2021 ANNUAL REPORT
THE ESCALADE FAMILY
WORKING TOGETHER TO CREATE MEMORABLE MOMENTS
MESSAGE TO
OUR SHAREHOLDERS
One hundred years ago, the United States and the world were returning to normal after the Spanish Flu pandemic.
The malaise and disenchantment following world war and a devastating pandemic soon gave way to a period of
energy and economic growth in the Roaring ‘20s. 1922 also marked the formation of the company which became
Escalade. From the Williams Shoe Company to Indian Archery and Toy to Martin Yale and beyond, Escalade’s history
is notable for our ability to pivot and adapt. I invite you to take a moment to review the timeline in this annual report—
it is a remarkable 100-year journey with many twists and turns that brings us into 2022. We have deep respect for
those before us who overcame challenges and pursued new opportunities for future success and helped set the
stage for what has become Escalade today. With that comes a responsibility to build upon our foundation for the
next 100 years.
2021 was both challenging and productive for our company. The worldwide supply chain issues challenged our teams,
yet they worked together tirelessly and produced remarkable results. Net sales increased 14.6% on top of the 51.6%
Covid fueled increase in 2020. While many areas, notably home fitness came back to trendline, Escalade was able to
gain market share in several key areas during the year and continue to grow beyond Covid.
The enormous supply chain disruptions which became daily news were a challenge for nearly every company sourcing
or producing consumer and industrial products. Demurrage, dwell times, detention, transloading—all terms normally
limited to specialty trade journals and logistics specialists became daily conversation. Escalade’s growth and market
share gains are due, in large part, to the tireless, around the clock efforts of our professionals in sourcing, purchasing,
manufacturing, logistics, distribution, and sales. It truly was a team effort to keep goods moving to serve our retail
partners and consumers. As a company, we absorbed enormous costs to expedite, or merely secure space to move
our goods. Escalade’s philosophy is to manage costs, become more efficient, and to raise prices only as a last resort.
In 2021 it became a matter of balancing the amount and timing of supply, the excess cost of moving goods, all with
an understanding of consumer demand and price elasticity as we raised prices throughout the year.
Our cost of goods rose faster than we raised prices. Gross margin declined 275 basis points, yet we were able to
generate a 3.1% increase in gross profit dollars due to the higher sales. I find this to be an acceptable trade-off as
we intend to hold on to our market share gains while the supply/demand imbalance and commodity prices will be
corrected over time through market forces.
Tight overhead cost control has been a hallmark of Escalade and 2021 was no exception. Selling, General &
Administrative costs as a percentage of sales declined from 14.7% to 13.8%. We’ve likely taken that as far as it can
go. Our plan going forward is to invest more to drive sales and higher gross margins.
On the bottom line, our diluted Earnings Per Share (EPS) declined 3% from $1.82 to $1.76. Our focus and objective is
always to increase shareholder value, and one key measure is EPS. From that standpoint, 2021 was a disappointment.
When considering that excess supply chain, currency exchange, and raw materials costs negatively impacted EPS by
over 50 cents per share in 2021, the picture changes a bit. I am proud of the accomplishments of our 676 dedicated
employees and inspired by their passion and commitment to serving our loyal customers.
We enter 2022 ready to take advantage of opportunities and overcome the challenges which will come our way.
Among Escalade’s advantages are our hybrid manufacturing/sourcing strategy, our decentralized organization with
robust corporate support, our ability to invest capital to generate long term growth and profitability, and now our
100-year heritage.
HYBRID MANUFACTURING/SOURCING STRATEGY
While many consumer product companies closed their factories and moved all production offshore over the past 20+
years, Escalade chose to retain domestic manufacturing capability and balance that with importing when necessary.
Today, we have the flexibility to produce in-house or to import as conditions dictate. In the current environment we are
I
bringing production back into our domestic manufacturing
facilities. Specific onshoring examples include entry level
compound archery bows
that we are moving back into our Gainesville, Florida
factory and previously imported umbrella bases which
will now be produced at US Weight in Olney, Illinois. Our
Victory Tailgate production facility in Orlando, Florida
continues to offer short run customized and licensed
games with the ability to deliver in days which cannot be
matched by offshore sourcing. Domestic production can
be cost competitive and provides additional advantages
of flexibility, quick response, and inventory control.
DECENTRALIZED ORGANIZATION
I wrote last year about our decentralized business units,
their ability to make decisions close to the consumer, and
the benefits they derive from Escalade’s corporate subject
matter experts and financial resources. Our business units
delivered many great wins in 2021:
• We increased market share in Archery Bows,
Indoor Games, Outdoor Games, and several other
categories.
• We gained important distribution in Basketball and
regained Table Tennis distribution against private
label alternatives.
• Onix solidified its position as the leading authentic
brand in the rapidly growing sport of Pickleball.
• We developed compelling new products in several
areas, notably Playground, Archery Accessories,
and American Heritage.
• Our newly acquired Rave water sports business
saw substantial growth despite being held back
by supply chain issues.
• And our Victory Tailgate business is preparing to
move into new, expanded facilities in Orlando, FL
that will support future growth.
CAPITAL ALLOCATION
We believe that prudent allocation of our shareholders’
capital is one of our greatest responsibilities. We evaluate
the relative merits of reinvestment in our current
operations, returning capital to shareholders through cash
dividends or share repurchases, acquisition and divestiture
of businesses, and debt reduction. Over the past 5 years
we have used each of these with the consistent goal
of increasing shareholder value.
REI NVESTMENT IN OUR CORE BUSINESS
Our highest priority is reinvesting in our existing
businesses to protect our market position, to support
growth, and to achieve greater efficiencies. During 2021
we invested $9.7 million of capital to support our current
portfolio. Among the most significant projects, we:
•
Increased our Evansville distribution center square
footage 20% by building out vacant space
we had acquired in 2020. During the year we
prepared the structure, added warehouse racking,
and relocated our high-speed package line. We
own an additional 140,000 square feet
of adjacent space for future expansion.
• Acquired our previously leased US Weight
manufacturing facility in Olney, IL along with
another nearby warehouse for our Lifeline
Fitness business. During a period of rapidly rising
warehouse rents, we have secured the home for
these businesses and bought the buildings at a
steep discount to replacement cost.
• Purchased $1.4 million in tooling and equipment
to improve efficiency and expand capacity in our
Gainesville FL and Olney IL production facilities.
•
Invested nearly $1 million in IT, website, and
related digital projects.
RETURNING CAPITAL TO SHAREHOLDERS
During 2021, we returned over $18 million to shareholders
through $7.7 million in cash dividends and $10.4 million
in share repurchases. This brings the three-year total to
$42.5 million.
For the past ten years, we’ve provided steady, growing
cash dividends to our shareholders. During 2021, we paid
quarterly dividends of $0.14 per share for an annual rate
of $0.56 per share. In March 2022, the Escalade Board
approved a dividend increase to $0.15 for the first quarter,
an increase of 7.1%.
Share repurchases are a tax efficient way to return capital
to shareholders. Those who wish to raise cash can sell
shares and pay capital gains tax rather than ordinary
income tax rates. Those who do not sell find that their
proportional ownership of Escalade has increased since
each remaining share represents ownership of a slightly
larger portion of the company.
