2020
ANNUAL REPORT
MESSAGE TO
OUR SHAREHOLDERS
This past year brought many changes to our day-to-day activities. People around the world were forced to adjust
the way they worked, communicated, and socialized. These changes drove the need to find in-home fitness and
recreation solutions as we all adjusted to life under lock-downs. The Escalade family of brands fit squarely into the
needs for fitness, recreation, and social distancing products.
Throughout 2020, it became clear that our previous strategic investments, nimble global supply chain, financial
flexibility, and our talented team would have an opportunity to come together to meet the unprecedented demand.
From the beginning of stay-at-home orders, our employees were challenged to maintain the health and well-being
of their families, while at the same time ensuring we fulfilled the strong demand for our product. Some inspiring
examples:
In March, we reduced operations in our Evansville, Indiana warehouse to help slow the spread of the virus. To
ensure our customers received their critical orders, many of the leadership team members volunteered to help
out in the distribution center operating forklifts to unload inbound containers of merchandise, picking orders,
and shipping essential goods. This team kept the company moving until it was deemed safe to reopen the
warehouse with appropriate health and safety protocols for full operations.
In April, our manufacturing facility in Gainesville, Florida was shuttered because of growing numbers of positive
COVID-19 tests. Over the course of the next several weeks, our leadership team worked diligently with local
and state officials to develop a plan to reopen the facility. During the shutdown we paid all employees their
full pay, rather than deploying layoffs, furloughs, or pay cuts. We reopened the facility after three weeks and
began fulfilling substantial backlogs of Archery product and key components for our Victory Tailgate business.
Our facilities in Orlando, Olney, and Rosarito, Mexico were significantly impacted by the virus and experienced
daily challenges related to COVID-19. The leadership teams in each of these facilities developed strategies
to ensure the balance between the health and well-being of our employees and the need to keep our supply
chain in motion.
As we ended the year, all our production and distribution facilities were open and operating. I cannot thank all
our employees enough for their inspiring efforts to respond to the needs of our customers. We are fortunate
to have such a hard-working team and it is heartwarming to see the results of their valiant effort.
The culmination was a record-breaking year. Some of the financial highlights include:
• Record revenue of $273.6 million, an increase of 51.6%
• Gross Margin of 27.3%, an improvement of 380 basis points from 23.5% in 2019
• Operating Margin improved from 5.1% to 12.1%
•
Earnings per Share increased 264% from $.50 to $1.82
• Return on Assets was 14.0% compared to 4.9% last year
• Return on Equity was 19.5%, up from 5.7% in 2019
In 2022 we will celebrate the centennial of our predecessor company, Williams Manufacturing, and are already laying
the groundwork for the next 100 years. We continue to develop our strategic plan, which guides Escalade as we
continue our journey of profitable growth. The key elements include staying close to the consumer, serving our trade
partners, investing in our people, strengthening our supply chain, integrating new digital technologies throughout our
business units, and maintaining a sound financial structure.
I
DECENTRALIZED MANAGEMENT ORGANIZATION
Escalade’s business units are managed by leaders who
live and breathe their categories every day. They have
different backgrounds, skills, and styles; yet all share a
passion for their business, for serving their customers,
and for working together to achieve the best results for
Escalade.
These General Managers (GMs) have the authority, and
the responsibility, to lead their respective units with the
primary goal of building the long-term value of their
brands, and thus Escalade. They are supported by a
relatively lean and talented corporate staff who assist
with Global Sourcing & Logistics, Financial resources,
Human Resources expertise, Information Technology
Infrastructure & Support, Legal and Corporate
Development assistance.
The result is individually entrepreneurial, responsive, and
consumer-driven businesses that share best practices
among each other while enjoying the benefits that come
from being part of a larger, stronger organization.
CAPITAL ALLOCATION
A key obligation of any successful company is the
responsible allocation of capital resources. At Escalade
we continually evaluate the relative merits of reinvesting
in our core business, acquiring other businesses, paying
cash dividends to our shareholders, and repurchasing our
stock in the open market.
Over the past ten years we have:
•
Invested $31 million in capital expenditures to
support our businesses,
• Spent $64 million on acquisitions, and received
$42 million from businesses sold,
• Paid $59 million in cash dividends, and
• Repurchased $10 million of company shares.
REINVESTMENT IN OUR CORE BUSINESSES
There is nothing more important than the satisfaction of
our existing customers, consumers, and valuable team
members. In 2020, we increased the investments in our
existing businesses:
renovations with minimal disruption to our team
members and are now prepared for the day when
our customers will again visit us to review the
innovative and exciting products we introduce
each season. The new showroom will help us
display and sell our expanding range of products,
while the offices and common areas will help us
retain and attract top talent.
•
In our Olney facility, we further invested in tooling
and machinery to expand production, enhance
efficiencies, and further fortify our supply chain.
Olney is a globally competitive manufacturing
facility that continuously works to become even
more productive and efficient.
• We also invested in key talent and leadership to
help us drive closer relationships with customers
and consumers, while setting up the business for
growth now and in the future. Specifically, we
added key talent in our emerging digital business
as well as product development and engineering;
all with an eye to bringing compelling products to
our consumers.
• Critical to our growth is the understanding of
consumer trends. In 2020, we invested in tools to
help us learn more about and move closer to our
consumer. We intend to arm our teams and our
customers with the latest business intelligence to
navigate the rapidly changing consumer landscape.
ACQUISITIONS
A glance at the Escalade history timeline on the
following pages shows how we have benefited from
strategic acquisitions (and divestitures) over many
years. Our corporate development team along with
our General Managers uncover and analyze dozens of
opportunities each year. When we find the proverbial
needle in the haystack—a business that fits with our
overall strategy, will be accretive to earnings in the near
term, strengthens our customer relationships, and builds
upon our capabilities—we have the financial strength and
experience to complete complex acquisitions quickly and
efficiently. Unlike many acquirers who immediately impose
their systems and ideas on the new business, we look for
cross-fertilization and sharing of knowledge to find the
best from both sides.
•
In our Evansville headquarters and distribution
center, we renovated much of our facility to
enhance collaboration, improve efficiencies,
and expand throughput. We used the COVID-19
work-from-home time to complete the
In late 2020, we made two key acquisitions that fit
squarely into our acquisition strategy. RAVE® Sports
originated the inflatable water trampoline and has
expanded into a wide range of water sports and inflatable
products. This acquisition marks our entry into the
2020 ANNUAL REPORT growing Water Sports and Recreation category. American Heritage Billiards® offers Escalade the opportunity to further
expand into the Game Room and pairs nicely with our Cue & Case billiards accessory business. Both transactions are
expected to help us further customer relationships, increase revenue, and contribute to earnings.
CASH DIVIDENDS
Escalade instituted a regular cash dividend policy in 2012 and has now paid dividends for 36 quarters in a row. From
8 cents in 2012 to 14 cents in 2020, the quarterly dividend has grown at just over 7% compounded annual rate. Your
Board of Directors evaluates the dividend at each board meeting with the goal of delivering consistent dividend
income to our shareholders while maintaining a prudent financial condition and funding further growth of the business.
SHARE REPURCHASE
Our policy is to buy back shares of our stock if, and only if, we believe the market price of Escalade stock is well
below the intrinsic value of our company. While often misunderstood or maligned by those with an axe to grind,
prudent share repurchase programs can be an effective tool to enhance shareholder value and provide additional
liquidity to stockholders who choose to sell. In the past two years, we have bought back nearly 5% of our shares at
an average price of $14.27 per share. These buybacks added 8 cents to 2020 earnings per share, increases our cash
flow by over $350,000 annually, and enhances our Return on Equity.
A COVID-19 BUMP OR PERSISTENT CHANGE IN HABITS?
While there can be no doubt that Escalade benefited from the stay-at-home orders and consumers’ needs to remain
fit and active in 2020, our teams are challenging themselves to grow from a new, higher plateau.
• Our experience after 9/11 was that it took several years for travel to resume to prior levels. Consumers
engaged in more at-home and in-town activities with family and friends. Escalade is all about creating great
memories and building relationships through recreation. The post-COVID-19 new normal will likely take some
time to fully emerge.
• We are fortunate to partner with some of the world’s best retailers. When consumer demand spiked and
supply chains ground to a halt, the Escalade team pulled out all the stops and helped our retail partners refill
their empty shelves with great product. We were able to win shelf space and expand our market share and are
working hard to continue that trend. Our retail partners know they can rely on Escalade to deliver compelling
products on time through our dynamic domestic and offshore supply chain.
• The move from densely populated city living to suburban and rural locations is well underway. Bigger houses
and larger yards lead to demand for game room and outdoor recreation products. Working from home and
shorter commutes mean more time for recreation with family and friends.
• Our new acquisitions provide additional revenue and profit opportunities. It is worth noting that RAVE® Sports
has historically generated significant revenue from water parks and summer camps, two channels that were
shut down in 2020.
The next several years will be an exciting time for Escalade. We have many competitive advantages, a solid
strategy, and a team that has proven it can overcome daunting challenges and capitalize on great opportunities.
When reflecting on our brand lineup, our passionate and committed team, our loyal customers, and our strategy for
sustainable growth, I do believe our best is yet to come.
Sincerely,
Walter P. Glazer, Jr.
Chairman, Interim Chief Executive Officer and President
Escalade Inc.
III
2020 FINANCIAL HIGHLIGHTS
$
$273.6 MILLION
IN TOTAL REVENUE
51.6% GROWTH
27.3% GROSS PROFIT
MARGIN
+380 BPS
2019
2020
$.50 EPS
$1.82 EPS
14.0%
RETURN ON
ASSETS
RETURN ON
EQUITY 19.5%
$25.934
MILLION
NET INCOME
$
257%
GROWTH
ESCA CLOSING
PRICE
12.31.2019
$9.83
QUARTERLY
DIVIDEND
INCREASE
12%
ESCA CLOSING
PRICE
12.31.2020
$21.17
2020 ANNUAL REPORT ESCALADE, INC.
FIVE YEAR HISTORICAL SUMMARY (Company Data $ in thousands)
COMPANY DATA
NET SALES
OPERATING INCOME
NET INCOME
INTEREST EXPENSE
2020
2019
2018*
2017
2016
273,649
180,541
175,780
177,333
171,662
33,032
9,275
13,817
14,600
14,583
25,934
7,258
10,377*
14,061
11,493
250
356
427
804
834
DEPRECIATION AND AMORTIZATION
4,016
4,031
3,857
3,910
5,244
EBITDA**
38,204
13,834
18,311*
20,753
22,018
CAPITAL EXPENDITURES
5,455
2,185
2,818
2,745
2,653
DIVIDENDS
ACQUISITIONS
7,466
7,204
7,215
6,607
6,282
15,581
765
7,169
1,450
9,659
SHARE REPURCHASES
6,739
2,938
10
-
-
SHAREHOLDERS' EQUITY
139,156
126,170
128,321
111,670
101,713
TOTAL DEBT
WORKING CAPITAL
30,073
135
-
23,121
25,439
99,326
68,705
71,160
60,718
57,205
SHARES OUTSTANDING (DILUTED)
14,225
14,439
14,477
14,391
14,317
PER SHARE DATA (DILUTED)
NET INCOME
BOOK VALUE
$1.82
$0.50
$0.72*
$0.98
$0.80
$9.78
$8.74
$8.86
$7.76
$7.10
NASDAQ LAST PRICE (CALENDAR YEAR)
$21.17
$9.83
$11.45
$12.30
$13.20
DIVIDEND
$0.52
$0.50
$0.50
$0.46
$0.44
FINANCIAL & ANALYTICAL DATA
NET PROFIT MARGIN
RETURN ON ASSETS (AVG)
RETURN ON EQUITY (AVG)
CURRENT RATIO
9.5%
14.0%
19.5%
3.2
4.0%
4.9%
5.7%
4.8
5.9%*
6.8%*
8.6%*
5.3
7.9%
9.2%
13.2%
4.1
6.7%
7.8%
11.6%
4.1
WORKING CAPITAL / NET SALES
36.3%
38.1%
40.5%
34.2%
33.3%
DEBT / EQUITY
21.6%
0.1%
0.0%
20.7%
25.0%
*Excludes $13.0 million gain recognized on the sale of our 50% owned equity method investment, Stiga, a Swedish entity.
**Earnings before interest, tax, depreciation & amortization.
V
2020
ACQUISITIONS
OUR BRANDS
& CATEGORIES
Signals our entry into Water
Sports.
Marks our further expansion into
Billiards & the Game Room.
2020 ANNUAL REPORT OUTDOOR GAMES
INDOOR GAMES
Escalade’s brands of outdoor games bring
families and friends together and keep the
action going all day long. Whether at the
beach, at a barbecue or in the backyard,
our products invite everyone to get in the
game.
Staying in isn’t boring thanks to indoor
game equipment and game room table
sets, from arcade classics to family
favorites. This equipment is worth its
weight in cool points helping consumers
take their game rooms to the next level.
BASKETBALL
DARTING
To brag on our own skills a moment,
we’re the No. 1 market leader in high-
end residential basketball. In other
words, we dominate the driveway. That’s
because our in-ground, wall-mounted and
portable hoops are designed to stand up
to countless hours of shooting drills or
winner-take-all rounds of H-O-R-S-E.
PLAYGROUND
The innovation Escalade is known for
becomes “funnovation” when applied
to wide-angle slides, climbing ladders,
retractable telescopes and more.
PICKLEBALL
Get out of the kitchen and serve up an
ace with Onix Pickleball. Escalade has
built the leading brand in paddles, balls,
and accessories for the fastest growing
sport in North America. That’s because
we’ve been a key player in this sport with
the funny name since before its popularity
began to soar.
ARCHERY
Our knowledge and passion for the sport
spans nine decades. Today, everything is
different and nothing has changed. We
remain a market leader, crafting the high-
quality, high-performance archery bows
and accessories that field and target
archers trust.
Aim for more. Popular from pubs to
professional tournaments, darting is the
ultimate game. Escalade serves the sport
with a wide variety of globally recognized
brands, making it the No. 1 market leader in
the category.
TABLE TENNIS
With Stiga & Ping-Pong under our brand
umbrella, we serve the entire universe of
table tennis enthusiasts and needs, from
friendly game room matches to club and
league play to professional tournaments.
BILLIARDS
When it comes to billiards, we run the
table. Our top of the line billiards’ brands
give Escalade a competitive edge in
providing customers and consumers with
the ultimate billiards experience.
FITNESS
Whether leveling up a home gym or setting
up in one corner of a bedroom, our gear
fits the space and the workout. Everything
you need. No excuses.
WATER SPORTS
Get on the water. Adding this business to
our existing portfolio expands our powerful
stable of outdoor and indoor recreational
brands, positioning Escalade for continued
revenue and profit growth.
VII
VII
ESCALADE HISTORY
2020 ANNUAL REPORT GLOBAL FOOTPRINT
WITH MANUFACTURING AND SOURCING FLEXIBILITY
IX
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 26, 2020
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 0-6966
ESCALADE, INCORPORATED
(Exact name of registrant as specified in its charter)
Indiana
(State of incorporation)
817 Maxwell Ave, Evansville, Indiana
(Address of Principal Executive Office)
13-2739290
(I.R.S. EIN)
47711
(Zip Code)
812-467-1358
(Registrant's Telephone Number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, No Par Value
Trading Symbol
ESCA
Name of Exchange on which registered
The NASDAQ Stock Market LLC
Securities registered pursuant to section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
Yes [ ] No [X]
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 [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Non-accelerated filer [ ]
Accelerated filer [X]
Smaller reporting company [X]
Emerging growth company [ ]
1
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report. [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange Act).
Yes [ ] No [X]
Aggregate market value of common stock held by nonaffiliates of the registrant as of July 11, 2020 based on the closing
sale price as reported on the NASDAQ Global Market: $143,976,960.
The number of shares of Registrant's common stock (no par value) outstanding as of February 15, 2021: 13,898,253.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's Proxy Statement relating to its annual meeting of stockholders scheduled to be held on
April 30, 2021 are incorporated by reference into Part III of this Report, which Proxy Statement will be filed with the
Securities and Exchange Commission within 120 days after the end of the Registrant’s fiscal year covered by this Form
10-K.
ESCALADE, INCORPORATED AND SUBSIDIARIES
Table of Contents
Part I
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Item 5.
Market for the Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.
Item 7.
Selected Financial Data
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting
Item 9.
and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions and Director Independence
Item 14.
Principal Accounting Fees and Services
Part IV
Item 15.
Item 16. Form 10-K Summary
Exhibits and Financial Statement Schedules
2
Page
3
6
17
17
17
17
18
18
18
25
25
25
26
27
28
28
28
29
29
29
30
ITEM 1—BUSINESS
General
Part I
Escalade, Incorporated (Escalade, the Company, we, us or our) operates in one business segment: Sporting
Goods (Escalade Sports). Escalade and its predecessors have more than 80 years of manufacturing and selling
experience in this industry.
Headquartered in Evansville, Indiana, Escalade Sports manufactures, imports, and distributes widely
recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and
fitness products through major sporting goods retailers, specialty dealers, key on-line retailers, traditional
department stores and mass merchants. Escalade is a leader in table tennis tables, residential in-ground
basketball goals and in archery bows. Some of the Company’s most recognized brands, owned or distributed,
include:
Product Category
Archery
Brand Names
Bear® Archery, Trophy Ridge®, Whisker Biscuit®, Cajun
Bowfishing™, Karnage™, Fletcher®, Rocket®, SIK®, BearX™
Table Tennis
Basketball Goals
Pickleball
Play Systems
Fitness
Safety and Utility Weights
Game Tables (Hockey and Soccer)
Water Sports
Billiard Tables and Accessories
STIGA®, Ping-Pong®
Goalrilla™, Goalsetter®, Goaliath®, Silverback®, Hoopstar®
Onix®, DURA®, Pickleball Now®
Woodplay®, Childlife®, Jack & June®
The STEP®, Lifeline®, Kettleworx®, Natural Fitness®, PER4M®
USWeight®
Triumph™ Sports, Atomic®, American Legend®, HJ Scott®
RAVE Sports®
American Heritage Billiards®, Cue&Case®, Lucasi®, Mizerak®,
Darting
Outdoor Games
Unicorn®, Winmau®, Arachnid®, Accudart®, Nodor®
Victory Tailgate®, Triumph™ Sports , Zume Games®, Viva Sol®
PureX®, Rage®, Players®
During 2020, 2019 and 2018, the Company had one customer, Amazon.com, Inc., that accounted for
approximately 23%, 21% and 19%, respectively of the Company’s revenues. During 2020, 2019 and 2018
the Company had another customer, Dick’s Sporting Goods, which accounted for approximately 13%, 13%
and 13%, respectively, of the Company’s revenues.
As of December 26, 2020, the Company had approximately 26%, 14% and 11% of its total accounts
receivable with Amazon.com, Inc., Academy Sports and Outdoors, Inc. and Dick’s Sporting Goods,
respectively. As of December 28, 2019, the Company had approximately 27% and 18% of its total accounts
receivable with Amazon.com, Inc. and Dick’s Sporting Goods, respectively.
Escalade Sports manufactures in the USA and Mexico and imports product from Asia, where the Company
utilizes a number of contract manufacturers.
Certain products produced by Escalade Sports are subject to regulation by the Consumer Product Safety
Commission. The Company believes it is in material compliance with all applicable regulations.
