<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended July 10, 1999
Commission File Number 0-6966
ESCALADE, INCORPORATED
----------------------
(Exact name of registrant as specified in its charter)
Indiana 13-2739290
------- ----------
(State of incorporation) (I.R.S. EIN)
817 Maxwell Avenue, Evansville, Indiana 47717
---------------------------------------------
(Address of principal executive office)
812-467-1200
------------
(Registrant's Telephone Number)
Securities registered pursuant to Section 12(b) of the Act
NONE
Securities registered pursuant to section 12(g) of the Act
Common Stock, No Par Value
--------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of Registrant's common stock (no par value)
outstanding as of July 28, 1999: 3,050,739
<PAGE> 2
INDEX
Page No.
Part I. Financial Information:
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheet (Unaudited) --
July 10, 1999, July 11, 1998, and
December 26, 1998 3
Consolidated Condensed Statement of Income (Unaudited) --
Three Months and Six Months Ended
July 10, 1999 and July 11,1998 4
Consolidated Condensed Statement of Cash Flows (Unaudited) --
Six Months Ended July 10, 1999 and July 11, 1998 5
Notes to Consolidated Condensed Financial Statements
(Unaudited) 6-9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations: 10-12
Part II. Other Information 13
Signatures 13
Exhibit 10.21 14-15
<PAGE> 3
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)
(Dollars in Thousands) July 10, July 11, December 26,
1999 1998 1998
ASSETS ----------------------------------------------
Current assets:
<S> <C> <C> <C>
Cash $ 230 $ 115 $ 340
Receivables, less allowances of
$532, $927 and $582 9,690 10,838 30,792
Inventories 13,800 16,004 12,647
Prepaid expense 430 210 130
Deferred income tax benefit 1,057 1,138 1,002
-------- -------- --------
TOTAL CURRENT ASSETS 25,207 28,305 44,911
Property, plant, and equipment 35,866 35,447 35,443
Accum. depr. and amortization (26,402) (24,725) (25,339)
-------- -------- --------
9,464 10,722 10,104
Goodwill 7,122 5,811 5,630
Other assets 4,020 2,592 2,844
-------- -------- --------
$ 45,813 $ 47,430 $ 63,489
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - bank $ 5,275 $ 1,875 $ 7,800
Current portion of long-term debt 300 2,300 2,300
Trade accounts payable 3,006 3,032 2,959
Accrued liabilities 7,067 6,370 11,643
Federal income tax payable 31 43 1,324
Dividends payable -- -- 3,122
-------- -------- --------
TOTAL CURRENT LIABILITIES 15,679 13,620 29,148
Other Liabilities:
Long-term debt 2,400 7,400 6,400
Deferred compensation 1,222 1,115 1,166
Deferred income tax liability -- 453 73
-------- -------- --------
3,622 8,968 7,639
Stockholders' equity:
Preferred stock:
Authorized 1,000,000 shares;
no par value, none issued
Common stock:
Authorized 10,000,000 shares;
no par value,Issued and
outstanding - 3,050,739,
3,105,250, and 3,097,357 at
7-10-99, 7-11-98, and 12-26-98 4,987 6,262 6,073
Retained earnings 21,234 18,297 20,388
Accumulated other comprehensive income 291 283 241
-------- -------- --------
26,512 24,842 26,702
-------- -------- --------
$45 813 $ 47,430 $ 63,489
======== ======== ========
</TABLE>
See notes to Consolidated Condensed Financial Statements.
<PAGE> 4
<TABLE>
<CAPTION>
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
(Dollars in Thousands, except per share amounts)
Three Months Ended Six Months Ended
July 10, July 11, July 10, July 11,
1999 1998 1999 1998
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 17,086 $ 19,077 $ 30,064 $ 34,860
Costs, expenses and other income:
Cost of products sold 11,935 13,783 20,828 24,649
Selling, administrative and
general expenses 4,290 4,253 7,393 7,786
Interest 109 311 253 588
Amortization of Goodwill 134 123 225 217
Other income (56) (121) (80) (189)
Gain on Disposal of Escalade
International (103) -- (103) --
-------- -------- -------- --------
16,309 18,349 28,516 33,051
INCOME BEFORE INCOME TAXES 777 728 1,548 1,809
Provision for income taxes 365 390 702 886
-------- -------- -------- --------
NET INCOME $ 412 $ 338 $ 846 $ 923
======== ======== ======== ========
Per share data:
Basic earning per share $ .13 $ .11 $ .27 $ .30
Diluted earnings per share $ .13 $ .11 $ .27 $ .30
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
NET INCOME $ 412 $ 338 $ 846 $ 923
UNREALIZED GAIN (LOSS)
ON SECURITIES, NET OF TAX 61 (22) 50 36
-------- -------- -------- --------
COMPREHENSIVE INCOME $ 473 $ 316 $ 896 $ 959
======== ======== ======== ========
</TABLE>
See notes to Consolidated Condensed Financial Statements.