During 2021 the company repurchased 491,618
shares—3.5% of the 13,919,380 shares outstanding at
the beginning of the year. Over the past three years,
we’ve repurchased 8.1% of our stock. Recent purchases
were completed at prices well above the current price
at the time of this writing in March 2022. This reflects a
significant difference of opinion between your board and
the stock market on the intrinsic value of Escalade. We’ll
know who was right when we look back in a few years.
ACQUISITIONS
Over the years, Escalade has bought many businesses and sold a few. Our General Managers and Corporate
Development team are always on the lookout and evaluate dozens of opportunities every year. We have completed
bolt-on acquisitions that fit within existing product lines and acquired platform companies in new, but adjacent
businesses; bought successful companies and assets out of bankruptcy; acquired large, fully operational companies
and small product lines. The common theme is businesses that fit our mission and will increase shareholder value.
While we made no acquisitions in 2021 it was a very busy year in corporate development. The beginning of the
year was devoted to ensuring the successful integration of Rave Sports® which we acquired in December 2020
and the resurrection of American Heritage Billiards® which we acquired out of bankruptcy in October 2020. Both
are progressing with long runways for continued growth and profitability.
The latter half of 2021 was devoted to analysis and negotiation toward an agreement to purchase Brunswick
Billiards®. We signed a definitive agreement on December 30 and I‘d like to personally thank our team members
and their families who gave up much of the holiday season so we could complete this important addition to
Escalade.
Brunswick Billiards was founded in 1845 and is a part of American history. Abraham Lincoln owned a Brunswick
billiards table. In contemporary accounts he described himself as an avid, if not particularly skilled, billiards player
who enjoyed the game and the benefits it provided him. We view ourselves as the steward of this great brand,
and just like all our other great brands, we will invest, protect, and build upon the name and reputation of Brunswick
Billiards.
DEBT REDUCTION
An excellent use of free cash flow can be to delever the balance sheet. Since Escalade sold it’s 50% interest in Stiga
AB in 2017, we’ve not had much debt. Now, with the Brunswick acquisition in 2022, share repurchases over the past
three years, and our buildup of buffer inventories to help manage the slow and unreliable supply chain, we now have
a healthy, but manageable level of debt. For the remainder of 2022, debt reduction will be a focus and excellent
opportunity to increase shareholder value. Given any estimate of the total Enterprise Value of the company, each
dollar of debt reduction becomes a dollar increase in equity value.
On the topic of debt, an important accomplishment during 2021 was negotiating a new credit agreement that
shifted our borrowings from 100% floating rate to a structure that included a $50 million term note with a 2.97%
fixed rate. As interest rates rise, we are locked in with this attractive fixed rate for five years. We also have
substantial flexibility through an expanded revolving credit line. Our finance team did an excellent job working
with our banks to accomplish this. We appreciate the support of JPMorgan Chase, our long-time banking partner
and their professionals who know our business well. We’ve added a relationship with Old National, our hometown
bank based in Evansville, IN and are happy that they are partnering with JPMorgan Chase to help facilitate
Escalade’s growth.
2022 AND BEYOND
As we look ahead, we are fortunate to be in categories that provide joy and satisfaction to so many people as
they participate in healthy recreational and competitive activities. Trends in society should continue to benefit
our businesses. Thank you for joining us on this journey to write the next chapter in Esclade’s story.
Sincerely,
Walter P. Glazer, Jr.
Chairman, Interim Chief Executive Officer and President
Escalade Inc.
III
2021 FINANCIAL HIGHLIGHTS
$
$313.6 MILLION
IN TOTAL REVENUE
14.6% GROWTH
24.6% GROSS PROFIT
MARGIN
2019
2020
2021
$0.50 EPS*
$1.82 EPS*
$1.76 EPS*
*Diluted earnings per share
$
$24.4
MILLION
NET INCOME
10.3% RETURN ON EQUITY
17.1%
RETURN ON ASSETS
SHARE
REPURCHASES
$10.4
MILLION
ANNUAL
DIVIDEND INCREASE
5.7%
ESCA CLOSING
PRICE
12.31.2021
$15.79
2021 ANNUAL REPORT ESCALADE, INC.
FIVE YEAR HISTORICAL SUMMARY (Company Data $ in thousands)
COMPANY DATA
NET SALES
OPERATING INCOME
NET INCOME
INTEREST EXPENSE
2021
2020
2019
2018*
2017
313,612 273,649
180,541
175,780
177,333
31,896
33,032
9,275
13,817
14,600
24,405
25,934
7,258
10,377*
14,061
1,510
250
356
427
804
DEPRECIATION AND AMORTIZATION
4,835
4,016
4,031
3,857
3,910
EBITDA**
37,796
38,204
13,834
18,311*
20,753
CAPITAL EXPENDITURES
9,696
5,455
2,185
2,818
2,745
DIVIDENDS
ACQUISITIONS
7,693
7,466
7,204
7,215
6,607
-
15,581
765
7,169
1,450
SHARE REPURCHASES
10,434
6,739
2,938
10
-
SHAREHOLDERS' EQUITY
146,615
139,156
126,170
128,321
111,670
TOTAL DEBT
WORKING CAPITAL
57,539
30,073
135
-
23,121
122,862
99,326
68,705
71,160
60,718
SHARES OUTSTANDING (DILUTED)
13,866
14,225
14,439
14,477
14,391
PER SHARE DATA (DILUTED)
NET INCOME
BOOK VALUE
$1.76
$1.82
$0.50
$0.72*
$0.98
$10.57
$9.78
$8.74
$8.86
$7.76
NASDAQ LAST PRICE (CALENDAR YEAR)
$15.79
$21.17
$9.83
$11.45
$12.30
DIVIDEND
$0.55
$0.52
$0.50
$0.50
$0.46
FINANCIAL & ANALYTICAL DATA
NET PROFIT MARGIN
RETURN ON ASSETS (AVG)
RETURN ON EQUITY (AVG)
CURRENT RATIO
7.8%
10.3%
17.1%
3.5
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
WORKING CAPITAL / NET SALES
39.2%
36.3%
38.1%
40.5%
34.2%
DEBT / EQUITY
39.2%
21.6%
0.1%
0.0%
20.7%
*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
OUR BRANDS & CATEGORIES
OUTDOOR GAMES
PICKLEBALL
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.
BASKETBALL
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.
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.
2021 ANNUAL REPORT
INDOOR GAMES
BILLIARDS
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.
DARTING
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.
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.
VIIVII
ESCALADE HISTORY
2021 ANNUAL REPORT GLOBAL FOOTPRINT
WITH MANUFACTURING AND SOURCING FLEXIBILITY
IX
Escalade announced and completed its
acquisition of Brunswick Billiards in January,
2022. Brunswick Billiards is the largest and
oldest provider of billiards tables, game
tables, and game room furniture in the
United States and has been the premier
billiards brand since its founding in 1845.
Having been involved in billiards since 1977,
Escalade recognized the enduring strength
of Brunswick Billiards and its great fit with
Escalade’s game room portfolio.
The Brunswick Billiards acquisition enables
Escalade to expand its reach into the
billiards and indoor recreation markets.
Brunswick Billiards complements Escalade’s
portfolio of billiards brands including
Cue & Case®, Lucasi®, Mizerak®, American
Heritage®, and American Legend® as well as
Escalade’s broader offering in the indoor
recreation market including Stiga® table
tennis, Accudart® and Unicorn® darting,
Atomic® game tables, and Victory Tailgate®
licensed and customized games.
