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 March 23, 1996
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)
817 Maxwell Avenue, Evansville, Indiana 47717
---------------------------------------------
(Address of principal executive offices)
812-467-1200
------------
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
--- ---
The number of shares of Registrant's common stock (no par value)
outstanding as of April 10, 1996 : 4,123,954
INDEX
Page No.
Part I. Financial Information:
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheet --
March 23, 1996, March 25, 1995, and
December 30, 1995 3
Consolidated Condensed Statement of Income --
Three Months Ended March 23, 1996 and March 25,1995 4
Consolidated Condensed Statement of Cash Flows --
Three Months Ended March 23, 1996 and March 25, 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations: 7-8
Part II. Other Information 8
Signatures 8
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
(Dollars in Thousands) March 23, March 25, December 30,
1996 1995 1995
ASSETS ------------------------------------------
Current assets:
Cash $ 261 $ 118 $ 1,247
Receivables, less allowances of
$753, $589 and $726 12,830 10,645 25,285
Inventories 15,994 27,067 15,152
Prepaid expense 119 198 267
Income tax refundable --- 399 275
Deferred income tax benefit 1,828 1,631 1,828
------- ------- -------
TOTAL CURRENT ASSETS 31,032 40,058 44,054
Property, plant, and equipment 33,273 37,908 33,064
Accum. depr. and amortization (22,508) (24,718) (21,840)
------- ------- -------
10,765 13,190 11,224
Deferred income tax benefit 662 706 662
Other assets 1,819 1,850 1,827
------- ------- -------
$44,278 $55,804 $57,767
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 200 $11,500 $14,350
Current portion of long-term debt 3,007 2,478 2,383
Trade accounts payable 3,032 2,802 2,370
Accrued liabilities 7,472 6,428 7,553
Federal income tax payable 202 329
------- ------- -------
TOTAL CURRENT LIABILITIES 13,913 23,208 26,985
Other Liabilities:
Long-term debt 5,641 8,648 6,265
Deferred compensation 1,203 1,100 1,179
------- ------- -------
6,844 9,748 7,444
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 - 4,123,954,
4,133,361, and 4,133,954 at
3-23-96, 3-25-95, and 12-30-95
$17,523 $17,571 $17,572
Retained earnings 5,998 5,277 5,766
------- ------- -------
$23,521 $22,848 $23,338
------- ------- -------
$44,278 $55,804 $57,767
======= ======= =======
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands, except per share amounts)
Three Months Ended
-------------------------------
March 23, 1996 March 25, 1995
-------------- --------------
Net sales $15,381 $18,110
Costs, expenses and other income:
Cost of products sold 11,128 14,117
Selling, administrative and
general expenses 3,552 3,521
Interest 309 571
Other income (55) (53)
------- -------
14,934 18,156
INCOME (LOSS) BEFORE INCOME TAXES 447 (46)
Provision (benefit) for income taxes 215 (5)
------- -------
NET INCOME (LOSS) $ 232 $ (41)
======= =======
Per share data:
NET INCOME (LOSS) $ .06 $ (.01)
======= =======
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Three Months Ended
March 23, 1996 March 25, 1995
Operating Activities: -------------------------------
Net Income (Loss) $ 232 $ (41)
Depreciation and amortization 668 903
Adjustments necessary to reconcile
net income to net cash provided by
operating activities 12,522 16,381
------- -------
Net cash provided by operating
activities 13,422 17,243
------- -------
Investing Activities:
Purchase of property and equipment (209) (383)
------- -------
Net cash used by investing activities (209) (383)
------- -------
Financing Activities:
Net decrease in notes pay.- bank (14,150) (17,737)
Purchase of common stock (49) ---
------- -------
Net cash used by financing activities (14,199) (17,737)
------- -------
Decrease in cash (986) (877)
Cash, beginning of period 1,247 995
------- -------
Cash, end of period $ 261 $ 118
======= =======
See notes to Consolidated Condensed Financial Statements.
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note A - Basis of Presentation
- ------------------------------
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial
position of the company as of March 23, 1996, March 25, 1995, and December
30, 1995 and the results of operations and changes in financial position for
the three months ended March 23, 1996 and March 25, 1995. The balance sheet
at December 30, 1995 was derived from the audited balance sheet included in
the 1995 annual report to shareholders.
Note B - Seasonal Aspects
- -------------------------
The results of operations for the three month periods ended March 23,
1996 and March 25, 1995 are not necessarily indicative of the results to be
expected for the full year.