<PAGE> 5
<TABLE>
<CAPTION>
ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(Dollars in Thousands)
Six Months Ended
July 10,1999 July 11,1998
Operating Activities: ------------------------------------
<S> <C> <C>
Net Income $ 846 $ 923
Depreciation and amortization 1,551 1,599
Adjustments necessary to reconcile
net income to net cash provided by
operating activities 15,616 9,626
-------- --------
Net cash provided by operating
activities 18,013 12,148
-------- --------
Investing Activities:
Purchase of property and equipment (1,415) (461)
-------- --------
Net cash used by investing activities (1,415) (461)
-------- --------
Financing Activities:
Net decrease in notes pay.- bank (3,000) (6,400)
Net reduction of long-term debt (9,500) (6,800)
Proceeds from exercise of stock options 277 382
Purchase of Common Stock (1,363) --
Payment of Cash Dividend (3,122) --
-------- --------
Net cash used by financing activities (16,708) (12,818)
-------- --------
Decrease in cash (110) (1,131)
Cash, beginning of period 340 1,246
-------- --------
Cash, end of period $ 230 $ 115
======== ========
</TABLE>
See notes to Consolidated Condensed Financial Statements.
<PAGE> 6
ESCALADE, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note A - Basis of Presentation
- ------------------------------
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position of
the company as of July 10, 1999, July 11, 1998, and December 26, 1998 and the
results of operations and changes in financial position for the six months ended
July 10,1999 and July 11, 1998. The balance sheet at December 26, 1998 was
derived from the audited balance sheet included in the 1998 annual report to
shareholders.
Note B - Seasonal Aspects
- -------------------------
The results of operations for the six month periods ended July 10, 1999
and July 11, 1998 are not necessarily indicative of the results to be expected
for the full year.
Note C - Inventories (Dollars in Thousands)
- -------------------------------------------
<TABLE>
<CAPTION>
7-10-99 7-11-98 12-26-98
------- ------- --------
<S> <C> <C> <C>
Raw Materials $ 4,396 $ 4,977 $ 3,488
Work In Process 3,165 3,672 3,442
Finished Goods 6,239 7,355 5,717
------- ------- -------
$13,800 $16,004 $12,647
======= ======= =======
</TABLE>
Note D - Income Taxes
- ---------------------
The provision for income taxes was computed based on financial
statement income.
Note E - Discontinued Operations
- --------------------------------
In December 1998, the Company adopted a plan to discontinue its
distribution operations. Those operations were performed by Escalade
International, Limited, a foreign subsidiary located in the United Kingdom. The
Company's other subsidiaries are all manufacturing operations. On July 8, 1999
the Company completed a transaction to sell 50% of the stock of Escalade
International to an investment group who assumed responsibility for running the
day to day operations. The sale was for $500,000 with $50,000 cash paid and
Notes Receivable of $450,000. The estimated loss on the disposal of Escalade
International was $1,222,279 including a provision of $250,000 for operating
losses during phase out. The actual loss on the sale was $1,118,892 which
included $213,057 in operating losses up to the time of sale. The second quarter
statements show a profit of $103,387 which was the amount the reserve for loss
on this transaction was greater than actual. Since only 50% was sold, the
operations are not considered discontinued and the statements have been revised
to eliminate discontinued operations. Going forward the Company's ownership
value in Escalade International of $500,000 will be shown as an investment and
will be accounted for under the equity method.
<PAGE> 7
Note F - Acquisition
- --------------------
On June 21, 1999, Martin Yale, the Company's office and graphic arts
products subsidiary, acquired certain assets of Mead Hatcher. The purchased
assets include all of Mead Hatcher's manufactured products consisting of
keyboard drawers, computer storage, copyholders, media retention systems, and
posting trays along with all associated tooling and production machinery
necessary to manufacture the products. The purchase price was $3,481,170. Martin
Yale will relocate the manufacturing of these products to its Los Angeles,
California facility. It is estimated that annual sales of these products will be
approximately $6,000,000.