Brunswick Billiards is based in Bristol,
Wisconsin and led by its General Manager
John Kazik. We are combining our talented
teams and creating an enduring world-
class billiards business. We look forward
to stewarding Brunswick Billiards into the
future and nourishing Brunswick’s lasting
connection with generations of consumers
who cherish the brand.
2021 ANNUAL REPORT 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 25, 2021
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
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 10, 2021 based on the closing
sale price as reported on the NASDAQ Global Market: $225,896,571.
The number of shares of Registrant's common stock (no par value) outstanding as of February 16, 2022: 13,493,332.
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 26, 2022 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.
[RESERVED]
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
Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
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
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6
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19
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26
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31
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 95 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
Game Tables (Hockey and Soccer)
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®, Air
Water Sports
Billiard Tables and Accessories
Darting
Outdoor Games
Hockey®
RAVE Sports®
American Heritage Billiards®, Brunswick Billiards®, Gold Crown®,
Centennial®, Cue&Case®, Lucasi®, Mizerak®, PureX®, Rage®,
Players®, Minnesota Fats®, Mosconi™
Unicorn®, Winmau®, Arachnid®, Accudart®, Nodor®
Victory Tailgate®, Triumph™ Sports , Zume Games®, Viva Sol®
During 2021, 2020 and 2019, the Company had one customer, Amazon.com, Inc., that accounted for
approximately 21%, 23% and 21%, respectively of the Company’s revenues. During 2021, 2020 and 2019
the Company had another customer, Dick’s Sporting Goods, which accounted for approximately 11%, 13%
and 13%, respectively, of the Company’s revenues.
As of December 25, 2021, the Company had approximately 24%, 17% and 10% of its total accounts
receivable with Amazon.com, Inc., Academy Sports and Outdoors, Inc. and Dick’s Sporting Goods,
respectively. 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.
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
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
backboards, 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, billiards, 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,
investing in product innovation, developing strong brand names, and making strategic acquisitions.
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 expanded its basketball distribution and domestic sourcing 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. On December 30, 2021, Escalade entered into an asset purchase
agreement to acquire the assets of the Brunswick Billiards® business from Life Fitness, LLC. Escalade
completed this acquisition on January 21, 2022, complementing its existing portfolio of billiards brands and
other offerings in the Company’s indoor recreation market.
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.”
4
4
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.
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 25, 2021 and December 26, 2020 were as follows:
Sporting Goods
USA
Mexico
Asia
Total
2021
2020
546
103
27
676
523
160
21
704
Of Escalade’s 676 employees at December 25, 2021, 670 were full time employees and 6 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 25, 2021. A labor contract was negotiated and renewed in May 2021 and
expires on January 31, 2025.
5
5
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 continues to accelerate its timing for placing orders with its suppliers and continues
its efforts to develop other potential sources of products and raw materials. In recent years, Escalade has
increased its sourcing of some products and raw materials from Brazil and Vietnam. Escalade’s acquisition of
the Brunswick Billiards® business may open additional sourcing opportunities.
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.
6
6
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
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 continued expansion and 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 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
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 2021 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, including sales of new product offerings to existing customers, in order
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. Price increases in raw
materials adversely impacted the Company’s net income in fiscal year 2021. 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
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 the Company or any of the significant suppliers terminated or
significantly curtailed its relationship with a significant supplier or the Company, respectively, or if a
significant supplier 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
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 insurance, 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
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 (such as the COVID 19 pandemic);
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
and/or inclusion in market indices such as the Russell 2000.
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.
11
11
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 and 2022,
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 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. The Phase 1 agreement expired December 31, 2021 and no new agreement has been entered into
or appears imminent. Accordingly, 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.
12
12
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.
COVID-19 PANDEMIC RISKS
The COVID-19 pandemic continues to affect 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 25, 2021, economic and health conditions
in the United States and across most of the globe changed rapidly during 2020 and 2021. Demand for the
Company’s products increased, substantially in fiscal year 2020 and remained strong in fiscal year 2021,
most 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 closures, employers requiring or allowing employees to work remotely and/or
implementing furloughs and layoffs, and consumers deciding to spend more time at home due to health and
other considerations. Such increased demand may not continue and/or demand may decrease from historical
levels depending on the uncertain duration and severity of the COVID-19 pandemic, the length of time it
takes for normal economic and operating conditions to resume or permanent changes if such conditions
result from the pandemic, additional governmental actions that may be taken and/or extensions of time for
restrictions that have been imposed or proposed 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. Although the Company largely resumed normal operations in 2021, subject to
increased health protocols having been implemented and easing of the pandemic at times, the pandemic
continues to create uncertainty for the Company. 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.
13
13
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. Although, the recent Omicron
outbreak has increased absenteeism, the Company’s operations have not been materially impacted. The
effects of future variants could be more disruptive. Travel restrictions imposed by the U.S. government and
of foreign countries, continue to limit, or in some cases such as China prohibit, 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 a further 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
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 and 2021 fiscal years compared to 2019, 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 still 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.
14
14
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 current presidential administration, Congress and
the courts may do with respect to future policies, regulations and legal decisions 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) environmental, social and governance issues that could impact the way we
conduct our business; (v) the acquisition of other businesses; (vi) the acquisition, extension, disposition or
abandonment of services or facilities; (vii) reporting and information requirements; and (viii) the
maintenance of accounts and records.
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.
15
15
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.
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.
16
16
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 and other countries notwithstanding the coronavirus pandemic, product
shipments from China and/or other countries 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 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.
17
17
ITEM 2—PROPERTIES
At December 25, 2021, the Company owned or operated from the following locations:
Location
Square
Footage
Owned or
Leased
Use
Evansville, Indiana, USA
771,000
Owned
Rosarito, Mexico
Gainesville, Florida, USA
Olney, Illinois, USA
174,700
154,200
108,500
Owned
Owned
Owned
Olney, Illinois, USA
Orlando, Florida, USA
Orlando, Florida, USA
Orlando, Florida, USA
Eagan, MN, USA
30,000
33,645
61,560
10,587
41,600
Leased
Leased
Leased
Shanghai, China
6,674
Leased
Distribution; sales and marketing;
engineering; administration
Manufacturing and distribution
Manufacturing and distribution
Distribution; sales and marketing;
engineering; manufacturing
Distribution
distribution
Manufacturing and distribution
Manufacturing and distribution
Distribution; sales and marketing;
engineering; administration
Sales and sourcing
Owned
Leased Marketing; manufacturing and
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.
18
18
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 16, 2022, there were approximately 97 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
2,084,585
$13.19
2,084,585
$ 5,475,786
68,547
None
None
$19.29
None
None
2,153,132
No Change
No Change
$ 4,153,252
No Change
No Change
Period
Share purchases prior to
10/2/2021 under the
current repurchase
program.
Fourth quarter purchases:
10/3/2021 – 10/30/2021
10/31/2021 – 11/27/2021
11/28/2021 – 12/25/2021
Total share purchases under
the current program
2,153,132
$13.38
2,153,132
$ 4,153,252
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 25, 2021, the Company has repurchased
2,153,132 shares of its common stock under this repurchase program for an aggregate price of $28,812,686.
