AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
September 12, 1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule
13E-4/A-1
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
ESCALADE, INCORPORATED
(NAME OF ISSUER AND PERSON FILING STATEMENT)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
296056 10 4
(CUSIP Number of Class of Securities)
JOHN R. WILSON
SECRETARY
ESCALADE, INCORPORATED
817 MAXWELL AVENUE
EVANSVILLE, INDIANA 47717
(812) 467-1265
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and
Communications on Behalf of the Person Filing the Statement)
COPY TO:
Richard G. Schmalzl, Esq.
Graydon, Head & Ritchey
1900 Fifth Third Center
511 Walnut Street
Cincinnati, Ohio 45202
(513) 621-6464
August 12, 1996
(Date Tender Offer First Published, Sent Or Given To Security Holders)
Calculation of Filing Fee
Transaction Valuation* Amount of Filing Fee
$10,000,000 $2,000
* Determined pursuant to Rule 0-11(b)(1). Assumes the purchase of 1,000,000
shares at $10.00 per share.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: $2,000.00
Form or Registration No.: Schedule 13E-4
Filing Party: Escalade, Incorporated
Date Filed: August 12, 1996
This Amendment No.1 amends and supplements the Rule 13e-4 Issuer
Tender Offer Statement on Schedule 13E-4, dated August 12, 1996
(the "Schedule 13E-4"), filed by Escalade, Incorporated, an
Indiana corporation (the "Company"), in connection with the
Company s offer to purchase up to 1,000,000 shares (or such
lesser number of shares as are properly tendered) of its Common
Stock, no par value (the "Shares"), at a price not less than
$6.00 nor more than $10.00 per Share, net to the Seller in Cash,
all upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated August 12, 1996 (the "Offer to
Purchase"), as amended hereby, and the related Letter of
Transmittal, copies of which were previously filed as Exhibits
(a)(1) and (a)(2) to the Schedule 13E-4, respectively, and
incorporated by reference therein. Terms defined in the Schedule
13E-4 and not separately defined herein shall have the meanings
specified in the Schedule 13 E-4.
The following information amends the information previously
included in the Schedule 13E-4.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item 9 is hereby amended by supplementing the following Exhibit:
(a)(1) Form of Offer to Purchase
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
Escalade, Incorporated
By: /s/ Robert E. Griffin
-----------------
Name: Robert E. Griffin
Title: Chairman and Chief
Executive Officer
Dated: September 12, 1996
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
(a)(1) Form of Offer to Purchase
EXHIBIT (a)(1)
Offer to Purchase
OFFER TO PURCHASE FOR CASH
BY
ESCALADE, INCORPORATED
Up to 1,000,000 Shares of its Common Stock at a Purchase Price
not less than $6.00 nor more than $10.00 per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00
P.M., EASTERN TIME, ON FRIDAY, SEPTEMBER 13, 1996, UNLESS THE
OFFER IS EXTENDED.
Escalade, Incorporated, an Indiana corporation (the
"Company"), invites its stockholders to tender shares of its
Common Stock, no par value (the "Shares") at prices not less than
$6.00 nor more than $10.00 per Share, net to the seller in cash,
specified by such stockholders, upon the terms and subject to the
conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Offer").
The Company will determine a single per Share price (not
less than $6.00 nor more than $10.00 per Share) (the "Purchase
Price") that it will pay for the Shares validly tendered pursuant
to the Offer and not withdrawn, taking into account the number of
Shares so tendered and the prices specified by the tendering
stockholders. The Company will select the Purchase Price that
will enable it to purchase 1,000,000 Shares (or such lesser
number of Shares as are validly tendered at prices not less than
$6.00 nor more than $10.00 per Share) pursuant to the Offer. The
Company will purchase all Shares validly tendered at prices at or
below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the Offer, including the provisions
thereof relating to proration and conditional tenders described
herein. Shares tendered at prices in excess of the Purchase
Price and Shares not purchased because of proration and
conditional tenders will be returned. Stockholders must complete
the section of the Letter of Transmittal relating to the price at
which they are tendering Shares in order to validly tender
Shares.
____________
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES
BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7.
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS OR EXECUTIVE
OFFICERS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO
WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE
HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS
BEEN ADVISED THAT NO EXECUTIVE OFFICER OF THE COMPANY INTENDS TO
TENDER SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of his
or her Shares should either (1) complete and sign the Letter of
Transmittal or a photocopy thereof in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and
any other required documents to Fifth Third Bank (the
"Depositary"), and either deliver the certificates for Shares to
the Depositary along with the Letter of Transmittal or deliver
such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3 hereof or (2) request his or her broker,
dealer, commercial bank, trust company or nominee to effect the
transaction for him or her. A stockholder whose Shares are
registered in the name of a broker, dealer, commercial bank,
trust company or nominee must contact such broker, dealer,
commercial bank, trust company or nominee if he or she desires to
tender such Shares. Any stockholder who desires to tender Shares
and whose certificates for such Shares are not immediately
available, or who cannot comply in a timely manner with the
procedure for book-entry transfer, should tender such Shares by
following the procedures for guaranteed delivery set forth in
Section 3 hereof.
______________________
On August 9, 1996, the last full trading day prior to the
commencement of the Offer, the last reported sale price of the
Shares on the Nasdaq Stock Market's National Market (the "Nasdaq
National Market") was $6.25 per Share. (Stockholders are urged
to obtain current market quotations for the Shares.)
Questions or requests for assistance or for additional
copies of this Offer to Purchase, the Letter of Transmittal or
other tender offer materials may be directed to the Dealer
Manager at the address and telephone number set forth on the back
cover of this Offer to Purchase.
______________________
The Dealer Manager for the Offer is:
NatCity Investments, Inc.
August 12, 1996
TABLE OF CONTENTS
Section Page
SUMMARY
INTRODUCTION
THE OFFER
1. NUMBER OF SHARES; PRORATION . . . . . . . . . . . . . . . . . . . .-6-
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES . . . . . . . . . . . .-7-
3. PROCEDURE FOR TENDERING SHARES. . . . . . . . . . . . . . . . . . .-8-
4. WITHDRAWAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . -10-
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE
PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
6. CONDITIONAL TENDER OF SHARES. . . . . . . . . . . . . . . . . . . -11-
7. CERTAIN CONDITIONS OF THE OFFER . . . . . . . . . . . . . . . . . -11-
8. PRICE RANGE OF SHARES; DIVIDENDS. . . . . . . . . . . . . . . . . -14-
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER. . . . . . . . -14-
10. CERTAIN INFORMATION CONCERNING THE COMPANY. . . . . . . . . . . . -16-
11. SOURCE AND AMOUNT OF FUNDS. . . . . . . . . . . . . . . . . . . . -20-
12. TRANSACTIONS AND AGREEMENTS CONCERNING SHARES . . . . . . . . . . -21-
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . -21-
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS . . . . . . . -25-
15. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . -25-
16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
SUMMARY
This general summary is provided solely for the convenience
of holders of Shares and is qualified in its entirety by
reference to the full text of and the more specific details
contained in this Offer to Purchase and the related Letter of
Transmittal and any amendments hereto and thereto. Capitalized
terms used in this summary without definition shall have the
meaning ascribed to such terms in the Offer to Purchase.
The Company Escalade, Incorporated
The Shares Shares of the Company's Common Stock, no par value
Number of
Shares Sought 1,000,000 of the 4,111,889 Shares outstanding as
of August 9, 1996.
Purchase Price The Company will select a single Purchase Price
which will be not less than $6.00 nor more than
$10.00 per Share. All Shares purchased by the
Company will be purchased at the Purchase Price
even if tendered at or below the Purchase Price.
Each stockholder desiring to tender Shares must
specify in the Letter of Transmittal the minimum
price (not less than $6.00 nor more than $10.00
per Share) at which such stockholder is willing to
have his or her Shares purchased by the Company.
Stockholders wishing to maximize the possibility
that their Shares will be purchased at the
Purchase Price may check the box on the Letter of
Transmittal marked "Shares Tendered At Purchase
Price Determined By Dutch Auction." Checking this
box may result in a purchase of the Shares so
tendered at the minimum price of $6.00.
Expiration
Date of Offer Friday, September 13, 1996, at 5:00 p.m., Eastern
time, unless extended by the Company.
How to Tender
Shares See Section 3. For further information, call the
Dealer Manager or consult your broker for
assistance.
Odd Lot Owners There will be no proration of Shares tendered by
any stockholder beneficially owning less than 100
Shares as of the close of business on August 9,
1996, who tenders all such Shares and completes
the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, the Notice of
Guaranteed Delivery.
Stockholders tendering Odd Lots will avoid the
payment of brokerage commissions and the
applicable odd lot discount payable in a sale of
Shares in a transaction effected on a securities
exchange.
Withdrawal
Rights Tendered Shares may be withdrawn at any time until
the Expiration Date of the Offer and, unless
previously purchased, after Tuesday, October 8,
1996. See Section 4.
Purpose of
Offer The Offer is designed to afford stockholders who
may be considering the sale of their shares an
opportunity to sell such shares to the Company for
a higher price than that which has been available
recently on the open market and without
transaction costs. The Company believes that the
Offer will have a positive long-term effect on the
Company's financial and capital ratios, earnings
per share and stock price. See Section 9.
Market Price
of Shares On August 9, 1996, the last reported sale price of
the Shares on the Nasdaq National Market was $6.25
per Share. See Section 8.
Brokerage
Commissions Not payable by stockholders.
