SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                       For the quarter ended July 15, 2006
                          Commission File Number 0-6966


                             ESCALADE, INCORPORATED
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                    Indiana                              13-2739290
            ------------------------                    ------------
            (State of incorporation)                    (I.R.S. EIN)


                  817 Maxwell Avenue, Evansville, Indiana 47711
                  ---------------------------------------------
                     (Address of principal executive office)

                                  812-467-1334
                         -------------------------------
                         (Registrant's Telephone Number)

           Securities registered pursuant to Section 12(b) of the Act
                                      NONE

           Securities registered pursuant to section 12(g) of the Act

                           Common Stock, No Par Value
                           --------------------------
                                (Title of Class)

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 is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12 b-2 of the Exchange Act).
                                 Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                 Class                Outstanding at August 10, 2006
          --------------------        ------------------------------
          Common, no par value                  13,024,839

<PAGE>

                                      INDEX


                                                                            Page
                                                                             No.

Part I.   Financial Information:

Item 1 -  Financial Statements:

          Consolidated Condensed Balance Sheets as of July 15, 2006
          (Unaudited), July 9, 2005 (Unaudited), and December 31, 2005        3

          Consolidated Condensed Statements of Income (Unaudited)
          for the Three Months and Six Months Ended July 15, 2006 and
          July 9, 2005                                                        4

          Consolidated Condensed Statements of Comprehensive
          Income (Unaudited) for the Three Months and Six Months Ended
          July 15, 2006 and July 9, 2005                                      4

          Consolidated Condensed Statements of Cash Flows (Unaudited)
          for the Six Months Ended July 15, 2006 and July 9, 2005             5

          Notes to Consolidated Condensed Financial Statements (Unaudited)    6

Item 2 -  Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          11

Item 3 -  Quantitative and Qualitative Disclosures about Market Risk         13

Item 4 -  Controls and Procedures                                            14

Part II.  Other Information

Item 2 -  Issuer Purchases of Equity Securities                              15

Item 4 -  Other Matters                                                      15

Item 6 -  Exhibits                                                           16

          Signatures                                                         16

                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(All amounts in thousands except share information)

<TABLE>
<CAPTION>
                                                         July 15,        July 9,       December 31,
                                                           2006           2005             2005
                                                        (Unaudited)    (Unaudited)       (Audited)
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
 ASSETS
 Current Assets:
       Cash and cash equivalents                       $      1,000    $      3,045    $      3,017
       Receivables, less allowance of $2,311;
            $2,146; and $1,544; respectively                 31,897          33,266          31,744
       Inventories                                           44,630          37,075          33,049
       Prepaid expenses                                       1,793           2,617           1,559
       Deferred income tax benefit                            1,780           2,132           1,818
                                                       ------------    ------------    ------------
TOTAL CURRENT ASSETS                                         81,100          78,135          71,187

Property, plant and equipment, net                           20,808          14,660          20,307
Intangible assets                                            21,758           7,148           6,634
Goodwill                                                     24,628          17,208          17,157
Investments                                                   6,752           5,791           7,786
Interest rate swap                                              322             (93)            181
Other assets                                                  1,499           2,493           2,044
                                                       ------------    ------------    ------------
                                                       $    156,867    $    125,342    $    125,296
                                                       ============    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
       Notes payable                                   $     19,033    $      1,658    $         --
       Current portion of long-term debt                         --             946           1,066
       Trade accounts payable                                 7,688           8,322           3,518
       Accrued liabilities                                   21,277          17,815          24,429
       Income tax payable                                      (310)            454           1,854
                                                       ------------    ------------    ------------
TOTAL CURRENT LIABILITIES                                    47,688          29,195          30,867

Other Liabilities:
       Long-term debt                                        32,530          27,030          18,487
       Deferred compensation                                  1,003           1,294           1,349
                                                       ------------    ------------    ------------
                                                             81,221          57,519          50,703

Stockholders' equity:
Preferred stock:
       Authorized 1,000,000 shares; no par value,
            none issued
Common stock:
       Authorized 30,000,000 shares; no par value,
            issued and outstanding - 13,024,839;
            13,062,973; and 12,946,869; respectively         13,025          13,063          12,947
Retained earnings                                            60,655          53,529          60,696
Accumulated other comprehensive income                        1,966           1,231             950
                                                       ------------    ------------    ------------
                                                             75,646          67,823          74,593
                                                       ------------    ------------    ------------
                                                       $    156,867    $    125,342    $    125,296
                                                       ============    ============    ============
</TABLE>

See notes to Consolidated Condensed Financial Statements.