Note G - Earnings Per Share
- -----------------------------
Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>
Three Months Ended
July 10, 1999
--------------------------------------------------------
Weighted
Average Per Share
Income Shares Amount
------ --------- ----------
<S> <C> <C> <C>
Net Income $ 412
----
Basic Earnings per Share
Income available to common
stockholders 412 3,060 $ .13
=======
Effect of Dilutive Securities
Stock options 4
----- -----
Diluted Earnings Per Share
Income available to common
stockholders and assumed
conversions $ 412 3,064 $ .13
===== ===== =======
<CAPTION>
Three Months Ended
July 11, 1998
---------------------------------------------------------
Weighted
Average Per Share
Income Shares Amount
------ -------- ------
<S> <C> <C> <C>
Net Income $ 338
-----
Basic Earnings per Share
Income available to common
stockholders 338 3,101 $ .11
=======
Effect of Dilutive Securities
Stock options 20
----- ----
Diluted Earnings Per Share
Income available to common
stockholders and assumed
conversions $ 338 3,121 $ .11
===== ===== =======
</TABLE>
<PAGE> 8
Note G - Earnings Per Share
- -----------------------------
Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>
Six Months Ended
July 10, 1999
--------------------------------------------------------
Weighted
Average Per Share
Income Shares Amount
------- --------- ----------
<S> <C> <C> <C>
Net Income $ 846
-------
Basic Earnings per Share
Income available to common
stockholders 846 3,083 $.27
=======
Effect of Dilutive Securities
Stock options 4
------- --------
Diluted Earnings Per Share
Income available to common
stockholders and assumed
conversions $ 846 3,087 $.27
======= ======= =======
Six Months Ended
July 11, 1998
----------------------------------------------------------
Weighted
Average Per Share
Income Shares Amount
------- --------- ----------
<S> <C> <C> <C>
Net Income $ 923
-------
Basic Earnings per Share
Income available to common
stockholders 923 3,085 $ .30
=======
Effect of Dilutive Securities
Stock options 20
------- -------
Diluted Earnings Per Share
Income available to common
stockholders and assumed
conversions $ 923 3,105 $ .30
======= ======= =======
</TABLE>
<PAGE> 9
Note H - Segment Information
- -----------------------------
<TABLE>
<CAPTION>
As of and for the Six Months Ended
July 10, 1999
-------------------------------------------------------------
Office and
Sporting Graphic
Goods Arts Corporate Total
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Revenues from external customers $13,161 $16,903 $ --- $ 30,064
Net Income (885) 1,753 (22) 846
Assets $18,476 $23,220 $4,117 $ 45,813
<CAPTION>
As of and for the Six Months Ended
July 11, 1998
--------------------------------------------------------------
Office and
Sporting Graphic
Goods Arts Corporate Total
---------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Revenues from external customers $18,041 $16,819 $ --- $ 34,860
Net Income (761) 1,587 97 923
Assets $24,739 $19,355 $3,336 $ 47,430
</TABLE>
<PAGE> 10
ESCALADE, INCORPORATED AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain significant
factors which have affected the Company's earnings during the periods included
in the accompanying consolidated condensed statements of income.
RESULTS OF OPERATIONS
SECOND QUARTER COMPARISON 1999 vs. 1998
Net sales were $17,086,000 in the second quarter of 1999 as compared
to $19,077,000 in the second quarter of 1998 a decrease of $1,991,000 or 10.4%.
Sales of sporting goods decreased $2,281,000 or 23.2% and sales of office and
graphic arts products increased $290,000 or 3.0%.
Sporting goods sales decreased in pool tables, basketball and
dartboard cabinets, which was due to a decrease in units sold. The office and
graphic arts machines and equipment sales increase was mainly in graphic arts
products.
Cost of sales was $11,935,000 in the second quarter of 1999 as
compared to $13,783,000 in the second quarter of 1998, a decrease of $1,848,000
or 13.4%.
Cost of sales as a percentage of net sales was 69.9% in the second
quarter of 1999 as compared to 72.2% in the second quarter of 1998. Sporting
goods cost of sales as a percentage of net sales increased 2.5% and office and
graphic arts cost of sales as a percentage of net sales decreased 2.0%. The
increase in the sporting goods cost of sales percentage of net sales was due
mainly to the lower sales level causing lower absorption of overhead expenses.
The decrease in office and graphic arts cost of sales percentage of net sales
was due to lower material and labor costs.
