Escalade Q1 Income Up 93%; Sales Down 13%

Escalade, Inc. announced that net income nearly doubled for the quarter, increasing 93% to $1,154,000 or 9 cents per share as compared to 5 cents in the year ago quarter due in full to the turnaround of the office products operations. Net sales fell 13% for the quarter to $29,782,000 due primarily to product rationalization, delays or timing shifts of product shipments, and discontinued business with unprofitable customers.

Escalade Sports' net sales of sporting goods products were off 7% to $14,021,000 due to a shift in the timing of basketball system purchases by customers that will result in future shipments closer to their actual needs. Net income declined from a profit in the year ago quarter to a small loss this quarter. During the quarter, Escalade completed the acquisition of the assets of ChildLife, Inc., a manufacturer of premium wood outdoor residential play systems. This acquisition should add between five and six million dollars in revenue to the balance of this year. Escalade is still finalizing their fall and Christmas product placement, so it is a little early to predict full year sales revenues.

Martin Yale's net sales of office products declined 17% for the quarter to $15,761,000, primarily due to product rationalization and the discontinuation of business with unprofitable customers. Additionally, a temporary supply interruption of paper shredders resulted in both a loss of business for the quarter and the postponement of some shipments. This has now been fully corrected. Net income increased 293% for the quarter due to last year's aggressive worldwide cost reduction programs, U.S. facility consolidation, and to a lesser extent by price increases that were only partially realized during the quarter. Additionally, net income was increased by lower effective tax rates as European profitability allowed the partial utilization of tax loss carryforwards. Mr. Jack Costelloe, president of Martin Yale remarked that “There are more cost reductions to be realized as we consolidate and synergize European distribution; however, they will come at a much slower pace. Our primary focus now needs to shift to product development and innovation that creates growth in future years.”

Mr. Bill Reed, CEO and president of Escalade stated that “During the quarter, we paid our second annual dividend, increasing it 25% to 15 cents per share and replenished our stock buyback program, boosting it back to the $3,000,000 level. We are continuing to look for other means of enhancing shareholder value including reviewing acquisition opportunities.”

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
    (Unaudited, In Thousands Except Per Share Amounts)
                            3 Months Ended              12 Months Ended
                    19 March 2005  20 March 2004  19 March 2005  20 March 2004

    NET SALES           $29,782        $34,060       $216,431       $221,758

    OPERATING EXPENSES
    Cost of goods sold   20,859         24,518        154,732        159,223
    Selling and
     administrative       7,175          8,050         42,195         40,558
    Restructuring            --             --          2,366             --
    Impairment of
     goodwill                --             --          1,312             --

    OPERATING INCOME      1,748          1,492         15,826         21,977

    OTHER INCOME (EXPENSE)
    Interest expense       (286)          (365)        (1,692)        (2,200)
    Other income (expense)  245            (18)           281          2,543

    INCOME BEFORE INCOME
     TAXES                1,707          1,109         14,415         22,320

    PROVISION FOR INCOME
     TAXES                  553            511          6,032          6,880

    NET INCOME           $1,154           $598         $8,383        $15,440

    PER SHARE DATA
    Basic earnings per
     share                $0.09          $0.05          $0.64          $1.20
    Diluted earnings
     per share            $0.09          $0.05          $0.63          $1.18