                                       3
<PAGE>

ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(All amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                      ------------------------------------------------------------
                                           Three Months Ended               Six Months Ended
                                      ----------------------------    ----------------------------
                                        July 15,         July 9,        July 15,         July 9,
                                          2006            2005            2006            2005
                                      ------------    ------------    ------------    ------------
<S>                                   <C>             <C>             <C>             <C>
 Net sales                            $     48,949    $     47,551    $     81,749    $     77,333

 Costs, expenses and other income:
      Cost of products sold                 33,613          32,348          55,661          53,207
      Selling, general and
          administrative expenses           12,379          11,304          20,784          18,479
                                      ------------    ------------    ------------    ------------
      Operating income                       2,957           3,899           5,304           5,647

      Interest expense, net                   (810)           (494)         (1,064)           (780)
      Other income (expense)                  (190)            162            (255)            407
                                      ------------    ------------    ------------    ------------
 Income before income taxes                  1,957           3,567           3,985           5,274

 Provision for income taxes                    925           1,312           1,589           1,865
                                      ------------    ------------    ------------    ------------

 Net income                           $      1,032    $      2,255    $      2,396    $      3,409
                                      ============    ============    ============    ============

 Per Share Data:
      Basic earnings per share        $       0.08    $       0.17    $       0.18    $       0.26
      Diluted earnings per share      $       0.08    $       0.17    $       0.18    $       0.26
      Cash dividend paid                        --              --    $       0.20    $       0.15




CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

 Net income                           $      1,032    $      2,255    $      2,396    $      3,409

 Unrealized gain (loss) on
     securities, net of tax of
     $172, $(17), $75 and $(2),
     respectively                             (259)             25            (113)              4

 Foreign currency translation
     adjustment, net of tax of
     $(653), $1,924, $(689) and
     $2,335, respectively                      984          (2,898)          1,037          (3,516)

 Unrealized gain on interest rate
     swap agreement, net of tax of
     $(33), $(90), $(61) and
     $(127), respectively                       49             136              92             191
                                      ------------    ------------    ------------    ------------

 Comprehensive income (loss)          $      1,806    $       (482)   $      3,412    $         88
                                      ============    ============    ============    ============
</TABLE>

See notes to Consolidated Condensed Financial Statements.

                                       4
<PAGE>

ESCALADE, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)


                                                      Six Months Ended
                                               ------------------------------
                                               July 15, 2006    July 9, 2005
                                               -------------    -------------

Operating Activities:
     Net income                                $       2,396    $       3,409
     Depreciation and amortization                     2,733            2,654
     Adjustments necessary to reconcile
         net income to net cash provided
         by operating activities                      (6,184)          (1,139)
                                               -------------    -------------
     Net cash provided (used) by
         operating activities                         (1,055)           4,924

Investing Activities:
     Purchase of property and equipment               (1,416)            (901)
     Proceeds from asset disposition                      --               68
     Acquisition of assets                           (28,710)          (3,213)
                                               -------------    -------------
     Net cash used by investing
         activities                                  (30,126)          (4,046)

 Financing Activities:
     Net increase in notes payable                    31,914            1,541
     Proceeds from exercise of stock options           1,244              294
     Director fees paid by issuing stock                 141               95
     Purchase of common stock                         (1,376)            (670)
     Dividends paid                                   (2,604)          (1,961)
                                               -------------    -------------
     Net cash provided (used) by
         financing activities                         29,319             (701)
                                               -------------    -------------


 Effect of exchange rate changes on cash                (155)            (182)
                                               -------------    -------------
 Net decrease in cash and cash equivalents            (2,017)              (5)
 Cash and cash equivalents, beginning
    of period                                          3,017            3,050
                                               -------------    -------------
 Cash and cash equivalents, end of period      $       1,000    $       3,045
                                               =============    =============

See notes to Consolidated Condensed Financial Statements.

                                       5
<PAGE>

ESCALADE, INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note A - Basis of Presentation
--------------------------------------------------------------------------------

The significant accounting policies followed by the Company and its wholly owned
subsidiaries for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting. All adjustments that are of a
normal recurring nature and are in the opinion of management necessary for a
fair statement of the results for the periods reported have been included in the
accompanying consolidated condensed financial statements. The condensed
consolidated balance sheet of the Company as of December 31, 2005 has been
derived from the audited consolidated balance sheet of the Company as of that
date. Certain information and note disclosures normally included in the
Company's annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Form 10-K annual report for 2005 filed with
the Securities and Exchange Commission.


Note B - Seasonal Aspects
--------------------------------------------------------------------------------

The results of operations for the six-month periods ended July 15, 2006 and July
9, 2005 are not necessarily indicative of the results to be expected for the
full year.


