---

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

xQuarterly report
pursuant to Section 13 OR 15 (d) of the Securities Exchange Act of 1934

For the quarter ended March 22, 2008 or

oTransition 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                                 |  | 13-2739290  
|(State of incorporation)                |  | (I.R.S. EIN)
|                                        |  |             
|817 Maxwell Ave, Evansville, Indiana    |  | 47711       
|(Address of principal executive office) |  | (Zip Code)  

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

Securities registered pursuant to Section
12(b) of the Act

|                           |  |                                       
|-------------------------- |  | --------------------------------------
|Common Stock, No Par Value |  | The NASDAQ Stock Market LLC           
|(Title of Class)           |  | (Name of Exchange on Which Registered)

Securities
registered pursuant to section 12(g) of the Act: NONE

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 o


Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definition
of accelerated filer, large accelerated filer and smaller reporting company in
Rule 12b-2 of the Exchange Act.

| |                           |  |                             | 
| | ------------------------- |  | --------------------------- | 
| | Large accelerated filer o |  | Accelerated filer x         | 
| | Non-accelerated filer o   |  | Smaller reporting company o | 

Indicate by
checkmark whether the registrant is a shell company (as defined in Rule 12 b-2
of the Exchange Act).


Yes o 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 April 09, 2008 | 
| |                      |  |                               | 
| | Common, no par value |  | 12,697,586                    | 

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INDEX

|         |                                                                                                                                     |           
|-------- | ----------------------------------------------------------------------------------------------------------------------------------- | ----------
|         |                                                                                                                                     | Page
  No.
|         |                                                                                                                                     |           
|Part I.  | Financial Information:                                                                                                              |           
|         |                                                                                                                                     |           
|Item 1 - | Financial Statements:                                                                                                               |           
|         |                                                                                                                                     |           
|         | Consolidated Condensed Balance Sheets as of
  March 22, 2008,
  March 24, 2007, and December 29, 2007                               | 3         
|         |                                                                                                                                     |           
|         | Consolidated Condensed Statements of
  Operations for the Three Months Ended
  March 22, 2008 and March 24, 2007                    | 4         
|         |                                                                                                                                     |           
|         | Consolidated Condensed Statements of
  Comprehensive
  Income (Loss) for the Three Months Ended March 22, 2008 and
  March 24, 2007 | 4         
|         |                                                                                                                                     |           
|         | Consolidated Condensed Statements of Cash
  Flows for the Three
  Months Ended March 22, 2008 and March 24, 2007                    | 5         
|         |                                                                                                                                     |           
|         | Notes to Consolidated Condensed Financial
  Statements                                                                              | 6         
|         |                                                                                                                                     |           
|Item 2 - | Managements Discussion and Analysis of
  Financial Condition
  and Results of Operations                                           | 10        
|         |                                                                                                                                     |           
|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 6 - | Exhibits                                                                                                                            | 16        
|         |                                                                                                                                     |           
|         | Signatures                                                                                                                          | 16        

2

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|        |                      
|------- | ---------------------
|PART I. | FINANCIAL INFORMATION
|        |                      
|Item 1. | FINANCIAL STATEMENTS 