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—[RESERVED]
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.
19
19
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; continued listing of the Company’s common stock
on the NASDAQ Global Market and/or inclusion in market indices such as the Russell 2000; 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.
20
20
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. In January 2022, the Company completed
its acquisition of the assets of the Brunswick Billiards® business, complementing its existing portfolio of
billiards brands and other offerings in the Company’s indoor recreation market. 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
2021
2020
2019
14.6%
14.6%
51.6%
51.6%
2.7%
2.7%
(7.3%)
(5.9%)
293.9%
257.3%
(39.2%)
(64.5%)
The emergence of the coronavirus (COVID-19) around the world, and particularly in the United States and
China, continues to present 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 during 2020 and 2021. Demand for the Company’s products increased
substantially in fiscal year 2020 and remained strong in fiscal year 2021, most 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 closures, and employers
requiring or allowing employees to work remotely and/or implementing furloughs and layoffs, and consumers
deciding to spend more time at home due to health and other considerations. Such increased demand may not
continue and/or demand may decrease from historical levels depending on the uncertain duration and severity
of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume
or permanent changes if such conditions result from the pandemic, additional governmental actions that may
be taken and/or extensions of time for restrictions that have been imposed or proposed to date, and numerous
other uncertainties. Our revenue growth in prior quarterly or annual periods should not be relied upon as an
indication of future performance.
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.
21
21
The COVID-19 pandemic continued to affect the Company’s operations through the fourth quarter of 2021
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, 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.
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 25, 2021 are not necessarily indicative of the results to be
expected for fiscal year 2022. 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
2021
100.0%
75.4%
24.6%
13.8%
0.6%
10.2%
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%
Net revenue increased 14.6% in 2021 compared to 2020. The Company recognized increased sales primarily
in their outdoor product categories, including archery and pickleball, due to category growth and market share
gains.
The overall gross margin decreased to 24.6% in 2021 compared with 27.3% in 2020. Gross margins were
unfavorably impacted by currency exchange rates and higher supply chain, raw material, and inventory
carrying costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $43.4 million in 2021 compared to $40.3 million
in 2020, an increase of $3.1 million or 7.6%. The increase in SG&A is in line with the growth of the business.
SG&A as a percent of sales is 13.8% in 2021 compared with 14.7% in 2020.
Provision for Income Taxes
The effective tax rate for 2021 and 2020 was 20.1% and 21.2%, respectively. The 2021 effective tax rate is
slightly lower than the federal statutory rate primarily due to the captive insurance premiums being tax
exempt. With federal income tax credits helping to offset the impact of the state taxes and lower the statutory
rate. 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.
22
22
Sporting Goods
Net revenues, operating income, and net income for the Sporting Goods segment for the three years ended
December 25, 2021 were as follows:
In Thousands
2021
2020
2019
Net revenue
Operating income
Net income
$313,612
31,534
21,892
$273,649
32,685
23,625
$180,541
8,611
5,997
Net revenue increased 14.6% in 2021 compared to 2020.
Gross margin in 2021 was 24.6% compared to 27.3% in 2020. Gross margins were unfavorably impacted by
currency exchange rates and higher supply chain, raw material, and inventory carrying costs. Operating
income, as a percentage of net revenue, decreased to 10.1% in 2021 compared to 11.9% in 2020.
Financial Condition and Liquidity
The current ratio, a basic measure of liquidity (current assets divided by current liabilities), for 2021 was 3.5,
compared to 3.1 in 2020. Receivable levels increased to $66.0 million in 2021 compared with $65.3 million in
2020 and net inventory increased $19.9 million to $92.4 million in 2021 from $72.5 million in 2020. Trade
accounts payable and accrued liabilities decreased $5.0 million to $40.2 million from $45.2 million in 2020.
The Company’s working capital requirements are primarily funded through cash flows from operations and
revolving credit agreements with its bank. During 2021, the Company’s maximum borrowings under its
primary revolving credit lines and overdraft facility totaled $69.2 million compared to $33.6 million in 2020.
The overall effective interest rate in 2021 was 2.9% compared to the effective rate of 2.4% in 2020. Total debt
at the end of the Company’s 2021 fiscal year was $57.5 million.
On July 7, 2021, the Company and its wholly owned subsidiary, Indian Industries, Inc. (“Indian”) entered into
the Fourth Amendment dated as of July 7, 2021 (the “Fourth Amendment”) to the Amended and Restated
Credit Agreement dated as of January 21, 2019 (the “2019 Restated Credit Agreement”) among the Company,
Indian, each of their domestic subsidiaries, and Chase, as Administrative Agent and as Lender (the “Lender”).
Under the terms of the Fourth Amendment, the Lender extended a $50.0 million term loan to the Company
and reduced the maximum availability under the senior revolving credit facility from $75.0 million to $50.0
million. The Company may prepay the revolving credit facility, in whole or in part, and reborrow prior to the
revolving loan maturity date.
On January 21, 2022, the Company and its wholly owned subsidiary, Indian entered into an Amended and
Restated Credit Agreement (the “2022 Restated Credit Agreement”) with its issuing bank, JPMorgan Chase
Bank, N.A. (“Chase”), and the other lenders identified in the Restated Credit Agreement (collectively, the
“Lenders”). The 2022 Restated Credit Agreement amends and restates the 2019 Credit Agreement, as amended,
in its entirety, and continues the existing Company’s credit facilities which have been in place since April 30,
2009. The Company’s indebtedness under the 2022 Restated Credit Agreement continues to be collateralized
by liens on all of the present and future equity of each of the Company’s domestic subsidiaries and substantially
all of the assets of the Company (excluding real estate). Under the terms of the 2022 Restated Credit
Agreement, Old National Bank has been added as a Lender. The Lenders have now made available to Escalade
and Indian a senior revolving credit facility with increased maximum availability of $65.0 million (the
“Revolving Facility”), up from $50.0 million, plus an accordion feature that would allow borrowings up to
$90.0 million under the Revolving Facility subject to certain terms and conditions. The maturity date of the
revolving credit facility was extended to January 21, 2027. The Company may prepay the Revolving Facility,
in whole or in part, and reborrow prior to the revolving loan maturity date. The 2022 Restated Credit Agreement
further extended the maturity date for the term loan facility to January 21, 2027. As of January 21, 2022, the
outstanding principal amount of the term loan was $46.4 million.
23
23
Cash flows from operations and revolving credit agreements were used to fund acquisitions, to pay shareholder
dividends, and to fund stock repurchases.
In 2022, the Company estimates capital expenditures to be approximately $4.5 million.
The Company believes that cash generated from its projected 2022 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 2022. 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”.
Contractual Obligations
The following schedule summarizes the Company’s material contractual obligations as of December 25, 2021:
Amounts in thousands
Total
2022
2023 – 2024 2025 – 2026 Thereafter
Debt(1)
Future interest payments(1)
Operating leases
Minimum payments under
purchase, royalty and license
agreements
$57,539
5,511
2,442
$7,143
1,586
891
$14,286
2,543
753
$36,110
1,382
601
$ --
--
197
5,417
960
1,354
1,178
1,925
Total
$ 70,909
$ 10,580
$ 18,936
$ 39,271
$ 2,122
Note:
(1) Assumes that the Company will not increase borrowings under its long-term credit agreements and that the
effective interest rate experienced in 2021 of 2.9% will continue for the life of the agreements.