Note C - Inventories
--------------------------------------------------------------------------------

                                        July 15,       July 9,      December 31,
         (All amounts in thousands)       2006           2005           2005
                                      ------------   ------------   ------------

         Raw materials                $     10,642   $      8,550   $      7,128
         Work in progress                    8,456          7,019          5,358
         Finished goods                     25,532         21,506         20,563
                                      ------------   ------------   ------------
                                      $     44,630   $     37,075   $     33,049
                                      ============   ============   ============


Note D - Notes Payable
--------------------------------------------------------------------------------

On June 30, 2006, the Company executed a seventh amendment to the revolving term
agreement that effectively increased the current available borrowing limit under
the Euro Revolving Loan from Euro 2.5 million ($3.2 million) to Euro 3.0 million
($3.8 million) and extended the due date to May 19, 2008. All other terms of the
agreement were unchanged. As of July 15, 2006 the outstanding balance on this
line was Euro 1.6 million ($2.0 million).

On June 30, 2006, the Company's wholly owned subsidiary, Indian-Martin, Inc.,
executed a second amendment to its revolving term agreement that extended the
maturity due date to June 30, 2008. All other terms of the agreement were
unchanged. As of July 15, 2006 the outstanding balance on this line was $19.0
million.

On June 1, 2006, the Company executed a sixth amendment to the revolving term
agreement that effectively maintained the current available borrowing limit at
$31 million and delayed the annual reduction of $7 million until May 19, 2007.
All other terms of the agreement were unchanged. As of July 15, 2006 the
outstanding balance on this line was $27.8 million.


Note E - Income Taxes
--------------------------------------------------------------------------------

The provision for income taxes was computed based on financial statement income.

                                       6
<PAGE>

Note F - Employee Stock Option Plan
--------------------------------------------------------------------------------

The Company has two stock-based compensation plans. Prior to the start of the
current fiscal year, the Company accounted for these plans under the recognition
and measurement principles of APB Opinion No. 25, Accounting for Stock issued to
Employees, and related interpretations. Beginning with the current fiscal year,
the Company expenses the fair value of options to employee compensation expense
in accordance with SFAS 123R Share-Based Payment (SFAS 123R). During the three
months and six months ended July 15, 2006, the Company recorded compensation
expense of $297 thousand and $428 thousand, respectively.

The following table illustrates the effect on net income and earnings per share
had the Company applied the fair value provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation
for the three months and six months ended July 9, 2005.

<TABLE>
<CAPTION>
         (In Thousands Except Per Share           Three months ended   Six months ended
            Amounts)                                 July 9, 2005        July 9, 2005
        -------------------------------------------------------------------------------
<S>                                                  <C>                <C>
        Net income, as reported                      $       2,255      $       3,409
        Less:  Total stock-based employee
        compensation cost determined under
        the fair value based method, net of
        income taxes                                          (279)              (558)
                                                     -------------      -------------

        Pro forma net income                         $       1,976      $       2,851
                                                     =============      =============

        Earnings per share
            Basic--as reported                       $        0.17      $        0.26
                                                     =============      =============
            Basic--pro forma                         $        0.15      $        0.22
                                                     =============      =============

            Diluted--as reported                     $        0.17      $        0.26
                                                     =============      =============
            Diluted--pro forma                       $        0.15      $        0.22
                                                     =============      =============

<CAPTION>

Note G - Segment Information
--------------------------------------------------------------------------------

                                                       As of and for the Three Months
                                                            Ended July 15, 2006
                                       ----------------------------------------------------------
                                         Sporting        Office
         In thousands                      Goods        Products         Corp.           Total
         ----------------------------------------------------------------------------------------
<S>                                    <C>            <C>            <C>             <C>
         Revenues from external
            customers                  $     33,176   $     15,773   $         --    $     48,949
         Operating income (loss)              2,397          2,120         (1,560)          2,957
         Net income (loss)                      731            987           (686)          1,032
         Total assets                  $    101,517   $     47,589   $      7,761    $    156,867


                                                        As of and for the Six Months
                                                            Ended July 15, 2006
                                       ----------------------------------------------------------
                                         Sporting        Office
         In thousands                      Goods        Products         Corp.           Total
         ----------------------------------------------------------------------------------------

         Revenues from external
            customers                  $     53,060   $     28,689   $         --    $     81,749
         Operating income (loss)              2,922          4,534         (2,152)          5,304
         Net income (loss)                      781          2,571           (956)          2,396
         Total assets                  $    101,517   $     47,589   $      7,761    $    156,867
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                       As of and for the Three Months
                                                             Ended July 9, 2005
                                       ----------------------------------------------------------
                                         Sporting        Office
         In thousands                      Goods        Products         Corp.           Total
         ----------------------------------------------------------------------------------------
<S>                                    <C>            <C>            <C>             <C>
         Revenues from external
            customers                  $     28,569   $     18,982   $         --    $     47,551
         Operating income (loss)              2,960          1,960         (1,021)          3,899
         Net income (loss)                    1,608          1,198           (551)          2,255
         Total assets                  $     64,992   $     48,716   $     11,634    $    125,342