Stock
Transfer Tax None, except as provided in Instruction 7 of the
Letter of Transmittal.
Payment Date As Promptly as practicable after the Expiration
Date of the Offer.
Further
Information Any questions, requests for assistance or requests
for additional copies of this Offer to Purchase,
the Letter of Transmittal or other tender offer
materials may be directed to the Dealer Manager at
the address and phone number set forth on the back
cover page of this Offer to Purchase.
To the Holders of Common Stock of
Escalade, Incorporated:
INTRODUCTION
Escalade, Incorporated, an Indiana corporation (the
"Company"), invites its stockholders to tender shares of its Common
Stock, no par value (the "Shares") at prices not less than $6.00
nor more than $10.00 per Share, net to the seller in cash,
specified by such stockholders, upon the terms and subject to the
conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Offer").
The Company will determine a single per Share price (not less
than $6.00 nor more than $10.00 per Share) (the "Purchase Price")
that it will pay for the Shares validly tendered pursuant to the
Offer and not withdrawn, taking into account the number of Shares
so tendered and the prices specified by tendering stockholders.
The Company will select the Purchase Price that will enable it to
purchase 1,000,000 Shares (or such lesser number of Shares as is
validly tendered at prices not less than $6.00 nor more than $10.00
per Share) pursuant to the Offer. The Company will purchase all
Shares validly tendered at prices at or below the Purchase Price
and not withdrawn on or prior to the Expiration Date (as defined in
Section 1), upon the terms and subject to the conditions of the
Offer, including the provisions relating to proration and
conditional tenders described below. The Purchase Price will be
paid in cash, net to the seller, with respect to all Shares
purchased. Shares tendered at prices in excess of the Purchase
Price and Shares not purchased because of proration or conditional
tenders will be returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES
BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 7.
Tendering stockholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 7 of the
Letter of Transmittal, stock transfer taxes on the purchase of
Shares by the Company. The Company will pay all charges and
expenses of Fifth Third Bank (the "Depositary") incurred in
connection with the Offer. See Section 15. HOWEVER, ANY TENDERING
STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE AND SIGN THE
SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF TRANSMITTAL
MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING
OF 31% OF THE GROSS PAYMENTS PAYABLE TO SUCH STOCKHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTIONS 3 AND 13.
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS OR EXECUTIVE
OFFICERS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER
TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER
OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED
THAT NONE OF MESSRS. GRIFFIN, REED OR WILSON (THE COMPANY'S
CHAIRMAN, PRESIDENT AND CHIEF FINANCIAL OFFICER, RESPECTIVELY),
CONSTITUTING THE EXECUTIVE OFFICERS OF THE COMPANY, INTENDS TO
TENDER SHARES PURSUANT TO THE OFFER.
As of August 9, 1996, the Company had issued and outstanding
4,111,889 Shares and had reserved for issuance upon exercise of
outstanding stock options and warrants 459,477 Shares. As of
August 9, 1996, there were approximately 441 holders of record of
Shares. The 1,000,000 Shares that the Company is offering to
purchase represent approximately 24.3% of the Shares then
outstanding, or approximately 21.9% on a fully diluted basis
(assuming the exercise of all outstanding stock options and
warrants).
Stockholders are urged to obtain current market quotations for
the Shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Number of Shares. Upon the terms and subject to the
conditions described herein and in the Letter of Transmittal, the
Company will purchase up to 1,000,000 Shares that are validly
tendered on or prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) at a price (determined in
the manner set forth below) not less than $6.00 nor more than
$10.00 per Share. The later of 5:00 p.m., Eastern time, on Friday,
September 13, 1996, or the latest time and date to which the Offer
is extended, is referred to herein as the "Expiration Date." If the
Offer is oversubscribed as described below, only Shares tendered at
or below the Purchase Price on or prior to the Expiration Date will
be eligible for proration.
The Company will determine the Purchase Price taking into
account the number of Shares so tendered and the prices specified
by tendering stockholders. The Company will select the Purchase
Price that will enable it to purchase 1,000,000 Shares (or such
lesser number of Shares as is validly tendered and not withdrawn at
prices not less than $6.00 nor more than $10.00 per Share) pursuant
to the Offer. The Company reserves the right to purchase more than
1,000,000 Shares pursuant to the Offer, as may be permitted by
applicable laws, rules and regulations and/or in accordance with
the procedures for amending the Offer as described in Section 14
hereof. The Offer is not conditioned on any minimum number of
Shares being tendered.
In accordance with Instruction 5 of the Letter of Transmittal,
each stockholder who wishes to tender Shares must specify the price
(not less than $6.00 nor more than $10.00 per Share) at which such
stockholder is willing to have the Company purchase such Shares.
As promptly as practicable following the Expiration Date, the
Company will determine the Purchase Price (not less than $6.00 nor
more than $10.00 per Share) that it will pay for Shares validly
tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by tendering
stockholders. All Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price
and Shares not purchased because of proration or conditional
tenders, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the
Expiration Date.
Proration. Upon the terms and subject to the conditions of
the Offer, if 1,000,000 or fewer Shares have been validly tendered
at or below the Purchase Price and not withdrawn on or prior to the
Expiration Date, the Company will purchase all such Shares. Upon
the terms and subject to the conditions of the Offer, if more than
1,000,000 Shares have been validly tendered at or below the
Purchase Price and not withdrawn on or prior to the Expiration
Date, the Company will purchase Shares in the following order of
priority:
(a) all Shares validly tendered at or below the Purchase
Price and not withdrawn on or prior to the Expiration
Date by any stockholder (an "Odd Lot Owner") who owned
beneficially an aggregate of fewer than 100 Shares as
of the close of business on August 9, 1996, and who
validly tenders all of such Shares (partial and conditional
tenders will not qualify for this preference) and completes
the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, the Notice of
Guaranteed Delivery;
(b) after purchase of all of the foregoing Shares, all
Shares conditionally and validly tendered in
accordance with Section 6, for which the condition
was satisfied, and all other Shares unconditionally
and validly tendered at or below the Purchase Price
and not withdrawn on or prior to the Expiration Date
on a pro rata basis, if necessary (with appropriate
adjustments to avoid purchases of fractional
Shares); and
(c) if necessary, Shares conditionally tendered, for
which the condition was not satisfied, at or below
the Purchase Price and not withdrawn on or prior to
the Expiration Date, selected by random lot in
accordance with Section 6.
If proration of tendered Shares is required, because of the
difficulty in determining the number of Shares validly tendered
(including Shares tendered by the guaranteed delivery procedure
described in Section 3) and as a result of the "odd lot" procedure
described in Section 2 (the "Odd Lot Procedure") and the
conditional tender procedure described in Section 6, the Company
does not expect that it would be able to announce the final
proration factor or to commence payment for any Shares purchased
pursuant to the Offer until approximately seven trading days after
the Expiration Date. Proration of Shares, other than Shares
tendered pursuant to the Odd Lot Procedure, will be based on the
ratio of the number of Shares to be purchased by the Company
pursuant to the Offer, other than Shares purchased pursuant to the
Odd Lot Procedure, to the total number of Shares tendered by all
stockholders, other than Shares tendered pursuant to the Odd Lot
Procedure, at or below the Purchase Price. This ratio will be
applied to all Shares tendered by each stockholder, other than
Shares tendered pursuant to the Odd Lot Procedure, to determine the
number of Shares that will be purchased from each stockholder
pursuant to the Offer.
Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date.
Holders of Shares may obtain such preliminary information from the
Dealer Manager and may also be able to obtain such information from
their brokers. For a discussion of certain federal income tax
consequences, see Section 13.
THE COMPANY EXPRESSLY RESERVES THE RIGHT, IN ITS SOLE
DISCRETION, TO PURCHASE ADDITIONAL SHARES PURSUANT TO THE OFFER OR
TO DECREASE THE NUMBER OF SHARES BEING SOUGHT PURSUANT TO THE
OFFER.
If (i) the Company increases or decreases the price to be paid
for Shares, increases the number of Shares being sought and such
increase in the number of Shares being sought exceeds 2% of the
outstanding Shares or decreases the number of Shares being sought
and (ii) the Offer is scheduled to expire at any time earlier than
the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase or decrease is
first published, sent or given in the manner described in Section
14, the Offer will be extended until the expiration of ten business
days from the date of publication of such notice.
The Company also expressly reserves the right, in its sole
discretion, at any time or from time to time, to extend the period
of time during which the Offer is open by giving oral or written
notice of such extension to the Depositary. See Section 14. There
can be no assurance, however, that the Company will exercise its
right to extend the Offer.
For purposes of the Offer, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of
the time period from 12:01 a.m. through 12:00 midnight, Eastern
time.
Copies of this Offer to Purchase and the Letter of Transmittal
are being mailed to record holders of Shares and will be furnished
to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's stockholder list or, if
applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial
owners of Shares.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES.
All Shares validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date by or on behalf of
persons who each owned beneficially an aggregate of fewer than 100
Shares as of the close of business on August 9, 1996, will be
accepted before proration, if any, of the purchase of other
tendered Shares. See Section 1. Partial or conditional tenders
will not qualify for this preference, and it is not available to
beneficial holders of 100 or more Shares, even if such holders have
separate stock certificates for fewer than 100 Shares. By
accepting the Offer, an Odd Lot Owner will avoid the payment of
brokerage commissions and the applicable odd lot discount payable
in a sale of such Shares in a transaction effected on a securities
exchange.