The contractual obligations table does not reflect the Restated Credit Agreement entered into by the Company
on January 21, 2022. The impact of the Restated Credit Agreement is to increase future interest payments by
$0.6 million and extending the debt maturity date from 2026 to 2027. Amounts in the table above also exclude
legally binding minimum lease payments for a lease agreement that was signed, but had not yet commenced
as of December 25, 2021, in the amount of $9.9 million.
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.
24
24
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.
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.
25
25
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 25, 2021, 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 25, 2021.
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.
Capital Expenditures
As of December 25, 2021, the Company had no material commitments for capital expenditures. In 2022, the
Company estimates capital expenditures to be approximately $4.5 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.
26
26
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.
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.
The management of Escalade assessed the effectiveness of the Company’s internal control over financial
reporting as of December 25, 2021. 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 25, 2021, the Company’s internal control
over financial reporting was effective.
27
27
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., 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 2021. 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 2021 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM 9B — OTHER INFORMATION
None.
ITEM 9C — DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS.
Not applicable.
28
28
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 26,
2022 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 26, 2022 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 26, 2022 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
--
--
--
--
--
1,195,445
--
1,195,445
(1) The maximum number of shares that can be awarded under the Escalade, Incorporated 2017 Incentive Plan
is 1,661,598. The plan was approved by stockholders at Escalade’s Annual Meetings of Stockholders in 2017.
(2) Does not include 154,120 shares subject to outstanding, unvested restricted stock awards.
29
29
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 26, 2022 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 26, 2022 under the
caption “Certain Relationships and Related Person Transactions” and is incorporated herein by reference.
ITEM 14 — PRINCIPAL ACCOUNTING FEES AND SERVICES
The Company’s independent registered accounting firm is BKD, LLP; Evansville, IN; PCAOB ID: 686. 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 26, 2022 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 25, 2021 and December 26, 2020
Consolidated statements of operations—fiscal years ended December 25, 2021, December
26, 2020, and December 28, 2019
Consolidated statements of stockholders’ equity—fiscal years ended December 25, 2021,
December 26, 2020, and December 28, 2019
Consolidated statements of cash flows—fiscal years ended December 25, 2021, December
26, 2020, and December 28, 2019
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
2.1
3.1
3.2
10.1
10.2
Asset Purchase Agreement dated December 30, 2021, by and between Indian Industries,
Inc. d/b/a Escalade Sports and Life Fitness, LLC (without exhibits and schedules, which
Escalade has determined are not material) (h)
Articles of Incorporation of Escalade, Incorporated (a)
Amended By-Laws of Escalade, Incorporated (c)
Amended and Restated Credit Agreement dated as of January 21, 2022 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) (i)
Amended and Restated Pledge and Security Agreement dated as of January 21, 2022 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) (i)
30
30
(4) Executive Compensation Plans and Arrangements
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Escalade, Incorporated 2017 Incentive Plan, incorporated by reference herein from Annex 1
to the Registrant’s 2017 Definitive Proxy Statement (e)
Form of Stock Option Award Agreement utilized in Stock Option grants to employees
pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)
Form of Stock Option Award Agreement utilized in Stock Option grants to Directors
pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)
Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to
employees pursuant to the Escalade Incorporated 2017 Incentive Plan (b)
Form of Restricted Stock Unit Agreement utilized in Restricted Stock Unit grants to
Directors pursuant to the Escalade, Incorporated 2017 Incentive Plan (b)
Offer Letter dated March 30, 2020, by and between Scott J. Sincerbeaux and Escalade,
Incorporated (d)
Executive Severance agreement, dated March 30, 2020 and effective as of April 27, 2020,
between Scott J. Sincerbeaux and Escalade, Incorporated (d)
10.10 Waiver, Release, Non-Competition, Non-Solicitation and Non-Disclosure Agreement and
Release entered into on March 4, 2021 by and between Scott J. Sincerbeaux and Escalade,
Incorporated (f)
10.11 Offer Letter dated December 20, 2021 by and between Walter P. Glazer, Jr. and Escalade,
Incorporated (g)
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 10-K for the fiscal year ended December
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
30, 2017 and filed on February 27, 2018
(c) Incorporated by reference from the Company’s 2014 First Quarter Report on Form 10-Q filed on
April 22, 2014
(d) Incorporated by reference from the Company’s Form 8-K filed on April 1, 2020
(e) Incorporated by reference from the Company’s 2017 Proxy Statement
(f) Incorporated by reference from the Company’s Form 8-K filed on March 8, 2021
(g) Incorporated by reference from the Company’s Form 8-K filed on December 23, 2021
(h) Incorporated by reference from the Company’s Form 8-K filed on January 3, 2022
(i) Incorporated by reference from the Company’s Form 8-K filed on January 24, 2022
ITEM 16—FORM 10-K SUMMARY
None.
31
31
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 .................................................................... 33
Consolidated financial statements of Escalade, Incorporated and subsidiaries:
Consolidated balance sheets—December 25, 2021 and December 26, 2020 ...................................... 37
Consolidated statements of operations—fiscal years ended December 25, 2021,
December 26, 2020 and December 28, 2019 ................................................................................... 38
Consolidated statements of stockholders’ equity—fiscal years ended December 25, 2021,
December 26, 2020 and December 28, 2019 ................................................................................... 39
Consolidated statements of cash flows—fiscal years ended December 25, 2021,
December 26, 2020 and December 28, 2019 ................................................................................... 40
Notes to consolidated financial statements ............................................................................................ 41
32
32
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 25, 2021,
and December 26, 2020, and the related consolidated statements of operations, stockholders’ equity and cash flows
for each of the years in the three-year period ended December 25, 2021, and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Escalade, Incorporated as of December 25, 2021, and December 26, 2020, and the
results of its operations and its cash flows for each of the years in the three-year period ended December 25, 2021, 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 25, 2021, 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, 2022, expressed an
unqualified opinion on the effectiveness of Escalade, Incorporated’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of Escalade, Incorporated’s management. Our responsibility is to
express an opinion on Escalade, Incorporated’s 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 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 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 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.
33
33
Customer Allowances
As more fully described in Note 16 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 are included as part of
Net Sales on the consolidated statement of operations. At December 25, 2021, the total accrued for these customer
allowances was $5,357,000 and was 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 obtains the amount of sales subject to the allowances and the various allowances taken by
customers over time from its accounting system. All of this in turn led to a high degree of auditor judgment and
subjectivity 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 at
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.
We have served as Escalade, Incorporated’s auditor since 1977.
/s/ BKD, LLP
Evansville, Indiana
February 22, 2022
34
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
We have audited Escalade, Incorporated’s internal control over financial reporting as of December 25, 2021, based on
criteria established in Internal Control––Integrated Framework: (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, Escalade, Incorporated maintained, in all material respects, effective internal control over financial
reporting as of December 25, 2021, based on criteria established in Internal Control–– Integrated Framework: (2013)
issued by COSO.
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,
2022, 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.
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 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 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 the company’s assets that could have a material effect on the financial statements.