                                                        As of and for the Six Months
                                                             Ended July 9, 2005
                                       ----------------------------------------------------------
                                         Sporting        Office
         In thousands                      Goods        Products         Corp.           Total
         ----------------------------------------------------------------------------------------

         Revenues from external
            customers                  $     42,590   $     34,743   $         --    $     77,333
         Operating income (loss)              3,003          4,089         (1,445)          5,647
         Net income (loss)                    1,497          2,539           (627)          3,409
         Total assets                  $     64,992   $     48,716   $     11,634    $    125,342
</TABLE>

Note H - Dividend Payment
--------------------------------------------------------------------------------

On March 24, 2006, the Company paid a dividend of $0.20 per common share to all
shareholders of record on March 17, 2006. The total amount of the dividend was
$2.6 million and was charged against retained earnings.

Note I - Earnings Per Share
--------------------------------------------------------------------------------

The shares used in computation of the Company's basic and diluted earnings per
common share are as follows:

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                         -----------------------------
         All amounts in thousands                        July 15, 2006    July 9, 2005
         -----------------------------------------------------------------------------
<S>                                                             <C>             <C>
         Weighted average common shares
             outstanding                                        13,039          13,069
         Dilutive effect of stock options                           43             176
                                                         -------------   -------------
         Weighted average common shares
             outstanding, assuming dilution                     13,082          13,245
                                                         =============   =============


                                                                Six Months Ended
                                                         -----------------------------
         All amounts in thousands                        July 15, 2006    July 9, 2005
         -----------------------------------------------------------------------------

         Weighted average common shares
             outstanding                                        13,013          13,064
         Dilutive effect of stock options                           41             168
                                                         -------------   -------------
         Weighted average common shares
             outstanding, assuming dilution                     13,053          13,232
                                                         =============   =============
</TABLE>

Stock options that are anti-dilutive as to earnings per share are ignored in the
computation of dilutive earnings per share. The number of employee stock options
that were anti-dilutive in 2006 and 2005 was 416,800 and 167,800, respectively.

Note J - Acquisitions
--------------------------------------------------------------------------------

In February 2006, the Company purchased substantially all of the assets of
Family Industries, Inc., which manufactures and sells premium quality
residential playground systems from stained redwood. Combined with the
acquisition of the ChildLife product line in the first quarter of fiscal 2005,
this acquisition greatly enhances the breadth of the product offering and
expands the Company's potential customer base. Playground systems will continue
to be sold under both the Woodplay and ChildLife brand names, primarily through
specialty dealers. The operating results from this acquisition have been
included in the Sporting Goods business segment results since the date of

                                       8
<PAGE>

acquisition. The total price paid, which was paid in cash using the Company's
revolving credit lines, exceeded the estimated fair market value of the net
assets acquired resulting in $4.4 million in Goodwill. The Goodwill recorded
will be deductible for income tax purposes. The estimated fair market value of
the assets acquired and liabilities assumed as the date of acquisition are as
follows:

             (All amounts in thousands)                  Amount

             Current assets                          $      2,891
             Property, plant & equipment                       50
             Other assets                                     112
             Goodwill                                       4,726
                                                     ------------
                  Total assets acquired                     7,779

             Current liabilities                             (524)
                                                     ------------
                  Net assets acquired                $      7,255
                                                     ============


In April 2006, the Company acquired all of the outstanding stock of Desmar
Seguridad Y Archivo, S.L. ("Desmar"), a distributor of office products located
in Barcelona, Spain. The Company acquired Desmar to solidify its presence in
Spain. The operating results from this acquisition have been included in the
Office Products business segment results since the acquisition date. The Company
intends to operate this acquisition as a wholly owned distributor from its
current location. The total purchase price of EUR 1.9 million ($2.4 million) was
paid in cash and financed through the Company's current Euro debt facilities.
The purchase price exceeded the estimated fair market value of the assets
acquired resulting in Goodwill of $2.2 million. The Goodwill recorded will not
be deductible for income tax purposes. The estimated fair market value of the
assets acquired and liabilities assumed as the date of acquisition are as
follows:

             (All amounts in thousands)                  Amount

             Current assets                          $      1,412
             Property, plant & equipment                      177
             Other assets                                     493
             Goodwill                                       2,209
                                                     ------------
                  Total assets acquired                     4,291

             Current liabilities                           (1,913)
                                                     ------------
                  Net assets acquired                $      2,378
                                                     ============


In May 2006, the Company acquired substantially all of the assets of Carolina
Archery Products which manufactures and distributes archery accessories. This
acquisition expands the Company's product offerings in archery accessories and
provides the Company with valuable technology rights that will be used to
enhance its competitive position in the market place. The operating results from
this acquisition have been included in the Sporting Goods business segment
results since the date of acquisition. The total purchase price of $18.9 million
was paid in cash and financed through the Company's current debt facilities. The
estimated fair market value of the assets acquired and liabilities assumed as
the date of acquisition are as follows:

