Escalade, Inc. will restate its results for the fiscal years ended December 31, 2005 and December 25, 2004 to correct errors discovered by the company while preparing its financial statements for the year ended December 30, 2006. These restatements result primarily from a correction relating to the overstatement of the provision for income taxe, but also include a correction relating to the overstatement of employee benefit costs. The company will also restate the quarterly financial statements issued in fiscal 2006. Pending further analysis, the company expects to complete these restatements of its financial statements before it files its 2006 Form 10-K on or before March 15, 2007.
Based on the analysis to date, the company believes these restatements will increase previously reported net income for the fiscal year ended December 31, 2005 by approximately $0.9 million or 8 cents per share and will increase net income for the fiscal year ended December 25, 2004 by approximately $0.3 million or 3 cents per share.
The company believes the changes resulting from these restatements will have no effect on previously reported revenue or net cash flows. Further, these restatements are not expected to have an impact on segment profits as previously reported by the company or on compliance with any debt covenants with the company's lenders.
Consistent with the company's prior expectations, revenues for fiscal 2006 will be higher than that achieved in fiscal 2005, but profitability will be lower.
