SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-Q

|  |                                                                                           
|- | ------------------------------------------------------------------------------------------
|x | Quarterly report pursuant
  to Section 13 OR 15 (d) of the Securities Exchange Act of 1934
|  | For
  the quarter ended July 12, 2008 or                                                  
| 
|o | Transition report
  pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|  | For
  the transition period from _____ to _____                                           

Commission File Number 0-6966

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

|                                                                               |  |                                                                       
|------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------
|Indiana
  (State of incorporation)                                             |  | 13-2739290 
  (I.R.S. EIN)                                            
|                                                                               |  |                                                                       
|817 Maxwell Ave, Evansville, Indiana
  (Address of principal executive office) |  | 47711
  (Zip Code)                                                    
|                                                                               |  |                                                                       
|812-467-1334                                                                  
|(Registrants Telephone Number)                                               
|                                                                               |  |                                                                       
|Securities
  registered pursuant to Section 12(b) of the Act                  
|                                                                               |  |                                                                       
|Common
  Stock, No Par Value
  (Title of Class)                                |  | The
  NASDAQ Stock Market LLC
  (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 x

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 July 31, 2008
|                     |  |                               
|Common, no par value |  | 12,616,042                    

---



INDEX

|         |                                                                                                                                                |  |           
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|         |                                                                                                                                                |  | Page
  No.
|         |                                                                                                                                                |  |           
|Part I.  | Financial
  Information:                                                                                                                       |  |           
|         |                                                                                                                                                |  |           
|Item 1 - | Financial
  Statements:                                                                                                                        |  |           
|         |                                                                                                                                                |  |           
|         | Consolidated
  Condensed Balance Sheets as of July 12, 2008, July 14, 2007, and December 29,
  2007                                            |  | 3         
|         |                                                                                                                                                |  |           
|         | Consolidated Condensed Statements of Operations for the Three
  Months and Six Months Ended July 12, 2008 and July 14, 2007                    |  | 4         
|         |                                                                                                                                                |  |           
|         | Consolidated
  Condensed Statements of Comprehensive Income (Loss) for the Three Months and
  Six Months Ended July 12, 2008 and July 14, 2007 |  | 4         
|         |                                                                                                                                                |  |           
|         | Consolidated
  Condensed Statements of Cash Flows for the Six Months Ended July 12, 2008 and
  July 14, 2007                                   |  | 5         
|         |                                                                                                                                                |  |           
|         | Notes to
  Consolidated Condensed Financial Statements                                                                                         |  | 6         
|         |                                                                                                                                                |  |           
|Item 2 - | Managements
  Discussion and Analysis of Financial Condition and Results of Operations                                                        |  | 9         
|         |                                                                                                                                                |  |           
|Item 3 - | Quantitative
  and Qualitative Disclosures about Market Risk                                                                                   |  | 12        
|         |                                                                                                                                                |  |           
|Item 4 - | Controls
  and Procedures                                                                                                                      |  | 12        
|         |                                                                                                                                                |  |           
|Part II. | Other
  Information                                                                                                                            |  |           
|         |                                                                                                                                                |  |           
|Item 2 - | Issuer
  Purchases of Equity Securities                                                                                                        |  | 13        
|         |                                                                                                                                                |  |           
|Item 4 - | Submission
  of Matters to a Vote of Security Holders                                                                                          |  | 14        
|         |                                                                                                                                                |  |           
|Item 6 - | Exhibits                                                                                                                                       |  | 14        
|         |                                                                                                                                                |  |           
|         | Signatures                                                                                                                                     |  | 14        