              (All amounts in thousands)                  Amount

              Current assets                          $      3,358
              Property, plant & equipment                       67
              Patent & other intangibles                    15,447
                                                      ------------
                   Net assets acquired                $     18,872
                                                      ============

                                       9
<PAGE>

The following table presents unaudited pro forma financial information as if the
Carolina Archery acquisition described above had occurred at the beginning of
the respective periods:

<TABLE>
<CAPTION>
                                                               Three months ended
                                                         ------------------------------
         (In Thousands Except Per Share Amounts)         July 15, 2006     July 9, 2005
         ------------------------------------------------------------------------------
<S>                                                      <C>              <C>
         Net revenue:
              Net revenue excluding Carolina Archery
                  Products acquisition                   $      46,449    $      47,551
              Net revenue of Carolina Archery Products           3,113            2,700
              Consolidation adjustment                              --               --
                                                         -------------    -------------
              Pro forma net revenues                     $      49,562    $      50,251
                                                         =============    =============

         Net income:
              Net income excluding Carolina Archery
                  Products acquisition                   $       1,032    $       2,255
              Net income of Carolina Archery Products            1,280              600
              Consolidation adjustment                            (436)            (378)
                                                         -------------    -------------
              Pro forma net income                       $       1,876    $       2,477
                                                         =============    =============

         Basic earning per share:
              Excluding Carolina Archery Products
                  acquisition                            $        0.08    $        0.17
              Carolina Archery Products                           0.10             0.05
              Consolidation adjustment                           (0.03)           (0.03)
                                                         -------------    -------------
              Pro forma basic earnings per share         $        0.14    $        0.19
                                                         =============    =============


                                                                Six months ended
                                                         ------------------------------
         (In Thousands Except Per Share Amounts)         July 15, 2006     July 9, 2005
         ------------------------------------------------------------------------------

         Net revenue:
              Net revenue excluding Carolina Archery
                  Products acquisition                   $      79,249    $      77,333
              Net revenue of Carolina Archery Products           4,952            4,200
              Consolidation adjustment                              --               --
                                                         -------------    -------------
              Pro forma net revenues                     $      84,201    $      81,533
                                                         =============    =============

         Net income:
              Net income excluding Carolina Archery
                  Products acquisition                   $       2,009    $       3,409
              Net income of Carolina Archery Products            1,758              840
              Consolidation adjustment                            (694)            (588)
                                                         -------------    -------------
              Pro forma net income                       $       3,073    $       3,661
                                                         =============    =============

         Basic earning per share:
              Excluding Carolina Archery Products
                  acquisition                            $        0.15    $        0.26
              Carolina Archery Products                           0.14             0.06
              Consolidation adjustment                           (0.05)           (0.05)
                                                         -------------    -------------
              Pro forma basic earnings per share         $        0.24    $        0.28
                                                         =============    =============
</TABLE>

The consolidation adjustment in the above tables reflects the amortization of
patents and other intangible assets over the expected economic lives.

Note K - Restructuring Costs
--------------------------------------------------------------------------------

In 2004 the Company initiated a facility consolidation plan and involuntary
employee terminations in the Office Products segment in order to reduce costs
and increase the competitiveness of the Company. Under these plans no additional
costs were incurred during the quarter ended July 15, 2006. Liabilities under
these plans are as follows:

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                           Balance at                                   Balance at
            (All amounts in                 March 25,      Non-Cash         Cash         July 15,
               thousands)                     2006         Charges        Payments         2006
                                          ------------   ------------   ------------   ------------
<S>                                       <C>            <C>            <C>            <C>
         Severance and benefit
            costs                         $        148   $         --   $         --   $        148
         Facility closure costs                     --             --             --             --
                                          ------------   ------------   ------------   ------------
                                          $        148   $         --   $         --   $        148
                                          ============   ============   ============   ============
</TABLE>

Note L - Reclassifications
--------------------------------------------------------------------------------

Certain reclassifications have been made to the 2005 financial statements to
conform to the 2006 financial statement presentation.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

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, the impact of competitive products and pricing,
product demand and market acceptance, new product development, the continuation
and development of key customer and supplier relationships, Escalade's ability
to control costs, general economic conditions, fluctuation in operating results,
changes in the securities market 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" or "Company") manufactures and distributes
products for two industries: Sporting Goods and Office Products. Within these
industries the Company has successfully built a commanding market presence in
niche markets. This strategy is heavily dependent on brand recognition and
excellent customer service. Management believes the key indicators in measuring
the success of this strategy are revenue and earnings growth. A key strategic
advantage is the Company's established relationships with major customers that
allow the Company to bring new products to the market in a very cost effective
manner while maintaining a diversified product line and wide customer base. In
addition to strategic customer relations, the Company has over 75 years of
manufacturing experience that enable it to be a low cost supplier.