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

|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | ------- | -------------------------- | - | --------------------------- |  | - | ------- | 
|                                                                                                                                     |  | March 22,
2008
(Unaudited) |         | March 24,
2007
(Unaudited) |   | December
29, 2007
(Audited) | 
|ASSETS                                                                                                                               |  |                            |         |                            |   |                             |  |   |         | 
|Current Assets:                                                                                                                      |  |                            |         |                            |   |                             |  |   |         | 
|Cash and cash equivalents                                                                                                            |  | $                          | 3,693   |                            | $ | 37                          |  | $ | 2,808   | 
|Receivables, less allowance of $1,023; $1,440; and $1,087; respectively                                                              |  |                            | 23,781  |                            |   | 31,416                      |  |   | 30,639  | 
|Inventories                                                                                                                          |  |                            | 37,991  |                            |   | 35,595                      |  |   | 32,541  | 
|Prepaid expenses                                                                                                                     |  |                            | 2,797   |                            |   | 3,352                       |  |   | 2,551   | 
|Deferred income tax benefit                                                                                                          |  |                            | 1,611   |                            |   | 968                         |  |   | 1,399   | 
|Income tax receivable                                                                                                                |  |                            | 1,831   |                            |   | 1,720                       |  |   | 860     | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|TOTAL CURRENT ASSETS                                                                                                                 |  |                            | 71,704  |                            |   | 73,088                      |  |   | 70,798  | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|Property, plant and equipment, net                                                                                                   |  |                            | 22,200  |                            |   | 20,673                      |  |   | 20,391  | 
|Intangible assets                                                                                                                    |  |                            | 20,633  |                            |   | 22,551                      |  |   | 21,012  | 
|Goodwill                                                                                                                             |  |                            | 26,281  |                            |   | 24,992                      |  |   | 25,803  | 
|Investments                                                                                                                          |  |                            | 12,165  |                            |   | 10,298                      |  |   | 12,473  | 
|Interest rate swap                                                                                                                   |  |                            | 27      |                            |   | 197                         |  |   | 54      | 
|Other assets                                                                                                                         |  |                            | 1,764   |                            |   | 147                         |  |   | 1,485   | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|                                                                                                                                     |  | $                          | 154,774 |                            | $ | 151,946                     |  | $ | 152,016 | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                 |  |                            |         |                            |   |                             |  |   |         | 
|Current Liabilities:                                                                                                                 |  |                            |         |                            |   |                             |  |   |         | 
|Notes payable                                                                                                                        |  | $                          | 11,764  |                            | $ | 9,586                       |  | $ | 13,033  | 
|Trade accounts payable                                                                                                               |  |                            | 3,078   |                            |   | 4,142                       |  |   | 2,938   | 
|Accrued liabilities                                                                                                                  |  |                            | 20,389  |                            |   | 21,609                      |  |   | 23,216  | 
|Income tax payable                                                                                                                   |  |                            |        |                            |   |                            |  |   | 169     | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|TOTAL CURRENT LIABILITIES                                                                                                            |  |                            | 35,231  |                            |   | 35,337                      |  |   | 39,356  | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|Other Liabilities:                                                                                                                   |  |                            |         |                            |   |                             |  |   |         | 
|Long-term debt                                                                                                                       |  |                            | 29,029  |                            |   | 31,878                      |  |   | 19,135  | 
|Other non-current income tax liability                                                                                               |  |                            | 118     |                            |   | 164                         |  |   | 118     | 
|Deferred income tax liability                                                                                                        |  |                            | 589     |                            |   |                            |  |   | 589     | 
|Deferred compensation                                                                                                                |  |                            | 1,099   |                            |   | 1,005                       |  |   | 1,076   | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|TOTAL LIABILITIES                                                                                                                    |  |                            | 66,066  |                            |   | 68,384                      |  |   | 60,274  | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|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  12,697,586;
 13,008,198; and 12,673,149;
 shares respectively |  |                            | 12,698  |                            |   | 13,008                      |  |   | 12,673  | 
|Retained earnings                                                                                                                    |  |                            | 69,481  |                            |   | 66,956                      |  |   | 73,246  | 
|Accumulated other comprehensive income                                                                                               |  |                            | 6,529   |                            |   | 3,598                       |  |   | 5,823   | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|                                                                                                                                     |  |                            | 88,708  |                            |   | 83,562                      |  |   | 91,742  | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 
|                                                                                                                                     |  | $                          | 154,774 |                            | $ | 151,946                     |  | $ | 152,016 | 
|                                                                                                                                     |  |                            |         |                            |   |                             |  |   |         | 

See notes to
Consolidated Condensed Financial Statements.

3

---



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

|                                               |  |                    |        |                |   |        |  
|---------------------------------------------- |  | ------------------ | ------ | -------------- | - | ------ | -
|                                               |  | Three Months Ended |       
|                                               |  |                    |       
|                                               |  | March 22, 2008     |        | March 24, 2007 |  
|                                              
|Net sales                                      |  | $                  | 29,166 |                | $ | 33,467 |  
|                                               |  |                    |        |                |   |        |  
|Costs,
  expenses and other income:            |  |                    |        |                |   |        |  
|Cost of products sold                          |  |                    | 20,743 |                |   | 22,455 |  
|Selling, general and administrative
  expenses |  |                    | 9,042  |                |   | 8,625  |  
|Amortization                                   |  |                    | 437    |                |   | 568    |  
|                                               |  |                    |        |                |   |        |  
|Operating
  income (loss)                      |  |                    | (1,056 | )              |   | 1,819  |  
|                                               |  |                    |        |                |   |        |  
|Interest
  expense, net                        |  |                    | (487   | )              |   | (517   | )
|Other income                                   |  |                    | 162    |                |   | 64     |  
|                                               |  |                    |        |                |   |        |  
|Income
  (loss) before income taxes            |  |                    | (1,381 | )              |   | 1,366  |  
|                                               |  |                    |        |                |   |        |  
|Provision
  for income tax benefit (expense)   |  |                    | 533    |                |   | (269   | )
|                                               |  |                    |        |                |   |        |  
|                                               |  |                    |        |                |   |        |  
|Net income
  (loss)                            |  | $                  | (848   | )              | $ | 1,097  |  
|                                               |  |                    |        |                |   |        |  
|                                              
|Per share
  data:                              |  |                    |        |                |   |        |  
|Basic earnings (loss) per share                |  | $                  | (0.07  | )              | $ | 0.08   |  
|Diluted earnings (loss) per share              |  | $                  | (0.07  | )              | $ | 0.08   |  
|Cash dividend paid                             |  | $                  | 0.25   |                | $ | 0.22   |  