2

---



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

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

|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|---------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ------------------------ | - | -------------------------- |  | - | ------- | 
|                                                                                                                             |  | July 12, 2008(Unaudited) |         | July 14, 2007(Unaudited) |   | December 29, 2007(Audited) | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|ASSETS                                                                                                                       |  |                          |         |                          |   |                            |  |   |         | 
|Current Assets:                                                                                                              |  |                          |         |                          |   |                            |  |   |         | 
|Cash and cash equivalents                                                                                                    |  | $                        | 4,486   |                          | $ | 1,969                      |  | $ | 2,808   | 
|Receivables, less allowance of $1,014; $1,167; and $1,087;
  respectively                                                    |  |                          | 32,147  |                          |   | 33,700                     |  |   | 30,639  | 
|Inventories                                                                                                                  |  |                          | 39,090  |                          |   | 40,823                     |  |   | 32,541  | 
|Prepaid expenses                                                                                                             |  |                          | 2,720   |                          |   | 2,662                      |  |   | 2,551   | 
|Deferred income tax benefit                                                                                                  |  |                          | 2,397   |                          |   | 899                        |  |   | 1,399   | 
|Income tax receivable                                                                                                        |  |                          | 2,397   |                          |   | 714                        |  |   | 860     | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|TOTAL CURRENT ASSETS                                                                                                         |  |                          | 83,237  |                          |   | 80,767                     |  |   | 70,798  | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|Property, plant and equipment, net                                                                                           |  |                          | 23,719  |                          |   | 20,625                     |  |   | 20,391  | 
|Intangible assets                                                                                                            |  |                          | 20,306  |                          |   | 21,710                     |  |   | 21,012  | 
|Goodwill                                                                                                                     |  |                          | 26,772  |                          |   | 25,275                     |  |   | 25,803  | 
|Investments                                                                                                                  |  |                          | 12,076  |                          |   | 10,518                     |  |   | 12,473  | 
|Interest rate swap                                                                                                           |  |                          |        |                          |   | 146                        |  |   | 54      | 
|Other assets                                                                                                                 |  |                          | 1,464   |                          |   | 328                        |  |   | 1,485   | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|                                                                                                                             |  | $                        | 167,574 |                          | $ | 159,369                    |  | $ | 152,016 | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                         |  |                          |         |                          |   |                            |  |   |         | 
|Current Liabilities:                                                                                                         |  |                          |         |                          |   |                            |  |   |         | 
|Notes payable                                                                                                                |  | $                        | 52,345  |                          | $ | 12,129                     |  | $ | 13,033  | 
|Trade accounts payable                                                                                                       |  |                          | 4,450   |                          |   | 5,693                      |  |   | 2,938   | 
|Accrued liabilities                                                                                                          |  |                          | 18,433  |                          |   | 21,089                     |  |   | 23,216  | 
|Income taxes payable                                                                                                         |  |                          |        |                          |   |                           |  |   | 169     | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|TOTAL CURRENT LIABILITIES                                                                                                    |  |                          | 75,228  |                          |   | 38,911                     |  |   | 39,356  | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|Other Liabilities:                                                                                                           |  |                          |         |                          |   |                            |  |   |         | 
|Long-term debt                                                                                                               |  |                          | 2,737   |                          |   | 32,271                     |  |   | 19,135  | 
|Other non-current income tax liability                                                                                       |  |                          | 118     |                          |   | 164                        |  |   | 118     | 
|Deferred income tax liability                                                                                                |  |                          | 589     |                          |   |                           |  |   | 589     | 
|Deferred compensation                                                                                                        |  |                          | 1,128   |                          |   | 1,033                      |  |   | 1,076   | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|                                                                                                                             |  |                          | 79,800  |                          |   | 72,379                     |  |   | 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

  12,616,042;12,984,714;
  and 12,673,149; respectively |  |                          | 12,616  |                          |   | 12,985                     |  |   | 12,673  | 
|Retained earnings                                                                                                            |  |                          | 68,437  |                          |   | 69,492                     |  |   | 73,246  | 
|Accumulated other comprehensive income                                                                                       |  |                          | 6,721   |                          |   | 4,513                      |  |   | 5,823   | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|                                                                                                                             |  |                          | 87,774  |                          |   | 86,990                     |  |   | 91,742  | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 
|                                                                                                                             |  | $                        | 167,574 |                          | $ | 159,369                    |  | $ | 152,016 | 
|                                                                                                                             |  |                          |         |                          |   |                            |  |   |         | 

See notes to Consolidated
Condensed Financial Statements.