Results of Operations

Net revenues for the second quarter and first half of fiscal 2006 increased 2.9%
and 5.7%, respectively, over the same periods last year. Revenue growth in the
Sporting Goods business was partially offset by declining sales in the Office
Products business. Operating profits in the second quarter and the first half of
2006 were lower than the same periods last year as a result of higher selling,
administrative and general expenses.

                                       11
<PAGE>

The following schedule sets forth certain consolidated statement of income data
as a percentage of net revenue for the periods indicated:

<TABLE>
<CAPTION>
                                                    Three Months ended           Six Months ended
                                                 ----------------------------------------------------
                                                  July 15,       July 9,      July 15,      July 9,
                                                    2006          2005          2006          2005
        ---------------------------------------------------------------------------------------------
<S>                                                   <C>           <C>           <C>           <C>
         Net revenue                                  100.0%        100.0%        100.0%        100.0%
         Cost of products sold                         68.7%         68.0%         68.1%         68.8%
                                                 ----------    ----------    ----------    ----------
         Gross margin                                  31.3%         32.0%         31.9%         31.2%
         Selling, administrative and
         general expenses                              25.3%         23.8%         25.4%         23.9%
                                                 ----------    ----------    ----------    ----------
         Operating income                               6.0%          8.2%          6.5%          7.3%
</TABLE>

Consolidated Revenue and Gross Margin

Sales in the Sporting Goods business increased in fiscal 2006 over the same
periods last year; up 16.1% in the second quarter and 24.6% for the first half.
Acquisitions completed during the first half of fiscal 2006 accounted for a
significant portion of the revenue increase while existing products experienced
an overall growth rate of 7.2%. These acquisitions, one in the residential
wooden playground market and the other in the archery accessories market, are
part of the overall strategy to increase the Company's presence in the specialty
market, which includes dealers and specialty sports retailers. This strategy is
designed to broaden the customer base and lessen the impact of large mass market
retailers. Increased product placement for the 2006 holiday season indicates the
Company continues to enjoy strong relationships with mass market retailers and
sporting goods chain stores. However, Management believes that sales to
SEARS/K-Mart, the Company's largest single customer, will be down roughly $5.0
million in 2006 compared to 2005. Despite this, Management is cautiously
optimistic that sales to the mass market channel will be roughly equal with that
achieved in 2005.

Office Products sales, compared to the prior year, were down 16.9% in the second
quarter and 17.4% in the first half of fiscal 2006. Slightly more than half of
the sales shortfall is attributed to the planned elimination of non-core, low
margin products and the elimination of unprofitable customers. The balance of
the sales decline is related to lower shredder sales due to lower overall demand
for high security shredders and stiff price competition. Management believes
that a new line of security shredders introduced in the first quarter of 2006
will eventually stem the sales decline resulting from price competition.
However, Management does not expect to reverse the decline in sales until fiscal
2007. The sales decline experienced in the first half of fiscal 2006 is expected
to be indicative of the sales results for all of fiscal 2006.

The overall gross margin for the first six months of fiscal 2006 was relatively
unchanged from the same period last year. However, the Company anticipates the
overall gross margin to decline as the Office Products business, which has a
higher gross margin than the Sporting Goods business, becomes a smaller part of
total company sales. The slight decline in the overall gross margin for the
second quarter compared to the same period last year is the result of this shift
in the relative sizes of the two business segments. In addition, rising oil
prices will have a direct impact on raw material prices for steel and resin
which constitute a significant portion of product costs in both business
segments. To the extent that these cost increases cannot be passed on to
customers, the gross margins in both business segments will be negatively
impacted. At present it is not possible to quantify the extent or impact on
future gross margins.

Consolidated Selling, General and Administrative Expenses

Consolidated selling, general and administrative expenses increased 9.5% in the
second quarter and 12.5% in the first half of fiscal 2006, compared to the same
periods last year. The bulk of the increase, approximately $2.1 million for the
first half of 2006, relates to the Sporting Goods business where additional
selling and marketing expenses have been incurred to expand distribution into
the specialty market. Cost reductions in the Office Products business,
approximately $0.5 million for the first six months of fiscal 2006, were

                                       12
<PAGE>

substantially offset by employee stock option expense of $0.4 million and
roughly $0.3 million in non-recurring expenses associated with the retirement of
Mr. Reed, former President and CEO of the Company.

Provision for Income Taxes

The effective tax rate for the second quarter (47.3%) is significantly higher
than the rate achieved in the same quarter last year (36.8%) due to lower
foreign earnings and a one time adjustment to foreign taxes. Management believes
that the tax rate achieved for the first six months of 2006 is indicative of the
overall rate that will be achieved in fiscal 2006.