Selling, general, and administrative expenses were $4,290,000 in the
second quarter of 1999 as compared to $4,253,000 in the second quarter of 1998,
an increase of $37,000 or .9%.
Selling, general and administrative expenses as a percentage of net
sales was 25.1% in the second quarter of 1999 as compared to 22.3% in the second
quarter of 1998. This increase as a percentage of net sales was mainly due to
higher data processing costs in the office and graphic arts segment for year
2000 compliance conversion expenses.
Interest expense decreased $202,000 to $109,000 in 1999 from $311,000
in 1998, a decrease of 65.0% due to lower borrowing levels.
FIRST HALF COMPARISON 1999 VS. 1998
Net sales were $30,064,000 in the first half of 1999 as compared to
$34,860,000 in the first half of 1998, a decrease of $4,796,000 or 13.8%. Sales
of sporting goods decreased $4,880,000 or 27.0% and sales of office and graphic
arts products increased $84,000 or .5%.
The decrease in sporting goods net sales was about 45% in promotional
sales, 25% in international sales, 15.0% due to excess inventory carryover by a
large customer and 15.0% due to a bankruptcy filing by a large customer. In the
office and graphic arts products segment, the increase in sales is due mainly to
higher graphic arts product sales which offset decreased export sales.
<PAGE> 11
ESCALADE, INCORPORATED AND SUBSIDIARIES
RESULTS OF OPERATIONS CONTINUED
Cost of sales was $20,828,000 in the first half of 1999 as compared to
$24,649,000 in 1998, a decrease of $3,821,000 or 15.5%.
Cost of sales as a percentage of net sales was 69.3% in the first half
of 1999 as compared to 70.7% in the first half of 1998. This cost of sales % is
1.4% lower in 1999 than 1998 mainly due to higher % of office product sales in
the total sales dollars.
Selling, general, and administrative expenses were $7,393,000 in the
first half of 1999 as compared to $7,786,000 in the first half of 1998, a
decrease of $393,000 or 5.0%.
Selling, general, and administrative expenses as a percentage of net
sales were 24.6% in 1999 as compared to 22.3% in 1998. The increase in these
expenses as a percentage of net sales was mainly due to higher data processing
costs and lower sales volume.
Interest expense was $253,000 in the first half of 1999 as compared to
$588,000 in the first half of 1998, a decrease of $335,000 or 57.0%. The
decrease was due to lower average borrowing levels in the first half of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by operating activities was
$18,013,000 in the first half of 1999 as compared to $12,148,000 in the first
half of 1998. Most of the cash provided by operating activities was from
collection of the year end accounts receivable. The net accounts receivable
balance at the end of the year in 1998 was $30,792,000 and at the end of the
first half of 1999, the net accounts receivable balance was $9,690,000. The
Company's net cash used for investing activities was $1,415,000 in the first
half of 1999 as compared to $461,000 in the first half of 1998. The Company's
net cash used by financing activities was $16,708,000 in the first half of 1999
as compared to $12,818,000 in the first half of 1998. In 1999, the cash used by
financing activities paid down bank and long term debt, purchased the Company's
stock and paid a cash dividend.
The Company's working capital requirements are currently funded by
cash flow from operations and a domestic line of credit in the amount of
$15,000,000, which includes a letter of credit facility in the amount of
$2,000,000.
Inventories at the end of the first half of 1999 were $13,800,000 as
compared to $16,004,000 at the end of the first half of 1998, a decrease of
$2,204,000.
YEAR 2000 COMPLIANCE
The Company's sporting goods division, Escalade Sports, has completed
the evaluation, conversion and testing of its critical business systems to
determine whether such systems will be able to properly process data for the
year 2000. Escalade Sports employees first reviewed the underlying software
codes for year 2000 compatibility, and then converted the codes where necessary
to allow years to be read using four digits rather than two digits. Escalade
Sports employees then tested the converted code to determine whether the
affected business system would operate without interruption when data using the
year 2000 was input. Based on these processes, the Company believes that
Escalade Sports' internal software systems are currently year 2000 compliant and
have so notified the customers of Escalade Sports where appropriate.
Escalade Sports has also substantially completed the evaluation,
conversion and testing of its business and manufacturing equipment to prepare
for the year 2000. Escalade Sports has requested year 2000 compliance assurances
from its customers, vendors and other third parties such as utility companies.
Responses from these third parties have been slow to date. Escalade is uncertain
whether it will receive responses from all such parties and whether all such
responses will be satisfactory.