CONSOLIDATED
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

|                                                                                                                                            |  |   |       |   |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----- | - | - | ----- | -
|Net income (loss)                                                                                                                           |  | $ | (848  | ) | $ | 1,097 |  
|                                                                                                                                            |  |   |       |   |   |       |  
|Unrealized gain (loss) on marketable equity
  securities available for sale, net of tax benefit (expense) of $218 and
  $(45), respectively |  |   | (330  | ) |   | 68    |  
|                                                                                                                                            |  |   |       |   |   |       |  
|Foreign currency translation adjustment                                                                                                     |  |   | 1,053 |   |   | 72    |  
|                                                                                                                                            |  |   |       |   |   |       |  
|Unrealized loss on interest rate swap
  agreement, net of tax of $11 and $18, respectively                                                  |  |   | (17   | ) |   | (27   | )
|                                                                                                                                            |  |   |       |   |   |       |  
|                                                                                                                                           
|Comprehensive income (loss)                                                                                                                 |  | $ | (142  | ) | $ | 1,210 |  
|                                                                                                                                            |  |   |       |   |   |       |  

See notes to
Consolidated Condensed Financial Statements.

4

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

|                                                                                                |  |                    |        |                |   |        |  
|----------------------------------------------------------------------------------------------- |  | ------------------ | ------ | -------------- | - | ------ | -
|                                                                                                |  | Three Months Ended |       
|                                                                                                |  |                    |       
|                                                                                                |  | March 22, 2008     |        | March 24, 2007 |  
|                                                                                               
|Operating Activities:                                                                           |  |                    |        |                |   |        |  
|Net income (loss)                                                                               |  | $                  | (848   | )              | $ | 1,097  |  
|Depreciation and amortization                                                                   |  |                    | 1,225  |                |   | 1,061  |  
|Gain on disposal of property and
equipment                                                      |  |                    | (8     | )              |   | (52    | )
|Employee stock-based compensation                                                               |  |                    | 153    |                |   | 95     |  
|Adjustments necessary to reconcile net
  income (loss) to net cash used by operating activities |  |                    | (3,042 | )              |   | (6,418 | )
|                                                                                                |  |                    |        |                |   |        |  
|                                                                                               
|Net cash used by operating activities                                                           |  |                    | (2,520 | )              |   | (4,217 | )
|                                                                                                |  |                    |        |                |   |        |  
|                                                                                                |  |                    |        |                |   |        |  
|Investing Activities:                                                                           |  |                    |        |                |   |        |  
|Purchase of property and equipment                                                              |  |                    | (2,268 | )              |   | (353   | )
|Acquisition of assets                                                                           |  |                    |       |                |   | (3,627 | )
|Proceeds from sale of property and
  equipment                                                  |  |                    | 22     |                |   | 141    |  
|Proceeds from reduction in life insurance                                                       |  |                    |       |                |   | 306    |  
|Investment in marketable securities
  available for sale                                        |  |                    |       |                |   | (1,090 | )
|                                                                                                |  |                    |        |                |   |        |  
|                                                                                               
|Net cash used by investing activities                                                           |  |                    | (2,246 | )              |   | (4,623 | )
|                                                                                                |  |                    |        |                |   |        |  
|                                                                                                |  |                    |        |                |   |        |  
|Financing Activities:                                                                           |  |                    |        |                |   |        |  
|Net increase in notes payable                                                                   |  |                    | 8,625  |                |   | 8,519  |  
|Proceeds from exercise of stock options                                                         |  |                    | 313    |                |   | 129    |  
|Purchase of common stock                                                                        |  |                    | (195   | )              |   | (453   | )
|Director compensation                                                                           |  |                    | 11     |                |   |       |  
|Dividends paid                                                                                  |  |                    | (3,175 | )              |   | (2,872 | )
|                                                                                                |  |                    |        |                |   |        |  
|Net cash provided by financing activities                                                       |  |                    | 5,579  |                |   | 5,323  |  
|                                                                                                |  |                    |        |                |   |        |  
|Effect of exchange rate changes on cash                                                         |  |                    | 72     |                |   | (275   | )
|                                                                                                |  |                    |        |                |   |        |  
|Net increase (decrease) in cash and cash
  equivalents                                          |  |                    | 885    |                |   | (3,792 | )
|Cash and cash equivalents, beginning of
  period                                                |  |                    | 2,808  |                |   | 3,829  |  
|                                                                                                |  |                    |        |                |   |        |  
|Cash and cash equivalents, end of period                                                        |  | $                  | 3,693  |                | $ | 37     |  
|                                                                                                |  |                    |        |                |   |        |  

See notes to
Consolidated Condensed Financial Statements.