35
35
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, 2022
36
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 $457 and $896; 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:
Current portion of long-term debt
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 25,
2021
December 26,
2020
$ 4,374
65,991
92,382
7,569
739
171,055
24,936
2,210
20,778
32,695
124
$251,798
$ 7,143
15,847
24,385
818
48,193
50,396
4,759
1,387
448
105,183
--
$ 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
--
Authorized: 1,000,000 shares, no par value, none issued
Common stock
Authorized: 30,000,000 shares, no par value
Issued and outstanding: 2021 —13,493,332 shares, 2020 —13,919,380 shares
Retained earnings
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
See notes to consolidated financial statements.
13,493
133,122
146,615
$251,798
13,919
125,237
139,156
$220,705
37
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
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 25,
2021
Years Ended
December 26,
2020
December 28,
2019
$313,612
$273,649
$180,541
236,482
43,367
1,867
31,896
(1,510)
163
30,549
6,144
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
$ 24,405
$ 25,934
$ 7,258
$ 1.78
$ 1.76
$ 1.84
$ 1.82
$ 0.50
$ 0.50
38
38
Consolidated Statements of Stockholders’ Equity
All Amounts in Thousands
Common Stock
Shares
Amount
Retained
Earnings
Total
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
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
50
6
(492)
10
50
6
(492)
24,405
902
134
(50)
(7,693)
129
(9,942)
24,405
902
144
--
(7,693)
135
(10,434)
Balances at December 25, 2021
13,493
$13,493
$133,122
$146,615
See notes to consolidated financial statements.
39
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
Deferred income taxes
Loss (gain) on disposals of assets
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 property and equipment
Net cash 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 and 2019 are as follows:
Fair value of assets acquired
Cash paid for assets
Note payable for deferred purchase price obligation
Liabilities assumed
See notes to consolidated financial statements.
December 25,
2021
Years Ended
December 26,
2020
December 28,
2019
$ 24,405
$ 25,934
$ 7,258
4,835
(408)
902
567
(19)
(301)
(19,894)
(4,163)
(4,985)
939
(9,696)
--
--
43
(9,653)
(7,693)
232,065
(204,601)
144
(33)
(10,434)
135
9,583
869
3,505
$4,374
$ 1,433
$ 6,284
$--
--
--
$ --
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)
$ --
40
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 2021 was
52 weeks long, ending December 25, 2021. Fiscal year 2020 was 52 weeks long, ending on December 26, 2020. Fiscal
year 2019 was 52 weeks long, ending December 28, 2019.
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 25, 2021, the Company reclassed $4.7 million of book overdrafts 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 $748 thousand and $697 thousand at fiscal year-end 2021 and 2020, respectively.
Inventories, net of the valuation reserve, at fiscal year-ends were as follows:
In Thousands
Raw materials
Work in process
Finished goods
2021
2020
$9,142
3,529
79,711
$92,382
$9,121
3,538
59,829
$72,488
41
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
2021
2020
Land
Buildings and leasehold improvements
Machinery and equipment
Total cost
Accumulated depreciation and amortization
$ 2,255
24,175
31,853
58,283
(33,347)
$ 24,936
$ 1,943
18,798
28,083
48,824
(30,592)
$ 18,232
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 2021, 2020, or 2019.
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.
Employee Incentive Plan
During 2017, the Company approved an incentive plan explained in Note 9. The Company accounts for this plan
under the recognition and measurement principles of FASB ASC 718, Equity Based Payments.
Foreign Currency
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 2021, 2020, and 2019.
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.
42
42
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
2021, 2020 and 2019 were approximately $2.0 million, $1.5 million, and $1.6 million, respectively.
New Accounting Pronouncements and Changes in Accounting Principles
Standards Adopted:
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying Accounting for Income Taxes, which removes certain
exceptions to the general principles of Topic 740, Accounting for Income Taxes (“ASC 740”) and is intended to
improve consistency and simplify GAAP in several other areas of ASC 740 by clarifying and amending existing
guidance. The Company adopted this standard on December 27, 2020 and the adoption did not have a material impact
on its consolidated financial statements.
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.
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:
43
43
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
2021
2020
2019
Beginning balance
Additions
Deductions
Ending balance
$ 962
2,487
(2,330)
$ 1,119
$ 688
1,648
(1,374)
$ 962
$ 702
1,736
(1,750)
$ 688
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 potentially
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
2021
2020
2019
Beginning balance
Additions
Deductions
Ending balance
$ 697
446
(395)
$ 748
$ 786
831
(920)
$ 697
$ 456
756
(426)
$ 786
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:
44
44
In Thousands
2021
2020
2019
Beginning balance
Additions (Reductions)
Deductions
Ending balance
$ 896
(408)
(31)
$ 457
$ 483
473
(60)
$ 896
$ 532
322
(371)
$ 483
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
2021
2020
2019
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
Note 4 —
Leases
$ 2,296
12,930
(12,886)
$ 2,340
$ 1,292
11,940
(10,936)
$ 2,296
$ 1,550
7,292
(7,550)
$ 1,292
2021
2020
$ 5,573
8,775
10,037
$ 24,385
$ 7,685
7,532
9,054
$ 24,271
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 6 years. As of December 25, 2021, 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 is as
follows:
45
45
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 25, 2021
December 26, 2020
$1,489
3,019
378
$4,886
$1,347
$2,347
$828
973
250
$2,051
$762
$1,282
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 25, 2021
3.97 years
5.00%
Period Ended December
26, 2020
2.24 years
5.00%
Future minimum lease payments under non-cancellable leases as of December 25, 2021 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 25, 2021
Current operating lease liabilities
Long-term operating lease liabilities
Total
$891
412
341
312
289
197
2,442
(237)
$2,205
818
1,387
$2,205
As of December 25, 2021, we have entered into a lease for additional warehouse and operations which has not yet
commenced. Although the location is currently under construction, we do not control the building during construction,
and are thus not deemed to be the owner during construction. Amounts in the table above exclude legally binding
minimum lease payments for the lease signed but not yet commenced of $9.9 million.
46
46
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
2021
2020
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
24,715
2,749
18,017
9,736
475
700
56,392
24,068
2,749
8,100
266
301
130
35,614
24,715
2,749
18,017
9,736
475
700
56,392
23,860
2,749
6,669
174
206
89
33,747
Amortization expense was $1.9 million, $1.5 million and $1.5 million for 2021, 2020 and 2019, respectively.
Estimated future amortization expense is summarized in the following table:
In Thousands
2022
2023
2024
2025
2026
Thereafter
Sporting Goods
1,847
1,769
1,644
1,595
1,547
4,592
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 28, 2019
Acquisition
Balance at December 26, 2020
Acquisition
Balance at December 25, 2021
$26,749
5,946
$32,695
--
$32,695
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 —
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.
47
47
The 2019 Restated Credit Agreement allows Escalade to request the issuance of letters of credit of up to $5.0 million.
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.
On July 7, 2021, the Company and its wholly owned subsidiary, Indian Industries, Inc. (“Indian”), entered into the
Fourth Amendment dated as of July 7, 2021 (the “Fourth Amendment”) to the Amended and Restated Credit
Agreement dated as of January 21, 2019 among the Company, Indian, each of their domestic subsidiaries, and
JPMorgan Chase Bank, N.A., as Administrative Agent and as Lender (the “Lender”), as amended (the “Credit
Agreement”). Under the terms of the Fourth Amendment, the Lender extended a $50.0 million term loan to the
Company and reduced the maximum availability under the senior revolving credit facility from $75.0 million to $50.0
million. The proceeds of the term loan are being used to pay down the Company’s outstanding indebtedness under the
revolving credit facility, with the balance of the term loan proceeds being available for general working capital
purposes. The maturity date of the term loan is July 7, 2026 and the maturity date of the revolving credit facility
likewise was extended to July 7, 2026. The Company may prepay the revolving credit facility, in whole or in part, and
reborrow prior to the revolving loan maturity date.
