UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 13, 2007
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ESCALADE, INCORPORATED
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(Exact Name of Registrant as Specified in Its Charter)
Indiana
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(State or Other Jurisdiction of Incorporation)
0-6966 13-2739290
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(Commission File Number) (IRS Employer Identification No.)
817 Maxwell Avenue, Evansville, Indiana 47711
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(Address of Principal Executive Offices) (Zip Code)
(812) 467-1200
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 4 Matters Related to Accountants and Financial Statements
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review
On February 13, 2007, the Audit Committee of the Board of Directors of Escalade,
Incorporated ("Escalade"), upon the recommendation of Escalade's management and
in consultation with Escalade's independent registered public accounting firm,
BKD, LLP, determined that Escalade's audited financial statements for the fiscal
years ended December 31, 2005 and December 25, 2004, as well as the related
reports of BKD, LLP, and Escalade's interim reports for the fiscal quarters
ended March 25, 2006, July 15, 2006 and October 7, 2006, should no longer be
relied upon. Accordingly, Escalade intends to restate its financial statements
for the fiscal years ended December 31, 2005 and December 25, 2004 and for the
fiscal quarters ended March 25, 2006, July 15, 2006 and October 7, 2006.
These restatements will correct errors discovered by Escalade while preparing
its financial statements for the year ended December 30, 2006. These
restatements result primarily from a correction relating to the overstatement of
the provision for income taxes. These restatements also include a correction
relating to the overstatement of employee benefit costs. Pending further
analysis, the Company expects to complete these restatements of its financial
statements, and to amend its previously filed annual reports on Form 10-K and
quarterly reports on Form 10-Q for such periods, before it files its 2006 Form
10-K on or before March 15, 2007.
Based on the analysis to date, the Company believes these restatements will
increase previously reported net income for the fiscal year ended December 31,
2005 by approximately $0.9 million or $0.08 per share and will increase net
income for the fiscal year ended December 25, 2004 by approximately $0.3 million
or $0.03 per share.
The Company believes the changes resulting from these restatements will have no
effect on previously reported revenue or net cash flows. Further, these
restatements are not expected to have an impact on segment profits as previously
reported by the Company or on compliance with any debt covenants with the
Company's lenders.
In addition, Escalade's management is currently assessing the impact of the
restatements on management's previously issued reports on internal control over
financial reporting and disclosure controls and procedures. Escalade anticipates
that, as a result of the errors discovered in its financial statements as
discussed above, management will determine that Escalade had a material weakness
in internal control over financial reporting as of December 31, 2005 and
December 25, 2004. The existence of a material weakness as of such dates would
preclude management from concluding that Escalade's internal control over
financial reporting was effective as of December 31, 2005 and December 25, 2004
and would require Escalade to amend its reports on internal control over
financial reporting as contained in its Form 10-K for each of the fiscal years
ended December 31, 2005 and December 25, 2004. Escalade also expects to receive
an adverse opinion of its independent registered public accounting firm, BKD,
LLP, on Escalade's internal controls over financial reporting as of December 31,
2005 and December 25, 2004 and that the related auditors' reports in its Form
10-K for each of the fiscal years ended December 31, 2005 and December 25, 2004
will be revised and reissued.
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Escalade's management and Audit Committee have discussed the matters disclosed
in this current report on Form 8-K with BKD, LLP, Escalade's independent
registered public accounting firm.
On February 20, 2007, Escalade issued the press release attached hereto as
Exhibit 99.1 announcing the matters discussed above and is incorporated in this
Item 4.02 by reference.
This current report on Form 8-K and the press release contains forward-looking
statements. Words such as "anticipates," "intends," "expects," "believes,"
"will," "may," "would," and "should" identify forward-looking statements.
Forward-looking statements include, but are not limited to, Escalade's
expectations regarding the need to amend and restate it financial statements,
the reasons for the restatements, the periods affected, the impact of the
restated financial statements on the Company's results and its expectations
regarding the filing of the amended and restated financial statements.
Forward-looking statements are subject to risks and uncertainties including, but
not limited to, the final outcome of the Company's accounting review and actions
that may be taken or required as a result of the expected restatements and the
conclusions reached by the Company's management, Audit Committee, Board of
Directors or its independent registered public accounting firm based on the
results of the review; the impact of competitive products and pricing; product
demand and market acceptance; Escalade's ability to successfully integrate the
operations of acquired assets and businesses; new product development; the
continuation and development of key customer and supplier relationships;
Escalade's ability to control costs; general economic conditions; fluctuations
in operating results; changes in the securities markets 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 update these forward-looking statements after the date of this
current report on Form 8-K.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit Description
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99.1 Press release dated February 20, 2007
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Escalade, Incorporated has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: February 20, 2007 ESCALADE, INCORPORATED
By: /s/ TERRY D. FRANDSEN
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Terry D. Frandsen, Vice President
and Chief Financial Officer
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