5

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ESCALADE, INCORPORATED AND SUBSIDIARIESNOTES 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 29, 2007 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 2007 filed with the
Securities and Exchange Commission.

|                           
|---------------------------
|Note B -
 Reclassifications
|                           

Certain
reclassifications have been made to prior year financial statements to conform
to the current year financial statement presentation. These reclassifications
had no effect on net earnings.

|                          
|--------------------------
|Note C -
 Seasonal Aspects
|                          

The results of
operations for the three-month periods ended March 22, 2008 and March 24, 2007
are not necessarily indicative of the results to be expected for the full year.

|                    
|--------------------
|Note D -
Inventories
|                    

|                           |  |                |        |                |   |                   |  |   |        | 
|-------------------------- |  | -------------- | ------ | -------------- | - | ----------------- |  | - | ------ | 
|(All amounts
in thousands) |  | March 22,
2008 |        | March 24,
2007 |   | December 29,
2007 | 
|                           |  |                |        |                |   |                   | 
|Raw materials              |  | $              | 9,588  |                | $ | 10,054            |  | $ | 9,188  | 
|Work in progress           |  |                | 6,497  |                |   | 6,910             |  |   | 7,032  | 
|Finished goods             |  |                | 21,906 |                |   | 18,631            |  |   | 16,321 | 
|                           |  |                |        |                |   |                   |  |   |        | 
|                           |  | $              | 37,991 |                | $ | 35,595            |  | $ | 32,541 | 
|                           |  |                |        |                |   |                   |  |   |        | 

6

---



|                      
|----------------------
|Note E 
 Income Taxes
|                      

The provision
for income taxes was computed based on financial statement income. In
accordance with FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48), which
became effective for the Company on December 31, 2006, the Company has recorded
the following changes in uncertain tax positions under the caption Other
non-current income tax liability on the consolidated balance sheet:

|                                         |  |                |     |                |   |     | 
|---------------------------------------- |  | -------------- | --- | -------------- | - | --- | 
|                                         |  | Quarter Ended  |    
|In Thousands                             |  | March
22,
2008 |     | March
24,
2007 |  
|                                         |  |                |     |                |  
|Beginning Balance                        |  | $              | 118 |                | $ | 164 | 
|Additions for current year tax positions |  |                |    |                |   |    | 
|Additions for prior year tax positions   |  |                |    |                |   |    | 
|Settlements                              |  |                |    |                |   |    | 
|Reductions Settlements                   |  |                |    |                |   |    | 
|Reductions for prior year tax positions  |  |                |    |                |   |    | 
|                                         |  |                |     |                |   |     | 
|Ending Balance                           |  | $              | 118 |                | $ | 164 | 
|                                         |  |                |     |                |   |     | 

|                                              
|----------------------------------------------
|Note F 
 Fair Values of Financial Instruments
|                                              

In September
2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 157, Fair Value Measurements (Statement
No. 157) which defines fair value, establishes a framework for measuring fair
value, and expands disclosures about fair value measurements. This became
effective for the Company on December 30, 2007. The Company holds one type of
financial asset subject to valuation under Statement No. 157: marketable equity
securities available for sale. The Company does not have any liabilities
subject to valuation under Statement 157. Fair values as of March 22, 2008 were
calculated as follows:

|                                                 |  |                           |       |                                                                |   |                                               |  |                                           |   |  |   |   | 
|------------------------------------------------ |  | ------------------------- | ----- | -------------------------------------------------------------- | - | --------------------------------------------- |  | ----------------------------------------- | - |  | - | - | 
|(All amounts
in thousands)                       |  | Balance
at March
22, 2008 |       | Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1) |   | Significant
Other
Observable
Inputs
(Level 2) |  | Significant
unobservable
Inputs
(Level 3) |  
|                                                 |  |                           |       |                                                                |   |                                               |  |                                           |  
|Marketable
 equity securities available for sale |  | $                         | 3,983 |                                                                | $ | 3,983                                         |  | $                                         |  |  | $ |  | 
|                                                 |  |                           |       |                                                                |   |                                               |  |                                           |   |  |   |   | 
|                                                 |  | $                         | 3,983 |                                                                | $ | 3,983                                         |  | $                                         |  |  | $ |  | 
|                                                 |  |                           |       |                                                                |   |                                               |  |                                           |   |  |   |   | 

|                           
|---------------------------
|Note G -
Earnings Per Share
|                           