3

---



ESCALADE, INCORPORATED AND
SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(All amounts in thousands, except per share amounts)

|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|-------------------------------------------- |  | -------------------- | ------ | ------------------ | - | --------------- | - | --------------- | ------ | - | - | ------ | -
|                                             |  |                      |        |                    |  
|                                             |  | Three
  Months Ended |        | Six
  Months Ended |  
|                                             |  |                      |        |                    |  
|                                             |  | July
  12, 2008      |        | July
  14, 2007    |   | July
  12, 2008 |   | July
  14, 2007 |       
|                                             |  |                      |        |                    |   |                 |   |                 |       
|Net sales                                    |  | $                    | 45,796 |                    | $ | 50,530          |   | $               | 74,962 |   | $ | 83,997 |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Costs, expenses and other income:            |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Cost of products sold                        |  |                      | 33,275 |                    |   | 33,456          |   |                 | 54,018 |   |   | 55,911 |  
|Selling, general and administrative
expenses |  |                      | 12,578 |                    |   | 12,388          |   |                 | 21,620 |   |   | 21,013 |  
|Amortization                                 |  |                      | 732    |                    |   | 878             |   |                 | 1,169  |   |   | 1,446  |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Operating income (loss)                      |  |                      | (789   | )                  |   | 3,808           |   |                 | (1,845 | ) |   | 5,627  |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Interest expense                             |  |                      | (660   | )                  |   | (952            | ) |                 | (1,147 | ) |   | (1,469 | )
|Other income                                 |  |                      | 43     |                    |   | 790             |   |                 | 205    |   |   | 854    |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Income (loss) before income taxes            |  |                      | (1,406 | )                  |   | 3,646           |   |                 | (2,787 | ) |   | 5,012  |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Provision for income tax benefit (expense)   |  |                      | 702    |                    |   | (1,211          | ) |                 | 1,235  |   |   | (1,480 | )
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Net income (loss)                            |  | $                    | (704   | )                  | $ | 2,435           |   | $               | (1,552 | ) | $ | 3,532  |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Per Share Data:                              |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Basic earnings (loss) per share              |  | $                    | (0.06  | )                  | $ | 0.19            |   | $               | (0.12  | ) | $ | 0.27   |  
|Diluted earnings (loss) per share            |  | $                    | (0.06  | )                  | $ | 0.19            |   | $               | (0.12  | ) | $ | 0.27   |  
|                                             |  |                      |        |                    |   |                 |   |                 |        |   |   |        |  
|Cash dividend paid                           |  |                      |       |                    |   |                |   | $               | 0.25   |   | $ | 0.22   |  

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

|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|----------------------------------------------------------------------------------------------------------------- |  | - | ---- | - | - | ----- | - | - | ------ | - | - | ----- | -
|Net income (loss)                                                                                                 |  | $ | (704 | ) | $ | 2,435 |   | $ | (1,552 | ) | $ | 3,532 |  
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|Unrealized gain (loss) on securities available for sale, net of tax
  of $40, $(69), $115 and $(75), respectively |  |   | (139 | ) |   | 240   |   |   | (469   | ) |   | 307   |  
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|Foreign currency translation adjustment                                                                           |  |   | 349  |   |   | 708   |   |   | 1,402  |   |   | 784   |  
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|Unrealized (loss) on interest rate swap agreement, net of tax of $5,
  $10, $10 and $17, respectively             |  |   | (18  | ) |   | (33   | ) |   | (35    | ) |   | (60   | )
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  
|Comprehensive income (loss)                                                                                       |  | $ | (512 | ) | $ | 3,350 |   | $ | (654   | ) | $ | 4,563 |  
|                                                                                                                  |  |   |      |   |   |       |   |   |        |   |   |       |  

See notes to Consolidated
Condensed Financial Statements.