As of August 9, 1996, there were approximately 441 holders of
record of Shares. Approximately 35.1% of these holders of record
held individually fewer than 100 Shares and held in the aggregate
approximately 12,187 Shares. Because of the large number of Shares
held in the names of brokers and nominees, the Company is unable to
estimate the number of beneficial owners of fewer than 100 Shares
or the aggregate number of Shares they own. Any Odd Lot Owner
wishing to tender all of his Shares free of proration pursuant to
this Section must complete the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery.
The Company also reserves the right, but will not be obligated
to, purchase all Shares validly tendered by any stockholder who
tendered all Shares beneficially owned at or below the Purchase
Price and who, as a result of proration, would then beneficially
own an aggregate of fewer than 100 Shares. If the Company
exercises this right, it will increase the number of Shares that it
is offering to purchase in the Offer by the number of Shares
purchased through the exercise of such right.
3. PROCEDURE FOR TENDERING SHARES.
Proper Tender of Shares. To tender Shares validly pursuant to
the Offer, either (a) a properly completed and duly executed Letter
of Transmittal or photocopy thereof, together with any required
signature guarantees and any other documents required by the Letter
of Transmittal, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and
either (i) certificates for the Shares to be tendered must be
received by the Depositary at one of such addresses or (ii) such
Shares must be delivered pursuant to the procedures for book-entry
transfer described below (and a confirmation of such delivery
received by the Depositary), in each case on or prior to the
Expiration Date, or (b) the tendering holder of Shares must comply
with the guaranteed delivery procedure described below.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL,
IN ORDER TO TENDER SHARES PURSUANT TO THE OFFER, A STOCKHOLDER MUST
INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL THE
PRICE (IN MULTIPLES OF $0.125) AT WHICH SUCH SHARES ARE BEING
TENDERED. Stockholders wishing to tender Shares at more than one
price must complete separate Letters of Transmittal for each price
at which such Shares are being tendered. The same Shares cannot be
tendered at more than one price. FOR A TENDER OF SHARES TO BE
VALID, A PRICE BOX, BUT ONLY ONE PRICE BOX, ON EACH LETTER OF
TRANSMITTAL MUST BE CHECKED. Stockholders wishing to maximize the
possibility that their Shares will be purchased at the Purchase
Price may check the box on the Letter of Transmittal marked "Shares
Tendered at Purchase Price Determined by Dutch Auction." Checking
this box may result in a purchase of the Shares so tendered at the
minimum price of $6.00.
Book-Entry Transfer. The Depositary will establish an account
with respect to the Shares at The Depository Trust Company and the
Philadelphia Depository Trust Company (collectively referred to as
the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase,
and any financial institution that is a participant in the system
of any Book-Entry Transfer Facility may make delivery of Shares by
causing such Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with the procedures of
such Book-Entry Transfer Facility. Although delivery of Shares may
be effected through book-entry transfer, a properly completed and
duly executed Letter of Transmittal or photocopy thereof, together
with any required signature guarantees and any other required
documents, must, in any case, be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date, or the tendering
holder of Shares must comply with the guaranteed delivery procedure
described below. Delivery of the Letter of Transmittal and any
other required documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Signature Guarantees. Except as otherwise provided below, all
signatures on a Letter of Transmittal must be guaranteed by a firm
that is a member of a registered national securities exchange or
the National Association of Securities Dealers, Inc., or by a
commercial bank, trust company or other financial institution which
is a participant in an approved Signature Guarantee Medallion
Program (each of the foregoing being referred to as an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be
guaranteed if (a) the Letter of Transmittal is signed by the
registered holder of the Shares tendered therewith and such holder
has not completed the box entitled "Special Payment Instructions"
or the box entitled "Special Delivery Instructions" in the Letter
of Transmittal or (b) such Shares are tendered for the account of
an Eligible Institution. See Instructions 1 and 6 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender
Shares pursuant to the Offer and cannot deliver certificates for
such Shares and all other required documents to the Depositary on
or prior to the Expiration Date or the procedure for book-entry
transfer cannot be complied with in a timely manner, such Shares
may nevertheless be tendered if all of the following conditions are
met:
(a) such tender is made by or through an Eligible
Institution;
(b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form
provided by the Company (with any required signature
guarantees) is received by the Depositary as
provided below on or prior to the Expiration Date;
and
(c) the certificates for such Shares (or a confirmation
of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry
Transfer Facilities), together with a properly
completed and duly executed Letter of Transmittal
(or photocopy thereof) and any other documents
required by the Letter of Transmittal, are received
by the Depositary no later than 5:00 p.m., Eastern
time, on the third trading day after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission or mail to the Depositary and
must include a guarantee by an Eligible Institution in the form set
forth in such Notice.
The method of delivery of Shares and all other required
documents is at the option and risk of the tendering stockholder.
If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases
sufficient time should be allowed to assure timely delivery.
Federal Backup Withholding. To avoid federal income tax
backup withholding equal to 31% of the gross payments made pursuant
to the Offer, each stockholder must notify the Depositary of such
stockholder's correct taxpayer identification number and provide
certain other information by properly completing the Substitute
Form W-9 included in the Letter of Transmittal. Foreign
stockholders (as defined in Section 13) may be required to submit
a properly completed Form W-8, certifying non-United States status,
in order to avoid backup withholding. In addition, foreign
stockholders may be subject to 30% (or lower treaty rate)
withholding on gross payments received pursuant to the Offer (as
discussed in Section 13). For a discussion of certain federal
income tax consequences to tendering stockholders, see Section 13.
Each stockholder is urged to consult with his or her own tax
advisor.
Determination of Validity. All questions as to the Purchase
Price, the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Company, in its sole
discretion, and its determination shall be final and binding. The
Company reserves the absolute right to reject any or all tenders of
Shares that it determines are not in proper form or the acceptance
for payment of or payment for Shares that may, in the opinion of
the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any defect or irregularity in any tender of
Shares. None of the Company, the Dealer Manager, the Depositary,
or any other person will be under any duty to give notice of any
defect or irregularity in tenders, nor shall any of them incur any
liability for failure to give any such notice.
Rule 14e-4. It is a violation of Rule 14e-4 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), for a person to tender Shares for his or her own account
unless, at the time of tender and at the end of the proration
period or period during which Shares are accepted by lot (including
any extensions thereof), the person so tendering (i) has a net long
position equal to or greater than the amount of (x) Shares tendered
or (y) other securities immediately convertible into, exercisable,
or exchangeable for the amount of Shares tendered and will acquire
such Shares for tender by conversion, exercise or exchange of such
other securities and (ii) will cause such Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. The tender of Shares pursuant
to any one of the procedures described above will constitute the
tendering stockholder's representation and warranty that (i) such
stockholder has a net long position in the Shares being tendered
within the meaning of Rule 14e-4 promulgated under the Exchange
Act, and (ii) the tender of such Shares complies with Rule 14e-4.
The Company's acceptance for payment of Shares tendered pursuant to
the Offer will constitute a binding agreement between the tendering
stockholder and the Company upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after Tuesday,
October 8, 1996, unless theretofore accepted for payment as
provided in this Offer to Purchase. If the Company extends the
period of time during which the Offer is open, is delayed in
accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason,
then, without prejudice to the Company's rights under the Offer,
the Depositary may, on behalf of the Company, retain all Shares
tendered, and such Shares may not be withdrawn except as otherwise
provided in this Section 4, subject to Rule 13e-4(f)(5) under the
Exchange Act, which provides that the issuer making the tender
offer shall either pay the consideration offered, or return the
tendered securities promptly after the termination or withdrawal of
the tender offer.
To be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person who tendered the Shares to be
withdrawn and the number of Shares to be withdrawn. If the Shares
to be withdrawn have been delivered to the Depositary, a signed
notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible
Institution) must be submitted prior to the release of such Shares.
In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered
holder (if different from that of the tendering stockholder) and
the serial numbers shown on the particular certificates evidencing
the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the
withdrawn Shares. Withdrawals may not be rescinded, and Shares
withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered
by again following one of the procedures described in Section 3 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by the
Company, in its sole discretion, which determination shall be final
and binding. None of the Company, the Dealer Manager, the
Depositary or any other person will be under any duty to give
notification of any defect or irregularity in any notice of
withdrawal or incur any liability for failure to give any such
notification.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer and
as promptly as practicable after the Expiration Date, the Company
will determine the Purchase Price, taking into account the number
of Shares tendered and the prices specified by tendering
stockholders, announce the Purchase Price, and will (subject to the
proration and conditional tender provisions of the Offer) accept
for payment and pay for Shares validly tendered at or below the
Purchase Price. Thereafter, payment for all Shares validly
tendered on or prior to the Expiration Date and accepted for
payment pursuant to the Offer will be made by the Depositary by
check as promptly as practicable. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for Shares (or of
a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
a properly completed and duly executed Letter of Transmittal or
photocopy thereof, and any other required documents.
For purposes of the Offer, the Company will be deemed to have
accepted for payment (and thereby purchased) Shares that are
validly tendered and not withdrawn as, if and when it gives oral or
written notice to the Depositary of its acceptance for payment of
such Shares. The Company will pay for Shares that it has purchased
pursuant to the Offer by depositing the Purchase Price therefor
with the Depositary. The Depositary will act as agent for
tendering stockholders for the purpose of receiving payment from
the Company and transmitting payment to tendering stockholders.
Under no circumstances will interest be paid on amounts to be paid
to tendering stockholders, regardless of any delay in making such
payment.