3
Business Development
The Company is the successor to The Williams Manufacturing Company, founded in 1922, an Ohio-based
manufacturer and retailer of women’s and children’s footwear, and to the Indian Archery and Toy Corp.,
founded in 1927, an Evansville, Indiana-based manufacturer of archery equipment, badminton sets, and
darts. In the 1960’s, Indian Archery entered the table tennis manufacturing business and changed its name
to Indian Industries, Inc. Williams Manufacturing and Indian Industries operated independently of each other
until a series of transactions in the early 1970’s. In 1972, Williams Manufacturing acquired Martin-Yale
Industries, Inc., an Illinois-based manufacturer of office and graphic arts products, and crafts and toys. In
1973, Williams Manufacturing acquired both Indian Industries and Harvard Table Tennis, Inc., a
Massachusetts-based manufacturer of table tennis accessories. The resulting enterprise, renamed as
Escalade, Incorporated, became a diversified manufacturer of sporting goods, recreational products, office
products, graphic arts products, hobby and craft items, toys, and footwear.
In the following decades, Escalade continued to diversify its product lines through acquisitions and organic
growth, including increasing its manufacturing capabilities for table tennis tables, pool tables, basketball
backboard, goals, and poles, and related accessories. In order to focus on areas of potential growth, Escalade
also has divested certain product lines and businesses over the years. Most notably, Escalade exited the
footwear and toy businesses in the 1970’s and ultimately completed its exit from the office products and
graphic arts businesses in 2014. Such divestitures have resulted in Escalade now focusing 100% on its
Sporting Goods business segment. Escalade’s Sporting Goods segment competes in a variety of product
categories including basketball goals, archery, indoor and outdoor games, recreational, fitness, and related
products.
Core components of Escalade’s business development and growth strategy have been, and continue to be,
making strategic acquisitions, developing strong brand names, and investing in product innovation.
Escalade’s strategic acquisitions include, among others, its acquisitions of: the table tennis and pool table
assets of the Ideal Toy Company in 1977 and of Harvard Sports, Inc. in 1980; the home exercise equipment
business of Marcy Fitness Products, Inc. in 1989; the high quality basketball system assets of Zue
Corporation, including the Goalrilla™ brand in 1999; the table tennis assets of Lifetime Products, Inc. in
2000; the darting assets of Accudart in 2001; the filled vinyl weight assets and manufacturing business of
U.S. Weights, Inc. in 2001; the assets of North American Archery Group, including the Bear® Archery
brand in 2003; the residential playground systems businesses of ChildLife, Inc. in 2005 and of Woodplay in
2006; and the archery assets of Carolina Archery Products in 2006, of Trophy Ridge, LLC in 2007, and of
Cajun Archery in 2012. Escalade entered the pickleball product category through acquisitions of Pickleball
Now and Onix Sports in 2014 and 2015, expanded its billiard accessory business with the acquisition of
Cue&Case Sales, Inc. in 2014, and strengthened its manufacturing capabilities of basketball goals by
acquiring Goalsetter Systems, Inc. in 2015. More recently, in 2016, Escalade acquired the assets of Triumph
Sports USA, a leader in the indoor and outdoor games categories, in 2017 acquired the assets of Lifeline
Fitness, Inc., a leader in the fitness industry, in 2018 acquired Victory Tailgate, a manufacturer of premium
licensed and custom tailgating games, in 2020 acquired the billiard table, game room and recreational
product lines of American Heritage Billiards, and in 2020 acquired the assets of RAVE Sports, providing
entry into the water recreational products category.
For more information regarding Escalade’s business development and strategies for growth, please see “Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview.”
Marketing and Product Development
The Company makes a substantial investment in product development and brand marketing to differentiate
its product line from its competition. We conduct market research and development efforts to design products
which satisfy existing and emerging consumer needs. The Company markets directly to the consumer or
end-user as well as through its retail partners in the form of advertising and other promotional allowances.
4
Competition
Escalade is subject to competition with various manufacturers in each product line. The Company is not aware
of any other single company that is engaged in the same product lines as Escalade or that produces the same
range of products as Escalade. Nonetheless, competition exists for many Escalade products. Some competitors
are larger and have substantially greater resources than the Company. Escalade believes that its long-term
success depends on its ability to strengthen its relationship with existing customers, attract new customers, to
be a reliable source of products to timely supply customers with their needs, and to develop new products that
satisfy the quality and price requirements of sporting goods customers.
Licenses, Trademarks and Brand Names
The Company has an agreement and contract with STIGA Sports AB for the exclusive right and license to
distribute and produce table tennis equipment under the brand name STIGA® for North America. The
Company also owns several registered trademarks and brand names including but not limited to Goalrilla™,
Goalsetter®, Bear® Archery, Ping-Pong®, The Step®, Lifeline® and Woodplay®.
Backlog and Seasonality
Sales are based primarily on standard purchase orders and in most cases, orders are shipped within the same
month received. Unshipped orders at the end of the fiscal year (backlog) were not material and therefore are
not an indicator of future results. Due to diversity in product categories, revenues have not been seasonal and
are not expected to be so in the future.
Employees
The number of employees at December 26, 2020 and December 28, 2019 were as follows:
Sporting Goods
USA
Mexico
Asia
Total
2020
2019
523
160
21
704
365
84
19
468
Of Escalade’s 704 employees at December 26, 2020, 700 were full time employees and 4 were part time
employees.
The I.U.E./C.W.A. (United Electrical Communication Workers of America, AFL-CIO) represents hourly rated
employees at the Escalade Sports’ Evansville, Indiana distribution center. There were approximately 28
covered employees at December 26, 2020. A five year labor contract was negotiated and renewed in May 2016
and expires on May 1, 2021.
Sources of Supplies
Raw materials for Escalade's various product lines consist of, but are not limited to, wood, steel, aluminum,
plastics, fiberglass and packaging. Escalade relies upon suppliers in various countries and upon various third
party Asian manufacturers for many of its products. The Company believes that these sources will continue
to provide adequate supplies as needed and that all other materials needed for the Company’s various
operations are available in adequate quantities from a variety of domestic and foreign sources. From time to
time, Escalade may experience disruptions in its supply chain due to circumstances beyond its control, such
as the outbreak of the coronavirus or other public health crises and limited availability of shipping containers
and other third party logistics, which disruptions could adversely impact Escalade currently and in the future.
To alleviate these concerns, Escalade accelerated its timing for placing 2021 orders with its suppliers and
continues to identify and to develop other potential sources of products and raw materials.
5
SEC Reports
The Company’s Internet site (www.escaladeinc.com) makes available free of charge to all interested parties
the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form
8-K, and all amendments to those reports, as well as all other reports and schedules filed electronically with
the Securities and Exchange Commission (the Commission), as soon as reasonably practicable after such
material is electronically filed with or furnished to the Commission. Interested parties may also find reports,
proxy and information statements and other information on issuers that file electronically with the
Commission at the Commission's Internet site at www.sec.gov.
ITEM 1A—RISK FACTORS
OPERATIONAL RISKS TO THE COMPANY AND OUR BUSINESS
Markets are highly competitive which could limit the Company’s growth and reduce profitability.
The market for sporting goods is highly fragmented and intensely competitive. A majority of the Company’s
products are in markets that are experiencing low growth rates. Escalade competes with a variety of regional,
national and international manufacturers for customers, employees, products, services and other important
aspects of the business. The Company has historically sold a large percentage of its sporting goods products
to mass merchandisers and has increasingly attempted to expand sales to specialty retailer and dealer markets
and to on-line retailers. In addition to competition for sales into those distribution channels, vendors also
must compete in sporting goods with large format sporting goods stores, traditional sporting goods stores
and chains, warehouse clubs, discount stores and department stores. Competition from on-line retailers may
also impact sales. Some of the current and potential competitors are larger than Escalade and have
substantially greater financial resources that may be devoted to sourcing, promoting and selling their
products, and may discount prices more heavily than the Company can afford.
If the Company is unable to predict or effectively react to changes in consumer demand, it may lose
customers and sales may decline.
Success depends in part on the ability to anticipate and respond in a timely manner to changing consumer
demand and preferences regarding sporting goods. Products must appeal to a broad range of consumers
whose preferences cannot be predicted with certainty and are subject to change. The Company often makes
commitments to manufacture products months in advance of the proposed delivery to customers. If Escalade
misjudges the market for products, sales may decline significantly. The Company may have to take
significant inventory markdowns on unpopular products that are overproduced and/or miss opportunities for
other products that may rise in popularity, both of which could have a negative impact on profitability. A
major shift in consumer demand away from sporting goods products could also have a material adverse
effect on the Company’s business, results of operations and financial condition.
The Company may pursue strategic acquisitions, divestitures, or investments and the failure of a
strategic transaction to produce anticipated results or the inability to fully integrate an acquired
company could have an adverse impact on the Company’s business.
The Company has made acquisitions of complementary companies or businesses, which have been part of
the strategic plan, and may continue to pursue acquisitions in the future from time to time. Acquisitions may
result in difficulties in assimilating acquired companies, and may result in the diversion of capital and
management’s attention from other business issues and opportunities. The Company may not be able to
successfully integrate operations that it acquires, including personnel, financial and information systems,
cybersecurity measures, distribution, and operating procedures. If the Company fails to successfully
integrate acquisitions, the Company’s business could suffer. In addition, acquisitions may result in the
incurrence of debt, contingent liabilities, amortization expense or write-offs of goodwill or other intangibles,
any of which could affect the Company’s financial position. The Company also has sometimes divested or
6
discontinued certain operations, assets, and products that did not perform to the Company’s expectations or
no longer fit with the Company’s strategic objectives.
Divestitures may result in gains, losses, contingent liabilities, write-offs, tax consequences, or other related
costs and expenses that could affect the Company’s financial position. Escalade will consider acquisitions,
divestitures, and investments in the future, one or more of which, individually or in the aggregate, could be
material to the Company’s overall business, operations or financial position.
Growth may strain resources, which could adversely affect the Company’s business and financial
performance.
The Company has grown in the past through strategic acquisitions, and continues to make acquisitions in its
Sporting Goods business. Our growth strategy also depends on our ability to grow our e-commerce business,
including the development of our own direct to consumer e-commerce distribution channel. Growth places
additional demands on management and operational systems. If the Company is not successful in continuing
to support operational and financial systems, expanding the management team and increasing and effectively
managing customers and suppliers, growth may result in operational inefficiencies and ineffective
management of the Company’s business, which could adversely affect its business and financial
performance.
The Company’s ability to operate and expand its business and to respond to changing business and
economic conditions will be dependent upon the availability of adequate capital.
The rate of expansion will also depend on the availability of adequate capital, which in turn will depend in
large part on cash flow generated by the business and the availability of equity and debt capital. The
Company can make no assurances that it will be able to obtain equity or debt capital on acceptable terms or
at all. Our current senior secured revolving credit facility contains provisions that limit our ability to incur
additional indebtedness or make substantial asset sales, which might otherwise be used to finance our
operations. In the event of our insolvency, liquidation, dissolution or reorganization, the lenders under our
senior secured revolving credit facility would be entitled to payment in full from our assets before
distributions, if any, to our stockholders.
The Company is currently transitioning to a new Interim Chief Executive Officer and will soon commence
the process of seeking a new Chief Executive Officer, which may result in some disruption to the
Company.
On February 22, 2021, the Company announced that former Chief Executive Officer Scott J. Sincerbeaux
had resigned from all positions with the Company. While the Chairman of the Board of Directors, Walter P.
Glazer, Jr., has agreed to serve as the Company’s Interim Chief Executive Officer until a replacement is
hired, the transition may result in some disruptions to the Company’s ordinary course of operations.
Additionally, the process of seeking a new Chief Executive Officer requires substantial effort and time of
the Company’s Board of Directors and other executives, which may divert attention from other matters.
The Company could suffer if it fails to attract and retain skilled management and key personnel.
The Company’s success depends in large part on its ability to attract and retain highly qualified management
executives and key personnel. Significant competition for qualified candidates exists in the Company’s
business lines and geographic locations. If the Company is not able to hire and retain its executives and key
personnel, or if the compensation costs required to attract and retain such individuals becomes more
expensive, the Company may suffer adverse consequences to its business, operations, and financial
condition.
7
The Company derives a substantial portion of its revenue from a few significant customers and loss of
any of these customers could materially affect our results of operations and financial condition.
The Company has two major customers, each of which accounted for more than ten percent of consolidated
gross sales in the Company’s 2020 fiscal year. The Company also has several other large customers, none
of which represent more than ten percent of consolidated gross sales, and historically has derived substantial
revenues from these customers. Our customers continue to experience industry consolidation, which
increases our risk that we may be unable to find sufficient alternative customers. The Company needs to
continue to expand its customer base to minimize the effects of the loss of any single customer in the future.
If sales to one or more of the large customers would be lost or materially reduced, there can be no assurance
that the Company will be able to replace such revenues, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
The Company’s customers may experience financial difficulties that could result in losses to the
Company.
From time to time, one or more of the Company’s customers have experienced, are experiencing, or may in
the future experience financial difficulties that impair their ability to pay all amounts owed to the Company.
In such instances, the customer may file bankruptcy or take other actions to restructure the amounts owed to
secured and unsecured creditors, including unsecured trade creditors such as the Company. When this
occurs, the Company may not be able to collect the full amount owed to it by the customer, and in severe
situations may have to write off all or a substantial portion of those customer receivables. Any significant
resulting losses incurred by the Company relating to these or other customers could have a material adverse
effect on the Company’s business, results of operation, and financial condition.
The Company’s business may be adversely affected by the actions of and risks associated with third-
party suppliers.
The raw materials that the Company purchases for manufacturing operations and many of the products that
it sells are sourced from a wide variety of third-party suppliers. The Company cannot control the supply,
design, function or cost of many of the products that are offered for sale and are dependent on the availability
and pricing of key materials and products. Disruptions in the availability of raw materials used in production
of these products may adversely affect sales and result in customer dissatisfaction. In addition, global
sourcing of many of the products sold is an important factor in the Company’s financial performance. The
ability to find qualified suppliers and to access products in a timely and efficient manner is a significant
challenge, especially with respect to goods sourced outside the United States. Political instability, financial
instability of suppliers, merchandise quality issues, trade restrictions, tariffs, currency exchange rates,
transport capacity and costs, inflation and other factors relating to foreign trade are beyond the Company’s
control.
Historically, instability in the political and economic environments of the countries in which the Company
or its suppliers obtain products and raw materials has not had a material adverse effect on operations.
However, the Company cannot predict the effect that future changes in economic or political conditions in
the United States and in such foreign countries may have on operations. In the event of disruptions or delays
in supply due to economic or political conditions, such disruptions or delays could adversely affect results
of operations unless and until alternative supply arrangements could be made. In addition, products and
materials purchased from alternative sources may be of lesser quality or more expensive than the products
and materials currently purchased abroad.
8
Deterioration in relationships with suppliers or in the financial condition of suppliers could adversely
affect liquidity, results of operations and financial position.
Access to materials, parts and supplies is dependent upon close relationships with suppliers and the ability
to purchase products from the principal suppliers on competitive terms. The Company does not enter into
long-term supply contracts with these suppliers, and has no current plans to do so in the future. These
suppliers are not required to sell to the Company and are free to change the prices and other terms. Any
deterioration or change in the relationships with or in the financial condition of the Company’s significant
suppliers could have an adverse impact on its ability to procure materials and parts necessary to produce
products for sale and distribution. If any of the significant suppliers terminated or significantly curtailed its
relationship with the Company or ceased operations, the Company would be forced to expand relationships
with other suppliers, seek out new relationships with new suppliers or risk a loss in market share due to
diminished product offerings and availability. Any change in one or more of these suppliers’ willingness or
ability to continue to supply the Company with their products could have an adverse impact on the
Company’s liquidity, results of operations and financial position.
Disruptions to our supply chain could have an adverse impact on our operations.
Many of the Company’s products are manufactured outside the United States. Those products must be
transported by third parties over large geographic distances. Delays in the shipment or delivery of our
products could occur due to work stoppages, port strikes, lack of availability of transportation, and other
factors beyond the Company’s control. The Company currently is experiencing increased shipping costs for
products obtained from overseas due to a shortage of available shipping containers. If the Company
experiences any significant disruption in its supply chain or sharply rising costs, for any reason, such as the
ongoing coronavirus pandemic, the Company may be unable to satisfy customer demand for our products
resulting in lost sales. Such delays and increased costs could impair our ability to timely and efficiently
deliver our products, and could adversely impact our operating results.
Intellectual property rights are valuable, and any inability to protect them could reduce the value of
products.
The Company obtains patents, trademarks and copyrights for intellectual property, including its brand
names, which represent important assets to the Company. If the Company fails to adequately protect
intellectual property through patents, trademarks and copyrights, its intellectual property rights may be
misappropriated by others, invalidated or challenged, and our competitors could duplicate the Company’s
products or may otherwise limit any competitive design or manufacturing advantages. The Company
believes that success is likely to depend upon continued innovation, technical expertise, marketing skills,
branding, customer support and services rather than on legal protection of intellectual property rights.
However, the Company intends to aggressively assert its intellectual property rights when necessary.
The expiration or termination of our material trademarks, brand names and licensing agreements could
have a material adverse effect on the Company’s business.
The Company has invested substantial resources in developing and marketing the Company’s brands and
products over many years. The expiration or termination of one or more of the Company’s material
trademarks, patents or licensing agreements could result in the loss of such intellectual property. In such
event, the Company may not be able to recoup its investments in, and continue to benefit from the affected
brand names or products. The loss of such intellectual property and related rights could have a material
adverse effect on the Company.
9
Breaches of data or technology security could damage the Company’s reputation, cause the Company to
incur additional expense, expose the Company to litigation, and adversely affect the Company’s business.
A breach of our data or technology security could result in an unauthorized transfer or release of Company
proprietary, employee, customer and other Company related information, or the loss of valuable business
data or technology, that could cause a disruption in our business. Hackers are increasingly sophisticated and
operate large scale and complex cyber security attacks. In the event of such an attack, we may expend
significant capital and other resources to protect against, respond to, and/or alleviate problems caused by a
breach. Such an event could also result in unwanted negative media attention, damage to the Company’s
reputation, damage to our customers, and result in lost sales and lawsuits. The Company also must comply
with increasingly complex regulatory cyber security and privacy standards, which can be costly and
negatively impact the Company’s profitability.
Unauthorized disclosure of sensitive or confidential customer information could harm the Company’s
business and its standing with its customers.
Through sales and marketing activities, the Company collects and stores certain information that customers
provide to purchase products or services or otherwise communicate and interact with the Company. Despite
instituted safeguards for the protection of such information, the Company cannot be certain that all of its
systems are entirely free from vulnerability to attack. Computer hackers may attempt to penetrate the
Company’s network security and, if successful, misappropriate confidential customer or business
information. In addition, an employee, a contractor or other third party with whom the Company does
business may attempt to circumvent the Company’s security measures in order to obtain such information
or inadvertently cause a breach involving such information. Loss of customer or business information could
disrupt operations, damage the Company’s reputation, and expose the Company to claims from customers,
financial institutions, payment card associations and other persons, any of which could have an adverse
effect on the Company’s business, results of operations and financial condition. In addition, compliance with
tougher privacy and information security laws and standards may result in significant expense due to
increased investment in technology and the development of new operational processes.
Cybersecurity breaches or other data security incidents could result in unauthorized access, theft,
modification, or destruction of Company assets, including bank accounts, intellectual property, and
confidential information, which may adversely affect the Company’s business.
The Company has experienced an increase in cybersecurity threats and attempts to breach the Company’s
security networks. The techniques used to conduct cyber attacks, including phishing, hacking, and malicious
software, are increasingly sophisticated and the sources and targets of these attacks change frequently. Cyber
attacks may not be recognized until after attacks have been launched successfully or have been in place for
a period of time. From time to time, the Company has been, and likely will continue to be, the target of cyber
and other security threats. To the Company’s knowledge, the Company has not experienced a significant
cybersecurity breach that had a material impact on the Company’s business or operating results, although
there can be no assurance that the Company’s efforts to maintain the security of the Company’s information
technology networks and related systems will be effective or that attempted security breaches will not be
damaging in the future. The Company maintains cyber liability insurances, however, such insurance may
not be sufficient to cover the financial, legal, business or reputational losses that could result from a breach
of the Company’s systems.