Financial Condition and Liquidity

The following schedule summarizes the Company's total debt:

<TABLE>
<CAPTION>
                                                      July 15,        July 9,       December 31,
         In thousands                                   2006            2005            2005
         ---------------------------------------------------------------------------------------
<S>                                                 <C>             <C>             <C>
         Notes payable short-term                   $     19,033    $      1,658    $         --
         Current portion long-term debt                       --             946           1,066
         Long term debt                                   32,530          27,030          18,487
                                                    ------------    ------------    ------------
         Total debt                                 $     51,563    $     29,634    $     19,553
                                                    ============    ============    ============

         Total debt as a percentage of
            stockholder's equity                            68.0%           43.7%           26.2%
</TABLE>

Total debt at July 15, 2006 increased $32.0 million from the balance at December
31, 2005 primarily the result of the three acquisitions completed during the
first six months of fiscal 2006; the total cost of which was $28.7 million. In
addition the Company paid an annual dividend in March 2006 that totaled $2.6
million.

During the first half of 2006, operations consumed $1.1 million in cash compared
to generating $4.9 million for the same time period in 2005. The primary reason
for the decline is increased inventories in the Sporting Goods business.
Management believes the abnormally high inventory levels will be resolved by the
end of fiscal 2006 and that no additional excess or obsolete reserves are
necessary.

The acquisitions completed during the first half of 2006, were the primary
reason why net cash used by investing activities increased substantially
compared to the prior year. Spending for property plant and equipment for the
first half of 2006 was higher than the same period in 2005 due to costs
associated with completing the Reynosa, Mexico manufacturing plant.

The Company's working capital requirements are primarily funded from operating
cash flows and revolving credit agreements with its banks. The Company's
relationship with its primary lending bank remains strong and the Company
expects to have access to the same level of revolving credit that was available
in 2005. In addition, the Company believes it can quickly reach agreement to
increase available credit should the need arise.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to financial market risks, including changes in currency
exchange rates, interest rates and marketable equity security prices. To
mitigate these risks, the Company utilizes derivative financial instruments,
among other strategies. At the present time, the only derivative financial
instrument used by the company is an interest rate swap. The Company does not
use derivative financial instruments for speculative purposes.

                                       13
<PAGE>

A substantial majority of revenue, expense and capital purchasing activities are
transacted in U.S. dollars. However, the Company's foreign subsidiaries enter
into transactions in other currencies, primarily the Euro. To protect against
reductions in value and the volatility of future cash flows caused by changes in
currency exchange rates, the Company carefully considers the use of transaction
and balance sheet hedging programs. Such programs reduce, but do not entirely
eliminate, the impact of currency exchange rate changes. Presently the Company
does not employ currency exchange hedging financial instruments, but has
adjusted transaction and cash flows to mitigate adverse currency fluctuations.
Historical trends in currency exchanges indicate that it is reasonably possible
that adverse changes in exchange rates of 20% for the Euro could be experienced
in the near term. Such adverse changes would have resulted in a material impact
on income before taxes for the six months ended July 15, 2006.

A substantial portion of the Company's debt is based on U.S. prime and LIBOR
interest rates. In an effort to lock-in current low rates and mitigate the risk
of unfavorable interest rate fluctuations the Company has entered an interest
rate swap agreement. This agreement effectively converted a portion of its
variable rate debt into fixed rate debt.

An adverse movement of equity market prices would have an impact on the
Company's long-term marketable equity securities that are included in other
assets on the consolidated balance sheet. At July 15, 2006 the aggregate fair
value of long-term marketable equity securities was $2.4 million. Due to the
unpredictable nature of the equity market the Company has not employed any hedge
programs relative to these investments.


ITEM 4.   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 Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can 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. Also, the Company has
investments in certain unconsolidated entities. As the Company does not control
or manage these entities, its disclosure controls and procedures with respect to
such entities are necessarily substantially more limited than those it maintains
with respect to its consolidated subsidiaries.

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 the Company's 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.

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 Rule 13a-15(f) and
15d-15(f) of the Exchange Act) during the second quarter of 2006.

There have been no changes to the Company's internal control over financial
reporting that occurred since the beginning of the Company's second quarter of
2006 that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

                                       14
<PAGE>

PART II.  OTHER INFORMATION

Item 1.   Not Required.