<PAGE> 12
Martin Yale will complete the conversion phase of most of its critical
business systems for year 2000 compatibility in the third quarter. Martin Yale
expects that all necessary testing of the converted existing software and the
installation of a couple new software packages should be completed in the fourth
quarter of 1999. Outside third parties are working with Martin Yale employees in
preparing for the year 2000. Martin Yale is also seeking year 2000 compliance
assurances from its customers, vendors and other third parties, such as utility
companies.
As of the end of its second quarter of 1999, the Company had incurred
approximately $400,000 in connection with preparing for the year 2000. The
Company expects to incur approximately another $100,000 of year 2000 expenses by
the end of 1999. The Company estimates that its actual and future expenditures
in this area are 80% attributable to internal costs and external fees for
conversion of systems. The remaining 20% of year 2000 expenses are attributable
to new software and equipment. The Company is funding these expenses from
working capital. To the extent that the Company has utilized internal resources
to remedy potential year 2000 problems, the Company has foregone evaluating and
upgrading its systems that it otherwise would have undertaken in the ordinary
course of business. The Company does not believe that such reallocation of its
internal resources has had or will have a material adverse effect on it.
The Company believes that all of its operations, including those of
Escalade Sports and Martin Yale, will timely meet all requirements necessary to
be year 2000 compliant. As indicated above, the Company's subsidiaries are
continuing to implement their year 2000 plans but have not yet completed those
actions. In addition, the Company and its subsidiaries will continue to request
compliance assurances from its major customers, vendors and other third parties.
At this time, the Company cannot provide any assurances that it will be fully
year 2000 compliant, although the Company does not believe it will be materially
adversely affected by year 2000 issues.
The most likely year 2000 problems that the Company may face appear to
arise from the possible noncompliance of third parties. Possible difficulties
could arise in interfacing with major customers and/or in receiving raw
materials from suppliers. The Company is continuing to work with its customers
to ensure that no material data transmission problems will arise. The Company
also has, and is continuing to develop, back up sources for material vendors.
Accordingly, the Company does not anticipate that any such third party problems
should have a material adverse effect on the Company. However, in the event that
the year 2000 would cause the widespread loss of power, telecommunications and
other utilities in the areas where the Company operates, the disruption to the
Company's business may be material depending upon he length of time it would
take such suppliers to restore service to normal levels.
At this time, the Company has not developed specific contingency plans
in preparation for the year 2000 other than for identifying back up sources for
its material vendors. As the Company continues to complete its evaluation,
conversion and testing, the Company will assess whether there are any specific
areas where a contingency plan could help alleviate possible adverse effects
from the year 2000. If so, the Company will develop contingency plans in those
areas prior to the end of 1999.
<PAGE> 13
ESCALADE, INCORPORATED AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1, 2, and 3. Not Required.
Item 4. Submission of Matters to a Vote of Securities Holders.
The annual meeting of the Registrant was held at Indianapolis, Indiana on April
24, 1999. Proxy materials had been circulated on March 19, 1999, proposing the
election of eight members to the Board of Directors for a one year term, and the
appointment of Olive LLP to serve as independent auditors of the Company for the
year 1999.
The stockholders approved the election of Yale A. Blanc, Gerald J. Fox, Robert
E. Griffin, Blaine E. Matthews, Jr., Robert D. Orr, C. W. ("Bill") Reed,
A. Graves Williams, Jr., and Keith P. Williams to the Board of Directors, and
the appointment of Olive LLP as the Company's independent auditors.
Item 5. Not Required.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 10.21 - Sixth Amendment to amended and restated credit agreement
dated as of May 31, 1999 with Bank One, Indianapolis.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the three
months ended July 10, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ESCALADE, INCORPORATED
Date: July 30, 1999 Robert E. Griffin
-------------- ----------------------------
Robert E. Griffin
Chairman
Date: July 30, 1999 John R. Wilson
-------------- ----------------------------
John R. Wilson
Vice President and
Chief Financial Officer
<PAGE> 1
Exhibit 10.21
SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This Amendment ("Amendment") is made as of the 15TH day of JUNE, 1999,
by and between ESCALADE, INCORPORATED (the "Company") and BANK ONE, INDIANA, NA
(the "Bank").
WHEREAS, the Company and the Bank entered into an Amended and Restated
Credit Agreement dated May 31, 1996, as amended (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
below:
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning ascribed
in the Agreement.
