31.4% in the current year. However, during the second quarter
of 2004 the consolidated gross margin rate increased to 32.1% from 30.4% in the
first quarter of 2004. The primary reason for the decline in gross margin from
2003 to 2004 is manufacturing inefficiencies in the German factory producing
office products and the adverse effect of foreign currency rates on product
manufactured in Germany and sold in North America. In response to this, the
Company has made significant management changes in the German factory and
implemented an aggressive cost reduction effort to improve efficiency. These
efforts, combined with price increases on products produced in Germany, are
expected to improve the gross margin rates in the office products business in
the second half of 2004. Overall gross margins on sporting goods business were
marginally better in 2004 compared to 2003 as a result of increased higher
margin product sales such as archery and basketball.
Consolidated Selling, General and Administrative Expenses
Consolidated selling, general and administrative costs ("SG&A") were relatively
unchanged from the prior year in both the second quarter and first half of the
current year. As a percentage of net revenue, SG&A declined from 30.8% in the
first half of last year to 26.1% for the same period this year. The Company has
initiated various cost reduction efforts in the office product business and
expects to realize results from these efforts in the second half of this year.
Financial Condition and Liquidity
The financial condition of the company continues to be strong. The current
ratio, a basic measure of liquidity (current assets divided by current
liabilities), was 1.9 as of July 10, 2004 compared to 1.6 as of July 12, 2003
and 1.4 as of December 27, 2003. The increased current ratio is primarily due to
the conversion during the first half of approximately $10 million from
short-term debt to long-term debt.
The following schedule summarizes the Company's total debt:
July 10, July 12, December 27,
In thousands 2004 2003 2003
---------------------------------------------------------------------------
Notes payable short-term $ 12,228 $ 17,440 $ 21,568
Current portion long-term debt 354 5,179 354
Long term debt 26,470 31,861 15,729
------------ ------------ ------------
Total debt $ 39,052 $ 54,480 $ 37,651
============ ============ ============
Total debt at July 10, 2004 increased slightly from the total at December 27,
2003 as the company begins building product for the holiday sales season.
However, total debt at July 10, 2004 is significantly lower than the total at
July 12, 2003 reflecting the strong cash flow from operations. As a percentage
of stockholders' equity, total debt has decreased from 116% at July 12, 2003, to
63% at July 10, 2004.
During the first half of 2004, operations generated $824 thousand in cash
compared to $123 thousand during the same time period in 2003. Cash was provided
by net income adjusted for non-cash related items. During the first half of
2004, accounts receivable collections generated approximately $11 million in
cash, which was offset by planned inventory increases.
10
The Company's working capital requirements are primarily funded from operating
cash flows and revolving credit agreements with its banks. The Company's
relationship with its primary lending bank remains strong and the Company
expects to have access to the same level of revolving credit that was available
in 2003. In addition, the Company believes it can quickly reach agreement to
increase available credit should the need arise.
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 six months ended July 10, 2004.
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 July 10, 2004 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
11
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. Not Required.
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the registrant was held on April 23, 2004 at the offices
of the Company in Evansville, Indiana. Proxy materials were circulated on March
22, 2004 proposing the election of seven members to the Board of Directors for a
one year term, approval of the appointment of BKD LLP to serve as independent
auditors of the company for the year 2004, and an amendment to the articles of
incorporation to increase the number of authorized shares from 10 million shares
to 30 million shares.
Shareholders elected the proposed directors by the following vote totals:
For Withheld
--------------------------------
Robert E. Griffin 11,202,308 171,504
Blain E. Matthews, Jr. 11,139,794 234,018
C. W. "Bill" Reed 11,200,490 173,322
George Savitsky 11,361,198 12,614
Richard D. White 11,369,198 4,614
Edward E. (Ned) Williams 11,371,016 2,796
Keith P. Williams 11,371,016 2,796
Shareholders approved the appointment of BKD LLP to serve as independent
auditors of the Company for the year 2004 with the following vote: 11,357,760
shares for, 13,800 shares against and 2,252 shares abstained.
Shareholders approved the amendment to the articles of incorporation increasing
the number of authorized shares from 10 million shares to 30 million shares by
the following vote: 10,927,126 shares for, 350,704 shares against and 95,982
shares abstained.
Item 5. Not Required.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
10.1 First Amendment to Credit Agreement dated September
5, 2003 by and between Indian-Martin, Inc. and Bank
One, National Association, a national banking
association. The Effective date of the Amendment was
July 15, 2004.
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.
12
32.2 Chief Financial Officer Section 1350 Certification.
(b) Reports on Form 8-K
1. On April 8, 2004, Escalade filed a report on Form 8-K relating to
its financial information for the quarter ended March 20, 2004
and forward-looking statements as presented in the shareholder
message and press release dated April 8, 2004.
2. On April 28, 2004, Escalade filed a report on Form 8-K relating
to its announcement of a two-for-one stock split to all
shareholders of record on May 11, 2004.
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: July 30, 2004 /s/ C. W. (BILL) REED
------------- ----------------------------
C. W. (Bill) Reed
President and Chief Executive Officer
Date: July 30, 2004 /s/ TERRY D. FRANDSEN
------------- ----------------------------
Terry D. Frandsen
Vice President and
Chief Financial Officer
13