Certificates for all Shares not purchased will be returned
(or, in the case of Shares tendered by book-entry transfer, such
Shares will be credited to an account maintained with a Book-Entry
Transfer Facility) as promptly as practicable without expense to
the tendering stockholder.
Payment for Shares may be delayed in the event of difficulty
in determining the number of Shares properly tendered or if
proration is required. See Section 1. In addition, if certain
events occur, the Company may not be obligated to purchase Shares
pursuant to the Offer. See Section 7.
The Company will pay or cause to be paid any stock transfer
taxes with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. If, however, payment of the
Purchase Price is to be made to, or Shares not tendered or not
purchased are to be registered in the name of, any person other
than the registered holder, or if tendered Shares are registered in
the name of any person other than the person signing the Letter of
Transmittal, the amount of any stock transfer taxes (whether
imposed on the registered holder, such other person or otherwise)
payable on account of the transfer to such person will be deducted
from the Purchase Price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted. See
Instruction 7 of the Letter of Transmittal.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances and subject to the exceptions set
forth in Section 1, the Company may prorate the number of Shares
purchased pursuant to the Offer. As discussed in Section 13, the
number of Shares to be purchased from a particular stockholder
might affect the tax treatment of such purchase to such stockholder
and such stockholder's decision whether to tender. Each
stockholder is urged to consult with his or her own tax advisor.
Accordingly, a stockholder may tender Shares subject to the
condition that a specified minimum number of such holder's Shares
tendered pursuant to a Letter of Transmittal or Notice of
Guaranteed Delivery, must be purchased if any such Shares so
tendered are purchased, and any stockholder desiring to make such
a conditional tender must so indicate in the box captioned
"Conditional Tender" in such Letter of Transmittal and, if
applicable, the Notice of Guaranteed Delivery.
Any tendering stockholder wishing to make a conditional tender
must calculate and appropriately indicate such minimum number of
Shares. If the effect of accepting tenders on a pro rata basis
would be to reduce the number of Shares to be purchased from any
stockholder below the minimum number so specified, such tender will
automatically be regarded as withdrawn (except as provided in the
next paragraph). All Shares tendered by such a stockholder
pursuant to a Letter of Transmittal or Notice of Guaranteed
Delivery will be returned as promptly as practicable thereafter.
If conditional tenders would otherwise be so regarded as
withdrawn and would cause the total number of Shares to be
purchased to fall below 1,000,000, then, to the extent feasible,
the Company will select enough of such conditional tenders that
would otherwise have been so withdrawn to permit the Company to
purchase 1,000,000 Shares. In selecting among such conditional
tenders, the Company will select by lot and will limit its purchase
in each case to the designated minimum number of Shares to be
purchased.
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, the Company
will not be required to accept for payment or pay for any Shares
tendered, and may terminate or amend the Offer or may postpone
(subject to the requirements of the Exchange Act for prompt payment
for or return of Shares) the acceptance for payment of, or the
purchase of and payment for, Shares tendered, if at any time on or
after August 9, 1996 (the "Determination Date"), and before the
time of payment for any such Shares (whether any Shares have
theretofore been accepted for payment, purchased or paid for
pursuant to the Offer) any of the following events shall have
occurred (or shall have been determined by the Company in its
reasonable judgment to have occurred) regardless of the
circumstances giving rise thereto (including any action or omission
to act by the Company); provided, however, that, except for
conditions relating to the obtaining of any or all required state
or federal governmental regulatory approvals, the Company shall not
terminate the Offer after the Expiration Date :
(a) there shall have been threatened, instituted
or pending any action or proceeding by any
government or governmental, regulatory
or administrative agency or authority or
tribunal or any other person, domestic or foreign,
or before any court, authority, agency
or tribunal that (i) challenges the acquisition
of Shares pursuant to the Offer or otherwise in any
manner relates to or affects the Offer, or (ii) in
the reasonable judgment of the Company, could
materially and adversely affect the business, condition
(financial or other), income, operations or prospects of
the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated
future conduct of the business of the Company or any of
its subsidiaries or materially impair the contemplated
benefits of the Offer to the Company;
(b) there shall have been any action threatened, pending or
taken, or approval withheld, withdrawn or abrogated or
any statute, rule, regulation, judgment, order or injunction
threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or
to the Company or any of its subsidiaries, by any legislative
body, court, authority, agency or tribunal which, in the
Company's reasonable judgment, would or might directly or
indirectly (i) make the acceptance for payment of, or payment
for, some or all of the Shares illegal or otherwise restrict
or prohibit consummation of the Offer, or (ii) materially
affect the business, condition (financial or other), income,
operations or prospects of the Company or any of its
subsidiaries or otherwise materially impair in any way the
contemplated future conduct of the business of the Company
or any of its subsidiaries;
(c) it shall have been publicly disclosed or the Company shall
have learned that (i) any person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) has acquired
or proposes to acquire beneficial ownership of more than 5% of
the outstanding Shares whether through the acquisition of stock,
the formation of a group, the grant of any option or right, or
otherwise (other than as disclosed in a Schedule 13D or 13G
(or an amendment thereto) on file with the Securities and
Exchange Commission (the "Commission") on the Determination
Date), (ii) any such person or group that on or prior to the
Determination Date, had filed such a Schedule with the
Commission thereafter shall have acquired or shall propose to
acquire whether through the acquisition of stock, the
formation of a group, the grant of any option or right, or
otherwise, beneficial ownership of additional Shares
representing 2% or more of the outstanding Shares,
(iii) any new group shall have been formed which beneficially
owns more than 5% of the outstanding Shares, or
(iv) any person, entity or group shall have filed a
Notification and Report Form under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 or made a public
announcement reflecting an intent to acquire the Company
or any or its subsidiaries or any of their respective assets
or securities;
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market,
(ii) any significant decline in the market price of the Shares
or in the general level of market prices of equity securities
in the United States or abroad, (iii) any change in the general
political, market, economic or financial condition in the United
States or abroad that could have a material adverse effect on
the Company's business, condition (financial or other), income,
operations, prospects or ability to obtain financing generally
or the trading in the Shares, (iv) the declaration of a banking
moratorium or any suspension of payments in respect of banks in
the United States or any limitation on, or any event which, in
the Company's reasonable judgment, might affect the extension
of credit by lending institutions in the United States,
(v) the commencement of a war, armed hostilities or other
international or national crisis directly or indirectly
involving the United States or (vi) in the case of any of the
foregoing existing at the time of the commencement of the Offer,
in the Company's reasonable judgment, a material acceleration
or worsening thereof;
(e) a tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger, acquisition or other
business combination proposal for the Company or any subsidiary,
shall have been proposed, announced or made by a person other
than the Company;
(f) there shall have occurred any event or events that have
resulted in, or may in the reasonable judgment of the Company
result in, an actual or threatened change in the business,
condition (financial or other), income, operations, stock
ownership or prospects of the Company or any of its
subsidiaries, or materially impair the contemplated benefits
of the Offer to the Company; or
(g) (i) Moody's Investors Service, Inc. or Standard & Poor's
Corporation shall have downgraded or withdrawn the rating
accorded any securities of the Company, or (ii) Moody's
Investors Service, Inc. or Standard & Poor's Corporation
shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating
of any securities of the Company; and, in the reasonable
judgment of the Company, such event or events make it
undesirable or inadvisable to proceed with the Offer or with
such acceptance for payment or payment.
Any of the foregoing conditions may be waived by the Company,
in whole or in part, at any time and from time to time in its sole
discretion. The failure by the Company at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. Any
determination by the Company concerning the events described above
will be final and binding on all parties.
8. PRICE RANGE OF SHARES; DIVIDENDS.
The following table sets forth the high and low closing sales
prices of the Shares on the Nasdaq National Market.
Fiscal Quarters HIGH LOW
1994:
1st Quarter $9.13 $7.00
2nd Quarter 8.25 7.00
3rd Quarter 7.50 5.50
4th Quarter 5.75 4.50
1995:
1st Quarter 5.25 4.25
2nd Quarter 4.50 4.00
3rd Quarter 5.25 4.00
4th Quarter 4.75 3.63
1996:
1st Quarter 5.13 2.64
2nd Quarter 5.50 4.75
3rd Quarter 6.75 4.87
(through August 9, 1996)
On August 9, 1996, the last trading day prior to the
commencement of the Offer, the last reported sale price of the
Shares on the Nasdaq National Market was $6.25 per Share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
The Company has not paid cash dividends to its stockholders
and has no current intention to do so. Shares tendered and
purchased by the Company will not be entitled to any dividends in
respect of any dividends that may be declared in the future.
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company's management and Board of Directors desire to
enhance stockholder value and have determined that Share
repurchases funded by bank borrowings would advance such objectives
and be in the best interests of the Company and its stockholders.
The Company expects future cash flow from operations and available
borrowings will be sufficient to enable the Company to meet the
anticipated future needs of the Company's business and repay the
borrowings related to the Company's repurchases of Shares in this
Offer. In addition, the Company expects to have a higher
percentage return on stockholders equity over the long-term after
the repurchases of Shares in this Offer.
The Company's operations have been negatively impacted by
restructuring charges for sporting goods in recent years. However,
the Company believes that future operations will be more profitable
than in the recent past and expects to experience more stable cash
flow.