10
The market price of the Company’s common stock is likely to be highly volatile as the stock market in
general can be highly volatile.
The public trading of the Company’s common stock is based on many factors which could cause fluctuation
in the Company’s stock price. These factors may include, among other things:
General economic and market conditions;
Actual or anticipated variations in quarterly operating results;
Limited research coverage by securities analysts;
Relatively low market capitalization resulting in low trading volume in the Company’s stock;
If securities analysts provide coverage, our inability to meet or exceed securities analysts' estimates
or expectations;
Conditions or trends in the Company’s industries;
Changes in the market valuations of other companies in the Company’s industries;
Announcements by the Company or the Company’s competitors of significant acquisitions, strategic
partnerships, divestitures, joint ventures or other strategic initiatives;
Capital commitments;
Additions or departures of key personnel;
Tariffs, quotas, customs, import and export restrictions, and other trade barriers;
Global events, including acts or threats of war or terrorism, international conflicts, political
instability, natural disasters, and public health crises;
Sales and repurchases of the Company’s common stock; and
The ability to maintain listing of the Company’s common stock on the NASDAQ Global Market.
Many of these factors are beyond the Company’s control. These factors may cause the market price of the
Company’s common stock to decline, regardless of operating performance.
If we are unable to pay quarterly dividends at intended levels, our reputation and stock price may be
harmed.
Our quarterly cash dividend is currently $0.14 per common share. The dividend program requires the use of
a portion of our cash flow. Our ability to pay dividends will depend on our ability to generate sufficient cash
flows from operations in the future. This ability may be subject to certain economic, financial, competitive
and other factors that are beyond our control. Our Board of Directors (Board) may, at its discretion, increase
or decrease the intended level of dividends or entirely discontinue the payment of dividends at any time.
Any failure to pay dividends after we have announced our intention to do so may negatively impact our
reputation, investor confidence in us and negatively impact our stock price.
RISKS OF INTERNATIONAL OPERATIONS
International operations expose the Company to the unique risks inherent in foreign operations.
The Company has manufacturing operations in Mexico and sources many of its products and raw materials
from China and other Asian countries. Foreign operations encounter risks similar to those faced by U.S.
operations, as well as risks inherent in foreign operations, such as local customs and regulatory constraints,
control over product quality and content, foreign trade policies, competitive conditions, foreign currency
fluctuations and unstable political and economic conditions. Additionally, our international operations may
be adversely affected by political events, domestic or international terrorist events and hostilities,
complications due to natural, nuclear or other disasters, or public health crises. For instance, recent
government changes in Mexico have yielded requirements that call for increases in minimum wages at the
border as well as the interior of Mexico. In addition, beginning in 2020 and continuing into 2021, the ongoing
coronavirus outbreak has resulted in increased travel restrictions and extended shutdown of certain
businesses in Mexico, China and other countries in which the Company does business or has suppliers. These
or any further political or governmental developments or health concerns in locations in which the Company
11
conducts business could result in social, economic and labor instability. These uncertainties could have a
material adverse effect on the continuity of the Company’s operations and on the Company’s income and
profitability.
The Company’s business is subject to risks associated with sourcing and manufacturing outside of the
United States, and risks arising from tariffs and/or international trade wars.
The Company imports many of its raw materials and finished goods from countries outside of the United
States, including but not limited to China and Mexico. The Company’s ability to import products in a timely
and cost-effective manner may be affected by conditions, such as public health crises, labor disputes,
political unrest, and security requirements of the U.S. and other countries that could delay importation of
products or require us to locate alternative sources. Our import operations are subject to complex custom
laws, regulations, tax requirements, and trade regulations, such as tariffs set by governments through mutual
agreements or bilateral actions. U.S. tariffs on goods imported into the U.S., particularly goods from China,
have increased the cost of goods purchased by the Company and the ongoing adverse effects of such tariffs
potentially could become even more severe. The overall effect of these risks is that our costs may increase,
which in turn may result in lower profitability if we are unable to offset such increases through higher prices,
and/or that we may suffer a decline in sales if our customers do not accept price increases.
The United States, Mexico and Canada have entered into the United States-Mexico-Canada Agreement
("USMCA"), the successor agreement to the North American Free Trade Agreement ("NAFTA") which
became effective on July 1, 2020. In January 2020, the United States entered into a "Phase 1" trade agreement
with China. However, it remains unclear what the U.S. administration or foreign governments, including
China, specifically will or will not do with respect to tariffs, the USMCA or other international trade
agreements and policies. A trade war, other governmental action related to tariffs or international trade
agreements, changes in U.S. social, political, regulatory and economic conditions or in laws and policies
governing foreign trade, manufacturing, development and investment in the territories and countries where
we currently manufacture and sell products or any resulting negative sentiments towards the United States
could materially adversely affect the Company’s business, financial condition, operating results and cash
flows.
Substantially all of our import operations are subject to customs and tax requirements as well as trade
regulations, such as tariffs and quotas set by governments through mutual agreements or bilateral actions.
In addition, the countries in which our products are manufactured or imported may from time to time
impose additional quotas, duties, tariffs or other restrictions on our imports or adversely modify existing
restrictions. Adverse changes in these import costs and restrictions, or our suppliers' failure to comply with
customs regulations or similar laws, could harm our business. In this regard, possible changes in U.S.
policies and the potential effects of Brexit have introduced greater uncertainty with respect to future tax
and trade regulations. Changes in tax policy or trade regulations, such as the disallowance of tax
deductions on imported merchandise or the imposition of new tariffs on imported products, could have a
material adverse effect on our business and results of operations.
Our operations are also subject to the effects of international trade agreements and regulations that impose
requirements that could adversely affect our business, such as setting quotas on products that may be
imported from a particular country.
The Company could be adversely affected by changes in currency exchange rates and/or the value of the
United States dollar.
The Company is exposed to risks related to the effects of changes in foreign currency exchange rates and
the value of the United States dollar. Changes in currency exchange rates and the value of the United States
dollar can have a significant impact on earnings. While the Company carefully watches fluctuations in
currency exchange rates, these types of changes can have material adverse effects on the Company’s
business, results of operations and financial condition.
12
COVID-19 PANDEMIC RISKS
The COVID-19 pandemic currently is affecting the Company’s business. Additional factors could
exacerbate such consequences and/or cause materially adverse effects.
While the COVID-19 pandemic did not materially adversely affect the Company’s financial results and
business operations in the Company’s fiscal year ended December 26, 2020, economic and health conditions
in the United States and across most of the globe changed rapidly during 2020. In the short-term, demand
for the Company’s products has increased, notably in our fitness products and also in basketball, playground,
and indoor/outdoor games. Some of the increase in demand is likely due to consumers being required or
encouraged by governmental authorities to stay at home, schools being closed, and employers requiring
employees to work remotely and/or implementing furloughs and layoffs. Such increased demand may not
continue and/or demand may decrease from historical levels depending on the duration and severity of the
COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume,
additional governmental actions that may be taken and/or extensions of time for restrictions that have been
imposed to date, and numerous other uncertainties. During 2020, such restrictions at times caused the
Company to shut down its Mexico production facilities, to limit its Gainesville, Florida facility to conduct
only shipping and receiving operations but no manufacturing operations, to require all office staff to work
remotely, and to change staffing of the Company’s distribution center in Evansville, Indiana. While the
Company has largely resumed normal operations in such facilities subject to increased health protocols
having been implemented, most of the Company’s office staff continue to work remotely. The ongoing
pandemic may result in future business and manufacturing disruption, inventory shortages, delivery delays,
and reduced sales and operations, any of which could materially affect our business, financial condition, and
results of operations.
The ability of the Company’s employees to work may be significantly impacted by the coronavirus.
The Company’s employees are being affected by the COVID-19 pandemic. Virtually all of our office and
management personnel continue to work remotely. Travel restrictions imposed by the U.S. government and
of foreign countries, particularly China and Mexico have limited, or in some cases prohibited, normal
business travel relating to the Company’s internal operations and to our ongoing business relationships with
our customers and suppliers. The health of the Company’s workforce is of primary concern and the Company
may need to continue indefinitely existing precautionary measures, and possibly enact additional measures,
to help minimize the risk of our employees being exposed to the coronavirus. Further, our management team
continues to focus on mitigating the adverse effects of the COVID-19 pandemic, which has required and
will continue to require a large investment of time and resources across the entire Company, thereby
potentially diverting their attention from other priorities that existed prior to the outbreak of the pandemic.
If these conditions worsen, or last for an extended period of time, the Company’s ability to manage its
business may be impaired, and operational risks, cybersecurity risks and other risks facing the Company
even prior to the pandemic may be elevated.
The Company cannot predict the long-term impact of the COVID-19 pandemic on its customers,
suppliers, vendors, and other business partners.
The COVID-19 pandemic is affecting the Company’s customers, suppliers, vendors, and other business
partners, but the Company is not able to assess the full extent of the current impact nor predict the ultimate
consequences that will result therefrom. Although Amazon, the Company’s largest customer, has performed
well throughout the pandemic, it remains to be seen if consumer demand for online purchasers will continue
unabated and/or permanently change the way in which consumers make purchasing decisions. Dick’s
Sporting Goods, the Company’s second largest customer, and many of the Company’s other mass merchant
customers have experienced increased online orders and reduced foot traffic into their physical stores. In
general, many retailers are experiencing severe financial difficulties and bankruptcies. If those trends
continue for the long-term, the Company’s strategies in distributing and marketing its products will need to
change accordingly. The Company’s planning and efforts in recent years to position itself to ship many
goods purchased on Amazon or other online sources direct to consumers and for the Company to make direct
13
to consumer online sales may mitigate some, but not all, of the adverse effects resulting from changes in the
businesses of the Company’s resellers. If the Company’s sales channels are substantially impaired for an
extended period of time or fail to adapt to changing consumer preferences, the Company’s sales will be
materially reduced.
The ultimate magnitude of the COVID-19 pandemic is unpredictable, volatile and uncertain.
The COVID-19 pandemic has created significant public health concerns and economic disruption and may
continue to do so indefinitely. While the Company experienced substantial increases in sales and order
activity in its 2020 fiscal year, due in part to increased consumer demand for home recreational products
during the pandemic, we cannot predict the full impact of the pandemic nor can we predict with any certainty
whether and to what degree the disruptions caused by the pandemic and reactions thereto will continue.
Much is unknown, including the duration and severity of the pandemic, the amount of time it may take for
more normalized economic activity to resume, future government actions that may be taken, the effects on
the Company’s customers and suppliers, including their ability to pay for our products, the effects on
operations of the Company’s logistics providers, and the impact on the ability of the Company’s employees
to work and travel. Continuing and potential new governmental actions may further cause the Company to
modify its business operations or otherwise adversely impact the Company. While the Company has taken
numerous steps to mitigate the potential negative effects of the COVID-19 pandemic, there can be no
assurance that the Company will be able to respond quickly enough or appropriately to circumstances that
may change rapidly and/or that are outside of our control. The long-term impact of the pandemic on the
Company’s business is unknown and ultimately could result in material adverse effects on the Company’s
business, financial performance and results of operations.
LEGAL, TAX, ACCOUNTING AND REGULATORY RISKS
The Company is subject to risks associated with laws and regulations related to health, safety and
environmental protection.
Products, and the production and distribution of products, are subject to a variety of laws and regulations
relating to health, safety and environmental protection. Laws and regulations relating to health, safety and
environmental protection have been passed in several jurisdictions in which the Company operates in the
United States and abroad. Although the Company does not anticipate any material adverse effects based on
the nature of operations and the thrust of such laws, there is no assurance such existing laws or future laws
will not have a material adverse effect on the Company’s business, results of operations and financial
condition.
New laws, policies, regulations, rulemaking and oversight, as well as changes to those currently in effect,
could adversely impact our earnings, cash flows and operations.
Our assets and operations are subject to regulation and oversight by federal, state, and local regulatory
authorities. Legislative changes, as well as regulatory actions taken by these agencies, have the potential to
adversely affect our profitability. In addition, a certain degree of regulatory uncertainty is created by the U.S.
political climate. It remains unclear specifically what the changes in presidential administration and
Congress may do with respect to future policies and regulations that may affect us. Regulation affects many
aspects of our business and extends to such matters as (i) federal, state, and local taxation; (ii) rates (which
include tax, commodity, surcharges and fuel); (iii) the integrity, safety and security of facilities and
operations; (iv) the acquisition of other businesses; (v) the acquisition, extension, disposition or
abandonment of services or facilities; (vi) reporting and information requirements; and (vii) the maintenance
of accounts and records.
14
The preparation of the Company’s financial statements requires the use of estimates that may vary from
actual results.
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires management to make significant estimates that may affect financial
statements. Due to the inherent nature of making estimates, actual results may vary substantially from such
estimates, which could materially adversely affect the Company’s business, results of operations and
financial condition. For more information on the Company’s critical accounting estimates, please see the
Critical Accounting Estimates section of this Form 10-K.
Changes in accounting standards could impact reported earnings and financial condition.
The accounting standard setters, including the Financial Accounting Standards Board and the Securities and
Exchange Commission, periodically change the financial accounting and reporting standards that govern the
preparation of the Company’s consolidated financial statements. These changes can be hard to predict and
apply and can materially affect how the Company records and reports its financial condition and results of
operations. In some cases, the Company could be required to apply a new or revised standard retrospectively,
which may result in the restatement of prior period financial statements.
MACROECONOMIC AND GENERAL BUSINESS RISKS
Operating results may be impacted by changes in the economy that influence business and consumer
spending.
Operating results are directly impacted by the health of the North American and to a lesser extent, European
and Asian economies. We cannot predict how robust the economy will be or whether or not it will be
sustained. If economic recovery is slow to occur, or if the economy experiences a prolonged period of
decelerating or negative growth, the Company’s results of operations may be negatively impacted. In
general, the Company’s sales depend on discretionary spending by consumers. Business and financial
performance may be adversely affected by current and future economic conditions, including unemployment
levels, energy costs, interest rates, recession, inflation, the impact of natural disasters and terrorist activities,
public health crisis, and other matters that influence business and consumer spending.
Fluctuation in economic conditions could prevent the Company from accurately forecasting demand for
its products which could adversely affect its operating results or market share.
Fluctuation in economic conditions and market instability in the United States and globally makes it difficult
for the Company, customers and suppliers to accurately forecast future product demand trends, which could
cause the Company to produce excess products that can increase inventory carrying costs and result in
obsolete inventory. Alternatively, this forecasting difficulty could cause a shortage of products, or materials
used in products, that could result in an inability to satisfy demand for products and a loss of market share.
Failure to sustain a continuing economic recovery in the United States and elsewhere could have a
substantial adverse effect on our business.
Our business is tied to general economic and industry conditions as demand for sporting goods depends
largely on the strength of the economy, employment levels, consumer confidence levels and the availability
and cost of credit. These factors have had and could continue to have a substantial impact on our business.
Certain political developments in recent years have provided increased economic uncertainty. The United
Kingdom formally exited the European Union on January 31, 2020 (“Brexit”), and entered into a new trade
agreement with the European Union on December 24, 2020. The United Kingdom may set its own trade
policies with countries such as the United States, Australia and New Zealand that currently do not have free
trade agreements with the European Union. Although the Company may not be directly impacted by Brexit,
these and future trade deals could subject the rest of the world to tariffs and duties set by the World Trade
15
Organization, potentially resulting in higher import costs on the Company’s products and raw materials. In
addition, political conflicts in the U.S. could result in economic and trade policy actions that would impact
economic conditions in various countries, the cost of importing into the U.S. and the competitive landscape
of our customers, suppliers and competitors.
Adverse global economic conditions could also cause our customers and suppliers to experience severe
economic constraints in the future, including bankruptcy, which could have a material adverse impact on
our financial position and results of operations.
Quarterly operating results are subject to fluctuation.
Operating results have fluctuated from quarter to quarter in the past, and the Company expects that they will
continue to do so in the future. Factors that could cause these quarterly fluctuations include the following:
international, national and local general economic and market conditions; the size and growth of the overall
sporting goods markets; intense competition among manufacturers, marketers, distributors and sellers of
products; demographic changes; changes in consumer preferences; popularity of particular designs,
categories of products and sports; seasonal demand for products; adverse weather conditions that may create
fluctuations in demand for certain of our products; the size, timing and mix of purchases of products;
fluctuations and difficulty in forecasting operating results; ability to sustain, manage or forecast growth and
inventories; new product development and introduction; ability to secure and protect trademarks, patents and
other intellectual property; performance and reliability of products; customer service; the loss of significant
customers or suppliers; dependence on distributors; business disruptions; disruptions or delays in our supply
chain, including potential disruptions or delays arising from political unrest, war, labor strikes, natural
disasters, and public heath crises such as the coronavirus pandemic; increased costs of freight and
transportation to meet delivery deadlines; changes in business strategy or development plans; general risks
associated with doing business outside the United States, including, without limitation: exchange rates,
import duties, tariffs, quotas and political and economic instability; changes in government regulations; any
liability and other claims asserted against the Company; ability to attract and retain qualified personnel; and
other factors referenced or incorporated by reference in this Form 10-K and any other filings with the
Securities and Exchange Commission.
Terrorist attacks, acts of war, natural disasters, and public health crises may seriously harm the
Company’s business.
Among the chief uncertainties facing the nation and the world and, as a result, our business, is the instability
and conflict in the Middle East and uncertainties regarding North Korea, Russia, China and other Asian and
European countries. Obviously, no one can predict with certainty what the overall economic impact will be
as a result of these circumstances. Terrorist attacks may cause damage or disruption to the Company,
employees, facilities and customers, which could significantly impact net sales, costs and expenses and
financial condition. The potential for future terrorist attacks, the national and international responses to
terrorist attacks, and other acts of war and hostility may cause greater uncertainty and cause business to
suffer in ways the Company currently cannot predict.
In addition, any natural disaster or other serious disruption to one of the Company’s manufacturing or
distribution sites due to fire, tornado, earthquake or other natural disasters in countries where the Company
conducts business, or political unrest, war, labor strikes, work stoppages or public health crises, such as
outbreaks of the coronavirus in countries where our suppliers are located could result in the disruption of the
Company’s shipments and supply chain of products and raw materials. Although we have continued to obtain
product shipments from China notwithstanding the coronavirus pandemic, product shipments from China
may be delayed in the future. Although we are monitoring the situation and have adapted our ordering
practices in our attempt to minimize the effects of potential disruptions, the Company cannot predict
whether, for how long, or the extent to which the pandemic may disrupt the Company’s supply chain,
manufacturing operations, and/or product shipments. Any significant disruption resulting from similar
events on a large scale or over a prolonged period could cause significant delays until the Company would
be able to resume normal operations or shift to other third party suppliers, if needed. There can be no
16
assurance that alternative capacity could be obtained on favorable terms, if at all, and could negatively affect
the Company’s sales and profitability.
These risks are not exhaustive.
Other sections of this Form 10-K may include additional factors which could adversely impact the
Company’s business and financial performance. Moreover, the Company operates in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and it is not possible for
management to predict all risk factors, nor can the Company assess the impact of all factors on business or
the extent to which any factor, or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Given these risks and uncertainties, investors should not
place undue reliance on forward-looking statements as a prediction of actual results.
ITEM 1B—UNRESOLVED STAFF COMMENTS
None.