4

---



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

|                                                                                                |  |                    |         |                 |   |         |  
|----------------------------------------------------------------------------------------------- |  | ------------------ | ------- | --------------- | - | ------- | -
|                                                                                                |  | Six
  Months Ended |        
|                                                                                                |  |                    |        
|                                                                                                |  | July
  12, 2008    |         | July
  14, 2007 |  
|                                                                                                |  |                    |         |                 |  
|Operating Activities:                                                                           |  |                    |         |                 |   |         |  
|Net income (loss)                                                                               |  | $                  | (1,552  | )               | $ | 3,532   |  
|Depreciation and amortization                                                                   |  |                    | 2,436   |                 |   | 2,913   |  
|Adjustments necessary to reconcile net income (loss) to net cash used
  by operating activities |  |                    | (13,888 | )               |   | (11,236 | )
|                                                                                                |  |                    |         |                 |   |         |  
|Net cash used by operating activities                                                           |  |                    | (13,004 | )               |   | (4,791  | )
|                                                                                                |  |                    |         |                 |   |         |  
|                                                                                                |  |                    |         |                 |   |         |  
|Investing Activities:                                                                           |  |                    |         |                 |   |         |  
|Purchase of property and equipment                                                              |  |                    | (4,109  | )               |   | (1,273  | )
|Acquisition of assets                                                                           |  |                    | (452    | )               |   | (3,624  | )
|Proceeds from sale of property and equipment                                                    |  |                    | 26      |                 |   | 170     |  
|Proceeds from reduction in life insurance                                                       |  |                    |        |                 |   | 400     |  
|                                                                                                |  |                    |         |                 |   |         |  
|Net cash used by investing activities                                                           |  |                    | (4,535  | )               |   | (4,327  | )
|                                                                                                |  |                    |         |                 |   |         |  
|                                                                                                |  |                    |         |                 |   |         |  
|Financing Activities:                                                                           |  |                    |         |                 |   |         |  
|Net increase in notes payable                                                                   |  |                    | 22,915  |                 |   | 11,454  |  
|Proceeds from exercise of stock options                                                         |  |                    | 313     |                 |   | 133     |  
|Director fees paid by issuing stock                                                             |  |                    | 22      |                 |   | 122     |  
|Purchase of common stock                                                                        |  |                    | (921    | )               |   | (803    | )
|Dividends paid                                                                                  |  |                    | (3,174  | )               |   | (2,866  | )
|                                                                                                |  |                    |         |                 |   |         |  
|Net cash provided by financing activities                                                       |  |                    | 19,155  |                 |   | 8,040   |  
|                                                                                                |  |                    |         |                 |   |         |  
|                                                                                                |  |                    |         |                 |   |         |  
|Effect of exchange rate changes on cash                                                         |  |                    | 62      |                 |   | (782    | )
|                                                                                                |  |                    |         |                 |   |         |  
|Net increase (decrease) in cash and cash equivalents                                            |  |                    | 1,678   |                 |   | (1,860  | )
|Cash and cash equivalents, beginning of period                                                  |  |                    | 2,808   |                 |   | 3,829   |  
|                                                                                                |  |                    |         |                 |   |         |  
|Cash and cash equivalents, end of period                                                        |  | $                  | 4,486   |                 | $ | 1,969   |  
|                                                                                                |  |                    |         |                 |   |         |  

See notes to Consolidated
Condensed Financial Statements.

5

---



ESCALADE,
INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

|                                                     
|-----------------------------------------------------
|Note A 
  Summary of Significant Accounting Policies
|                                                     

Presentation of Consolidated Condensed
Financial Statements - 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 consolidated condensed balance sheet of the
Company as of December 29, 2007 has been derived from the audited consolidated
condensed 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 consolidated
condensed 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 six-month periods ended July 12, 2008 and July 14, 2007 are
not necessarily indicative of the results to be expected for the full year.