The Offer is designed to afford stockholders considering the
sale of their shares an opportunity to sell a significant portion,
or perhaps all of their shares to the Company for a higher price
than has been recently available in the open market, and, without
the usual transaction costs associated with market sales. In
addition, the Offer will allow qualified odd lot holders whose
shares are purchased pursuant to the Offer an avenue to avoid
payment of brokerage commissions as well as any applicable odd lot
discounts chargeable on a sale of shares that otherwise could apply
to open market transactions.
The Offer also allows stockholders to sell a portion of their
shares while retaining a continuous equity interest in the Company,
if they so desire. Stockholders whose shares are not tendered or
purchased in the Offer will obtain a proportionate increase in
their ownership interest in the Company and thus in the Company's
future earnings and assets. This is a result of the acquisition of
shares by the Company pursuant to the Offer and the corresponding
reduction in the number of outstanding shares.
If fewer than 1,000,000 Shares are purchased pursuant to the
Offer, the Company may repurchase the remainder of such Shares on
the open market, in privately negotiated transactions or otherwise.
In the future, the Company also may determine to purchase
additional Shares on the open market, in privately negotiated
transactions, through one or more tender offers or otherwise. Any
such purchases may be on the same terms or on terms which are more
or less favorable to stockholders than the terms of the Offer.
However, Rule 13e-4 under the Exchange Act prohibits the Company
and its affiliates from purchasing any Shares, other than pursuant
to the Offer, until at least ten business days after the Expiration
Date. Any future purchases of Shares by the Company would depend
on many factors, including the market price of the Shares, the
Company's business and financial position, and general economic and
market conditions.
Shares that the Company acquires pursuant to the Offer will
become authorized but unissued Shares and will be available for
issuance by the Company without further stockholder action (except
as may be required by applicable law or the rules of the securities
exchanges on which the Shares are listed). Such Shares could be
issued without stockholder approval for, among other things,
acquisitions, the raising of additional capital for use in the
Company's business, stock dividends or in connection with employee
stock, stock option and other plans, or a combination thereof. The
Company has no current plans for the Shares it may acquire pursuant
to the Offer or any other authorized but unissued Shares.
As of August 9, 1996, the Company had issued and outstanding
4,111,889 Shares and had reserved for issuance upon exercise of
outstanding stock options and warrants 459,477 Shares. The
1,000,000 Shares that the Company is offering to purchase represent
approximately 24.3% of the Shares then outstanding. As of August,
1996, all executive officers of the Company as a group owned
beneficially an aggregate of 682,884 Shares (including an aggregate
of 47,150 Shares that may be acquired pursuant to the exercise of
outstanding stock options. The Company has been advised that no
executive officer of the Company intends to tender Shares pursuant
to the Offer. If the Company purchases 1,000,000 Shares pursuant
to the Offer and no executive officer of the Company tenders
Shares, the percentage of outstanding Shares owned beneficially by
the Company's executive officers as a group would be approximately
19.1% of the Shares then outstanding (including for this purpose,
Shares that may be acquired by such executive officers pursuant to
the exercise of outstanding stock options).
None of the Company's non-management directors have informed
the Company as to whether or not such director may tender shares in
this Offer, and one or more such director may tender all or part of
his shares in this Offer. Such persons owned beneficially an
aggregate of 505,936 Shares as of the date hereof.
Except as disclosed in Section 10 hereof, the Company has no
plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of the Company
or the disposition of securities of the Company; (b) an
extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets
of the Company or any of its subsidiaries; (d) any change in the
present Board of Directors or management of the Company; (e) any
material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company; (f) any other
material change in the Company's corporate structure or business;
(g) any change in the Company's Articles of Incorporation or Bylaws
or any actions which may impede the acquisition of control of the
Company by any person; (h) a class of equity security of the
Company being delisted from a national securities exchange; (i) a
class of equity security of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (j) the suspension of the Company's obligation to
file reports pursuant to Section 15(d) of the Exchange Act.
The Company's purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and
is likely to reduce the number of holders of Shares. Nonetheless,
the Company anticipates that there will still be a sufficient
number of Shares outstanding and publicly traded following the
Offer to ensure a continued trading market in the Shares. Based on
the published guidelines of the Nasdaq National Market, the Company
does not believe that its purchase of Shares pursuant to the Offer
will cause its remaining Shares to be delisted from such exchange.
The Shares are currently "margin securities" under the rules
of the Federal Reserve Board. This has the effect, among other
things, of allowing brokers to extend credit on the collateral of
the Shares. The Company believes that, following the repurchase of
Shares pursuant to the Offer, the Shares will continue to be
"margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The Shares are registered under the Exchange Act, which
requires, among other things, that the Company furnish certain
information to its stockholders and the Commission and comply with
the Commission's proxy rules in connection with meetings of the
Company's stockholders. The Company believes that its purchase of
Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
Stockholders who determine not to accept the Offer or whose
Shares are not purchased in the Offer will realize an increase in
their percentage ownership interest in the Company and thus, in the
Company's future earnings and assets. Because of the smaller number
of Shares outstanding after consummation of the Offer, increases or
decreases in net earnings will result in proportionately greater
increases or decreases in earnings per Share. See Section 10.
NEITHER THE COMPANY NOR ANY OF ITS DIRECTORS OR EXECUTIVE
OFFICERS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER
TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER
OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED
THAT NO EXECUTIVE OFFICER OF THE COMPANY INTENDS TO TENDER SHARES
PURSUANT TO THE OFFER.
10. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is an Indiana corporation with its principal
executive offices located at 817 Maxwell Avenue, P.O. Box 889,
Evansville, Indiana 47706-0889. The Company's telephone number is
(812) 467-1200.
Escalade is a diversified company engaged in the manufacture
and sale of sporting goods and office and graphic arts products.
Escalade and its predecessors have produced sporting goods for over
65 years and have produced office machines for over 35 years.
Escalade's sporting goods business is conducted exclusively
through Escalade Sports. The Company manufactures and sells a
variety of sporting goods such as table tennis tables and
accessories, archery equipment, home pool tables and accessories,
combination bumper pool and card tables, game tables, basketball
backboards, goals and poles, darts, dart cabinets, home fitness
machines, weight benches, cast iron weight sets, and other home
fitness accessories. The Company currently manufactures sporting
goods in Evansville, Indiana, Compton, California and Tijuana,
Mexico. The Company's office and graphic arts products include
paper trimmers, paper folding machines, paper drills, collators,
decollators, bursting machines, letter openers, automated paper
joggers, checksigners, stamp affixers, paper shredders, bindery
carts, plate makers, sinks, light tables, cameras and related
accessories. Escalade's office and graphic arts products business
is conducted exclusively through Martin Yale. The Company
currently manufactures office and graphic arts products in Wabash,
Indiana.
Summary Historical Consolidated Financial Information
The summary historical consolidated financial information for
fiscal years 1994 and 1995 has been derived from the audited
consolidated financial statements of the Company contained in the
Company's Annual Reports on Form 10-K for the years ended December
31, 1994 and December 30, 1995. This information should be read in
conjunction with and is qualified in its entirety by reference to
such audited statements and the related notes thereto.
The summary historical consolidated financial information for
the six month periods ended July 15, 1995 and July 13, 1996 has not
been audited but in the opinion of management contains all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation. This information was derived
from the Company's Quarterly Reports on Form 10-Q for those periods
and should be read in conjunction with those statements and the
related notes contained therein.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share amounts)
SIX MONTHS ENDED
JULY 13, 1996 JULY 15, 1995
UNAUDITED UNAUDITED
-------------------------------
INCOME STATEMENT DATA
Net Sales
Sporting Goods $ 24,657 $ 28,394
Office & Graphic Arts Products 10,298 8,876
Total Net Sales 34,955 37,270
Net Income (loss) $ 920 $ (1,459)
Weighted Average Shares 4,122 4,133
PER SHARE DATA
Net Income (loss) Per Share $ .22 $ (.35)
Book Value Per Share 5.87 5.19
Ratio of Earnings to Fixed Charges(1) 3.33 ---
BALANCE SHEET DATA
Working Capital $ 15,598 $ 14,927
Total Assets 51,249 59,084
Short-term Debt 10,683 20,327
Long-term Debt 3,340 7,198
Total Stockholder's Equity $ 24,147 $ 21,430
YEAR ENDED
DECEMBER 30, 1995 DECEMBER 31, 1994
AUDITED AUDITED
-------------------------------------
INCOME STATEMENT DATA
Net Sales
Sporting Goods $ 73,858 $ 85,318
Office & Graphic Arts Products 17,321 17,276
Total Net Sales 91,179 102,594
Net Income (loss) $ 448 $ (2,403)
Weighted Average Shares 4,134 4,129
PER SHARE DATA
Net Income (loss) Per Share $ .11 $ (.58)
Book Value Per Share 5.65 5.54
Ratio of Earnings to Fixed Charges(1) 1.34 ---
BALANCE SHEET DATA
Working Capital $ 17,069 $ 16,837
Total Assets 57,767 75,883
Short-term Debt 16,732 31,215
Long-term Debt 6,266 9,148
Total Stockholder's Equity $ 23,338 $ 22,889
(1) For purposes of computing the ratio of earnings to fixed charges, earnings
are defined as the sum of pre-tax income plus fixed charges. Fixed
charges consist of all interest expense, one-third of rent expense (which
approximates the interest component of such expense) and amortization of
debt expense. There is no ratio for the year ended December 31, 1994 or
six months ended July 15, 1995 because there were no earnings. The fixed
charges for year ended December 31, 1994 were $2,339,000 and for six
months ended July 15, 1995 were $1,359,000.