ITEM 2—PROPERTIES
At December 26, 2020, the Company owned or operated from the following locations:
Location
Evansville, Indiana, USA
Rosarito, Mexico
Gainesville, Florida, USA
Olney, Illinois, USA
Orlando, Florida, USA
Square
Footage
Owned or
Leased
Use
771,000
174,700
154,200
108,500
50,018
Owned
Distribution; sales and marketing;
engineering; administration
Manufacturing and distribution
Owned
Manufacturing and distribution
Owned
Leased
Manufacturing and distribution
Leased Marketing; manufacturing and
Orlando, Florida, USA
Eagan, MN, USA
10,587
41,600
Leased
Leased
Shanghai, China
6,674
Leased
distribution
Manufacturing and distribution
Distribution; sales and marketing;
engineering; administration
Sales and sourcing
The Company believes that its facilities are in satisfactory and suitable condition for their respective operations.
The Company also believes that it is in material compliance with all applicable environmental regulations and
is not subject to any proceeding by any federal, state or local authorities regarding such matters. The Company
provides regular maintenance and service on its plants and machinery as required.
ITEM 3—LEGAL PROCEEDINGS
The Company is involved in litigation arising in the normal course of its business, but the Company does not
believe that the disposition or ultimate resolution of such claims or lawsuits will have a material adverse effect
on the business or financial condition of the Company.
The Company is not aware of any probable or levied penalties against the Company relating to the American
Jobs Creation Act.
ITEM 4—MINE SAFETY DISCLOSURES
Not applicable.
17
Part II
ITEM
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
5—MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED
The Company's common stock is traded under the symbol “ESCA” on the NASDAQ Global Market.
As of February 15, 2021, there were approximately 109 stockholders of record of our common stock, although
there is a significantly larger number of beneficial owners of our common stock.
ISSUER PURCHASES OF EQUITY SECURITIES
(a) Total
Number of
Shares (or
Units)
Purchased
(b) Average
Price Paid per
Share (or Unit)
(c) Total
Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d) Maximum
Number (or
Approximate
Dollar Value) of
Shares (or Units)
that May Yet Be
Purchased Under
the Plans or
Programs
1,397,490
$9.28
1,397,490
$ 10,000,330
None
209,831
54,193
None
$20.67
$19.87
No Change
1,607,321
1,661,514
No Change
$ 5,664,110
$ 14,586,649
Period
Share purchases prior to
10/3/2020 under the
current repurchase
program.
Fourth quarter purchases:
10/4/2020 – 10/31/2020
11/1/2020 – 11/28/2020
11/29/2020 – 12/26/2020
Total share purchases under
the current program
1,661,514
$11.06
1,661,514
$ 14,586,649
The Company has one stock repurchase program which was established in February 2003 by the Board of
Directors and which initially authorized management to expend up to $3,000,000 to repurchase shares on
the open market as well as in private negotiated transactions. In February 2005, February 2006, August 2007
and February 2008 the Board of Directors increased the remaining balance on this plan to its original level
of $3,000,000. In September 2019, the Board of Directors increased the stock repurchase program from
$3,000,000 to $5,000,000. In December 2020, the Board of Directors increased the stock repurchase program
to $15,000,000. From its inception date through December 26, 2020, the Company has repurchased
1,661,514 shares of its common stock under this repurchase program for an aggregate price of $18,379,289.
The repurchase program has no termination date and there have been no share repurchases that were not part
of a publicly announced program.
ITEM 6—SELECTED FINANCIAL DATA [Not Required]
ITEM 7—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following section should be read in conjunction with Item 1: Business; Item 1A: Risk Factors; and Item 8:
Financial Statements and Supplementary Data.
18
Forward-Looking Statements
This report contains forward-looking statements relating to present or future trends or factors that are subject
to risks and uncertainties. These risks include, but are not limited to: specific and overall impacts of the
COVID-19 global pandemic on Escalade’s financial condition and results of operations; Escalade’s plans and
expectations surrounding the transition to its new Chief Executive Officer and all potential related effects and
consequences; the impact of competitive products and pricing; product demand and market acceptance; new
product development; Escalade’s ability to achieve its business objectives, especially with respect to its
Sporting Goods business on which it has chosen to focus; Escalade’s ability to successfully achieve the
anticipated results of strategic transactions, including the integration of the operations of acquired assets and
businesses and of divestitures or discontinuances of certain operations, assets, brands, and products; the
continuation and development of key customer, supplier, licensing and other business relationships; Escalade’s
ability to develop and implement our own direct to consumer e-commerce distribution channel; Escalade’s
ability to successfully negotiate the shifting retail environment and changes in consumer buying habits; the
financial health of our customers; disruptions or delays in our business operations, including without limitation
disruptions or delays in our supply chain, arising from political unrest, war, labor strikes, natural disasters,
public health crises such as the coronavirus pandemic, and other events and circumstances beyond our control;
Escalade’s ability to control costs; Escalade’s ability to successfully implement actions to lessen the potential
impacts of tariffs and other trade restrictions applicable to our products and raw materials, including impacts
on the costs of producing our goods, importing products and materials into our markets for sale, and on the
pricing of our products; general economic conditions; fluctuation in operating results; changes in foreign
currency exchange rates; changes in the securities markets; Escalade’s ability to obtain financing and to
maintain compliance with the terms of such financing; the availability, integration and effective operation of
information systems and other technology, and the potential interruption of such systems or technology; risks
related to data security of privacy breaches; and other risks detailed from time to time in Escalade’s filings with
the Securities and Exchange Commission. Escalade’s future financial performance could differ materially from
the expectations of management contained herein. Escalade undertakes no obligation to release revisions to
these forward-looking statements after the date of this report.
Overview
Escalade, Incorporated (Escalade, the Company, we, us or our) is focused on growing its Sporting Goods
segment through organic growth of existing categories, strategic acquisitions, and new product development.
The Sporting Goods segment competes in a variety of categories including basketball goals, archery, indoor
and outdoor recreation and fitness products. Strong brands and on-going investment in product development
provide a solid foundation for building customer loyalty and continued growth.
Within the sporting goods industry, the Company has successfully built a robust market presence in several
niche markets. This strategy is heavily dependent on expanding our customer base, barriers to entry, strong
brands, excellent customer service and a commitment to innovation. A key strategic advantage is the
Company’s established relationships with major customers that allow the Company to bring new products to
market in a cost-effective manner while maintaining a diversified portfolio of products to meet the demands of
consumers. In addition to strategic customer relations, the Company has substantial manufacturing and import
experience that enable it to be a reliable and low-cost supplier.
To enhance growth opportunities, the Company has focused on promoting new product innovation and
development and brand marketing. In addition, the Company has embarked on a strategy of acquiring
companies or product lines that complement or expand the Company's existing product lines or provide
expansion into new or emerging categories in sporting goods. A key objective is the acquisition of product
lines with barriers to entry that the Company can take to market through its established distribution channels
or through new market channels. Significant synergies are achieved through assimilation of acquired product
lines into the existing Company structure.
19
In 2018, the Company acquired Victory Tailgate, LLC, a brand known for its premium licensed and custom
tailgating games. In October 2020, the Company acquired the assets of the billiard table, game room, and
recreational product lines of American Heritage Billiards, including the related intellectual property. In
December 2020, the Company acquired substantially all of the business and assets of Revel Match LLC, dba
RAVE Sports, a brand known for its innovative and high-quality water recreation products. These and other
acquisitions strengthen the Company’s leadership in various product categories, while providing exciting new
opportunities within the growing water sports market. The Company also sometimes divests or discontinues
certain operations, assets, and products that do not perform to the Company's expectations or no longer fit with
the Company's strategic objectives.
Management believes that key indicators in measuring the success of these strategies are revenue growth,
earnings growth, new product introductions, and the expansion of channels of distribution. The following table
sets forth the annual percentage change in revenues and net income over the past three years:
Net revenue
Sporting Goods
Total
Net income
Sporting Goods
Total
COVID-19 Pandemic
2020
2019
2018
51.6%
51.6%
293.9%
257.3%
2.7%
2.7%
(39.2%)
(64.5%)
(0.9%)
(0.9%)
14.4%
45.4%
The emergence of the coronavirus (COVID-19) around the world, and particularly in the United States and
China, presents significant risks to the Company, not all of which the Company is able to fully evaluate or even
to foresee at the current time. Economic and health conditions in the United States and across most of the globe
have changed rapidly since the end of the Company’s first quarter of 2020. In the short-term, demand for the
Company’s products has increased, notably in our fitness products, basketball, playground, and indoor/outdoor
games. Some of the increase in demand is likely due to consumers being required or encouraged by
governmental authorities to stay at home, schools being closed, and employers requiring employees to work
remotely and/or implementing furloughs and layoffs. Such increased demand may not continue and/or demand
may decrease from historical levels depending on the duration and severity of the COVID-19 pandemic, the
length of time it takes for normal economic and operating conditions to resume, additional governmental
actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and
numerous other uncertainties.
In addition, increased customer demand for certain products presents challenges for the Company to anticipate
and adjust inventory levels to meet such demand. So far, the Company has been able to obtain products from
its suppliers on a timely basis. To alleviate the risks of incurring product outages, the Company has accelerated
orders of certain products with a resulting increase in inventories. While the Company believes it is currently
in strong financial condition, a substantial decrease in customer demand and/or slower payments by the
Company’s mass merchants, specialty dealers and other customers could adversely affect the Company’s
liquidity.
The COVID-19 pandemic continued to affect the Company’s operations through the fourth quarter of 2020
and may continue to do so indefinitely thereafter. All of these factors may have far reaching impacts on the
Company’s business, operations, and financial results and conditions, directly and indirectly, including without
limitation impacts on the health of the Company’s management and employees, many of whom are still
working remotely, manufacturing, distribution, marketing and sales operations, customer and consumer
behaviors, and on the overall economy. The scope and nature of these impacts, most of which are beyond the
Company’s control, continue to evolve and the outcomes are uncertain.
20
Due to the above circumstances and as described generally in this Form 10-K, the Company’s results of
operations for the fiscal year ended December 26, 2020 are not necessarily indicative of the results to be
expected for fiscal year 2021. Management cannot predict the full impact of the COVID-19 pandemic on the
Company’s sales channels, supply chain, manufacturing and distribution nor to economic conditions generally,
including the effects on consumer spending. The ultimate extent of the effects of the COVID-19 pandemic on
the Company is highly uncertain and will depend on future developments, and such effects could exist for an
extended period of time even after the pandemic might end.
Results of Operations
The following schedule sets forth certain consolidated statement of operations data as a percentage of net
revenue:
Net revenue
Cost of products sold
Gross margin
Selling, administrative and general expenses
Amortization
Operating income
Revenue and Gross Margin
2020
100.0%
72.7%
27.3%
14.7%
0.5%
12.1%
2019
100.0%
76.5%
23.5%
17.6%
0.8%
5.1%
2018
100.0%
74.4%
25.6%
16.9%
0.8%
7.9%
Net revenue increased 51.6% in 2020 compared to 2019. The Company recognized increased sales across
nearly all product categories due to increased product placement and continued high demand, most notably in
our outdoor and fitness categories.
The overall gross margin percentage increased to 27.3% in 2020 compared with 23.5% in 2019. Margins
were favorably impacted by factory utilization, change in sales mix and supply chain improvements made
throughout the year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $40.3 million in 2020 compared to $31.6 million
in 2019, an increase of $8.7 million or 27.5%. The increase in SG&A is in line with the growth of the
business. SG&A as a percent of sales is 14.7% in 2020 compared with 17.6% in 2019.
Provision for Income Taxes
The effective tax rate for 2020 and 2019 was 21.2% and 18.8%, respectively. The 2020 effective tax rate is
slightly higher than the federal statutory rate primarily due to the impact of state taxes, with federal income
tax credits helping to offset the impact of the state taxes and lower the statutory rate. The 2019 effective tax
rate is lower than the statutory rate primarily due to the federal benefit of state income taxes and federal
income tax credits.
21
Sporting Goods
Net revenues, operating income, and net income for the Sporting Goods segment for the three years ended
December 26, 2020 were as follows:
In Thousands
2020
2019
2018
Net revenue
Operating income
Net income
$273,649
32,685
23,625
$180,541
8,611
5,997
$175,780
13,999
9,869
Net revenue increased 51.6% in 2020 compared to 2019.
The gross margin ratio in 2020 was 27.3% compared to 23.5% in 2019. The increase was primarily due to
factory utilization, changes in sales mix and supply chain improvements made throughout the year. Operating
income, as a percentage of net revenue, increased to 11.9% in 2020 compared to 4.8% in 2019.
Financial Condition and Liquidity
The current ratio, a basic measure of liquidity (current assets divided by current liabilities), for 2020 was 3.1,
compared to 4.8 in 2019. Receivable levels increased to $65.3 million in 2020 compared with $35.5 million in
2019 and net inventory increased $30.2 million to $72.5 million in 2020 from $42.3 million in 2019.
The Company’s working capital requirements are primarily funded through cash flows from operations and
revolving credit agreements with its bank. During 2020, the Company’s maximum borrowings under its
primary revolving credit lines and overdraft facility totaled $33.6 million compared to $10.5 million in 2019.
The overall effective interest rate in 2020 was 2.4% compared to the effective rate of 8.7% in 2019. Total long-
term debt at the end of the Company’s 2020 fiscal year was $30.1 million.
On January 21, 2019, the Company entered into an Amended and Restated Credit Agreement (“2019 Restated
Credit Agreement”) with its issuing bank, JPMorgan Chase Bank, N.A. (“Chase”), and the other lenders
identified in the 2019 Restated Credit Agreement (collectively, the “Lender”). Under the terms of the 2019
Restated Credit Agreement, the Lender has made available to the Company a senior revolving credit facility
with increased maximum availability of $50.0 million. The maturity date was extended to January 31, 2022.
In addition to the increased borrowing amount and extended maturity date, other significant changes reflected
in the 2019 Restated Credit Agreement include: more favorable interest rate provisions; increases in borrowing
base availability; releases of existing mortgages on the Company’s real property; and increasing to $25.0
million the total consideration that the Company may use for acquisitions without obtaining the Lender’s
consent, as long as no event of default exists.
On December 14, 2020, the Company and its wholly owned subsidiary, Indian Industries, Inc. (“Indian”)
entered into the Third Amendment dated as of December 14, 2020 (the “Third Amendment”) to the 2019
Restated Credit Agreement dated as of January 21, 2019 among the Company, Indian, each of their domestic
subsidiaries, and Chase, as Administrative Agent and as Lender. Under the terms of the Third Amendment,
the maximum availability under the senior revolving credit facility increased to $75.0 million, up from $50.0
million. The maturity date of the revolving credit facility was extended to December 14, 2023. In addition to
the increased borrowing amount and extended maturity date, other significant changes reflected in the Third
Amendment include: increases in borrowing base availability if the Company’s funded debt to EBITDA ratio
is less than 1.75 to 1:00; increasing to $30.0 million the total consideration that the Company may use for
acquisitions without obtaining the Lender’s consent, as long as no event of default exists; resetting the
maximum authorized stock repurchases to $15.0 million for the period commencing upon entry into the
Third Amendment; increasing the interest rate on borrowings by twenty five basis points; increasing the
unused facility fee by five basis points; and adding more specific provisions and procedures for replacement
of LIBOR if and when LIBOR would no longer be the benchmark for determining interest rates.
22
Cash flows from operations and revolving credit agreements were used to fund acquisitions, to pay shareholder
dividends, and to fund stock repurchases.
In 2021, the Company estimates capital expenditures to be approximately $7.0 million.
The Company believes that cash generated from its projected 2021 operations and the commitment of
borrowings from its primary lender will provide it with sufficient cash flows for its operations.
It is possible that if economic conditions deteriorate, this could have adverse effects on the Company’s ability
to operate profitably during fiscal year 2021. To the extent that occurs, management will pursue cost
reduction initiatives and consider realignment of its infrastructure in an effort to match the Company’s
overhead and cost structure with the sales level dictated by current market conditions.
New Accounting Pronouncements
Refer to Note 1 to the consolidated financial statements under the sub-heading “New Accounting
Pronouncements”.
Off Balance Sheet Financing Arrangements
The Company has no financing arrangements that are not recorded on the Company’s balance sheet.
Contractual Obligations
The following schedule summarizes the Company’s material contractual obligations as of December 26, 2020:
Amounts in thousands
Total
2021
2022 – 2023 2024 – 2025 Thereafter
Debt
Future interest payments
Operating leases
Minimum payments under
purchase, royalty and license
agreements
$30,073
1,796
1,768
6,494
$ -
718
971
942
$30,073
1,078
717
$ -
-
80
$ --
--
--
1,889
1,139
2,524
Total
$ 40,131
$ 2,631
$ 33,757
$ 1,219
$ 2,524
Critical Accounting Estimates
The methods, estimates and judgments used in applying the Company’s accounting policies have a significant
impact on the results reported in its financial statements. Some of these accounting policies require difficult
and subjective judgments, often as a result of the need to make estimates of matters that are inherently
uncertain. The most critical accounting estimates are described below and in the Notes to the Consolidated
Financial Statements.
Product Warranty
The Company provides limited warranties on certain of its products for varying periods. Generally, the
warranty periods range from 30 days to one year. However, some products carry extended warranties of three-
year, five-year, seven-year, ten-year, fifteen-year, and lifetime warranties. The Company records an accrued
liability and reduction in sales for estimated future warranty claims based upon historical experience and
management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior
years are recorded as an adjustment to the accrued liability and sales in the current year. To the extent there are
product defects in current products that are unknown to management and do not fall within historical defect
rates, the product warranty reserve could be understated and the Company could be required to accrue
additional product warranty costs thus negatively affecting gross margin.
23
Inventory Valuation Reserves
The Company evaluates inventory for obsolescence and excess quantities based on demand forecasts over
specified time frames, usually one year. The demand forecast is based on historical usage, sales forecasts and
current as well as anticipated market conditions. All amounts in excess of the demand forecast are deemed to
be potentially excess or obsolete and a reserve is established based on the anticipated net realizable value. To
the extent that demand forecasts are greater than actual demand and the Company fails to reduce manufacturing
output accordingly, the Company could be required to record additional inventory reserves which would have
a negative impact on gross margin.
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based upon a review of outstanding receivables,
historical collection information and existing economic conditions. Accounts receivable are ordinarily due
between 30 and 60 days after the issuance of the invoice. Accounts are considered delinquent when more than
90 days past due. Delinquent receivables are reserved or written off based on individual credit evaluation and
specific circumstances of the customer. To the extent that actual bad debt losses exceed the allowance recorded
by the Company, additional reserves would be required which would increase selling, general and
administrative costs.
Customer Allowances
Customer allowances are common practice in the industries in which the Company operates. These
agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are
accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and
accruals are adjusted, if necessary, as additional information becomes available.
Impairment of Goodwill
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances
indicate the carrying value of goodwill may not be recoverable, in accordance with guidance in Financial
Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 350, Intangibles – Goodwill
and Other. A qualitative assessment is first performed to determine if the fair value of the reporting unit is
"more likely than not" less than the carrying value. If so, we proceed to a quantitative assessment, in which the
fair value of the reporting unit is compared to its carrying value. If the carrying value of goodwill exceeds the
implied estimated fair value calculated, an impairment charge to current operations is recorded to reduce the
carrying value to the implied estimated fair value.