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

|                                                                  |  |                |        |                |  |  |        |  | 
|----------------------------------------------------------------- |  | -------------- | ------ | -------------- |  |  | ------ |  | 
|                                                                  |  | 3 Months Ended |       
|                                                                  |  |                |       
|All amounts
in thousands                                          |  | March 22, 2008 |        | March 24, 2007 | 
|                                                                  |  |                |        |                | 
|                                                                 
|Weighted average common shares outstanding                        |  |                | 12,683 |                |  |  | 13,034 |  | 
|Dilutive effect of stock options                                  |  |                | 12     |                |  |  | 16     |  | 
|                                                                  |  |                |        |                |  |  |        |  | 
|Weighted average common shares outstanding,
 assuming dilution    |  |                | 12,695 |                |  |  | 13,050 |  | 
|                                                                  |  |                |        |                |  |  |        |  | 
|                                                                  |  |                |        |                |  |  |        |  | 
|Number of anti-dilutive stock options and
 restricted stock units |  |                | 673    |                |  |  | 462    |  | 

7

---



|                                     
|-------------------------------------
|Note H 
 Employee Stock Compensation
|                                     

The fair value
of stock-based compensation is recognized in accordance with the provisions of
SFAS No. 123R Share-Based Payments
(SFAS 123R).

During the
three months ended March 22, 2008 and pursuant to the 2007 Incentive
Plan, the Company awarded 2,657 restricted stock units to directors and 139,500
restricted stock units to employees. The restricted stock units awarded to the
directors vest after one year following the grant date. The restricted stock
units awarded to employees vest at the end of three years conditioned on the
achievement of specified market conditions. The number of shares issued to
employees can range between 75% and 150% of the award amount depending on the
outcome of specified performance criteria. Restricted stock awards are subject
to forfeiture if on the vesting date the employee is not employed or the
director no longer holds a position with the Company.

The Company
utilizes Monte Carlo techniques to determine the fair value of restricted stock
units granted with market conditions attached to vesting.

For the three
months ended March 22, 2008 and March 24, 2007, the Company recognized stock
based compensation expense of $153 thousand and $95 thousand, respectively. At
March 22, 2008, there was $1.7 million in unrecognized stock-based compensation
expense related to non-vested stock awards.

|                             
|-----------------------------
|Note I -
 Segment Information
|                             

|                                 |  |                                                     |        |                 |   |        |  |       |        |   |   |         |  
|-------------------------------- |  | --------------------------------------------------- | ------ | --------------- | - | ------ |  | ----- | ------ | - | - | ------- | -
|                                 |  | As of and for the Three Months
Ended March 22, 2008 |       
|                                 |  |                                                     |       
|In thousands                     |  | Sporting
Goods                                      |        | Office
Products |   | Corp.  |  | Total |       
|                                 |  |                                                     |        |                 |   |        |  |       |       
|                                
|Revenues from external customers |  | $                                                   | 17,533 |                 | $ | 11,633 |  | $     |       |   | $ | 29,166  |  
|Operating income (loss)          |  |                                                     | (1,299 | )               |   | 1,020  |  |       | (777   | ) |   | (1,056  | )
|Net income (loss)                |  |                                                     | (1,069 | )               |   | 588    |  |       | (367   | ) |   | (848    | )
|Total assets                     |  | $                                                   | 86,219 |                 | $ | 47,008 |  | $     | 21,547 |   | $ | 154,774 |  

|                                 |  |                                                     |        |                 |   |        |  |       |        |   |   |         | 
|-------------------------------- |  | --------------------------------------------------- | ------ | --------------- | - | ------ |  | ----- | ------ | - | - | ------- | 
|                                 |  | As of and for the Three Months
Ended March 24, 2007 |       
|                                 |  |                                                     |       
|In thousands                     |  | Sporting
Goods                                      |        | Office
Products |   | Corp.  |  | Total |       
|                                 |  |                                                     |        |                 |   |        |  |       |       
|                                
|Revenues from external customers |  | $                                                   | 20,457 |                 | $ | 13,010 |  | $     |       |   | $ | 33,467  | 
|Operating income (loss)          |  |                                                     | 522    |                 |   | 2,121  |  |       | (824   | ) |   | 1,819   | 
|Net income (loss)                |  |                                                     | 43     |                 |   | 1,286  |  |       | (232   | ) |   | 1,097   | 
|Total assets                     |  | $                                                   | 93,723 |                 | $ | 45,569 |  | $     | 12,654 |   | $ | 151,946 | 

8

---



|                          
|--------------------------
|Note J 
 Dividend Payment
|                          