Summary Unaudited Pro Forma Consolidated Financial Information
The summary unaudited pro forma consolidated financial
information gives effect to the purchase of shares pursuant to the
Offer as if such purchase had occurred at the dates indicated based
on certain assumptions. This information should be read in
conjunction with the summary historical consolidated financial
information, Form 10-K, Form 10-Q and related notes referred to
earlier. These estimated financial effects of the repurchase are
not necessarily indicative of either the Company's financial
position or the results of its operations, which would actually
have been obtained, had the purchase of shares pursuant to the
Offer and related debt assumption been completed at the date
indicated, or, be obtained in the future. The summary unaudited
pro forma consolidated financial information has been included
herein as required by the rules of the Commission and is for
comparative purposes only.
Certain statements made below relating to plans, conditions,
objectives and economic performance go beyond historical
information and may provide an indication of future results. To
that extent, they are forward-looking statements within the meaning
of Section 21E of the Exchange Act, and each is subject to factors
that could cause actual results to differ from those in the
forward-looking statement.
<TABLE>
SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share amounts)
SIX MONTHS ENDED
JULY 13, 1996
<CAPTION>
ASSUMED ASSUMED
HISTORICAL $6 PER SHARE $10 PER SHARE
UNAUDITED PURCHASE PRICE PURCHASE PRICE
------------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales
Sporting Goods $24,657 $24,657 $24,657
Office & Graphic Arts Products 10,298 10,298 10,298
Total Net Sales 34,955 34,955 34,955
Net Income $ 920 $ 772 $ 672
Weighted Average Shares 4,122 3,122 3,122
PER SHARE DATA
Net Income Per Share $ .22 $ .25 $ .22
Book Value Per Share 5.87 5.83 4.55
Ratio of Earnings to Fixed Charges 3.33 2.73 2.47
BALANCE SHEET DATA
Working Capital $15,598 $13,598 $ 13,598
Total Assets 51,249 51,249 51,249
Short-term Debt 10,683 12,683 12,683
Long-term Debt 3,340 7,340 11,340
Total Stockholders' Equity $24,147 $18,147 $ 14,147
</TABLE>
<TABLE>
YEAR ENDED
DECEMBER 30, 1995
<CAPTION>
ASSUMED ASSUMED
HISTORICAL $6 PER SHARE $10 PER SHARE
AUDITED PURCHASE PRICE PURCHASE PRICE
----------------------------------------------------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales
Sporting Goods $73,858 $73,858 $73,858
Office & Graphic Arts Products 17,321 17,321 17,321
Total Net Sales 91,179 91,179 91,179
Net Income $ 448 $ 196 $ 10
Weighted Average Shares 4,134 3,134 3,134
PER SHARE DATA
Net Income Per Share $ .11 $ .06 $ -0-
Book Value Per Share 5.65 5.53 4.26
Ratio of Earnings to Fixed Charges 1.34 1.29 1.26
BALANCE SHEET DATA
Working Capital $17,069 $15,069 $15,069
Total Assets 57,767 57,767 57,767
Short-term Debt 16,732 18,732 18,732
Long-term Debt 6,266 10,266 14,266
Total Stockholders' Equity $23,338 $17,338 $13,338
<FN>
See accompanying notes to Summary Unaudited Pro Forma Consolidated
Financial Information.
</TABLE>
Notes to Summary Unaudited Pro Forma Consolidated Financial
Information
The summary unaudited pro forma consolidated financial
information assumes that the Offer and the borrowings connected
therewith to purchase 1,000,000 shares at $6.00 or $10.00, are
consummated on the same day. The purchase price of either
$6,000,000 or $10,000,000 will be financed from borrowings.
The operating data for the six month period ended July 13,
1996 and the year ended December 30, 1995 assumes that the
repurchase of shares and related financing occurred as of December
31, 1995 and January 1, 1995, respectively.
The balance sheet data as of July 13, 1996 and December 30,
1995 assume that the repurchase of shares by the company pursuant
to the Offer and related financings had occurred as of the
respective balance sheet dates.
Pro forma adjustments were made for interest expense and bank
fees. The decrease in net income after tax effect of these pro
forma adjustments was $148,000 and $248,000 for the six month
period ended July 13, 1996 at $6.00 and $10.00 respectively and
$252,000 and $438,000 for the year ended December 30, 1995 at $6.00
and $10.00 respectively.
11. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 1,000,000 Shares pursuant
to the Offer at a price of $10.00 per Share, the total amount
required by the Company to purchase such Shares will be
$10,000,000, exclusive of fees and other expenses. It is
anticipated that the Company will fund the purchase of Shares
pursuant to the Offer and the payment of related fees and expenses
by borrowings under a $13,900,000 term loan facility (the "Term
Facility") pursuant to a Commitment Letter dated July 24, 1996 (the
"Commitment Letter") between Bank One, Indianapolis, N.A. and the
Company.
The Term Facility will have a term of five years. The Term
Facility will be secured by a pledge of all personal property of
the Company and its subsidiaries, including all accounts
receivable, inventories, machinery and equipment, general
intangibles and the stock of the subsidiaries.
The Company may elect that all or a portion of the borrowings
under the Term Facility bear interest at a rate per annum equal to
the rate of interest publicly announced by Bank One as its prime
rate, or (ii) the London Interbank Offered Rate; plus (x) in the
case of the prime rate, a spread of up to 25 basis points depending
upon the Company's funded debt to EBITDA ratio, or (y) in the case
of the London Interbank Offered Rate, a spread of between 125 to
225 basis points depending upon the Company's funded debt to EBITDA
ratio.
Each of the subsidiaries of the Company will guarantee the
Term Facility. The Commitment Letter provides that the
availability of the Term Facility will be subject to the
satisfaction of certain customary conditions, including but not
limited to the execution of definitive loan documentation, the
accuracy of representations and warranties and the absence of any
default. The Loan Agreement for the Term Facility is anticipated
to provide for representations, warranties and covenants of the
Company customary for credit facilities of this kind. The
covenants are expected to include (i) financial covenants, (ii)
restrictions on indebtedness, mergers, consolidations, liquidations
and dissolutions, sales of assets, dividends and other payments in
respect of capital stock, capital expenditures and changes in lines
of business and (iii) restrictions on liens and pledging of assets.
The Commitment Letter provides that events of default, subject to
grace periods and baskets where applicable, will include, among
other things, (i) failure to make payments when due, (ii) violation
of covenants, (iii) inaccuracy of representations and warranties,
(iv) cross default on material debt, (v) material judgments and
(vi) bankruptcy.
The Company currently anticipates that borrowings under the
Term Facility will be repaid out of cash generated from the
Company's operations.
The preceding summary of the Commitment Letter is qualified in
its entirety by reference to the text of the Commitment Letter,
which is filed as an exhibit to the Issuer Tender Offer Statement
on Schedule 13E-4 (the "Schedule 13E-4") of which this Offer to
Purchase forms a part. A copy of the Schedule 13E-4 may be
obtained from the Commission in the manner provided in Section 16.
12. TRANSACTIONS AND AGREEMENTS CONCERNING SHARES.
Based upon the Company's records and upon information provided
to the Company by its directors and executive officers, neither the
Company nor, to the Company's knowledge, any of its associates,
subsidiaries, directors, executive officers or any associate of any
such director or executive officer, or any director or executive
officer of its subsidiaries, has engaged in any transactions
involving the Shares during the 40 business days preceding the date
hereof. Except for outstanding options to purchase Shares, neither
the Company nor, to the Company's knowledge, any of its directors
or executive officers is a party to any contract, arrangement,
understanding or relationship relating directly or indirectly to
the Offer with any other person with respect to the Shares.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
In General. The following summary is a general discussion of
certain United States federal income tax consequences relating to
the Offer. This summary does not discuss any aspects of state,
local, foreign or other tax laws. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and
existing final, temporary and proposed Treasury Regulations,
Revenue Rulings and judicial decisions, all of which are subject to
prospective and retroactive changes. The summary deals only with
Shares held as capital assets within the meaning of Section 1221 of
the Code and does not address tax consequences that may be relevant
to investors in special tax situations, such as certain financial
institutions, tax-exempt organizations, insurance companies,
dealers in securities or currencies, stockholders who have acquired
their Shares upon the exercise of options or otherwise as
compensation, or stockholders holding the Shares as part of a
conversion transaction, as part of a hedge or hedging transaction,
or as a position in a straddle for tax purposes. The Company will
not seek a ruling from the Internal Revenue Service (the "IRS")
with regard to the tax matters discussed below. Accordingly, each
stockholder should consult its own tax advisor with regard to the
Offer and the application of United States federal income tax laws,
as well as the laws of any state, local or foreign taxing
jurisdiction, to its particular situation.
Characterization of the Sale. A sale of Shares by a
stockholder of the Company pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes and may
also be a taxable transaction under applicable state, local and
foreign tax laws. The United States federal income tax
consequences to a stockholder may vary depending upon the
stockholder's particular facts and circumstances. Under Section
302 of the Code, a sale of Shares by a stockholder to the Company
pursuant to the Offer will be treated as a "sale or exchange" of
such Shares for United States federal income tax purposes (rather
than as a distribution by the Company with respect to the Shares
held by the tendering stockholder) if the receipt of cash upon such
sale (i) is "substantially disproportionate" with respect to the
stockholder, (ii) results in a "complete termination" of the
stockholder's interest in the Company, or (iii) is "not essentially
equivalent to a dividend" with respect to the stockholder. These
tests (the "Section 302 tests") are explained more fully below.