If a quantitative assessment of goodwill impairment testing is required, the Company establishes fair value by
using an income approach or a combination of a market approach and an income approach. The market
approach uses the guideline-companies method to estimate the fair value of a reporting unit based on reported
sales of publicly-held entities engaged in the same or a similar business as the reporting unit. The income
approach uses the discounted cash flow method to estimate the fair value of a reporting unit by calculating the
present value of the expected future cash flows of the reporting unit. The discount rate is based on a weighted
average cost of capital determined using publicly-available interest rate information on the valuation date and
data regarding equity, size and country-specific risk premiums/decrements compiled and published by a
commercial source. The Company uses assumptions about expected future operating performance in
determining estimates of those cash flows, which may differ from actual cash flows.
The Company has one reporting unit that is identical to our operating segment, Sporting Goods. Of the total
recorded goodwill of $32.7 million at December 26, 2020, the entire amount was allocated to the Escalade
Sports reporting unit. The results of the qualitative impairment assessment of the Escalade Sports reporting
unit indicated that it was not “more likely than not” that the fair value of the reporting unit was less than the
carrying value as of December 26, 2020.
24
Long Lived Assets
The Company evaluates the recoverability of certain long-lived assets whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Estimates of future cash flows used
to test recoverability of long-lived assets include separately identifiable undiscounted cash flows expected
to arise from the use and eventual disposition of the assets. Where estimated future cash flows are less than
the carrying value of the assets, impairment losses are recognized based on the amount by which the carrying
value exceeds the fair value of the assets.
Non-Marketable Equity Method Investment
The Company had a minority equity position in a company strategically related to the Company’s business,
but did not have control over this company. The accounting method employed was dependent on the level of
ownership and degree of influence the Company can exert on operations. Where the equity interest was less
than 20% and the degree of influence was not significant, the cost method of accounting is employed. Where
the equity interest was greater than 20% but not more than 50%, the equity method of accounting is utilized.
Under the equity method, the Company’s proportionate share of net income was recorded in equity in earnings
of affiliates on the consolidated statements of operations. The proportionate share of net income was $0.1
million in 2018. Total cash dividends received from this equity investment amounted to $2,323 thousand in
2018. On May 17, 2018, the company completed the sale of its 50% interest for $33.7 million, resulting in a
gain on sale of $13.0 million. In conjunction with the sale, the Company entered into a new license agreement
with Stiga for the licensing rights to manufacture, market, promote, sell and distribute Stiga-branded table
tennis hobby products in the United States, Mexico and Canada. The Company has had the licensing rights for
such products since 1995 pursuant to an existing license agreement that expired December 31, 2018. The new
license agreement went into effect on January 1, 2019.
Effect of Inflation
The Company cannot accurately determine the precise effects of inflation. The Company attempts to pass on
increased costs and expenses through price increases when necessary. The Company is working on reducing
expenses; improving manufacturing technologies; and redesigning products to keep these costs under control.
Capital Expenditures
As of December 26, 2020, the Company had no material commitments for capital expenditures. In 2021, the
Company estimates capital expenditures to be approximately $7.0 million.
ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK [Not
Required]
ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by Item 8 are set forth in Part IV, Item 15.
ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
25
ITEM 9A —CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Escalade maintains disclosure controls and procedures that are designed to ensure that information required to
be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized, and reported within
the time periods specified in the SEC’s rules and forms, and that such information is accumulated and
communicated to the Company’s management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition
of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and procedures, no matter how
well designed and operated, could provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. On December 4, 2020, the Company acquired substantially
all of the business and assets of Revel Match LLC, dba RAVE Sports. The Company is in the process of
evaluating the existing controls and procedures of the acquired business and integrating them into our system
of internal control over financial reporting. In accordance with guidance provided by SEC Staff permitting the
exclusion of an acquired business from management’s assessment of the effectiveness of internal control over
financial reporting for the year in which the business was acquired, we have excluded from the following
assessment of the Company’s disclosure controls and procedures the disclosure controls and procedures of
RAVE Sports, and we have excluded RAVE Sports from our assessment of the effectiveness of internal control
over financial reporting as of December 26, 2020.
The Company carried out an evaluation, under the supervision and with the participation of the Company’s
management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of
the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief
Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
Management’s Report on Internal Control over Financial Reporting
Escalade’s management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. Escalade’s internal control system was designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. Internal control over financial reporting of the
Company includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and
directors of the Company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s
financial statements.
All internal control systems, no matter how well designed, have inherent limitations, including the possibility
of human error or circumvention through collusion or improper overriding of controls. Therefore, even those
internal control systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation. Further, because of changes in conditions, the effectiveness of internal
control may vary over time.
26
The management of Escalade assessed the effectiveness of the Company’s internal control over financial
reporting as of December 26, 2020. In making its assessment of internal control over financial reporting,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control – Integrated Framework (published in 2013) and implemented a
process to monitor and assess both the design and operating effectiveness of the Company’s internal controls.
Based on this assessment, management believes that, as of December 26, 2020, the Company’s internal control
over financial reporting was effective.
This annual report on Form 10-K includes an attestation report of the Company’s registered public accounting
firm regarding internal control over financial reporting. Management’s report regarding internal control over
financial reporting is subject to attestation by the Company’s registered public accounting firm pursuant to
rules of the Securities and Exchange Commission. In addition, this report by management regarding internal
control over financial reporting is specifically not incorporated by reference into any other filing by the
Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
/s/ Walter P. Glazer, Jr., Interim Chief Executive Officer /s/ Stephen R. Wawrin, Chief Financial Officer
Changes in Internal Control over Financial Reporting
Management of the Company has evaluated, with the participation of the Company’s Chief Executive
Officer and Chief Financial Officer, changes in the Company’s internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the fourth quarter of 2020. In
connection with such evaluation, there have been no changes to the Company’s internal control over
financial reporting that occurred since the beginning of the Company’s fourth quarter of 2020 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM 9B — OTHER INFORMATION
None.
27
Part III
ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required under this item with respect to Directors and Executive Officers is contained in the
registrant's Proxy Statement relating to its annual meeting of stockholders scheduled to be held on April 30,
2021 under the captions “Certain Beneficial Owners,” “Election of Directors,” “Executive Officers of the
Registrant,” “Board of Directors, Its Committees, Meetings and Functions,” and “Delinquent Section 16(a)
Reports,” if applicable, and is incorporated herein by reference.
ITEM 11— EXECUTIVE COMPENSATION
Information required under this item is contained in the registrant's Proxy Statement relating to its annual
meeting of stockholders scheduled to be held on April 30, 2021 under the captions “Compensation Discussion
and Analysis,” “Compensation Committee Interlocks and Insider Participation,” “Report of the Compensation
Committee” and “Executive Compensation” and is incorporated herein by reference, except that the
information required by Item 407(e)(5) of Regulation S-K which appears under the caption “Report of the
Compensation Committee” is specifically not incorporated by reference into this Form 10-K or into any other
filing by the registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934.
ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Except for the information required by Item 201(d) of Regulation S-K, which is included below, information
required by this item is contained in the registrant’s proxy statement relating to its annual meeting of
stockholders scheduled to be held on April 30, 2021 under the captions “Certain Beneficial Owners” and
“Election of Directors” and is incorporated herein by reference.
Equity Compensation Plan Information
Plan Category
Equity compensation plans approved by
security holders (1)
Equity compensation plans not approved by
security holders
Total
Number of
Securities to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights (2)
Weighted-Average
Exercise Price
of Outstanding Options,
Warrants
and Rights
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
10,000
--
10,000
$ 14.39
--
1,196,059
--
1,196,059
(1) These plans include the Escalade, Incorporated 2007 Incentive Plan, including an additional 1,500,000
shares added under a 2012 amendment to the Escalade 2007 Incentive Plan, and the Escalade, Incorporated
2017 Incentive Plan. All plans were approved by stockholders at Escalade’s Annual Meetings of Stockholders
in 2007, 2012, and 2017, respectively.
(2) Does not include 244,076 shares subject to outstanding, unvested restricted stock awards.
28
ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information required by Item 407(a) of Regulation S-K is contained in the registrant’s proxy statement
relating to its annual meeting of stockholders to be held on April 30, 2021 under the captions “Election of
Directors” and “Board of Directors, Its Committees, Meetings and Functions” and is incorporated herein by
reference. The information required by Item 404 of Regulation S-K is contained in the registrant’s proxy
statement relating to its annual meeting of stockholders scheduled to be held on April 30, 2021 under the
caption “Certain Relationships and Related Person Transactions” and is incorporated herein by reference.
ITEM 14 — PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is contained in the registrant’s proxy statement relating to its annual
meeting of stockholders scheduled to be held on April 30, 2021 under the caption “Principal Accounting Firm
Fees” and is incorporated herein by reference.
ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Part IV
(A) Documents filed as a part of this report:
(1) Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated financial statements of Escalade, Incorporated and subsidiaries:
Consolidated balance sheets—December 26, 2020 and December 28, 2019
Consolidated statements of operations—fiscal years ended December 26, 2020, December
28, 2019, and December 29, 2018
Consolidated statements of comprehensive income—fiscal years ended December 26,
2020, December 28, 2019, and December 29, 2018
Consolidated statements of stockholders’ equity—fiscal years ended December 26, 2020,
December 28, 2019, and December 29, 2018
Consolidated statements of cash flows—fiscal years ended December 26, 2020, December
28, 2019, and December 29, 2018
Notes to consolidated financial statements
All other schedules are omitted because of the absence of conditions under which they are
required or because the required information is given in the consolidated financial statements or
notes thereto.
(3) Exhibits
3.1
3.2
10.1
10.2
10.3
10.4
Articles of Incorporation of Escalade, Incorporated (a)
Amended By-Laws of Escalade, Incorporated (f)
Amended and Restated Credit Agreement dated as of January 21, 2019 among Escalade,
Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan
Chase Bank, N.A., as Administrative Agent (without exhibits and schedules, which
Escalade has determined are not material) (b)
First Amendment dated as of September 3, 2019 to Amended and Restated Credit
Agreement dated as of January 21, 2019 among Escalade, Incorporated, Indian Industries,
Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as
Administrative Agent (j)
Pledge and Security Agreement dated as of January 21, 2019 among Escalade,
Incorporated, Indian Industries, Inc., each of their domestic subsidiaries, and JPMorgan
Chase Bank, N.A., as Administrative Agent (without exhibits and schedules, which
Escalade has determined are not material) (c)
Second Amendment dated as of March 24, 2020 to Amended and Restated Credit
Agreement date as of January 21, 2019 among Escalade, Incorporated, Indian Industries,
29
10.5
Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as
Administrative Agent (k)
Third Amendment dated as of December 14, 2020 to Amended and Restated Credit
Agreement dated as of January 21, 2019 among Escalade, Incorporated, Indian Industries,
Inc., each of their domestic subsidiaries, and JPMorgan Chase Bank, N.A., as
Administrative Agent (l)
(4) Executive Compensation Plans and Arrangements
10.6
10.7
10.8
10.9
Escalade, Incorporated 2007 Incentive Plan, as amended, incorporated by reference herein
from Annex 1 and 2 to the Registrant’s 2012 Definitive Proxy Statement (e)
Escalade, Incorporated 2017 Incentive Plan, incorporated by reference herein from Annex 1
to the Registrant’s 2017 Definitive Proxy Statement (i)
Form of Stock Option Award Agreement utilized in Stock Option grants to employees
pursuant to the Escalade, Incorporated 2017 Incentive Plan (d)
Form of Stock Option Award Agreement utilized in Stock Option grants to Directors
pursuant to the Escalade, Incorporated 2017 Incentive Plan (d)
10.10 Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to
employees pursuant to the Escalade Incorporated 2017 Incentive Plan (d)
10.11 Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to
Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan (d)
10.12 Offer Letter dated March 30, 2020, by and between Scott J. Sincerbeaux and Escalade,
Incorporated (h)
10.13 Executive Severance agreement, dated March 30, 2020 and effective as of April 27, 2020,
between Scott J. Sincerbeaux and Escalade, Incorporated (h)
Subsidiaries of the Registrant
Consent of BKD, LLP
Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certification
Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certification
Chief Executive Officer Section 1350 Certification
Chief Financial Officer Section 1350 Certification
21
23.1
31.1
31.2
32.1
32.2
101.Cal Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.Def Inline XBRL Taxonomy Extension Definition Linkbase Document
101.Lab Inline XBRL Taxonomy Extension Label Linkbase Document
101.Pre Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.Ins Inline XBRL Instance Document
101.Sch Inline XBRL Taxonomy Extension Schema Document
104
(a) Incorporated by reference from the Company's 2007 First Quarter Report on Form 10-Q
(b) Incorporated by reference from the Company's Form 8-K/A filed on February 1, 2019. The 2019
Amended and Restated Credit Agreement supersedes the 2016 Credit Agreement with JPMorgan
Chase Bank, N.A. previously entered into by the Company and Indian Industries, Inc. The
domestic subsidiaries of the Company and Indian Industries are parties to the 2019 Amended and
Restated Credit Agreement as subsidiary guarantors, which supersedes the Unlimited Continuing
Guarantees previously entered into by those subsidiaries.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(c) Incorporated by reference from the Company’s Form 8-K filed on January 25, 2019. The 2019
Pledge and Security Agreement supersedes the pledge agreements previously entered into by the
Company, Indian Industries, Inc. and their domestic subsidiaries
(d) Incorporated by reference from the Company’s Form 10-K for the fiscal year ended December
30, 2017 and filed on February 27, 2018
(e) Incorporated by reference from the Company’s 2012 Proxy Statement
(f) Incorporated by reference from the Company’s 2014 First Quarter Report on Form 10-Q filed on
April 22, 2014
(g) Incorporated by reference from the Company’s 2016 First Quarter Form 10-Q filed on April 15,
2016
(h) Incorporated by reference from the Company’s Form 8-K filed on April 1, 2020
(i) Incorporated by reference from the Company’s 2017 Proxy Statement
(j) Incorporated by reference from the Company’s Form 8-K filed on September 3, 2019
(k) Incorporated by reference from the Company’s Form 8-K filed on March 24, 2020
(l) Incorporated by reference from the Company’s Form 8-K filed on December 14, 2020
ITEM 16—FORM 10-K SUMMARY
None.
30
ESCALADE, INCORPORATED AND SUBSIDIARIES
Index to Financial Statements
The following consolidated financial statements of the Registrant and its subsidiaries and Independent
Accountants’ Reports are submitted herewith:
Page
Reports of Independent Registered Public Accounting Firm .................................................................... 32
Consolidated financial statements of Escalade, Incorporated and subsidiaries:
Consolidated balance sheets—December 26, 2020 and December 28, 2019 ...................................... 37
Consolidated statements of operations—fiscal years ended December 26, 2020,
December 28, 2019 and December 29, 2018 ................................................................................... 38
Consolidated statements of comprehensive income—fiscal years ended
December 26, 2020, December 28, 2019 and December 29, 2018……………………………… 39
Consolidated statements of stockholders’ equity—fiscal years ended December 26, 2020,
December 28, 2019 and December 29, 2018 ................................................................................... 39
Consolidated statements of cash flows—fiscal years ended December 26, 2020,
December 28, 2019 and December 29, 2018 ................................................................................... 40
Notes to consolidated financial statements ............................................................................................ 41
31
Reports of Independent Registered Public Accounting Firms
Audit Committee, Board of Directors and Stockholders
Escalade, Incorporated
Evansville, Indiana
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Escalade, Incorporated as of December 26, 2020,
and December 28, 2019, and the related consolidated statements of operations, comprehensive income, stockholders’
equity and cash flows for each of the years in the three-year period ended December 26, 2020, and the related notes
(collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Escalade, Incorporated as of December 26,
2020 and December 28, 2019, and the results of its operations and its cash flows for each of the years in the three-year
period ended December 26, 2020, in conformity with accounting principles generally accepted in the United States of
America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), Escalade, Incorporated’s internal control over financial reporting as of December 26, 2020, based
on criteria established in Internal Control-–Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated February 22, 2021, expressed an
unqualified opinion on the effectiveness of Escalade, Incorporated’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of Escalade, Incorporated’s management. Our
responsibility is to express an opinion on Escalade, Incorporated’s consolidated financial statements based on our
audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to
Escalade, Incorporated in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the U.S. Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
32
Customer Allowances
As more fully described in Note 18 within the consolidated financial statements, revenue is recognized net of
various sales adjustments, which includes estimated customer allowances for advertising subsidies, volume rebates
and catalog allowances. Escalade, Incorporated reviews such allowances on an ongoing basis and accruals are
adjusted based on the information within the customer agreements. These estimated sales adjustments totaled
$21,267,000 for the year ended December 26, 2020, which are included as part of Net Sales on the consolidated
statement of operations. At December 26, 2020, the total accrued for these customer allowances was $7,532,000 and
were presented as part of accrued liabilities on the consolidated balance sheet.
The principal consideration for our determination that performing procedures relating to these accruals is a critical
audit matter was the significant judgment by management to estimate the accruals due to the complexity of the
process involved in developing the accruals. The volume of the customer contracts containing allowance agreements
is significant, some customers are granted multiple types of allowances and contract terms can change
frequently. Management exercises judgment in computing the amount of sales subject to the allowances and tracks
the amount of the various allowances taken by customers over time. All of this in turn led to a high degree of auditor
judgment, subjectivity and effort in performing procedures and evaluating management’s process for developing the
accruals.
We identified the estimated sales allowances as a critical audit matter. The primary procedures we performed to
address this critical audit matter included:
Testing the design and operating effectiveness of controls, including those related to technology, over the
estimated sales allowances, including data completeness and accuracy and the potential for management
bias in the estimation process;
Testing the completeness and accuracy of the underlying data used to estimate the accrual by agreeing the
sales data used in the calculation to reports that were reconciled to the financial statements, reconciling the
various allowance percentages to signed customer contracts, tracing the allowance amounts used by the
various customers during the year to supporting documentation and comparing the estimated allowances
from the end of each reporting period to actual results that occurred during subsequent reporting periods;
Testing the clerical accuracy of the individual customer allowances computed by management and agreeing
the total of all estimated allowances to the respective accounts on the financial statements.
Assumptions Used in Estimating Goodwill and Intangible Assets Associated with Business
Combinations
As described in Note 15 to the consolidated financial statements, the Company consummated the acquisition of the
assets of Revel Match LLC d/b/a Rave Sports during the year ended December 26, 2020, resulting in the expansion
of the Company’s operating product lines and additional goodwill of $5,946,000 and additional intangible assets of
$5,000,000 being recognized on the Company’s consolidated balance sheet. As part of this acquisition, management
assessed that the acquisition qualified as a business combination and all identifiable assets and liabilities acquired
were recorded at fair value as part of the purchase price allocation as of the acquisition date. The identification and
valuation of such acquired assets and assumed liabilities requires management to exercise significant judgment and
consider the use of outside vendors to estimate the fair value allocations.
We identified the consummated acquisition and the valuation of acquired assets and assumed liabilities a critical
audit matter. Auditing the acquired balance sheet and acquisition related considerations involved a high degree of
subjectivity in evaluating management's operational assumptions of the newly acquired division, fair value
estimates, purchase price allocations and assessing the appropriateness of outside vendor valuation models.
The primary procedures we performed to address this critical audit matter included:
Obtaining and reviewing the executed Asset Purchase Agreement documents to gain an understanding of
the underlying terms of the consummated acquisition;
33
Obtaining and reviewing management’s acquisition checklist to gain an understanding of cut-off
procedures performed and asset/liability identification considerations made;
Testing management’s purchase price allocation spreadsheet focusing on the completeness and accuracy of
the balance sheet acquired and related fair value purchase price allocations made to identified assets
acquired and liabilities assumed;
Obtaining and reviewing all significant outside vendor valuation estimates and challenging management’s
review of the appropriateness of the valuations assessed/allocated to assets acquired and liabilities assumed;
including but not limited to, testing all critical inputs, assumptions applied and valuation models utilized by
the outside vendors;
Testing the goodwill calculation resulting from the acquisition consummated, being the difference between
the total net consideration paid and the fair value of the net assets acquired;
Utilizing internal valuation specialists to assist with testing the related fair value purchase price allocations
made to identified assets acquired and liabilities assumed;
Reviewing and evaluating the adequacy of the disclosures made in the footnotes of the Company’s SEC
filings.