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.
48
48
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
2021
2020
Senior secured revolving credit facility of $50.0 million with a
maturity of July 7, 2026. The interest rate at December 25, 2021
was 3.00% and 2.15% at December 26, 2020.
Term loan of $50.0 million with a maturity date of July 7, 2026. The
interest rate at December 25, 2021, was 2.97%.
Current portion of long-term debt
$ 10,515
$ 30,073
47,024
57,539
(7,143)
$ 50,396
--
30,073
--
$ 30,073
The Company makes monthly principal payments under the Term loan of $595 thousand. Maturities of long-term
debt outstanding at December 25, 2021 are as follows: $7.1 million in 2022, $7.1 million in 2023, $7.1 million in
2024, $7.1 million in 2025 and $29.0 million in 2026.
Note 7 —
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
2021
2020
2019
Weighted average common shares outstanding
Dilutive effect of stock options and restricted stock units
Weighted average common shares outstanding, assuming dilution
13,747
119
13,866
14,096
129
14,225
14,407
32
14,439
Number of anti-dilutive stock options and unvested restricted stock units
--
58
80
Weighted average common shares outstanding, assuming dilution, includes the incremental shares that would be
issued upon the assumed exercise of stock options outstanding.
Note 8 —
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 $1,041
thousand, $841 thousand and $816 thousand for 2021, 2020 and 2019, respectively.
49
49
Note 9 —
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 2021, and pursuant to the 2017 Incentive Plan, in lieu of cash payments of director fees, the Company
awarded to certain directors 5,683 shares of common stock. In 2021, the Company awarded 13,332 restricted stock
units to directors and 37,283 restricted stock units 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 2021 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.
A summary of restricted stock awards activity is as follows:
Non-vested stock units as of December 28, 2019
Granted
Vested
Forfeited
Non-vested stock units as of December 26, 2020
Granted
Vested
Forfeited
Non-vested stock units as of December 25, 2021
Number of
Shares
Weighted
Average Grant
Date Fair Value
128,636
171,519
(56,079)
--
244,076
50,615
(84,887)
(55,684)
154,120
$11.78
7.67
11.39
--
$8.98
20.74
8.98
7.99
$13.19
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 2021, 2020, and 2019 the Company
recognized $902 thousand, $1,011 thousand, and $505 thousand respectively in compensation expense related to
restricted stock units and as of December 25, 2021 and December 26, 2020, there was $629 thousand and $926
thousand respectively, of unrecognized compensation expense related to restricted stock units.
Stock Options
Total compensation expense recorded in the statements of operations for 2021, 2020 and 2019 relating to stock
options was zero, $5 thousand and $8 thousand, respectively. No stock options were awarded during 2021, 2020 or
2019.
50
50
The following table summarizes option activity for each of the three years ended 2021:
Incentive Stock Options
Granted
Outstanding
Director Stock Options
Granted
Outstanding
2021
2020
2019
--
--
--
--
10,000
20,000
--
--
--
--
--
--
The following table summarizes stock option transactions for the three years ended 2021:
2021
Shares
Option Price
2020
Shares Option Price
Shares
2019
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
10,000
--
--
(10,000)
--
--
--
$14.39
--
--
$14.39
--
$14.39
--
--
$14.39
$14.39
20,000
--
--
(10,000)
10,000
10,000
--
35,000 $11.86 to $14.39
--
$11.86
$11.86
$14.39
--
(5,000)
(10,000)
20,000
6,666
--
The total intrinsic value of options exercised was zero, $73 thousand and zero for 2021, 2020 and 2019, respectively.
There were no stock options outstanding at December 25, 2021.
Note 10 — 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
2021
2020
2019
$ 30,549
$ 32,922
$ 8,934
$ 4,819
758
5,577
408
159
567
$ 6,144
$ 5,479
854
6,333
$ 1,419
129
1,548
665
(10)
655
$ 6,988
367
(239)
128
$ 1,676
51
51
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
Captive insurance earnings
Incentive stock options
Other
Recorded provision for income taxes
2021
2020
2019
$ 6,415
$ 6,914
$ 1,876
724
(38)
(251)
(456)
(214)
(36)
$ 6,144
668
(103)
(114)
(443)
(4)
70
$ 6,988
(86)
(60)
(93)
--
(1)
40
$ 1,676
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 25, 2021 and December
26, 2020. 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 2017.
The Company has state, net of federal benefit, research tax credit carryforwards of $244 thousand as of December
25, 2021. The state research tax credit carryforwards begin to expire in 2021. A valuation allowance has been
established in the amount of $23 thousand as of December 25, 2021 related to the state tax credit carryforwards,
leaving an ending deferred, net of federal benefit, in the amount of $221 thousand. The decrease in the valuation
allowance relates to the statutory expiration of prior year credits. 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. In addition, the Company has foreign tax credit
carryforwards of $95 thousand, as of December 25, 2021.
At December 25, 2021, the Company had domestic federal income taxes receivable of $631 thousand, domestic
state income taxes receivable of $108 thousand, and transition tax payable of $387 thousand recorded. 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 $387 thousand recorded.
52
52
The components of the net deferred tax liabilities are as follows:
In Thousands
Assets
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) Decrease during period
Ending balance
2021
2020
$ 1,248
329
339
515
34
--
2,465
(1,474)
(4,973)
(517)
(237)
(7,201)
$ 1,042
297
353
378
29
2
2,101
(1,024)
(4,685)
(376)
(182)
(6,267)
(27)
4
(23)
$ (4,759)
--
(27)
(27)
$ (4,193)
The following table reconciles the total amounts of unrecognized tax benefits:
In Thousands
2021
2020
2019
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
$ --
-
-
61
-
-
$ 61
$ --
-
-
-
-
-
$ --
The total amount of unrecognized tax benefits, net of federal income tax benefits, of $48 thousand at December
25, 2021 and 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 25,
2021.
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.
53
53
Note 11 — Operating Segment and Geographic Information
The following table presents certain operating segment information.
In Thousands
2021
2020
2019
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
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
$ 313,612
31,534
1,510
8,295
21,892
241,547
4,835
9,696
--
362
--
(2,151)
2,513
10,251
--
--
313,612
31,896
1,510
6,144
24,405
251,798
4,835
9,696
$ 273,649
32,685
250
8,951
23,625
211,253
4,016
5,455
$ 180,541
8,611
358
2,272
5,997
141,167
4,031
2,185
--
347
--
(1,963)
2,309
9,452
--
--
273,649
33,032
250
6,988
25,934
220,705
4,016
5,455
--
664
(2)
(596)
1,261
7,612
--
--
180,541
9,275
356
1,676
7,258
148,779
4,031
2,185
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 2021. 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.
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; and deferred tax assets.
54
54
The Company had net assets of $15.8 million and $16.0 million located in Mexico as of December 25, 2021 and
December 26, 2020, respectively.