On March 21,
2008, the Company paid a dividend of $0.25 per common share to all shareholders
of record on March 14, 2008. The total amount of the dividend was approximately
$3.2 million and was charged against retained earnings.

|                                      
|--------------------------------------
|Note K  New
 Accounting Standards    
|                                      
|                                      
|Accounting Standards
Yet to Be Adopted

In December
2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations(SFAS
No. 141R). SFAS No. 141R changes accounting for business
combinations through a requirement to recognize 100 percent of the fair values
of assets acquired, liabilities assumed, and noncontrolling interests in
acquisitions of less than a 100 percent controlling interest when the
acquisition constitutes a change in control of the acquired entity. Other
requirements include capitalization of acquired in-process research and
development assets, expensing, as incurred, acquisition-related transaction
costs and capitalizing restructuring charges as part of the acquisition only if
requirements of SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities, are met. SFAS
No. 141R is effective for business combination transactions for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008 and is therefore effective
for the Company beginning in fiscal year 2009. The implementation of this
guidance will affect the Companys results of operations and financial position
after its effective date only to the extent it completes applicable business
combinations and therefore the impact cannot be determined at this time.

In December
2007, the FASB issued SFAS No. 160, Noncontrolling
Interest in Consolidated Financial Statements, an amendment of ARB No. 51
(SFAS No. 160). SFAS No. 160 establishes the economic entity
concept of consolidated financial statements, stating that holders of residual
economic interest in an entity have an equity interest in the entity, even if
the residual interest is related to only a portion of the entity. Therefore,
SFAS No. 160 requires a noncontrolling interest to be presented as a
separate component of equity. SFAS No. 160 also states that once control
is obtained, a change in control that does not result in a loss of control
should be accounted for as an equity transaction. The statement requires that a
change resulting in a loss of control and deconsolidation is a significant
event triggering gain or loss recognition and the establishment of a new fair
value basis in any remaining ownership interests. SFAS No. 160 is
effective for fiscal years beginning on or after December 15, 2008 and is
therefore effective for the Company beginning in fiscal year 2009. The Company
does not expect the adoption of SFAS No. 160 to have a material impact on
its results of operations and financial position.

9

---



Accounting Standards
Adopted in Fiscal 2008

In February
2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities(SFAS No.
159). SFAS No. 159 permits companies, at their election, to measure
specified financial instruments and warranty and insurance contracts at fair
value on a contract-by-contract basis, with changes in fair value recognized in
earnings each reporting period. The election, called the fair value option,
will enable some companies to reduce the volatility in reported earnings caused
by measuring related assets and liabilities differently, and it is easier than
using the complex hedge-accounting requirements in SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities(SFAS No. 133), to achieve similar results.
Subsequent changes in fair value for designated items will be required to be
reported in earnings in the current period. SFAS No. 159 is effective for
financial statements issued for fiscal years beginning after November 15,
2007 and therefore became effective for the Company as of December 30, 2007.
The Company has not elected to measure any eligible items at fair value.
Accordingly, the adoption of SFAS No. 159 has not impacted the Companys
results of operations and financial position.

In September
2006, the FASB issued SFAS No. 157, Fair
Value Measurements (SFAS No. 157). SFAS No. 157
establishes a single authoritative definition of fair value, establishes a
framework for measuring fair value, and expands disclosure requirements
pertaining to fair value measurements. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15,
2007 and therefore became effective for the Company as of December 30, 2007.
The adoption of SFAS No. 157 has not impacted the Companys results of
operations and financial position.

|         |                                                                                       
|-------- | --------------------------------------------------------------------------------------
|Item 1A. | Not
 Required.                                                                        
|         |                                                                                       
|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 market presence
in niche markets. This strategy is heavily dependent on expanding the customer
base, barriers to entry, brand recognition and excellent customer service. 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 cost
effective manner while maintaining a diversified product line and wide customer
base. In addition to strategic customer relations, the Company has substantial
manufacturing and import experience that enable it to be a low cost supplier.

10

---



A majority of the Companys products are in markets that are
experiencing low growth rates. Where the Company enjoys a commanding market
position, such as table tennis tables in the Sporting Goods segment and paper
folding machines in the Office Products segment, revenue growth is expected to
be low. However, in markets that are fragmented and where the Company is not
the dominant leader, such as archery in the Sporting Goods segment and data
security shredders in the Office Products segment, the Company anticipates
higher growth. To augment internal growth, the Company has developed a strategy
of acquiring companies or product lines that complement or expand the Companys
product lines. 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.

Results
of Operations

Consolidated net sales for the first quarter of 2008 were down in both
the Sporting Goods and Office Product segments compared to the same quarter
last year resulting in an operating loss of $1.1 million for the quarter
compared to an operating gain of $1.8 million for the same quarter last year.