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

|                             |  |               |        |               |   |                   |  |   |        | 
|---------------------------- |  | ------------- | ------ | ------------- | - | ----------------- |  | - | ------ | 
|(All amounts
  in thousands) |  | July 12, 2008 |        | July 14, 2007 |   | December 29, 2007 | 
|                             |  |               |        |               |   |                   |  |   |        | 
|Raw
  materials              |  | $             | 10,468 |               | $ | 10,790            |  | $ | 9,188  | 
|Work in
  progress           |  |               | 5,807  |               |   | 8,490             |  |   | 7,032  | 
|Finished
  goods             |  |               | 22,815 |               |   | 21,543            |  |   | 16,321 | 
|                             |  |               |        |               |   |                   |  |   |        | 
|                             |  | $             | 39,090 |               | $ | 40,823            |  | $ | 32,541 | 
|                             |  |               |        |               |   |                   |  |   |        | 

|                        
|------------------------
|Note E 
  Notes Payable
|                        

On June 2,
2008, the Company executed an amendment to the revolving term agreement
effectively maintaining the amount of available funds at $30 million by delaying
the commencement of the annual $5 million step down until May 31, 2009. All
other terms and conditions of the agreement were substantially unchanged. As of
July 12, 2008 the outstanding balance on this line of credit was $28.7 million.

On June 2, 2008,
the Companys wholly owned subsidiary, Indian-Martin, Inc. executed an
amendment to its revolving term agreement revising the schedule of available
funds to $30 million as of June 1, 2008. All other terms and conditions of the
agreement were unchanged. As of July 12, 2008 the outstanding balance on this
line of credit was $23.6 million.

As discussed in Part II, Item 3, the Company is out of
compliance with two financial covenants in its bank credit facility as of the
end of the second quarter of fiscal 2008. Because there is no assurances that
the lender will grant a waiver all amounts due under the credit facility have
been classified as short-term.

6

---



|                       
|-----------------------
|Note F 
  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 condensed balance sheet:

|                                         |  |                  |     |               |   |     | 
|---------------------------------------- |  | ---------------- | --- | ------------- | - | --- | 
|                                         |  | Six Months Ended |    
|In Thousands                             |  | July 12, 2008    |     | July 14, 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 G 
  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 July 12, 2008 were calculated as follows:

|                                                  |  |                          |       |                                                                |   |                                               |  |                                           |   |  |   |   | 
|------------------------------------------------- |  | ------------------------ | ----- | -------------------------------------------------------------- | - | --------------------------------------------- |  | ----------------------------------------- | - |  | - | - | 
|(All amounts
  in thousands)                      |  | Balance at July 12, 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 |  | $                        | 3,789 |                                                                | $ | 3,789                                         |  | $                                         |  |  | $ |  | 
|                                                  |  |                          |       |                                                                |   |                                               |  |                                           |   |  |   |   | 
|                                                  |  |                          |       |                                                                |   |                                               |  |                                           |   |  |   |   | 
|                                                  |  | $                        | 3,789 |                                                                | $ | 3,789                                         |  | $                                         |  |  | $ |  | 
|                                                  |  |                          |       |                                                                |   |                                               |  |                                           |   |  |   |   | 

|                                      
|--------------------------------------
|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 six
months ended July 12, 2008 and pursuant to the 2007 Incentive Plan, the Company
awarded 13,052 restricted stock units to directors and 138,500 restricted stock
units to employees. Of the restricted stock units awarded to the directors,
5,552 vested upon issuance and 7,500 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.