Item 2.  (c) ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                   (d) Maximum Number
                                                                                                    (or Approximate
                                                                              (c) Total Number      Dollar Value) of
                                           (a) Total                            of Shares (or       Shares (or Units)
                                           Number of                         Units) Purchased as     that May Yet Be
                                             Shares           (b) Average      Part of Publicly      Purchased Under
                                           (or Units)       Price Paid per    Announced Plans          the Plans
Period                                     Purchased        Share (or Unit)     or Programs           or Programs

-----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                    <C>              <C>                <C>
Shares purchases prior to
     03/25/2006 under the
     current repurchase program.            449,964                $ 9.38           449,964            $ 3,000,000
-----------------------------------------------------------------------------------------------------------------------

Second quarter purchases:
-----------------------------------------------------------------------------------------------------------------------
03/26/2006 - 04/22/2006                        None                  None              None                   None
-----------------------------------------------------------------------------------------------------------------------
04/23/2006 - 05/20/2006                      26,688                $10.59            26,688              2,717,368
-----------------------------------------------------------------------------------------------------------------------
05/21/2006 - 06/17/2006                       5,786                $10.81             5,786              2,654,811
-----------------------------------------------------------------------------------------------------------------------
06/18/2006 - 07/15/2006                        None                  None              None                   None
-----------------------------------------------------------------------------------------------------------------------

Total share purchases under the
     current program                        482,418                $ 9.46           482,438            $ 2,654,811
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has one stock repurchase program which was established in February
2003 by the Board of Directors and which authorized management to expend up to
$3,000,000 to repurchase shares on the open market as well as in private
negotiated transactions. The repurchase plan has no termination date. There have
been no share repurchases that were not part of a publicly announced program. In
February 2006, the Board of Directors increased the remaining amount on this
plan to its original level of $3,000,000.

Item 3.    Not Required.

Item 4.    Submission of Matters to a Vote of Security Holders

The annual meeting of the registrant was held on April 22, 2006 at the Sheraton
Indianapolis Hotel & Suites in Indianapolis, Indiana. Proxy materials were
circulated on March 18, 2006 and then amended on April 20, 2006 proposing the
election of six members to the Board of Directors for a one year term and
approve the adoption of a special stock option grant to non-employee directors.

Shareholders elected the proposed directors by the following vote totals:

                                                    For             Withheld
                                             -----------------------------------

            Robert E. Griffin                    11,480,153         401,643
            Blaine E. Matthews, Jr.              11,764,011         105,785
            Edward E. (Ned) Williams             11,789,986          79,810
            Richard D. White                     11,856,092          13,704
            George Savitsky                      11,804,586          65,210
            Richard F. Baalmann, Jr.             11,856,092          13,704

The shareholders approved the proposal to make a special grant of 2,000 stock
options to each of the five independent directors. There were 8,737,646 shares
voted in favor of the proposal and 146,471 shares voted against the proposal.
There were 2,995,211 Broker Non-votes.

                                       15
<PAGE>

Item 5.    Not Required.

Item 6.    Exhibits

     (a)      Exhibits

         Number     Description

          31.1      Chief Executive Officer Rule 13a-14(a)/15d-14(a)
                    Certification.
          31.2      Chief Financial Officer Rule 13a-14(a)/15d-14(a)
                    Certification.
          32.1      Chief Executive Officer Section 1350 Certification.
          32.2      Chief Financial Officer Section 1350 Certification.
          10.1      Agreement dated April 19, 2006 by and between Charles
                    William Reed and Escalade, Incorporated (Management
                    Contract) (a)
          10.2      Sixth Amendment to Amended and Restated Credit Agreement
                    effective October 24, 2001 by and between Escalade,
                    Incorporated and JPMorgan Chase Bank, NA. The effective date
                    of the Amendment was May 19, 2006. (b)
          10.3      Seventh Amendment to Amended and Restated Credit Agreement
                    effective October 24, 2001 by and between Escalade,
                    Incorporated and JPMorgan Chase Bank, NA. The effective date
                    of the Amendment was July 1, 2006. (c)
          10.4      Promissory Note between Escalade, Incorporated and JPMorgan
                    Chase Bank, NA. Dated July 1, 2006. (c)
          10.5      Second Amendment to Credit Agreement dated September 5, 2003
                    by and between Indian-Martin, Inc. and JPMorgan Chase Bank,
                    NA. The effective date of the Amendment was July 1, 2006.(c)
          10.6      Promissory Note between Indian-Martin, Inc. and JPMorgan
                    Chase Bank, NA. Dated July 1, 2006. (c)

          (a) Incorporated by reference from the Company's Form 8-K filed with
              the Securities and Exchange Commission on April 19, 2006.
          (b) Incorporated by reference from the Company's Form 8-K filed with
              the Securities and Exchange Commission on June 2, 2006.
          (c) Incorporated by reference from the Company's Form 8-K filed with
              the Securities and Exchange Commission on July 5, 2006.



SIGNATURE

Pursuant to the requirements 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



Date:     August 10, 2006                   /s/ ROBERT E. GRIFFIN
          ---------------                   ------------------------------------
                                            Robert E. Griffin
                                            Chairman and Chief Executive Officer



Date:     August 10, 2006                   /s/ TERRY D. FRANDSEN
          ---------------                   ------------------------------------
                                            Terry D. Frandsen
                                            Vice President and
                                            Chief Financial Officer

                                       16