During 2021, 2020 and 2019, the Company had one customer, Amazon.com, Inc., that accounted for approximately
21%, 23% and 21%, respectively of the Company’s revenues. During 2021, 2020 and 2019 the Company had
another customer, Dick’s Sporting Goods, which accounted for approximately 11%, 13% and 13%, respectively, of
the Company’s revenues.
As of December 25, 2021, the Company had approximately 24%, 17% and 10% of its total accounts receivable with
Amazon.com, Inc., Academy Sports and Outdoors, Inc. and Dick’s Sporting Goods, respectively. 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 25, 2021, approximately 28 employees of the Company's labor force were covered by a collective
bargaining agreement that expires on January 31, 2025.
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
2021
2020
2019
North America
Europe
Other
$ 309,211
2,153
2,248
$ 313,612
$ 270,173
1,555
1,921
$ 273,649
$ 178,069
1,001
1,471
$ 180,541
Note 12 — Summary of Quarterly Results
In thousands, except per share data (unaudited)
March 20
July 10
October 2
December 25
2021
Net Sales
Operating Income
Net income
Basic Earnings Per Share Data:
Diluted Earnings Per Share Data:
$ 59,191
7,129
5,442
$ 0.39
$ 0.39
$ 99,679
10,686
8,126
$ 0.59
$ 0.58
$ 81,298
7,672
5,966
$ 0.44
$ 0.43
$ 73,444
6,409
4,871
$ 0.36
$ 0.36
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
55
$ 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
55
Note 13 — Acquisitions
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.
Note 14 — Commitments and Contingencies
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 25, 2021, the Company had future estimated minimum non-cancelable royalty and license payments as
follows:
In Thousands
2022
2023
2024
2025
2026
Thereafter
Amount
$ 960
788
566
579
599
1,925
$ 5,417
56
56
Note 15 — 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 long-term debt, including the current portion of long-term debt,
adequately reflects the fair value of these instruments.
The following table presents estimated fair values of the Company’s financial instruments in accordance with FASB
ASC 825 at December 25, 2021 and December 26, 2020.
2021
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
$ 4,374
$ 4,374
$ --
$ --
Financial liabilities
Current portion of long-term debt
Long-term debt
$7,143
$50,396
$ --
$ --
$ 7,143
$50,396
$ --
$ --
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
$30,073
$ --
$30,073
$ --
Note 16 — Revenue from Contracts with Customers
Revenue Recognition – 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.
57
57
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.
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
25, 2021
Years Ended
December
26, 2020
December
28, 2019
$115,949
96,166
119,550
11,337
3,240
346,242
8,304
2,488
21,838
32,630
$313,612
$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
Contract Balances – The following table provides information on changes in our contract liability balances
during the twelve month periods ended December 25, 2021, December 26, 2020 and December 28, 2019.
All Amounts in Thousands
December
25, 2021
Years Ended
December
26, 2020
December
28, 2019
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
$ -
-
$ -
$ -
-
$ -
$ -
(413)
$ -
58
58
Note 17 — Subsequent Events
On January 21, 2022, the Company completed its acquisition of the assets constituting the Brunswick Billiards
business of Life Fitness, LLC. The estimated purchase price of the acquisition is $36.4 million, subject to final
adjustment for net working capital as of the closing date. The acquisition was funded by cash and the Company’s
revolving credit facility. The Company has not yet finalized the purchase price or its final evaluation of the fair
value of certain items.
On January 21, 2022, the Company entered into an Amended and Restated Credit Agreement (“Restated Credit
Agreement”) with its issuing bank, JP Morgan Chase Bank, N.A. (“Chase”), and the other lenders identified in the
Restated Credit Agreement (collectively, the “Lender”). Under the terms of the Restated Credit Agreement, Old
National Bank has been added as a Lender. The Lenders have now made available to the Company a senior
revolving credit facility with increased maximum availability of $65.0 million (the “Revolving Facility”), up from
$50.0 million, plus an accordion feature that would allow borrowings up to $90.0 million under the Revolving
Facility subject to certain terms and conditions. The maturity date of the revolving credit facility was extended to
January 21, 2027. The Company may prepay the Revolving Facility, in whole or in part, and reborrow prior to the
revolving loan maturity date. The Restated Credit Agreement further extended the maturity date for the term loan
facility to January 21, 2027. As of January 21, 2022, the outstanding principal amount of the term loan is $46.4
million.
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
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
Revolving
Commitment
ABR Spread
Revolving
Commitment
Term Benchmark
Spread
Letter of
Credit
Fee
Commitment
Fee Rate
0.25%
2.00%
2.00%
0.30%
-0-
1.75%
1.75%
0.25%
(0.25%)
1.50%
1.50%
0.20%
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.
In addition to the increased revolving borrowing amount and extended maturity dates, other significant changes
reflected in the Restated Credit Agreement include: specifying that Indian’s acquisition of the assets of the
Brunswick Billiards business is a permitted acquisition; providing a $7.5 million swingline commitment by Chase;
replacing LIBOR with the replacement benchmark secured overnight financing rate as previously contemplated;
and adjustments to certain financial covenants relating to the fixed charge coverage ratio. Escalade’s indebtedness
under the Restated Credit Agreement continues to be collateralized by liens on all of the present and future equity
of each of Escalade’s domestic subsidiaries and substantially all of the assets of the Company (excluding real estate).
Each direct and indirect domestic subsidiary of Escalade and Indian has secured its guaranty of indebtedness
incurred under the Revolving Facility with a first priority security interest and lien on all of such subsidiary’s assets.
Escalade, Indian and all of the domestic subsidiaries have entered into an Amended and Restated Pledge and
Security Agreement dated January 21, 2022 in favor of the Lender to continue the existing liens, previously existing
under the original pledge and security agreements entered into on April 30, 2009, as amended, and thereafter for
subsidiaries created or acquired after that date. The obligations, guarantees, liens and other interests granted by
Escalade, Indian, and their domestic subsidiaries continue in full force and effect.
59
59
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.
President and Chief Executive Officer
February 22, 2022
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
President and Chief Executive
Officer
Director
Director
Director
February 22, 2022
February 22, 2022
February 22, 2022
February 22, 2022
Director
February 22, 2022
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
February 22, 2022
60
60
Exhibit 21
ESCALADE, INCORPORATED AND SUBSIDIARIES
List of Subsidiaries at December 25, 2021
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.
61
61
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 No. 333-218340) of our report dated February 22, 2022, on our audits of the consolidated financial statements
of Escalade, Incorporated as of December 25, 2021, and December 26, 2020, and for each of the three years in the
period ended December 25, 2021, which report is included in this Annual Report on Form 10-K.
/s/ BKD, LLP
BKD, LLP
Evansville, Indiana
February 22, 2022
62
62
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, 2022
/s/ Walter P. Glazer, Jr.
Walter P. Glazer, Jr.
Chief Executive Officer
63
63
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, 2022
64
/s/ Stephen R. Wawrin
Stephen R. Wawrin
Chief Financial Officer
64
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 25, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Walter
P. Glazer, Jr, 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.
Chief Executive Officer
February 22, 2022
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 25, 2021 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, 2022
65
65
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 26, 2022 at the Corporate offices located at
817 Maxwell Avenue Evansville, IN 47711
ESCALADEINC.COM