We have served as Escalade, Incorporated’s auditor since 1977.
/s/ BKD, LLP
Evansville, Indiana
February 22, 2021
34
Report of Independent Registered Public Accounting Firm
Audit Committee, Board of Directors and Stockholders
Escalade, Incorporated
Evansville, Indiana
Opinion on the Internal Control Over Financial Reporting
have
audited Escalade,
We
of
December 26, 2020, based on criteria established in Internal Control––Integrated Framework: (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Incorporated’s
reporting
financial
internal
control
over
as
In our opinion, Escalade, Incorporated maintained, in all material respects, effective internal control over financial
reporting as of December 26, 2020, based on criteria established in Internal Control–– Integrated Framework: (2013)
issued by COSO.
Escalade, Incorporated acquired substantially all of the assets of Revel Match LLC, dba RAVE Sports (RAVE) in
December 2020, and management excluded RAVE from its assessment of the effectiveness of Escalade,
Incorporated’s internal control over financial reporting as of December 26, 2020. RAVE represented 6.8 percent and
0.05 percent of Escalade, Incorporated’s total assets and total revenues, respectively, as of and for the year ended
December 26, 2020. Our audit of internal control over financial reporting of Escalade Incorporated also excluded an
evaluation of the internal control over financial reporting of RAVE.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements of Escalade, Incorporated and our report dated February 22,
2021, expressed an unqualified opinion thereon.
Basis for Opinion
Escalade, Incorporated’s management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
Escalade, Incorporated’s internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to
Escalade, Incorporated in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the U.S. Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
35
Definitions and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of Escalade, Incorporated; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of Escalade, Incorporated are being made only in
accordance with authorizations of management and directors of Escalade, Incorporated; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Escalade,
Incorporated’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ BKD, LLP
Evansville, Indiana
February 22, 2021
36
ESCALADE, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
All Amounts in Thousands Except Share Information
ASSETS
Current Assets:
Cash and cash equivalents
Receivables, less allowances of $896 and $483; respectively
Inventories
Prepaid expenses
Prepaid income tax
TOTAL CURRENT ASSETS
Property, plant and equipment, net
Operating lease right-of-use assets
Intangible assets
Goodwill
Other assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Note payable
Trade accounts payable
Accrued liabilities
Current operating lease liabilities
TOTAL CURRENT LIABILITIES
Long-term debt
Deferred income tax liability
Operating lease liabilities
Other liabilities
TOTAL LIABILITIES
Commitments and contingencies
Stockholders' equity:
Preferred stock
December 26,
2020
December 28,
2019
$ 3,505
65,280
72,488
4,068
57
145,398
18,232
1,608
22,645
32,695
127
$220,705
$ -
20,947
24,271
854
46,072
30,073
4,193
763
448
81,549
--
$ 5,882
35,450
42,269
3,151
163
86,915
15,111
1,080
18,847
26,749
77
$148,779
$ 135
7,765
9,689
621
18,210
-
3,537
475
387
22,609
--
Authorized: 1,000,000 shares, no par value, none issued
Common stock
Authorized: 30,000,000 shares, no par value
Issued and outstanding: 2020 —13,919,380 shares, 2019 —14,214,777 shares
Retained earnings
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
See notes to consolidated financial statements.
13,919
125,237
139,156
$220,705
14,215
111,955
126,170
$148,779
37
ESCALADE, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
All Amounts in Thousands Except Per Share Data
Net Sales
Costs and Expenses
Cost of products sold
Selling, administrative and general expenses
Amortization
Operating Income
Other Income (Expense)
Interest expense
Equity in earnings of affiliates
Gain on sale of equity method investment (includes
($3,729) of accumulated other comprehensive loss
reclassification from foreign currency translation
adjustment)
Other income (expense)
Income Before Income Taxes
Provision for Income Taxes
Net Income
Earnings Per Share Data:
Basic earnings per share
Diluted earnings per share
See notes to consolidated financial statements.
December 26,
2020
Years Ended
December 28,
2019
December 29,
2018
$273,649
$180,541
$175,780
198,822
40,315
1,480
33,032
(250)
--
--
140
32,922
6,988
138,181
31,616
1,469
9,275
(356)
--
--
15
8,934
1,676
130,750
29,807
1,406
13,817
(427)
121
13,020
(89)
26,442
6,000
$ 25,934
$ 7,258
$ 20,442
$ 1.84
$ 1.82
$ 0.50
$ 0.50
$ 1.42
$ 1.41
38
Escalade, Incorporated and Subsidiaries
Consolidated Statements of Comprehensive Income
All Amounts in Thousands
Net Income
December 26,
2020
Years Ended
December 28,
2019
December 29,
2018
$ 25,934
$ 7,258
$ 20,442
Foreign currency translation adjustment before
reclassifications
Amounts reclassified from comprehensive income due to
divestiture of equity investment
-
-
-
-
(1,119)
3,729
Comprehensive Income
$ 25,934
$ 7,258
$ 23,052
See notes to consolidated financial statements.
Consolidated Statements of Stockholders’ Equity
All Amounts in Thousands
Common Stock
Shares
Amount
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balances at December 30, 2017
14,372
$14,372
$99,908
$ (2,610)
$111,670
Other comprehensive income
Net income
Expense of stock options and restricted stock units
Exercise of stock options
Settlement of restricted stock units
Dividends declared
Stock issued to directors as compensation
Purchase of stock
9
47
12
(1)
9
47
12
(1)
20,442
604
45
(47)
(7,215)
154
(9)
2,610
2,610
20,442
604
54
--
(7,215)
166
(10)
Balances at December 29, 2018
14,439
$14,439
$113,882
$ -
$128,321
Net income
Expense of stock options and restricted stock units
Exercise of stock options
Settlement of restricted stock units
Dividends declared
Stock issued to directors as compensation
Purchase of stock
10
29
9
(272)
10
29
9
(272)
7,258
513
108
(29)
(7,204)
93
(2,666)
7,258
513
118
--
(7,204)
102
(2,938)
Balances at December 28, 2019
14,215
$14,215
$111,955
$ -
$126,170
Net income
Expense of stock options and restricted stock units
Exercise of stock options
Settlement of restricted stock units
Issuance of restricted stock awards
Dividends declared
Stock issued to directors as compensation
Purchase of stock
10
55
35
10
(406)
10
55
35
10
(406)
25,934
1,016
134
(55)
(35)
(7,466)
87
(6,333)
25,934
1,016
144
--
--
(7,466)
97
(6,739)
Balances at December 26, 2020
13,919
$13,919
$125,237
$ -
$139,156
See notes to consolidated financial statements.
39
ESCALADE, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
All Amounts in Thousands
Operating Activities:
Net Income
Reconciling adjustments:
Depreciation and amortization
Provision for doubtful accounts
Stock option and restricted stock unit expense
Equity in net income of joint venture investments
Deferred income taxes
Gain on sale of equity method investment
Gain on insurance proceeds received for damage to property
Loss (gain) on disposals of assets
Dividends received from equity method investments
Changes in
Accounts receivable
Inventories
Prepaids and other assets
Accounts payable and accrued expenses
Net cash provided by operating activities
Investing Activities:
Purchase of property and equipment
Acquisitions
Payment on note payable related to an acquisition
Proceeds from sale of equity investment
Insurance proceeds received for damage to property
Proceeds from sale of property and equipment
Net cash provided by (used in) investing activities
Financing Activities:
Dividends paid
Proceeds from issuance of long-term debt
Payments on long-term debt
Proceeds from exercise of stock options
Deferred financing fees
Purchase of stock
Director stock compensation
Net cash provided by (used in) financing activities
Increase (decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, beginning of year
Cash and Cash Equivalents, end of year
Supplemental Cash Flows Information
Interest paid
Income taxes paid
Information regarding the Company’s acquisitions in 2020, 2019 and 2018 are as
follows:
Fair value of assets acquired
Cash paid for assets
Consideration of holdback provision
Note payable for deferred purchase price obligation
Liabilities assumed
See notes to consolidated financial statements.
December 26,
2020
Years Ended
December 28,
2019
December 29,
2018
$ 25,934
$ 7,258
$ 20,442
4,016
473
1,016
--
656
--
--
(2)
--
(29,905)
(26,422)
(42)
26,909
2,633
(5,455)
(15,446)
(135)
--
--
4
(21,032)
(7,466)
84,044
(53,971)
144
(87)
(6,739)
97
16,022
(2,377)
5,882
$3,505
$ 205
$6,205
$16,277
(15,446)
--
--
$ 831
4,031
322
513
--
128
--
--
7
--
4,911
(3,147)
1,971
44
16,038
(2,185)
(765)
--
--
--
4
(2,946)
(7,204)
77,502
(77,502)
118
(112)
(2,938)
102
(10,034)
3,058
2,824
$5,882
$ 346
$1,383
$ 900
(765)
--
(135)
$ --
3,857
155
604
(121)
940
(13,020)
(377)
--
2,323
(1,140)
(3,359)
194
(3,992)
6,506
(2,818)
(7,169)
--
33,705
1,154
--
24,872
(7,215)
28,024
(51,145)
54
--
(10)
166
(30,126)
1,252
1,572
$2,824
$ 423
$4,844
$9,285
(7,169)
286
--
$2,402
40
Note 1 —
Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Escalade, Incorporated and its wholly-owned subsidiaries (Escalade, the Company, we, us or our) are engaged in the
manufacture and sale of sporting goods products. The Company is headquartered in Evansville, Indiana and has
manufacturing facilities in the United States of America and Mexico. The Company sells products to customers
primarily in North America with minimal sales throughout the remainder of the world.
Principles of Consolidation
The consolidated financial statements include the accounts of Escalade, Incorporated and its wholly-owned
subsidiaries. All material inter-company accounts and transactions have been eliminated.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (GAAP). The books and records of subsidiaries located in foreign countries are
maintained according to generally accepted accounting principles in those countries. Upon consolidation, the
Company evaluates the differences in accounting principles and determines whether adjustments are necessary to
convert the foreign financial statements to the accounting principles upon which the consolidated financial statements
are based. As a result of this evaluation no material adjustments were identified.
Fiscal Year End
The Company’s fiscal year is a 52 or 53 week period ending on the last Saturday in December. Fiscal year 2020 was
52 weeks long, ending on December 26, 2020. Fiscal year 2019 was 52 weeks long, ending December 28, 2019. Fiscal
year 2018 was 52 weeks long, ending December 29, 2018.
Cash and Cash Equivalents
Highly liquid financial instruments with insignificant interest rate risk and with original maturities of three months or
less are classified as cash and cash equivalents. Cash and cash equivalent balances may at times be in excess of
federally insured limits. The Company maintains its cash and cash equivalent balances at high-credit quality financial
institutions. Book overdrafts that result from outstanding checks in excess of our bank balance are reclassified to
accrued liabilities. As of December 26, 2020, the Company reclassed $5.0 million of book overdrafts to accrued
liabilities.
Accounts Receivable
Revenue from the sale of the Company’s products is recognized when obligations under the terms of a contract with
our customer are satisfied; generally this occurs with the transfer of control of our goods at a point in time based on
shipping terms and transfer of title. Accounts receivable are stated at the amount billed to customers. Interest and late
charges billed to customers are not material and, because collection is uncertain, are not recognized until collected and
are therefore not included in accounts receivable. The Company provides an allowance for doubtful accounts which
is described in Note 2 – Certain Significant Estimates.
Inventories
Inventory cost is computed on a currently adjusted standard cost basis (which approximates actual cost on a current
average or first-in, first-out basis). Work in process and finished goods inventory are determined to be saleable based
on a demand forecast within a specific time horizon, generally one year or less. Inventory in excess of saleable
amounts is reserved, and the remaining inventory is valued at the lower of cost or net realizable value. This inventory
valuation reserve totaled $697 thousand and $786 thousand at fiscal year-end 2020 and 2019, respectively.
Inventories, net of the valuation reserve, at fiscal year-ends were as follows:
In Thousands
Raw materials
Work in process
Finished goods
2020
2019
$9,121
3,538
59,829
$72,488
$3,186
2,177
36,906
$42,269
41
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation and amortization are computed for financial
reporting purposes principally using the straight-line method over the following estimated useful lives: buildings,
20-30 years; leasehold improvements, term of the lease; machinery and equipment, 5-15 years; and tooling, dies
and molds, 2-5 years. Property, plant and equipment consist of the following:
In Thousands
2020
2019
Land
Buildings and leasehold improvements
Machinery and equipment
Total cost
Accumulated depreciation and amortization
$ 1,943
18,798
28,083
48,824
(30,592)
$ 18,232
$ 1,943
16,831
24,721
43,495
(28,384)
$ 15,111
The Company evaluates the recoverability of certain long-lived assets whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. Estimates of future cash flows used to test recoverability
of long-lived assets include separately identifiable undiscounted cash flows expected to arise from the use and
eventual disposition of the assets. Where estimated future cash flows are less than the carrying value of the assets,
impairment losses are recognized based on the amount by which the carrying value exceeds the fair value of the
assets. No asset impairment was recognized during the years ended 2020, 2019, or 2018.
Investments
Non-Marketable Equity Investment: The Company had an equity position in a company that strategically related to
the Company’s business, but the Company did not have control over that entity. The accounting method employed
was dependent on the level of ownership and degree of influence the Company could exert on operations. Where the
equity interest was less than 20% and the degree of influence was not significant, the cost method of accounting was
employed. Where the equity interest was greater than 20% but not more than 50%, the equity method of accounting
was utilized. Under the equity method, the Company’s proportionate share of net income was recorded in equity in
earnings of affiliates on the consolidated statement of operations. The proportionate share of net income was $0.1
million in 2018. Total cash dividends received from this equity investment amounted to $2,323 thousand in 2018. The
Company considered whether the fair value of its equity investment declined below its carrying value whenever
adverse events or changes in circumstances indicated that recorded values may not be recoverable. If the Company
considered any such decline to be other than temporary (based on various factors, including historical financial results,
product development activities and overall health of the investments’ industry), a write-down was recorded to
estimated fair value.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over fair value of net tangible and identifiable intangible assets
of acquired businesses. Intangible assets consist of patents, consulting agreements, non-compete agreements, customer
lists, developed technology, license agreements, and trademarks. Goodwill is deemed to have an indefinite life and is
not amortized, but is subject to impairment testing annually in accordance with guidance included in FASB ASC 350,
Intangibles – Goodwill and Other. Other intangible assets are amortized using the straight-line method over the
following lives: license agreements, 17 years; developed technology, 5 years; trademarks, 20 years to indefinite life;
consulting agreements, the life of the agreement; customer lists, 3 to 14 years; non-compete agreements, the lesser of
the term or 5 years; and patents, the lesser of the remaining life or 5 to 15 years.
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate
the carrying value of goodwill may not be recoverable, in accordance with guidance in FASB ASC 350, Intangibles
– Goodwill and Other. A qualitative assessment is first performed to determine if the fair value of the reporting unit
is "more likely than not" less than the carrying value. If so, we proceed to a quantitative assessment, in which the fair
value of the reporting unit is compared to its carrying value. If the carrying value of goodwill exceeds the implied
estimated fair value calculated, an impairment charge to current operations is recorded to reduce the carrying value to
the implied estimated fair value.
42
Employee Incentive Plan
During 2017, the Company approved an incentive plan explained in Note 10. The Company accounts for this plan
under the recognition and measurement principles of FASB ASC 718, Equity Based Payments.
Foreign Currency Translation
The functional currency for the foreign operations of Escalade is the U.S. dollar. Gains or losses resulting from
foreign currency transactions are included in selling, general and administrative expense in the Consolidated
Statements of Operations and were insignificant in fiscal years 2020, 2019, and 2018.
Cost of Products Sold
Cost of products sold is comprised of those costs directly associated with or allocated to the products sold and
include materials, labor and factory overhead.
Provision for Income Taxes
Income tax in the consolidated statement of operations includes deferred income tax provisions or benefits for all
significant temporary differences in recognizing income and expenses for financial reporting and income tax purposes.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax asset will not be realized.
The Company accounts for uncertainty in tax positions by recognizing in its financial statements the impact of a tax
position only if that position is more likely than not of being sustained.
Research and Development
Research and development costs are charged to expense as incurred. Research and development costs incurred during
2020, 2019 and 2018 were approximately $1.5 million, $1.6 million, and $1.5 million, respectively.
New Accounting Pronouncements and Changes in Accounting Principles
Standards Adopted:
In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU)
2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The
amendments in this update eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill
impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An
impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s
fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting
unit. In addition, income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit
should be considered when measuring the goodwill impairment loss, if applicable.
The Company adopted this standard on December 29, 2019. The adoption of this standard did not have an impact
to the financial statements of the Company.
New Accounting Standards to be Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments. This amendment requires the measurement and recognition of expected
credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment
model with an expected loss model which requires the use of forward-looking information to calculate credit loss
estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to
available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in
the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. The
amendments are effective in fiscal years beginning after December 15, 2020, and interim periods within those fiscal
years. We do not expect the standard to have a material impact on our consolidated financial statements. In
November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives
and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. This amendment delays the effective dates of
specific ASUs, including ASU 2016-13 by one year. Amendments in ASU 2016-13 are effective in fiscal years
beginning after December 15, 2022, and interim periods within those fiscal years.
43
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes, which simplifies the accounting for income taxes. This guidance will be effective for fiscal years
beginning after December 15, 2020, and interim periods within those fiscal years. We are currently evaluating the
impact of the new guidance on our consolidated financial statements.
Note 2 —
Certain Significant Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities; the
disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and the reported
amounts of revenues and expenses during the reporting period. These estimates and judgments are evaluated on an
ongoing basis and are based on experience; current and expected future conditions; third party evaluations; and various
other assumptions believed reasonable under the circumstances. The results of these estimates form the basis for
making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting
treatment with respect to commitments and liabilities. Actual results may differ from the estimates and assumptions
used in the financial statements and related notes.
Listed below are certain significant estimates and assumptions related to the preparation of the consolidated financial
statements:
Goodwill and Intangible Assets
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate
the carrying value of goodwill may not be recoverable, in accordance with guidance in FASB ASC 350, Intangibles –
Goodwill and Other. A qualitative assessment is first performed to determine if the fair value of the reporting unit is
"more likely than not" less than the carrying value. If so, we proceed to a quantitative assessment, in which the fair
value of the reporting unit is compared to its carrying value. If the carrying value of goodwill exceeds the implied
estimated fair value calculated, an impairment charge to current operations is recorded to reduce the carrying value to
the implied estimated fair value.
Other intangible assets are amortized using the straight-line method over the following lives: license agreements, 17
years; developed technology, 5 years; trademarks, 20 years to indefinite life; consulting agreements, the life of the
agreement; customer lists, 3 to 14 years; non-compete agreements, the lesser of the term or 5 years; and patents, the
lesser of the remaining life or 5 to 15 years.
Indefinite-lived intangible assets are reviewed for impairment annually, or whenever events or changes in
circumstances indicate the carrying amount of an intangible asset may not be recoverable. There are inherent
assumptions and judgments required in the analysis of goodwill and intangible impairment.