If any of the Section 302 tests is satisfied, and the sale of
the Shares is therefore treated as a "sale or exchange" of such
Shares for United States federal income tax purposes, the tendering
stockholder will recognize capital gain or loss equal to the
difference between the amount of cash received by the stockholder
pursuant to the Offer and the stockholder's tax basis in the Shares
sold pursuant to the Offer. Any such gain or loss will be
long-term capital gain or loss if the Shares have been held for
more than one year.
If none of the Section 302 tests is satisfied and the Company
has sufficient current and accumulated earnings and profits, the
tendering stockholder will be treated as having received a dividend
includible in gross income in an amount equal to the entire amount
of cash received by the stockholder pursuant to the Offer (without
reduction for the tax basis of the Shares sold pursuant to the
Offer), no loss will be recognized, and (subject to reduction as
described below for corporate stockholders eligible for the
dividends-received deduction) the tendering stockholder's basis in
the Shares sold pursuant to the Offer will be added to such
stockholder's basis in its remaining Shares, if any. No assurance
can be given that any of the Section 302 tests will be satisfied as
to any particular stockholder, and thus no assurance can be given
that any particular stockholder will not be treated as having
received a dividend taxable as ordinary income. If the sale of
Shares is not treated as a sale or exchange for federal income tax
purposes, any cash received for Shares pursuant to the Offer in
excess of the Company's earnings and profits will be treated,
first, as a nontaxable return of capital to the extent of the
stockholder's basis for such stockholder's Shares, and, thereafter,
as capital gain, to the extent it exceeds such basis.
Constructive Ownership of Stock. In determining whether any
of the Section 302 tests is satisfied, stockholders must take into
account not only the Shares which are actually owned by the
stockholder, but also Shares which are constructively owned by the
stockholder within the meaning of Section 318 of the Code. Under
Section 318 of the Code, a stockholder may constructively own
Shares actually owned, and in some cases constructively owned, by
certain related individuals or entities in which the stockholder
has an interest, or, in the case of stockholders that are entities,
by certain individuals or entities that have an interest in the
stockholder, and Shares which the stockholder has the right to
acquire by exercise of an option or by conversion. Contemporaneous
dispositions or acquisitions of Shares by a stockholder or related
individuals or entities may be deemed to be part of a single
integrated transaction which will be taken into account in
determining whether any of the Section 302 tests has been
satisfied. EACH STOCKHOLDER SHOULD BE AWARE THAT BECAUSE PRORATION
MAY OCCUR IN THE OFFER, EVEN IF ALL THE SHARES ACTUALLY AND
CONSTRUCTIVELY OWNED BY A STOCKHOLDER ARE TENDERED PURSUANT TO THE
OFFER, FEWER THAN ALL OF SUCH SHARES MAY BE PURCHASED BY THE
COMPANY. THUS, PRORATION MAY AFFECT WHETHER A SALE BY A
STOCKHOLDER PURSUANT TO THE OFFER WILL MEET ANY OF THE SECTION 302
TESTS. See Section 6 for information regarding each stockholder's
option to make a conditional tender of a minimum number of Shares.
A stockholder should consult its own tax advisor regarding whether
to make a conditional tender of a minimum number of Shares, and the
appropriate calculation thereof.
Section 302 Tests. One of the following tests must be
satisfied in order for the sale of Shares pursuant to the Offer to
be treated as a sale or exchange for federal income tax purposes.
a. Substantially Disproportionate Test. The receipt of cash
by a stockholder will be "substantially disproportionate" if the
percentage of the outstanding Shares actually and constructively
owned by the stockholder immediately following the sale of Shares
pursuant to the Offer (treating as not outstanding all Shares
purchased pursuant to the Offer) is less than 80% of the percentage
of the outstanding Shares actually and constructively owned by such
stockholder immediately before the sale of Shares pursuant to the
Offer (treating as outstanding all Shares purchased pursuant to the
Offer), and the stockholder owns actually or constructively less
than 50% of the total combined voting power of all classes of stock
entitled to vote immediately after the sale of Shares. The IRS
also takes the position that options, including warrants, to
purchase shares under certain circumstances are to be taken into
account for purposes of meeting the "substantially
disproportionate" test on a shareholder by shareholder basis
pursuant to the attribution rules under section 318 of the Code.
Stockholders should consult their tax advisors with respect to the
application of the "substantially disproportionate" test to their
particular situation.
b. Complete Termination Test. The receipt of cash by a
stockholder will be a "complete termination" of the stockholder's
interest if either (i) all of the Shares actually and
constructively owned by the stockholder are sold pursuant to the
Offer, or (ii) all of the Shares actually owned by the stockholder
are sold pursuant to the Offer and, with respect to the Shares
constructively owned by the stockholder which are not sold pursuant
to the Offer, the stockholder is eligible to waive (and effectively
waives) constructive ownership of all such Shares under procedures
described in Section 302(c) of the Code and the regulations
thereunder which require that certain formal steps be followed to
be effective. Stockholders considering making such a waiver should
do so in consultation with their tax advisors.
c. Not Essentially Equivalent to a Dividend Test. Even if
the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete termination"
test, a stockholder may nevertheless satisfy the "not essentially
equivalent to a dividend" test if the stockholder's sale of Shares
pursuant to the Offer results in a "meaningful reduction" in the
stockholder's proportionate interest in the Company. Whether the
receipt of cash by a stockholder will be "not essentially
equivalent to a dividend" will depend upon the stockholder's
particular facts and circumstances. The IRS has indicated in
published rulings that even a small reduction in the proportionate
interest of a small minority stockholder in a publicly held
corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." The IRS held in Rev.
Rul. 76-385, 1976-2 C.B. 92, that a reduction in the percentage
ownership interest of a stockholder in a publicly held corporation
from .0001118% to .0001081% (a reduction to 96.7% of the
stockholder's prior percentage ownership interest) would constitute
a "meaningful reduction." Stockholders expecting to rely on the
"not essentially equivalent to a dividend" test should consult
their own tax advisors as to its application in their particular
situation.
Corporate Stockholder Dividend Treatment. Under current law,
generally, if a sale of Shares by a corporate stockholder is
treated as a dividend, the corporate stockholder may be entitled to
claim a deduction equal to 70% of the dividend under Section 243 of
the Code, subject to applicable limitations. Corporate
stockholders should consider the effect of Section 246(c) of the
Code, which disallows the 70% dividends-received deduction with
respect to stock that is held for 45 days or less. For this
purpose, the length of time a taxpayer is deemed to have held stock
may be reduced by periods during which the taxpayer's risk of loss
with respect to the stock is diminished by reason of the existence
of certain options or other transactions. Moreover, under Section
246A of the Code, if a corporate stockholder has incurred
indebtedness directly attributable to an investment in Shares, the
70% dividends-received deduction may be reduced by a percentage
generally computed based on the amount of such indebtedness and the
total adjusted tax basis in the Shares. In addition, because it is
expected that the redemption of Shares will not be pro rata with
respect to all stockholders, any amount received by a corporate
stockholder pursuant to the Offer that is treated as a dividend
will likely constitute an "extraordinary dividend" under Section
1059 of the Code (except as may otherwise be provided in
regulations yet to be promulgated by the Treasury Department).
Accordingly, a corporate stockholder would be required under
Section 1059(a) of the Code to reduce its basis (but not below
zero) in its Shares by the non-taxed portion of the extraordinary
dividend (i.e., the portion of the dividend for which a deduction
is allowed), and, if such portion exceeds the stockholder's tax
basis for its Shares, to treat the excess as gain from the sale of
such Shares in the year in which a sale or disposition of such
Shares occurs. The basis reduction rules of Section 1059 also
generally apply to dividends which exceed a threshold percentage of
a stockholder's basis in its stock, unless the stockholder has held
its stock for more than two years before the announcement date of
such dividend. For purposes of applying Section 1059, all
dividends received by a stockholder and having their ex-dividend
dates within an 85-day period (expanded to a 365-day period, in the
case of dividends received in such period that in the aggregate
exceed 20% of the stockholder's adjusted tax basis in the Shares)
are aggregated. Corporate stockholders should consult their own
tax advisors as to the application of Section 1059 of the Code to
the Offer, and to any dividends which may be paid with respect to
the Shares, as well as the effect of pending legislation discussed
below.
Foreign Stockholders. The Company will withhold United States
federal income tax at a rate of 30% from the gross proceeds paid
pursuant to the Offer to a foreign stockholder or his agent, unless
the Company determines that a reduced rate of withholding is
applicable pursuant to a tax treaty or that an exemption from
withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business by
the foreign stockholder within the United States. For this
purpose, a foreign stockholder is any stockholder that is not (i)
a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or
(iii) any estate or trust the income of which is subject to United
States federal income taxation regardless of its source.
Generally, the determination of whether a reduced rate of
withholding is applicable is made by reference to a foreign
stockholder's address or to a properly completed Form 1001
furnished by the stockholder, and the determination of whether an
exemption from withholding is available on the grounds that gross
proceeds paid to a foreign stockholder are effectively connected
with a United States trade or business is made on the basis of a
properly completed Form 4224 furnished by the stockholder. The
Company will determine a foreign stockholder's eligibility for a
reduced rate of, or exemption from, withholding by reference to the
stockholder's address and any Forms 1001 or 4224 submitted to the
Company by a foreign stockholder unless facts and circumstances
indicate that such reliance is not warranted or unless applicable
law requires some other method for determining whether a reduced
rate of withholding is applicable. These forms can be obtained from
the Company.