7

---



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

During the
three months and six months ended July 12, 2008, the Company recognized stock
based compensation expense of $294 thousand and $447 thousand, respectively.
During the three months and six months ended July 14, 2007, the Company
recognized stock based compensation expense of $295 thousand and $390 thousand,
respectively. At July 12, 2008, there was $1.5 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 July 12, 2008 |       
|                                 |  |                                                       |       
|In thousands                     |  | Sporting 
  Goods                                     |        | Office 
  Products |   | Corp.  |  | Total |       
|                                 |  |                                                       |        |                    |   |        |  |       |       
|                                 |  |                                                       |        |                    |   |        |  |       |       
|Revenues from external customers |  | $                                                     | 29,197 |                    | $ | 16,599 |  | $     |       |   | $ | 45,796 |  
|Operating income (loss)          |  |                                                       | (380   | )                  |   | 1,107  |  |       | (1,516 | ) |   | (789   | )
|Net income (loss)                |  |                                                       | (602   | )                  |   | 658    |  |       | (760   | ) |   | (704   | )
|                                 |  |                                                       |        |                    |   |        |  |       |        |   |   |        |  

|                                 |  |                                                     |        |                    |   |        |  |       |        |   |   |         |  
|-------------------------------- |  | --------------------------------------------------- | ------ | ------------------ | - | ------ |  | ----- | ------ | - | - | ------- | -
|                                 |  | As of and for the Six Months 
  Ended July 12, 2008 |       
|                                 |  |                                                     |       
|In thousands                     |  | Sporting 
  Goods                                   |        | Office 
  Products |   | Corp.  |  | Total |       
|                                 |  |                                                     |        |                    |   |        |  |       |       
|                                 |  |                                                     |        |                    |   |        |  |       |       
|Revenues from external customers |  | $                                                   | 46,730 |                    | $ | 28,232 |  | $     |       |   | $ | 74,962  |  
|Operating income (loss)          |  |                                                     | (1,679 | )                  |   | 2,127  |  |       | (2,293 | ) |   | (1,845  | )
|Net income (loss)                |  |                                                     | (1,671 | )                  |   | 1,246  |  |       | (1,127 | ) |   | (1,552  | )
|Total assets                     |  | $                                                   | 94,026 |                    | $ | 50,708 |  | $     | 22,840 |   | $ | 167,574 |  
|                                 |  |                                                     |        |                    |   |        |  |       |        |   |   |         |  

|                                 |  |                                                       |        |                    |   |        |  |       |        |   |   |        | 
|-------------------------------- |  | ----------------------------------------------------- | ------ | ------------------ | - | ------ |  | ----- | ------ | - | - | ------ | 
|                                 |  | As of and for the Three Months 
  Ended July 14, 2007 |       
|                                 |  |                                                       |       
|In thousands                     |  | Sporting 
  Goods                                     |        | Office 
  Products |   | Corp.  |  | Total |       
|                                 |  |                                                       |        |                    |   |        |  |       |       
|                                 |  |                                                       |        |                    |   |        |  |       |       
|Revenues from external customers |  | $                                                     | 34,113 |                    | $ | 16,417 |  | $     |       |   | $ | 50,530 | 
|Operating income (loss)          |  |                                                       | 2,502  |                    |   | 2,779  |  |       | (1,473 | ) |   | 3,808  | 
|Net income (loss)                |  |                                                       | 1,693  |                    |   | 2,020  |  |       | (1,278 | ) |   | 2,435  | 

|                                 |  |                                                     |        |                    |   |        |  |       |        |   |   |         | 
|-------------------------------- |  | --------------------------------------------------- | ------ | ------------------ | - | ------ |  | ----- | ------ | - | - | ------- | 
|                                 |  | As of and for the Six Months 
  Ended July 14, 2007 |       
|                                 |  |                                                     |       
|In thousands                     |  | Sporting 
  Goods                                   |        | Office 
  Products |   | Corp.  |  | Total |       
|                                 |  |                                                     |        |                    |   |        |  |       |       
|                                 |  |                                                     |        |                    |   |        |  |       |       
|Revenues from external customers |  | $                                                   | 54,570 |                    | $ | 29,427 |  | $     |       |   | $ | 83,997  | 
|Operating income (loss)          |  |                                                     | 4,398  |                    |   | 4,972  |  |       | (2,297 | ) |   | 5,627   | 
|Net income (loss)                |  |                                                     | 1,736  |                    |   | 3,572  |  |       | (1,776 | ) |   | 3,532   | 
|Total assets                     |  | $                                                   | 99,846 |                    | $ | 46,693 |  | $     | 12,830 |   | $ | 159,369 | 

|                           
|---------------------------
|Note K  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.