2. The definition of Revolving Loan Maturity Date in the Section
bearing the heading ACCOUNTING TERMS - DEFINTIONS of the Agreement is hereby
amended and restated to read as follows:
- "REVOLVING LOAN MATURITY DATE" means May 31, 2000, and
hereafter any subsequent date to which the Commitment may be
extended by the Bank pursuant to the terms of Section
2.a(iv).
3. The first sentence of Section 2.a.(i) of the Agreement is hereby
amended and restated to read as follows:
(i) THE COMMITMENT - USE OF PROCEEDS. From the date of this
Agreement and until the Revolving Loan Maturity Date, the
Bank agrees to make Advances (collectively, the "Revolving
Loan") under a revolving line of credit from time to time to
the Company in amounts not exceeding Fifteen Million and
No/100 Dollars ($15,000,000.00) (the "Commitment") in the
aggregate at any time outstanding, provided that all
conditions of lending stated in Section 7 of this Agreement
as being applicable to the Revolving Loan have been
fulfilled at the time of each Advance.
4. The Company represents and warrants that (a) the representations and
warranties contained in the Agreement are true and correct in all material
respects as of the date of this Amendment, (b) no condition, act or event which
could constitute an Event of Default under the Agreement exists, and (c) no
condition, event, act or omission has occurred, which, with the giving of notice
or passage of time, would constitute an Event of Default under the Agreement.
5. The Company agrees to pay all fees and out-of-pocket disbursements
incurred by the Bank in connection with this Amendment, including legal fees
incurred by the Bank in the preparation, consummation, administration and
enforcement of this Amendment.
6. This Amendment shall become effective only after it is fully
executed by the Company and the Bank and the Bank shall have received from the
Company the following documents:
(a) Sixth Amendment to Amended and Restated Credit Agreement
(b) Promissory Note Modification Agreement
Except as amended by this Amendment, the Agreement shall remain in full force
and effect in accordance with its terms.
7. This Amendment is a modification only and not a novation. Except for
the above-quoted modification(s), the Agreement, any agreement or security
document, and all the terms and conditions thereof, shall be and remain in full
force and effect with the changes herein deemed to be incorporated therein. This
Amendment is to be considered attached to the Agreement and made a part thereof.
This Amendment shall not release or affect the liability of any guarantor,
surety or endorser of the Agreement or
<PAGE> 2
release any owner of collateral securing the Agreement. The validity, priority
and enforceability of the Agreement shall not be impaired hereby. To the extent
that any provision of this Amendment conflicts with any term or condition set
forth in the Agreement, or any agreement or security document executed in
conjunction therewith, the provisions of this Amendment shall supersede and
control. Company acknowledges that as of the date of this Amendment it has no
offsets with respect to all amounts owed by Company to Bank and Company waives
and releases all claims which it may have against Bank arising under the
Agreement on or prior to the date of this Amendment.
8. The Company acknowledges and agrees that this Amendment is limited
to the terms outlined above, and shall not be construed as an amendment of any
other terms or provisions of the Agreement; The Company hereby specifically
ratifies and affirms the terms and provisions of the Agreement. Company releases
Bank from any and all claims which may have arisen, known or unknown, in
connection with the Agreement on or prior to the date hereof. This Amendment
shall not establish a course of dealing or be construed as evidence of any
willingness on the Bank's part to grant other or future amendments, should any
be requested.
IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the day and year first above written.
BANK ONE, INDIANA, NA ESCALADE, INCORPORATED
By: __________________________________ By:______________________________
Andrew M. Cardimen, Vice President John R. Wilson, Chief Financial
Officer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SECOND
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> JUL-10-1999
<CASH> 230
<SECURITIES> 0
<RECEIVABLES> 10,222
<ALLOWANCES> 532
<INVENTORY> 13,800
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<PP&E> 35,866
<DEPRECIATION> 26,402
<TOTAL-ASSETS> 45,813
<CURRENT-LIABILITIES> 15,679
<BONDS> 2,400
0
0
<COMMON> 4,987
<OTHER-SE> 21,525
<TOTAL-LIABILITY-AND-EQUITY> 45,813
<SALES> 30,064
<TOTAL-REVENUES> 30,167
<CGS> 20,828
<TOTAL-COSTS> 28,221
<OTHER-EXPENSES> 145
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<INTEREST-EXPENSE> 253
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<INCOME-TAX> 702
<INCOME-CONTINUING> 846
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<NET-INCOME> 846
<EPS-BASIC> .27
<EPS-DILUTED> .27
</TABLE>