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

|                                              |  |                    |   |                |       |   | 
|--------------------------------------------- |  | ------------------ | - | -------------- | ----- | - | 
|                                              |  | Three months ended |  
|                                              |  | March 22,
2008     |   | March 24,
2007 |      
|                                              |  |                    |   |                |       |   | 
|Net revenue                                   |  | 100.0              | % |                | 100.0 | % | 
|Cost of products sold                         |  | 71.1               | % |                | 67.1  | % | 
|                                              |  |                    |   |                |       |   | 
|Gross
 margin                                 |  | 28.9               | % |                | 32.9  | % | 
|Selling, administrative and
 general expenses |  | 31.0               | % |                | 25.8  | % | 
|Amortization                                  |  | 1.5                | % |                | 1.7   | % | 
|                                              |  |                    |   |                |       |   | 
|Operating
 income (loss)                      |  | -3.6               | % |                | 5.4   | % | 
|                                              |  |                    |   |                |       |   | 

Consolidated Revenue and Gross Margin

Revenues from the Sporting Goods business were down 14% in the first
quarter compared to the same quarter last year due to several factors.
Approximately 74% of the decline relates to the Companys mass-market retail
customers who are experiencing lower than expected sell through on game room
products such as table tennis and billiards. General market demand for game
room products has been declining for several years, but this decline has been
accelerated in 2008 by worsening economic conditions in the United States. In
response, several of the Companys mass-market retail customers have initiated
efforts to reduce their inventories and consequently bought less of the
Companys products in the first quarter of 2008. Sales to the Companys largest
mass-market retail customer, Sears Holdings, were down 60% in the first quarter
of 2008 compared to last year. In the second half of 2008, the Company will
cease supplying table tennis and billiard tables to Sears Holdings; these
product lines represented approximately 50% of the total sales to Sears
Holdings in fiscal 2007. Management believes that total sales to its
mass-market retail customers in 2008 will be significantly lower than levels
achieved in 2007. Sales to specialty retailers and dealers were down 9% in the
first quarter compared to the same period last year due principally to
production and shipping delays of archery bows. The Company has now solved
these production problems, but does not expect to recover lost revenues. Based
on the first quarter results and early product placement information, the
Company currently expects sporting goods sales for 2008 to be approximately 12%
lower in 2008 compared to 2007.

11

---



Revenues from the Office Products business declined 11% in the first
quarter compared to last year due in part to worsening economic conditions
which have significantly affected the Companys mass-market office products
retailers in the United States who are reporting lower sales as the economy
slows, particularly in high value items such as the Companys paper folding
machines. The Company is beginning to see this same trend develop in some
European countries; specifically France and Spain. Sales in Europe have also
been hampered by production delays on a new high security shredder which was
scheduled to begin shipping at the beginning of the first quarter of 2008 but
did not begin shipping until the end of the first quarter of 2008. Some
European customers withheld orders in anticipation of this new shredder product
line. Management believes revenues from the office products business will be
slightly lower in fiscal 2008 than achieved in fiscal 2007.

Reduced sales volumes in both business segments have resulted in excess
production capacity which translated into unfavorable production cost variances
during the first quarter of 2008. As a result, the overall gross margin ratio
declined in the first quarter of 2008 compared to the same period in 2007. The
Company is currently evaluating each of its manufacturing facilities and
anticipates taking action in the second quarter of 2008 to mitigate future
unfavorable product cost variances. The gross margin ratio in Office Products
has been further degraded as a result of the increasing strength of the EURO as
it relates to product produced in Germany and sold in the United States.
Management expects the overall gross margin ratio for 2008 to be less than that
achieved in 2007.

Consolidated Selling, General and
Administrative Expenses

Compared to the same period last year, consolidated selling, general
and administrative (SG&A) costs increased 4% in the first quarter.
SG&A costs in the Sporting Goods business segment increased 5% due to
increased selling and marketing costs associated with the specialty retailer
and dealer channel. SG&A costs in the Office Products business increased 3%
due to changes in exchange rates; excluding the effect of exchange rates,
SG&A costs in the Office Products business declined 5% during the first
quarter of 2008 compared to last year.

Provision for Income Taxes

The effective tax rate in the first quarter of 2008 was 39% compared to
20% in the same period last year. This increase, which benefits the Company, is
related to the size of the loss incurred in the current quarter relative to the
size of permanent adjustments in taxable income which were smaller in the first
quarter of 2008 than in the same period last year. The Company anticipates the
effective tax rate for 2008 to be relatively unchanged from that experienced in
fiscal 2007.