8

---



|                             
|-----------------------------
|Note J 
  Earnings Per Share
|                             

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

|                                                                |  |                    |        |                  |  |               |  |               |        |  |  |        | 
|--------------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ------------- |  | ------------- | ------ |  |  | ------ | 
|                                                                |  | Three Months Ended |        | Six Months Ended | 
|                                                                |  |                    |        |                  | 
|All amounts
  in thousands                                      |  | July 12, 2008      |        | July 14, 2007    |  | July 12, 2008 |  | July 14, 2007 |       
|                                                                |  |                    |        |                  |  |               |  |               |       
|Weighted average common shares outstanding                      |  |                    | 12,635 |                  |  | 12,974        |  |               | 12,656 |  |  | 13,000 | 
|Dilutive effect of stock options and
  restricted stock units   |  |                    | 22     |                  |  | 13            |  |               | 22     |  |  | 13     | 
|                                                                |  |                    |        |                  |  |               |  |               |        |  |  |        | 
|Weighted average common shares outstanding,
  assuming dilution |  |                    | 12,657 |                  |  | 12,987        |  |               | 12,678 |  |  | 13,013 | 
|                                                                |  |                    |        |                  |  |               |  |               |        |  |  |        | 

Stock options that are anti-dilutive as to
earnings per share and unvested restricted stock units which have a market
condition for vesting that has not been achieved are ignored in the computation
of dilutive earnings per share. The number of stock options and restricted
stock units that were excluded in 2008 and 2007 was 668,217 and 562,319,
respectively.

|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|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 over 75
years of manufacturing and import experience that enable it to be a low cost
supplier.

Results
of Operations

Net revenues for the second quarter and first half of fiscal 2008
declined 9.4% and 10.8%, respectively, compared to the same periods last year.
The largest single contributor to the revenue decline was lower sales to
mass-retail customers in the Sporting Goods business. Consequently the Company
recorded operating losses for the second quarter and first half of fiscal 2008
compared to operating profits in the same periods last year.

9

---



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

|                                               |  |                    |       |                  |  |               |   |               |       |    |  |       |  
|---------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ------------- | - | ------------- | ----- | -- |  | ----- | -
|                                               |  | Three Months ended |       | Six Months ended | 
|                                               |  |                    |       |                  | 
|                                               |  | July 12, 2008      |       | July 14, 2007    |  | July 12, 2008 |   | July 14, 2007 |      
|                                               |  |                    |       |                  |  |               |   |               |      
|Net revenue                                    |  |                    | 100.0 | %                |  | 100.0         | % |               | 100.0 | %  |  | 100.0 | %
|Cost of products sold                          |  |                    | 72.7  | %                |  | 66.2          | % |               | 72.1  | %  |  | 66.6  | %
|                                               |  |                    |       |                  |  |               |   |               |       |    |  |       |  
|Gross margin                                   |  |                    | 27.3  | %                |  | 33.8          | % |               | 27.9  | %  |  | 33.4  | %
|Selling, administrative and
  general expenses |  |                    | 27.4  | %                |  | 24.5          | % |               | 28.8  | %  |  | 25.0  | %
|Amortization                                   |  |                    | 1.6   | %                |  | 1.7           | % |               | 1.6   | %  |  | 1.7   | %
|                                               |  |                    |       |                  |  |               |   |               |       |    |  |       |  
|Operating income                               |  |                    | (1.7  | )%               |  | 7.5           | % |               | (2.5  | )% |  | 6.7   | %