Note C - Inventories (Dollars in Thousands)
- -------------------------------------------
3-23-96 3-25-95 12-30-95
------- ------- --------
Raw Materials $ 6,655 $10,472 $ 6,692
Work In Process 3,153 3,619 3,136
Finished Goods 6,186 12,976 5,324
------- ------- -------
$15,994 $27,067 $15,152
======= ======= =======
Note D - Earnings Per Share
- ---------------------------
Earnings (loss) per common and common equivalent shares are based on
average shares outstanding. Dilutive effects of stock options on net income
(loss) are not material. The number of shares used to calculate earnings
(loss) per share for the three months ended March 23, 1996 and March 25,
1995 was 4,133,359 and 4,133,361.
Note E - Income Taxes
- ---------------------
The provision (benefit) for income taxes was computed based on
financial statement income (loss).
ESCALADE, INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's earnings during the
periods included in the accompanying consolidated condensed statements of
income.
RESULTS OF OPERATIONS
FIRST QUARTER COMPARISON 1996 vs. 1995
Net sales were $ 15,381,000 in the first quarter of 1996 as compared
to $18,110,000 in the first quarter of 1995 a decrease of $2,729,000 or
15.1%. Sales of sporting goods decreased $3,349,000 or 23.5% and sales
of office and graphic arts products increased $620,000 or 16.2%.
The decrease in sporting goods sales was mainly due to decreased
volume in the dartboard cabinet product line. The increase in office and
graphic arts machines and equipment sales is primarily due to increased
market share in the office machines and equipment product line.
Cost of sales was $11,128,000 in the first quarter of 1996 as compared
to $14,117,000 in the first quarter of 1995, a decrease of $2,989,000 or
21.2%.
Cost of sales as a percentage of net sales was 72.3% in the first
quarter of 1996 as compared to 78.0% in the first quarter of 1995. Sporting
goods cost of sales as a percentage of net sales decreased 4.2% and office
and graphic arts cost of sales as a percentage of net sales decreased 1.6%.
These decreases in the cost of sales percentage of net sales were due to
lower material costs and reduced direct labor costs.
Selling, general, and administrative expenses were $3,552,000 in the
first quarter of 1996 as compared to $3,521,000 in the first quarter of
1995, an increase of $31,000 or .9%.
Selling, general and administrative expenses as a percentage of net
sales was 23.1% in the first quarter of 1996 as compared to 19.4% in the
first quarter of 1995. This increase as a percentage of net sales was mainly
due to decreased sales volume.
Interest expense decreased $262,000 to $309,000 in 1996 from $571,000
in 1995, a decrease of 45.9% due to decreased borrowing levels.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities was
$13,422,000 in the first quarter of 1996 as compared to $17,243,000 in the
first quarter of 1995. Most of the cash provided by operating activities was
from collection of the year end accounts receivable during the first
quarter. The net accounts receivable balance at the end of the year was
$25,285,000 and at the end of the first quarter the net accounts receivable
balance was $12,830,000. The Company's net cash used for investing
activities was $209,000 in the first quarter of 1996 as compared to $383,000
in the first quarter of 1995. This decrease of $174,000 was in the purchase
of property and equipment. The Company's net cash used by financing
activities was $14,199,000 in the first quarter of 1996 as compared to
$17,737,000 in the first quarter of 1995. Most of the cash used by
financing activities was for the pay down of notes payable - bank. At the
end of the year, the notes payable - bank was $14,350,000 and at the end of
the first quarter notes payable - bank was $200,000.
The Company's working capital requirements are currently funded by
cash flow from operations, a domestic line of credit in the amount of
$28,000,000, and a letter of credit facility in the amount of $4,000,000.
The outstanding loans under the domestic line of credit bear interest at
either of the following rates, as selected by the Company from time to time;
the bank's prime lending rate or the London Inter-Bank Offered Rate plus
1.25%. The Company's domestic line of credit agreement expires on May 31,
1996 and will be renewed during the second quarter.
The Company reactivated its stock buy back program in the first
quarter of 1996. Under the plan the Company purchased 10,000 shares at
$4.9375 per share during the first quarter.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the three months ended March 23, 1996.
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:April 10, 1996 Robert E. Griffin
-------------- ----------------------------
Robert E. Griffin
Chairman and Chief
Executive Officer
Date:April 10, 1996 John R. Wilson
-------------- ----------------------------
John R. Wilson
Vice President and
Chief Financial Officer
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