12

---



Financial Condition and Liquidity

The Company continues to exhibit strong financial health. Total bank
debt at the end of the first quarter of 2008 was relatively unchanged from the
same period last year, but up from the latest year end. The following schedule
summarizes the Companys total bank debt:

|                               |  |                |        |                |   |                   |  |   |        | 
|------------------------------ |  | -------------- | ------ | -------------- | - | ----------------- |  | - | ------ | 
|In thousands                   |  | March 22,
2008 |        | March 24,
2007 |   | December 29,
2007 | 
|                               |  |                |        |                |   |                   | 
|                               |  |                |        |                |   |                   |  |   |        | 
|Notes payable short-term       |  | $              | 11,764 |                | $ | 9,586             |  | $ | 13,033 | 
|Current portion long-term debt |  |                |       |                |   |                  |  |   |       | 
|Long term debt                 |  |                | 29,029 |                |   | 31,878            |  |   | 19,135 | 
|                               |  |                |        |                |   |                   |  |   |        | 
|Total bank debt                |  | $              | 40,793 |                | $ | 41,464            |  | $ | 32,168 | 
|                               |  |                |        |                |   |                   |  |   |        | 

As a percentage of stockholders equity, total bank debt was 46%, 50%
and 35% at March 22, 2008, March 24, 2007 and December 29, 2007, respectively.

During the first quarter of 2008, operations used $2.5 million in cash
primarily due to incurring a net operating loss. In addition to funding
operations, the Company used $3.2 million in cash to pay a dividend to
stockholders and invested $2.3 million in property plant and equipment of which
$2.1 million relates to a project to implement a global information system. The
total cost of this project is expected to be approximately $5.2 million with
most of the costs being incurred during 2008.

The Company funds working capital requirements through operating cash
flows and revolving credit agreements with its bank. 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 2007. 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.

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 could have resulted
in a material impact on income before taxes for the three months ended March
22, 2008.

13

---



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 into an interest rate swap
agreement. This agreement, which ends in May 2008, 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 March 22, 2008 the aggregate carrying value of
long-term marketable equity securities was $4.0 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 first quarter of 2008.

There have
been no changes to the Companys internal control over financial reporting that
occurred since the beginning of the Companys first quarter of 2008 that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

14

---



|         |                                           
|-------- | ------------------------------------------
|PART II. | OTHER
 INFORMATION                        
|         |                                           
|Item 1.  | Not
 Required.                            
|         |                                           
|Item 2.  | (c) ISSUER
 PURCHASES OF EQUITY SECURITIES

|                                                                            |  |                                                    |  |                                              |  |                                                                                                     |  |                                                                                                                                    |      |  |  |  |  |            |  |  |  |   |            |  | 
|--------------------------------------------------------------------------- |  | -------------------------------------------------- |  | -------------------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------- | ---- |  |  |  |  | ---------- |  |  |  | - | ---------- |  | 
|Period                                                                      |  | (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 |     
|                                                                            |  |                                                    |  |                                              |  |                                                                                                     |  |                                                                                                                                    |     
|Shares purchases prior to 12/29/2007 under the
current repurchase
 program. |  |                                                    |  | 892,533                                      |  |                                                                                                     |  | $                                                                                                                                  | 8.93 |  |  |  |  | 892,533    |  |  |  | $ | 3,000,000  |  | 
|                                                                           
|First quarter purchases:                                                    |  |                                                    |  |                                              |  |                                                                                                     |  |                                                                                                                                    |      |  |  |  |  |            |  |  |  |   |            |  | 
|12/30/2007  01/26/2008                                                     |  |                                                    |  | None                                         |  |                                                                                                     |  |                                                                                                                                    | None |  |  |  |  | No
 Change |  |  |  |   | No
 Change |  | 
|01/27/2008  02/23/2008                                                     |  |                                                    |  | None                                         |  |                                                                                                     |  |                                                                                                                                    | None |  |  |  |  | No
 Change |  |  |  |   | No
 Change |  | 
|02/24/2008  03/22/2008                                                     |  |                                                    |  | None                                         |  |                                                                                                     |  |                                                                                                                                    | None |  |  |  |  | No
 Change |  |  |  |   | No
 Change |  | 
|                                                                           
|Total share purchases under the current
program                             |  |                                                    |  | 892,533                                      |  |                                                                                                     |  | $                                                                                                                                  | 8.93 |  |  |  |  | 892,533    |  |  |  | $ | 3,000,000  |  | 

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 each of February 2005 and 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. The repurchase plan has no
termination date and there have been no share repurchases that were not part of
a publicly announced program except for shares purchased in connection with the
exercise of stock options.

15

---



Item 3, 4 and
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.            

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: April
 10, 2008 | /s/ Terry D.
 Frandsen  
|                      | Vice
 President and     
|                      | Chief
 Financial Officer

16

---