Product Warranty
The Company provides limited warranties on certain of its products, for varying periods. Generally, the warranty
periods range from 30 days to one year. However, some products carry extended warranties of three-year, five-year,
seven-year, ten-year, fifteen-year, and lifetime warranties. The Company records an accrued liability and reduction
in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level
of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the
accrued liability and sales in the current year. Changes in product warranty were as follows:
In Thousands
2020
2019
2018
Beginning balance
Additions
Deductions
Ending balance
$ 688
1,648
(1,374)
$ 962
$ 702
1,736
(1,750)
$ 688
$ 691
1,448
(1,437)
$ 702
44
Inventory Valuation Reserves
The Company evaluates inventory for obsolescence and excess quantities based on demand forecasts based on
specified time frames; usually one year. The demand forecast is based on historical usage, sales forecasts and current
as well as anticipated market conditions. All amounts in excess of the demand forecast are deemed to be excess or
obsolete and a reserve is established based on the anticipated net realizable value. Changes in inventory valuation
reserves were as follows:
In Thousands
2020
2019
2018
Beginning balance
Additions
Deductions
Ending balance
$ 786
831
(920)
$ 697
$ 456
756
(426)
$ 786
$ 504
383
(431)
$ 456
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based upon a review of outstanding receivables, historical
collection information and existing economic conditions. Accounts receivable are ordinarily due between 30 and 60
days after the issuance of the invoice. Accounts are considered delinquent when more than 90 days past due.
Delinquent receivables are reserved or written off based on individual credit evaluation and specific circumstances of
the customer. Changes in allowance for doubtful accounts were as follows:
In Thousands
2020
2019
2018
Beginning balance
Additions
Deductions
Ending balance
$ 483
473
(60)
$ 896
$ 532
322
(371)
$ 483
$ 623
155
(246)
$ 532
Customer Allowances
Customer allowances are common practice in the industries in which the Company operates. These agreements are
typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a
reduction to gross sales. The Company reviews such allowances on an ongoing basis and accruals are adjusted, if
necessary, as additional information becomes available. Changes in customer allowances for advertising subsidies,
volume rebates and catalog allowances were as follows:
In Thousands
2019
2019
2018
Beginning balance
Additions
Deductions
Ending balance
Note 3 —
Accrued Liabilities
Accrued liabilities consist of the following:
In Thousands
Employee compensation
Customer related allowances and accruals
Other accrued items
$ 1,292
11,940
(10,936)
$ 2,296
$ 1,550
7,292
(7,550)
$ 1,292
$ 3,357
6,575
(8,382)
$ 1,550
2020
2019
$ 7,685
7,532
9,054
$ 24,271
$ 1,917
4,876
2,896
$ 9,689
45
Note 4 —
Leases
We have operating leases for office, manufacturing and distribution facilities as well as for certain equipment. Our
leases have remaining lease terms of 1 year to 5 years. As of December 26, 2020, the Company has not entered into
any lease arrangements classified as a finance lease.
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-
use (“ROU”) assets, current operating lease liabilities and operating lease liabilities on our consolidated balance
sheet. The Company has elected an accounting policy to not recognize short-term leases (one year or less) on the
balance sheet. The Company also elected the package of practical expedients which applies to leases that
commenced before the adoption date. By electing the package of practical expedients, the Company did not need
to reassess the following; whether any existing contracts are or contain leases, the lease classification for any
existing leases and initial direct costs for any existing leases.
ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease
payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot
be determined, we use our incremental borrowing rate based on the information available at the commencement
date to determine the present value of future payments. Lease terms may include options to extend or terminate the
lease when it is reasonably certain that we will exercise those options. Lease expense for minimum lease payments
is recognized on a straight-line basis over the lease term. Components of lease expense and other information as
follows:
All Amounts in Thousands
Lease Expense
Operating Lease Cost
Short-term Lease Cost
Variable Lease Cost
Total Operating Lease Cost
Operating Lease – Operating Cash Flows
New ROU Assets – Operating Leases (non-cash)
Twelve Months Ended
Twelve Months Ended
December 26, 2020
December 28, 2019
$828
973
250
$2,051
$762
$1,282
$826
446
244
$1,516
$755
$867
Other information about lease amounts recognized in our consolidated financial statements is summarized as
follows:
Weighted Average Remaining Lease Term – Operating Leases
Weighted Average Discount Rate – Operating Leases
Period Ended
December 26, 2020
2.24 years
5.00%
Period Ended December
28, 2019
1.98 years
5.00%
46
Future minimum lease payments under non-cancellable leases as of December 26, 2020 were as follows:
All Amounts in Thousands
Year 1
Year 2
Year 3
Year 4
Year 5
Thereafter
Total future minimum lease payments
Less imputed interest
Total
Reported as of December 26, 2020
Current operating lease liabilities
Long-term operating lease liabilities
Total
$910
496
221
56
24
-
1,707
(90)
$1,617
854
763
$1,617
Note 5 —
Acquired Intangible Assets and Goodwill
The carrying basis and accumulated amortization of recognized intangible assets are summarized in the following
table:
In Thousands
Patents
Non-compete agreements
Customer list
Trademarks
Developed technology
License agreements
2020
2019
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
24,715
2,749
18,017
9,736
475
700
56,392
23,860
2,749
6,669
174
206
89
33,747
24,515
2,749
14,317
8,359
475
700
51,115
23,689
2,702
5,575
143
111
48
32,268
Amortization expense was $1.5 million, $1.5 million and $1.4 million for 2020, 2019 and 2018, respectively.
Estimated future amortization expense is summarized in the following table:
In Thousands
2021
2022
2023
2024
2025
Thereafter
Sporting Goods
1,866
1,847
1,768
1,644
1,595
6,140
All goodwill is allocated to the operating segment of the business. The changes in the carrying amount of goodwill
were:
In Thousands
Sporting Goods
Balance at December 29, 2018
Acquisition
Balance at December 28, 2019
Acquisition
Balance at December 26, 2020
$26,381
368
$26,749
5,946
$32,695
47
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate
the carrying value of goodwill may not be recoverable, in accordance with guidance in FASB ASC 350, Intangibles
– Goodwill and Other. A qualitative assessment is first performed to determine if the fair value of the reporting unit
is “more likely than not” less than the carrying value. If so, we proceed to a quantitative assessment, in which the
fair value of the reporting unit is compared to its carrying value. If the carrying value of goodwill exceeds the
implied estimated fair value calculated, an impairment charge to current operations is recorded to reduce the
carrying value to the implied estimated fair value.
Note 6 —
Equity Interest Investments
The Company had a 50% interest in a joint venture, Stiga Sports AB (Stiga). The joint venture was accounted for
under the equity method of accounting. Stiga, located in Sweden, is a global sporting goods company producing
table tennis equipment, snow sleds and game products. The Company entered into a share purchase agreement for
the private sale of the Company’s 50% interest in the Stiga joint venture. On May 17, 2018, the Company completed
the sale of its 50% interest for $33.7 million, resulting in a gain on sale of $13.0 million. In conjunction with the
sale, the Company entered into a new license agreement with Stiga for the licensing rights to manufacture, market,
promote, sell and distribute Stiga-branded table tennis hobby products in the United States, Mexico and Canada.
The Company has had the licensing rights for such products since 1995 pursuant to an existing license agreement
that expired December 31, 2018. The new license agreement went into effect on January 1, 2019.
Financial information for Stiga reflected in the table below has been translated from local currency to U.S. dollars
using average exchange rates for income statement amounts. The Company’s 50% portion of net income for Stiga
for the period from December 31, 2017 through May 17, 2018 is $121 thousand. For the year ended December 29,
2018, the Company paid royalties to Stiga in the amount of $0.4 million. For the year ended December 28, 2019,
the Company paid royalties to Stiga in the amount of $0.5 million. For the year ended December 26, 2020, the
Company paid royalties to Stiga in the amount of $0.5 million.
In accordance with Rule 4-08(g) of Regulation S-X, summarized financial information for Stiga Sports AB
statements of operations for the period from December 31, 2017 through May 17, 2018 is as follows:
Period from December 31,
2017 through May 17, 2018
Net sales
Gross profit
Net income
$ 12,978
6,019
241
Note 7 —
Borrowings
On January 21, 2019, the Company entered into an Amended and Restated Credit Agreement (“2019 Restated Credit
Agreement”) with the Lender. Under the terms of the 2019 Restated Credit Agreement, the Lender has made available
to the Company a senior revolving credit facility with increased maximum availability of $50.0 million. The maturity
date was extended to January 31, 2022. In addition to the increased borrowing amount and extended maturity date,
other significant changes reflected in the 2019 Restated Credit Agreement include: more favorable interest rate
provisions; increases in borrowing base availability; releases of existing mortgages on the Company’s real property;
and increasing to $25.0 million the total consideration that the Company may use for acquisitions without obtaining
the Lender’s consent, as long as no event of default exists.
The 2019 Restated Credit Agreement allows Escalade to request the issuance of letters of credit of up to $5.0 million.
48
On December 14, 2020, the Company entered into the Third Amendment dated as of December 14, 2020 (the “Third
Amendment”) to the 2019 Restated Credit Agreement dated as of January 21, 2019. Under the terms of the Third
Amendment, the maximum availability under the senior revolving credit facility increased to $75.0 million, up from
$50.0 million. The maturity date of the revolving credit facility was extended to December 14, 2023. In addition to
the increased borrowing amount and extended maturity date, other significant changes reflected in the Third
Amendment include: increases in borrowing base availability if the Company’s funded debt to EBITDA ratio is less
than 1.75 to 1:00; increasing to $30.0 million the total consideration that the Company may use for acquisitions
without obtaining the Lender’s consent, as long as no event of default exists; resetting the maximum authorized
stock repurchases to $15.0 million for the period commencing upon entry into the Third Amendment; increasing the
interest rate on borrowings by twenty five basis points; increasing the unused facility fee by five basis points; and
adding more specific provisions and procedures for replacement of LIBOR if and when LIBOR would no longer be
the benchmark for determining interest rates.
Each loan will bear interest at the Adjusted LIBO Rate for the interest period in effect plus the Applicable Rate.
Applicable Rate means the applicable rate per annum set forth below, based upon Escalade’s Funded Debt to
Adjusted Ratio as of the most recent determination date:
Funded Debt to
EBITDA Ratio
Revolving
Eurodollar
Borrowing
ABR
Revolving
Borrowing
Letter of
Credit Fee
Commitment
Fee
Category 1
Greater than or equal
to 2.50 to 1.0
Category 2
Greater than or equal
to 1.50 to 1.0 but
less than 2.50 to 1.0
Category 3
Less than 1.50 to 1.0
2.25%
0.25%
2.25%
0.35%
2.00%
-0-
2.00%
0.35%
1.75%
(0.25%)
1.75%
0.35%
The Applicable Rate shall be determined as of the end of each quarter based upon the Company’s annual or quarterly
consolidated financial statements and shall be effective during the period commencing the date of delivery to the agent.
Indebtedness under the 2019 Restated Credit Agreement continues to be collateralized by liens on all of the present
and future equity of each of the Company’s and Indian Industries’ domestic subsidiaries and substantially all of the
assets of their respective assets pursuant to the Pledge and Security Agreement dated January 25, 2019 by and
among the Company, Indian Industries, their domestic subsidiaries, and Chase. The 2019 Pledge and Security
Agreement supersedes the pledge and security agreements previously entered into by the Company, Indian
Industries, and their domestic subsidiaries. In addition, each direct and indirect domestic subsidiary of the Company
and Indian Industries, Inc. continues to unconditionally guarantee all of the indebtedness of Escalade arising under
the 2019 Restated Credit Agreement pursuant to the terms thereof. The subsidiary guarantees arising under the 2019
Restated Credit Agreement supersede the unlimited continuing guaranty agreements previously entered into by such
domestic subsidiaries.
Long-Term Debt
Long-term debt at fiscal year-ends was as follows:
In Thousands
2020
2019
Senior secured revolving credit facility of $75.0 million with a
maturity of December 14, 2023. The interest rate at December 26,
2020 was 2.154%.
$ 30,073
$ --
49
Note 8 —
Earnings Per Share
The shares used in the computation of the Company’s basic and diluted earnings per common share are as follows:
In Thousands
2020
2019
2018
Weighted average common shares outstanding
Dilutive effect of stock options and restricted stock units
Weighted average common shares outstanding, assuming dilution
14,096
129
14,225
14,407
32
14,439
14,422
55
14,477
Number of anti-dilutive stock options and unvested restricted stock units
58
80
70
Weighted average common shares outstanding, assuming dilution, includes the incremental shares that would be
issued upon the assumed exercise of stock options outstanding.
Note 9 —
Employee Benefit Plans
The Company has an employee profit-sharing salary reduction plan, pursuant to the provisions of Section 401(k) of
the Internal Revenue Code, for all employees. The Company’s contribution is a matching percentage of the employee
contribution as determined by the Board of Directors annually. The Company’s expense for the plan was $841
thousand, $816 thousand and $715 thousand for 2020, 2019 and 2018, respectively.
Note 10 — Stock Compensation Plans
In May 2017, Shareholders approved the Escalade, Incorporated 2017 Incentive Plan (2017 Incentive Plan), which
is an incentive plan for key employees, directors and consultants with various equity-based incentives as described
in the plan document. The 2017 Incentive Plan is a replacement for the 2007 Incentive Plan, which expired at the
end of April 2017. All options issued and outstanding under the expired plans will remain in effect until exercised,
expired or forfeited.
The 2017 Incentive Plan is administered by the Board of Directors or a committee thereof, which is authorized to
determine, among other things, the key employees, directors or consultants who will receive awards under the plan,
the amount and type of award, exercise prices or performance criteria, if applicable, and vesting schedules. Under
the original terms of the plan and subject to various restrictions contained in the plan document, the total number
of shares of common stock which may be issued pursuant to awards under the Plan may not exceed 1,661,598.
Restricted Stock Awards
During 2020, and pursuant to the 2017 Incentive Plan, in lieu of cash payments of director fees, the Company
awarded to certain directors 9,448 shares of common stock. In 2020, the Company awarded 22,850 restricted stock
units to directors, 113,669 restricted stock units and 35,000 shares of restricted stock to employees. The restricted
stock units awarded to directors time vest over two years (one-half one year from grant date and one-half two years
from grant date) provided that the director is still a director of the Company at the vest date. Director restricted
stock units are subject to forfeiture, except for termination of services as a result of retirement, death or disability,
if on the vesting date the director no longer holds a position with the Company. All of the 2020 restricted stock
units awarded to employees time vest over three years (one-third one year from grant, one-third two years from
grant and one-third three years from grant) provided that the employee is still employed by the Company on the
vesting date, and 18,268 of such restricted stock units are also subject to performance conditions. The 35,000 shares
of restricted stock vest over three years (40% one year from grant, 30% two years from grant and 30% three years
from grant) provided that the employee is still employed by the Company on the vesting date.
50
A summary of restricted stock awards activity is as follows:
Non-vested stock units as of December 29, 2018
Granted
Vested
Forfeited
Non-vested stock units as of December 28, 2019
Granted
Vested
Forfeited
Non-vested stock units as of December 26, 2020
Number of
Shares
Weighted
Average Grant
Date Fair Value
125,987
47,300
(28,888)
(15,763)
128,636
171,519
(56,079)
--
244,076
$12.05
11.54
12.40
12.08
$11.78
7.67
11.39
--
$8.98
When vesting is dependent on certain market criteria, the fair value of restricted stock units is determined by the
use of Monte Carlo techniques. The market price of the Company’s stock on the grant date is used to value
restricted stock units where vesting is not contingent on market criteria. In 2020, 2019, and 2018 the Company
recognized $1,011 thousand, $505 thousand, and $591 thousand respectively in compensation expense related to
restricted stock units and as of December 26, 2020 and December 28, 2019, there was $926 thousand and $622
thousand respectively, of unrecognized compensation expense related to restricted stock units.
Stock Options
Total compensation expense recorded in the statements of operations for 2020, 2019 and 2018 relating to stock
options was $5 thousand, $8 thousand and $13 thousand, respectively. As of December 28, 2019 there was $5
thousand of total unrecognized compensation costs related to stock options. No stock options were awarded during
2020, 2019 or 2018.
The following table summarizes option activity for each of the three years ended 2020:
Incentive Stock Options
Granted
Outstanding
Director Stock Options
Granted
Outstanding
2020
2019
2018
--
--
--
10,000
20,000
20,000
--
--
--
--
--
15,000
The following table summarizes stock option transactions for the three years ended 2020:
2020
Shares
Option Price
2019
Shares Option Price
2018
Shares Option Price
Outstanding at beginning of year
Issued during year
Canceled or expired
Exercised during year
Outstanding at end of year
Exercisable at end of year
Weighted-average fair value of
options granted during the year
20,000
--
--
(10,000)
10,000
10,000
--
$14.39
--
--
$14.39
$14.39
35,000$11.86 to $14.39
44,250 $5.85 to $14.39
--
$11.86
$11.86
$14.39
--
(5,000)
(10,000)
20,000
6,666
--
--
--
--
(9,250)
35,000$11.86 to $14.39
15,000
$5.85
--
The total intrinsic value of options exercised was $0.1 million, $0.0 million and $0.1 million for 2020, 2019 and
2018, respectively.
51
The following table summarizes information about stock options outstanding at December 26, 2020:
Range of
Exercise Prices
Number of
Shares
Weighted-Average
Remaining
Contractual Life
Weighted-Average
Exercise Price
Number of
Shares
Weighted-Average
Exercise Price
Options Outstanding
Options Exercisable
$14.39
10,000
1.17 years
$ 14.39
10,000
$ 14.39
During the year ended December 26, 2020, the following activity occurred under the Company’s stock option plan:
Nonvested balance, beginning of year
Granted
Vested
Forfeited
Nonvested balance, end of year
Note 11 — Other Comprehensive Loss
The components of other comprehensive loss were as follows:
Number of
Options
Weighted Average Grant
Date Fair Value
13,334
--
(13,333)
--
--
$ 2.52
--
$ 2.52
--
$ --
In Thousands
2020
2019
Change in foreign currency translation adjustment
before reclassifications
Amounts reclassified from comprehensive income due
to a divestiture of equity investment
--
--
2018
$ (1,119)
3,729
--
--
Note 12 — Provision for Taxes
Income before taxes and the provision for taxes consisted of the following:
In Thousands
Income before taxes:
Provision (benefit) for taxes:
Current
Federal
State
Deferred
Federal
State
2020
2019
2018
$ 32,922
$ 8,934
$ 26,442
$ 5,479
854
6,333
665
(10)
655
$ 6,988
$ 1,419
$ 4,574
129
1,548
367
(239)
128
$ 1,676
486
5,060
591
349
940
$ 6,000
52
The provision for income taxes was computed based on financial statement income. A reconciliation of the
provision for income taxes to the amount computed using the statutory rate follows:
In Thousands
Income tax at statutory rate
Increase (decrease) in income tax resulting from
State tax expense, net of federal effect
Federal true-ups
Federal tax credits
Effect of foreign tax rates
Valuation allowances (state and foreign)
Captive insurance earnings
Incentive stock options
Tax Cuts & Jobs Act of 2017
Other
Recorded provision for income taxes
2020
2019
2018
$ 6,914
$ 1,876
$ 5,553
668
(103)
(114)
--
--
(443)
(4)
--
70
$ 6,988
(86)
(60)
(93)
--
--
--
(1)
--
40
$ 1,676
660
(23)
(115)
(304)
(150)
(263)
(9)
588
63
$ 6,000
The provision for income taxes was computed based on financial statement income. In accordance with FASB ASC
740, the Company has an uncertain tax position as of and for the years ended December 26, 2020. The Company
did not have an uncertain tax position for the year ended December 28, 2019. Interest costs and penalties related to
income taxes are classified as interest expense and selling, general and administrative costs, respectively in the
Company’s financial statements. The Company and its subsidiaries file income tax returns in the U.S. federal
jurisdiction, and multiple state and foreign jurisdictions. The Company is subject to future examinations by federal,
state and other tax authorities for all years after 2016.