A foreign stockholder with respect to whom tax has been
withheld may be eligible to obtain a refund of all or a portion of
the withheld tax if the stockholder satisfied one of the Section
302 tests for capital gain treatment or is otherwise able to
establish that no tax or a reduced amount of tax was due. Foreign
stockholders are urged to consult their own tax advisors regarding
the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption
and the refund procedure.
Backup Withholding. See Section 3 with respect to the
application of United States federal income tax backup withholding.
Legislative Proposals With Potential Direct Effects.
(a) Capital Gains: The Revenue Reconciliation Act of 1995, as
passed by Congress and vetoed by the President, includes a
reduction in the tax on net long-term capital gains for both
individuals and corporations. Under the bill, individual taxpayers
would be permitted a deduction for 50% of net capital gains (i.e.,
the excess of net long-term capital gains over net short-term
capital losses). In addition, the deduction for net long-term
capital losses could not exceed 50% of the excess of net long-term
capital losses over net short-term capital gains. Corporations
would be subject to a maximum tax rate of 28% on their net capital
gains. These reductions in the effective capital gains tax rates
generally would be effective for transactions occurring after 1994.
It is uncertain whether capital gains relief ultimately will be
adopted and, if adopted, what form such relief will take or what
the effective date will be.
(b) Corporate dividends-received deduction: The Revenue
Reconciliation Act of 1995, as passed by Congress and vetoed by the
President, and the President's budget proposal would amend Section
1059 of the Code to require corporate stockholders to recognize
gain immediately whenever the non-taxed portion of an extraordinary
dividend exceeds the basis of stock with respect to which the
dividend is received. Such legislation would also cause any amount
characterized as a dividend due to the Section 318 option
attribution rules to be treated as an extraordinary dividend under
Section 1059 (with the legislation's gain recognition rule applied
by taking into account only the basis of the stock redeemed). The
legislation generally is proposed to be effective for redemptions
after May 3, 1995. It is uncertain whether such proposals will be
adopted and, if adopted, what form such legislation will take.
In addition, the President's budget proposal (but not the
Revenue Reconciliation Act of 1995 as passed by Congress) would
generally reduce the dividends-received deduction under Section 243
of the Code from 70% to 50% and would require the 46-day holding
period of Section 246(c) of the Code to be satisfied over a period
immediately before and/or after the taxpayer becomes entitled to
receive the dividend. Both of these provisions would apply to
dividends paid after January 31, 1996.
The impact of pending and future budget and tax legislation on
the United States federal tax system, including possible effects on
taxation of the Offer, is uncertain. Stockholders are advised to
consult their own tax advisors as to these matters.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE
OFFER MAY VARY DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR
CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO INFORMATION IS
PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY
THEM PURSUANT TO THE OFFER, THE EFFECT OF THE STOCK OWNERSHIP
ATTRIBUTION RULES MENTIONED ABOVE AND THE EFFECT OF TAX LEGISLATIVE
PROPOSALS.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole
discretion and at any time or from time to time, to extend the
period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary. There can be no
assurance, however, that the Company will exercise its right to
extend the Offer. During any such extension, all Shares previously
tendered will remain subject to the Offer, except to the extent
that such Shares may be withdrawn as set forth in Section 4. The
Company also expressly reserves the right, in its sole discretion,
(i) to terminate the Offer and not accept for payment any Shares
not theretofore accepted for payment or, subject to Rule
13e-4(f)(5) under the Exchange Act, which requires the Company
either to pay the consideration offered or to return the Shares
tendered promptly after the termination or withdrawal of the Offer,
to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 7 hereof by giving oral or written
notice of such termination to the Depositary and making a public
announcement thereof and (ii) at any time or from time to time, to
amend the Offer in any respect. Amendments to the Offer may be
effected by public announcement. Without limiting the manner in
which the Company may choose to make public announcement of any
termination or amendment, the Company shall have no obligation
(except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement,
other than by making a release to the Dow Jones News Service,
except in the case of an announcement of an extension of the Offer,
in which case the Company shall have no obligation to publish,
advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than 9:00 a.m.,
Eastern time, on the next business day after the previously
scheduled Expiration Date. Material changes to information
previously provided to holders of the Shares in this Offer or in
documents furnished subsequent thereto will be disseminated to
holders of Shares in compliance with Rule 13e-4(e)(2) promulgated
under the Exchange Act.
If the Company materially changes the terms of the Offer or
the information concerning the Offer, or if it waives a material
condition of the Offer, the Company will extend the Offer to the
extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the
Exchange Act. Those rules require that the minimum period during
which an offer must remain open following material changes in the
terms of the offer or information concerning the offer (other than
a change in price, change in dealer's soliciting fee or change in
percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or
information. In a published release, the Commission has stated
that in its view, an offer should remain open for a minimum of five
business days from the date that notice of such a material change
is first published, sent or given. The Offer will continue or be
extended for at least ten business days from the time the Company
publishes, sends or gives to holders of Shares a notice that it
will (a) increase or decrease the price it will pay for Shares or
the amount of the dealer's soliciting fee or (b) increase (except
for an increase not exceeding 2% of the outstanding Shares) or
decrease the number of Shares it seeks.
15. FEES AND EXPENSES.
The Company has retained Fifth Third Bank as Depositary and NatCity
Investments, Inc. will serve as Dealer Manager in connection with
the Offer. The Dealer Manager may request brokers, dealers and
other nominee stockholders to forward materials relating to the
Offer to beneficial owners. The Dealer Manager will receive a fee
for its services of $0.025 for each Share tendered and accepted in
this Offer. The Depositary will receive reasonable and customary
compensation for its services and will also be reimbursed for
certain out-of-pocket expenses. The Company has agreed to
indemnify the Dealer Manager and Depositary against certain
liabilities, including certain liabilities under the federal
securities laws, in connection with the Offer. Neither the Dealer
Manager nor the Depositary has been retained to make solicitations
or recommendations in connection with the Offer.
Although the Company does not contemplate doing so, certain
directors or executive officers of the Company may, from time to
time, contact stockholders to provide them with information
regarding the Offer. Such directors and executive officers will not
make any recommendation to any stockholder as to whether to tender
all or any Shares and will not solicit the tender of any Shares.
The Company will not compensate any director or executive officer
for this service.
Other than as described above, the Company will not pay any
solicitation fees to any broker, dealer, bank, trust company or
other person for any Shares purchased in connection with the Offer.
The Company will reimburse such persons for customary handling and
mailing expenses incurred in connection with the Offer.
The Company will pay all stock transfer taxes, if any, payable
on account of the acquisition of the Shares by the Company pursuant
to the Offer, except in certain circumstances where special payment
or delivery procedures are utilized pursuant to Instruction 7 of
the Letter of Transmittal.
16. MISCELLANEOUS.
The Company is subject to the informational requirements of
the Exchange Act and in accordance therewith files reports, proxy
statements and other information with the Commission relating to
its business, financial condition and other matters. Certain
information as of particular dates concerning the Company's
directors and officers, their remuneration, options granted to
them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company
is filed with the Commission. The Company has also filed an Issuer
Tender Offer Statement on Schedule 13E-4 with the Commission, which
includes certain additional information relating to the Offer.
Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048, and Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material may be obtained by mail, upon payment of
the Commission's customary fees, from the Commission's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports, proxy statements and other information also
should be available for inspection at the office of the Nasdaq
Stock Market at 7735 K Street, N.W., Washington, D.C. 20006-1506.
The Company's Schedule 13E-4 may not be available at the
Commission's regional offices.
The Offer is being made to all holders of Shares. The Company
is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to a valid
state statute. If the Company becomes aware of any valid state
statute prohibiting the making of the Offer, the Company will make
a good faith effort to comply with such statute. If, after such
good faith effort, the Company cannot comply with such statute, the
Offer will not be made to, nor will tenders be accepted from or on
behalf of, holders of Shares in such state. In those jurisdictions
whose securities, blue sky or other laws require the Offer to be
made on behalf of the Company by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such
jurisdictions.
ESCALADE, INCORPORATED
August 12,1996
Facsimile copies of the Letter of Transmittal will be accepted
from Eligible Institutions. The Letter of Transmittal and
certificates for Shares should be sent or delivered by each
stockholder of the Company or his or her broker, dealer, bank or
trust company to the Depositary at one of its addresses set forth
below.
The Depositary:
FIFTH THIRD BANK
TO: Fifth Third Bank, Depositary
By Mail or Overnight Courier:
Fifth Third Bank
Corporate Trust Operations
38 Fountain Square Plaza
Mail Drop 1090F5
Cincinnati, Ohio 45263
By Hand:
Fifth Third Bank Fifth Third Bank
Corporate Trust Operations c/o Harris Trust
38 Fountain Square Plaza 77 Water Street
15th Floor 4th Floor
Cincinnati, Ohio 45263 New York, NY 10005
By Facsimile Transmission:
(For Eligible Institutions Only)
(513) 744-8909
To Confirm Receipt of Facsimile:
(513) 579-5320
(800) 837-2755
Any questions or requests for assistance may be directed to
the Dealer Manager at the telephone number and address listed
below. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal or other tender offer materials may be
directed to the Dealer Manager and such copies will be furnished
promptly at the Company's expense. Stockholders may also contact
their local broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Dealer Manager:
NATCITY INVESTMENTS, INC.
Corporate Finance Department
251 North Illinois Street
Indianapolis, IN 46204
(800) 382-1126