The Company has state, net of federal benefit, research tax credit carryforwards of $353 thousand as of December
26, 2020. The state research tax credit carryforwards begin to expire in 2020. A valuation allowance has been
established in the amount of $27 thousand related to the state tax credit carryforwards, leaving an ending deferred,
net of federal benefit, in the amount of $326 thousand. The valuation allowance is based on the historical results
and estimated future results of the Company, as it is the judgment of management not all of these tax carryforward
attributes will be realized before they begin to expire.
At December 26, 2020, the Company had domestic federal income taxes receivable of $180 thousand, domestic
state income taxes payable of $123 thousand, and transition tax payable of $0.4 million recorded. At December 28,
2019, the Company had domestic federal income taxes payable of $41 thousand, domestic income taxes receivable
of $204 thousand and a transition tax payable of $387 thousand recorded.
53
The components of the net deferred tax liabilities are as follows:
In Thousands
Assets
Employee benefits
Valuation reserves
Stock based compensation
Federal and state credits
Lease obligation
Other
Net operating loss carry forward
Total assets
Liabilities
Property and equipment
Goodwill and intangible assets
Lease – right of use asset
Prepaid insurance
Total liabilities
Valuation Allowance
Beginning balance
Increase during period
Ending balance
2020
2019
$ --
1,042
297
353
378
29
2
2,101
(1,024)
(4,685)
(376)
(182)
(6,267)
$ 55
779
208
347
--
--
--
1,389
(470)
(4,278)
--
(178)
(4,926)
--
(27)
(27)
$ (4,193)
--
--
--
$ (3,537)
Deferred tax assets (liabilities) are included in the consolidated balance sheets as follows:
In Thousands
Deferred income tax asset – current
Deferred income tax asset (liability) – long-term
2020
$ --
(4,193)
$ (4,193)
2019
$ --
(3,537)
$ (3,537)
As of December 26, 2020, the Company had deferred tax assets recorded related to state net operating losses of $2
thousand. The net operating losses will begin to expire in 2031.
The following table reconciles the total amounts of unrecognized tax benefits:
In Thousands
2020
2019
2018
Balance at beginning of year
Increases related to prior year tax positions
Decreases related to prior year tax positions
Increases related to current year tax positions
Settlements
Closure of tax years
Balance at end of year
$ --
-
-
61
-
-
$ 61
$ --
-
-
-
-
-
$ --
$ --
-
-
-
-
-
$ --
The total amount of unrecognized tax benefits, net of federal income tax benefits, of $48 thousand as of December
26, 2020, that if recognized, would affect the effective tax rate on income from continuing operations.
The Company had no accrued interest and penalties related to taxes, recognized as a liability, as of December 26,
2020.
54
The Company has assessed its risk associated with all tax return positions and believes its tax reserve estimate
reflects its best estimate of the deductions and positions it will be able to sustain, or it may be willing to concede
as part of a settlement. At this time, the Company does not anticipate any change in its tax reserves in the next
twelve months. The Company will continue to monitor the progress and conclusion of all audits and will adjust its
estimated liability as necessary.
Note 13 — Operating Segment and Geographic Information
The following table presents certain operating segment information.
In Thousands
2020
2019
2018
Sporting Goods
Net revenue
Operating income
Interest expense
Provision for taxes
Net income
Identifiable assets
Depreciation & amortization
Capital expenditures
All Other
Net revenue
Operating income (loss)
Interest expense (income)
Provision (benefit) for taxes
Net income
Identifiable assets
Depreciation & amortization
Capital expenditures
Total
Net revenue
Operating income
Interest expense
Provision for taxes
Net income
Identifiable assets
Depreciation & amortization
Capital expenditures
$ 273,649
32,685
250
8,951
23,625
211,253
4,016
5,455
--
347
--
(1,963)
2,309
9,452
--
--
273,649
33,032
250
6,988
25,934
220,705
4,016
5,455
$ 180,541
8,611
358
2,272
5,997
141,167
4,031
2,185
$ 175,780
13,999
427
3,739
9,869
142,490
3,857
2,818
--
664
(2)
(596)
1,261
7,612
--
--
180,541
9,275
356
1,676
7,258
148,779
4,031
2,185
--
(182)
--
2,261
10,573
7,037
--
--
175,780
13,817
427
6,000
20,442
149,527
3,857
2,818
Each operating segment is individually managed and has separate financial results that are reviewed by the
Company’s management. There were no changes to the composition of segments in 2020. The accounting policies
of the reportable segments are the same as those described in the summary of significant accounting policies.
The Sporting Goods segment consists of home entertainment products such as table tennis tables and accessories;
basketball goals; pickleball; pool tables and accessories; outdoor playsets; water sports; soccer and hockey tables;
archery equipment and accessories; and fitness, arcade and darting products. Customers include retailers, dealers and
wholesalers located throughout North America, Europe and the rest of the world.
All Other consist of general and administrative expenses not specifically related to the operating business segments
and included investment income from equity investments.
55
Interest expense is allocated to operating segments based on working capital usage and the provision for taxes is
allocated based on a combined federal and state statutory rate of 27.5% adjusted for actual taxes on foreign income.
Permanent tax adjustments and timing differences are included in the all other segment.
Identifiable assets are principally those assets used in each segment. The assets in the all other segment are principally
cash and cash equivalents; deferred tax assets; and investments.
The Company had net assets of $16.0 million and $8.7 million located in Mexico as of December 26, 2020 and
December 28, 2019, respectively.
During 2020, 2019 and 2018, the Company had one customer, Amazon.com, Inc., that accounted for approximately
23%, 21% and 19%, respectively of the Company’s revenues. During 2020, 2019 and 2018 the Company had
another customer, Dick’s Sporting Goods, which accounted for approximately 13%, 13% and 13%, respectively, of
the Company’s revenues.
As of December 26, 2020, the Company had approximately 26%, 14% and 11% of its total accounts receivable
with Amazon.com, Inc., Academy Sports and Outdoors, Inc. and Dick’s Sporting Goods, respectively. As of
December 28, 2019, the Company had approximately 27% and 18% of its total accounts receivable with
Amazon.com, Inc. and Dick’s Sporting Goods, respectively.
As of December 26, 2020, approximately 28 employees of the Company's labor force were covered by a collective
bargaining agreement that expires May 1, 2021.
Raw materials for Escalade’s various product lines consist of wood, tempered glass, particle board, standard grades
of steel and steel tubing, aluminum, engineering plastics, fiberglass and packaging materials. Escalade relies upon
domestic, Mexico, and Asian suppliers for these materials and upon various Asian manufacturers for many of its
products.
Net sales are attributed to country based on location of customer. Net sales by geographic region/country were as
follows:
In Thousands
2020
2019
2018
North America
Europe
Other
$ 270,173
1,555
1,921
$ 273,649
$ 178,069
1,001
1,471
$ 180,541
$ 172,656
965
2,159
$ 175,780
Note 14 — Summary of Quarterly Results
In thousands, except per share data (unaudited)
March 21
July 11
October 6
December 26
2020
Net Sales
Operating Income
Net income
Basic Earnings Per Share Data:
Diluted Earnings Per Share Data:
$ 37,289
2,424
1,951
$ 0.14
$ 0.14
$ 83,524
10,872
8,710
$ 0.62
$ 0.61
$ 78,069
12,815
10,186
$ 0.72
$ 0.71
$ 74,767
6,921
5,087
$ 0.36
$ 0.36
56
In thousands, except per share data (unaudited)
March 23
July 13
October 5
December 28
2019
Net Sales
Operating Income
Net income
Basic Earnings Per Share Data:
Diluted Earnings Per Share Data:
Note 15 — Acquisitions
$ 32,102
394
267
$ 0.02
$ 0.02
$ 55,639
2,471
1,876
$ 0.13
$ 0.13
$ 45,756
2,899
2,540
$ 0.18
$ 0.18
$ 47,044
3,511
2,575
$ 0.18
$ 0.18
All of the Company’s acquisitions have been accounted for using the purchase method of accounting.
2020
In October 2020, the Company acquired the assets of the billiard table, game room, and recreational product lines
of American Heritage Billiards, including the related intellectual property. In December 2020, the Company
acquired substantially all of the business and assets of Revel Match LLC, dba RAVE Sports, a brand known for its
innovative and high-quality water recreation products. Total consideration paid for the acquisitions was $15.4
million. The consideration paid by the company for these acquisitions was allocated to the assets acquired, net of
the liabilities assumed, based upon their estimated fair values as of the date of the acquisition. The excess of the
purchase price over the estimated fair value of the assets acquired, net of the estimated fair value of the liabilities
assumed, was recorded as goodwill. The recorded goodwill is deductible for tax purposes. The allocation of the
purchase price, including values assigned to assets, liabilities and the amount of goodwill and intangible assets are
represented in the table below.
In thousands
Assets acquired and liabilities assumed:
Accounts receivable, net
Inventories, net
Other assets
Goodwill
Intangible assets
Accounts payable
Other liabilities
$ 399
3,797
936
5,946
5,277
(576)
(333)
$15,446
2019
During 2019, the Company acquired Dura Pickleball, a brand known for being the official ball of the US Open
Pickleball Championships, Tournament of Champions, and the USA National Pickleball Championships for a total
consideration of cash and note payable to seller of $900 thousand.
2018
During 2018, the Company acquired Victory Tailgate, LLC, a brand known for its premium licensed and custom
tailgating games for total consideration of cash of approximately $7.2 million, subject to adjustments for working
capital and consideration of holdback provision.
57
The consideration paid by the Company for this acquisition was allocated to the assets acquired, net of the liabilities
assumed, based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over
the estimated fair value of the assets acquired, net of the estimated fair value of the liabilities assumed, was recorded
as goodwill. The allocation of the purchase price, including values assigned to assets, liabilities and the amount of
goodwill and intangible assets are represented in the table below.
In thousands
Assets acquired and liabilities assumed:
Cash
Accounts receivable
Inventories
Other assets
Goodwill
Intangible assets
Accounts payable
Other liabilities
Consideration of holdback provision
Note 16 — Commitments and Contingencies
$ 94
252
603
2,003
4,833
1,500
(2,088)
(314)
$ 6,883
286
$7,169
The Company is involved in litigation arising in the normal course of its business. The Company does not believe
that the disposition or ultimate resolution of existing claims or lawsuits will have a material adverse effect on the
business or financial condition of the Company.
The Company has entered into various agreements whereby it is required to make royalty and license payments. At
December 26, 2020, the Company had future estimated minimum non-cancelable royalty and license payments as
follows:
In Thousands
2021
2022
2023
2024
2025
Thereafter
Amount
$ 942
1,344
545
560
579
2,524
$ 6,494
Note 17 — Fair Values of Financial Instruments
The following methods were used to estimate the fair value of all financial instruments recognized in the
accompanying balance sheets at amounts other than fair values.
Cash and Cash Equivalents and Time Deposits
Fair values of cash and cash equivalents approximate cost due to the short period of time to maturity.
Notes Payable and Long-term Debt
The Company believes the carrying value of short-term debt, including current portion of long-term debt, and long-
term debt adequately reflects the fair value of these instruments.
58
The following table presents estimated fair values of the Company’s financial instruments in accordance with FASB
ASC 825 at December 26, 2020 and December 28, 2019.
2020
In Thousands
Financial assets
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Fair Value
Cash and cash equivalents
$ 3,505
$ 3,505
$ --
$ --
Financial liabilities
Long-term debt
2019
In Thousands
Financial assets
$30,073
$ --
$30,073
$ --
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Fair Value
Cash and cash equivalents
$ 5,882
$ 5,882
$ --
$ --
Note 18 — Revenue from Contracts with Customers
Revenue Recognition – Effective December 31, 2017, we adopted ASC 606. The adoption of this standard
did not impact the timing of revenue recognition for customer sales. Revenue is recognized when obligations under
the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our goods
at a point in time based on shipping terms and transfer of title. Revenue is measured as the amount of consideration
we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent
with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are
reported within revenue.
Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net
sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments
and primarily fall into one of three categories; returns, warranties and customer allowances.
Returns – The Company records an accrued liability and reduction in sales for estimated product returns
based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return
authorizations that have been communicated by the customer.
Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued
liability and reduction in sales for estimated future warranty claims based upon historical experience and
management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years
are recorded as an adjustment to the accrued liability and sales in the current year.
Customer Allowances – Customer allowances are common practice in the industries in which the Company
operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances
and are accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and
accruals are adjusted, if necessary, as additional information becomes available.
59
Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods
brands in basketball goals, archery, indoor and outdoor game recreation and fitness products. These products are
sold through multiple sales channels that include; mass merchants, specialty dealers, key on-line retailers (“E-
commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:
All Amounts in Thousands
Gross Sales by Channel:
Mass Merchants
Specialty Dealers
E-commerce
International
Other
Total Gross Sales
Less: Gross-to-Net Sales Adjustments
Returns
Warranties
Customer Allowances
Total Gross-to-Net Sales Adjustments
Total Net Sales
December
26, 2020
Years Ended
December
28, 2019
December
29, 2018
$104,147
80,419
109,297
8,226
2,312
304,401
7,837
1,648
21,267
30,752
$273,649
$66,428
53,878
74,029
6,562
2,475
203,372
5,415
1,736
15,680
22,831
$180,541
$68,196
59,211
58,026
8,533
1,828
195,794
5,085
1,448
13,481
20,014
$175,780
Contract Balances – The following table provides information on changes in our contract liability balances
during the twelve month periods ended December 26, 2020, December 28, 2019 and December 29, 2018. The
contract liability recorded during the twelve month periods ended December 29, 2018 is related to a lump sum
payment received for consulting services to be provided over the next year. The contract liability was amortized,
and revenues recognized, evenly over the year. At December 29, 2018, the contract liability balance was $413 and
was reported within Accrued liabilities in our Consolidated Balance Sheet. During the year ended December 28,
2019, the liability was fully amortized.
All Amounts in Thousands
Increase due to cash received, excluding amounts
recognized as revenue during the period
Revenue recognized that was included in the contract
liability balance at the beginning of the period
Increase in contract liability during the period
Note 19 — Subsequent Events
December
26, 2020
Years Ended
December
28, 2019
December
29, 2018
$ -
-
$ -
$ -
(413)
$ -
$ 413
-
$ 413
On February 22, 2021, the Company announced that Scott J. Sincerbeaux, its President and Chief Executive
Officer had resigned from all of his positions with Escalade, including as Chief Executive Officer and President
and as a director, on terms being mutually agreed upon by the Company and Mr. Sincerbeaux, effective February
19, 2021. Also on February 19, 2021, the Board of Directors of Escalade appointed Walter P. Glazer, Jr. as
Escalade’s Interim Chief Executive Officer and President effective immediately. Mr. Glazer, age 62, has served as
a director at Escalade since 2015 and has served as Chairman of the Board of Directors at Escalade since May of
2018, and he will continue in that role in addition to being Chief Executive Officer and President. Mr. Glazer has
served as Chief Executive Officer with Speedball Art Products Company since 1997. Mr. Glazer has no family
relationship with any other executive officer or director of Escalade. Mr. Glazer has not been involved in any
related party transaction with Escalade.
60
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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
By:
/s/ Walter P. Glazer, Jr.
Walter P. Glazer, Jr.
Interim President and Chief Executive Officer
February 22, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ Walter P. Glazer, Jr.
Walter P. Glazer, Jr.
/s/ Katherine F. Franklin
Katherine F. Franklin
/s/ Edward E. Williams
Edward E. Williams
/s/ Richard Baalmann, Jr.
Richard Baalmann, Jr.
/s/ Patrick Griffin
Patrick Griffin
/s/ Stephen R. Wawrin
Stephen R. Wawrin
Chairman and Director and Interim
President and Chief Executive
Officer
February 22, 2021
Director
Director
Director
February 22, 2021
February 22, 2021
February 22, 2021
Director
February 22, 2021
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
February 22, 2021
61
Exhibit 21
ESCALADE, INCORPORATED AND SUBSIDIARIES
List of Subsidiaries at December 26, 2020
Parent
Escalade, Incorporated
Subsidiaries (1)
Indian Industries, Inc.
U.S. Weight, Inc.
Lifeline Products, LLC
Harvard Sports, Inc.
Harvard California, S. DE R.L. C.V.
Bear Archery, Inc.
Escalade Sports Playground, Inc.
Escalade Sports (Shanghai) Co., Ltd.
Wedcor Holdings, Inc.
EIM Company, Inc.
SOP Services, Inc.
Escalade Insurance, Inc.
Goalsetter Systems, Inc.
Victory Tailgate, LLC
Victory Made, LLC
State of or Other
Jurisdiction of
Incorporation
Percent of Voting
Securities Owned
by Parent
Indiana, USA
Indiana, USA
Illinois, USA
Illinois, USA
California, USA
B.C. Mexico
Florida, USA
North Carolina, USA
China
Indiana, USA
Nevada, USA
Nevada, USA
Nevada, USA
Iowa, USA
Florida, USA
Florida, USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1) Each subsidiary Company has been included in Consolidated Financial Statements for all periods following its
acquisition. See Notes to Consolidated Financial Statements.
62
Exhibit 23.1
Independent Registered Public Accounting Firm Consent
We consent to the incorporation by reference in the registration statement of Escalade, Incorporated on Form S-8
(File Nos. 333-142756, 333-183322 and 333-218340) of our report dated February 22, 2021, on our audits of the
consolidated financial statements of Escalade, Incorporated as of December 26, 2020, and December 28, 2019, and
for each of the three years in the period ended December 26, 2020, which report is included in this Annual Report
on Form 10-K.
/s/ BKD, LLP
BKD, LLP
Evansville, Indiana
February 22, 2021
63
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Walter P. Glazer, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Escalade, Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this annual report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the
registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: February 22, 2021
/s/ Walter P. Glazer, Jr.
Walter P. Glazer, Jr.
Interim Chief Executive Officer
64
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Stephen R. Wawrin, certify that:
1. I have reviewed this annual report on Form 10-K of Escalade, Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this annual report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the
registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: February 22, 2021
/s/ Stephen R. Wawrin
Stephen R. Wawrin
Chief Financial Officer
65
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Escalade, Incorporated (the Company) on Form 10-K for the period ending
December 26, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Walter
P. Glazer, Jr, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company.
/s/ Walter P. Glazer, Jr.
Walter P. Glazer, Jr.
Interim Chief Executive Officer
February 22, 2021
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Escalade, Incorporated (the Company) on Form 10-K for the period ending
December 26, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I,
Stephen R. Wawrin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition
and result of operations of the Company.
/s/ Stephen R. Wawrin
Stephen R. Wawrin
Chief Financial Officer
February 22, 2021
66
CORPORATE INFORMATION
CORPORATE HEADQUARTERS
817 MAXWELL AVENUE
EVANSVILLE, IN 47711
812.467.1200
ESCALADEINC.COM
COMMON STOCK LISTING
NASDAQ
(SYMBOL: ESCA)
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BKD, LLP
TRANSFER AGENT
BROADRIDGE CORPORATE ISSUE SOLUTIONS, INC.
PO BOX 1342
BRENTWOOD, NY 11717
877.830.4936
BROADRIDGE.COM
INVESTOR RELATIONS
PATRICK GRIFFIN
812.467.1358
The Company’s annual shareholder meeting will be
held at 8:00 am (Central Daylight Savings Time) on
April 30, 2021 at the Corporate offices located at 817
Maxwell Avenue Evansville, IN 47711