Consolidated
Revenue and Gross Margin

Sales in
the Sporting Goods business declined 14.4% in both the second quarter and first
half of fiscal 2008 compared to the same periods last year. Sales to mass-retail
customers declined 23.3% in the second quarter and 20.2% in the first half of
fiscal 2008 compared to the corresponding periods last year. The Companys
mass-market retail customers are experiencing lower than expected sell through
on game room products such as table tennis and billiards due to consumer
uncertainty generated by the poor economy 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 half of 2008. In fiscal 2007, Sears Holdings was the Companys
largest mass-retail customer accounting for 18% of total Sporting Goods sales.
In the first half of fiscal 2008, sales to Sears Holdings are down approximately
66% compared to the same period last year and management expects sales for the
full year to decline further because the Company has ceased 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. Although
the Company has achieved placement with other large mass-retail customers that
will partially offset this lost business, Management expects total sales to its
mass-market retail customers in 2008 to be down significantly from the levels
achieved in 2007. In an effort to limit the Companys exposure to fluctuations
in mass-retail customers, the Company has been focused on expanding its
distribution into specialty retailers and dealers. During the past few years,
sales to specialty retailers and dealers have grown so that they now make up
more than 50% of Sporting Goods sales. Sales to specialty retailers and dealers
during the second quarter and first half of fiscal 2008 were relatively unchanged
compared to the same period last year despite the low level of consumer
confidence in the United States. Based on the first half results and product
placement information, the Company currently expects Sporting Goods sales for
2008 to be roughly 20% lower in 2008 compared to 2007.

Compared
to last year, Office Products sales were up 1.1% for the second quarter but
down 4.1% for the first half of fiscal 2008. Excluding the effect of changing
foreign exchange rates, Office Products sales declined 7.8% and 11.0% in the
second quarter and first half of 2008, respectively, compared to last year.
During the second quarter, sales in the United States remained relatively
unchanged while sales in Europe declined due to a worsening economic climate.
The Companys products are viewed by consumers as high-value discretionary
items and are therefore negatively impacted during economic downturns.
Management believes total Office Product sales for fiscal 2008 will be
relatively unchanged from fiscal 2007.

The overall
gross margin ratio for the second quarter and first half of fiscal 2008 were
lower than the same periods last year due to unfavorable production cost
variances associated with excess production capacity and increased costs
associated with product sourced in China. The Company has excess production
capacity in its Sporting Goods business as a result of shifting production to
China without reducing the number of facilities operated. The Company is
currently evaluating plant consolidation options to mitigate future unfavorable
production cost variances. The anticipated benefits will not be realized until
fiscal 2009. Consequently, Management does not expect any improvements in the
gross margin ratio during the remainder of fiscal 2008.

10

---



Consolidated Selling,
General and Administrative Expenses

Consolidated
selling, general and administrative expenses (SG&A) for the second
quarter and first half of fiscal 2008 were up 1.5% and 2.9%, respectively,
compared to the same periods last year. Excluding the effect of changes in
foreign currency rates, SG&A costs for the second quarter and first half of
fiscal 2008 were down 2.7% and 1.42%, respectively, with the largest decline
coming from the Sporting Goods business where variable compensation costs are
down in relation to sales volume and profitability. SG&A costs in the Office
Products business are up slightly over last year reflecting increased
investments in the sales staff at the end of the last fiscal year.

Interest Expense and
Other Expense

Interest costs in the second quarter were
slightly lower than the same period last year but relatively unchanged for the
first half of fiscal 2008. Although total bank debt increased over the same
period last year, the Company benefited from lower interest rates resulting
from Federal Reserve interest rate cuts over the last 12 months.

Other income in the second quarter and first
half of fiscal 2008 was less than the same periods last year due to declining
royalties on technology licensed to competitors who have migrated to other
technologies as the Company has increased its direct competition to these
companies. Management anticipates substantially diminished royalty income in
fiscal 2008.

Provision for Income
Taxes

During the first half of fiscal 2008, the
Company benefited, because of its loss, from a higher effective tax rate
(44.3%) compared to the effective tax rate for the first half of fiscal 2007 (29.5%)
primarily due to the timing of permanent differences in calculating US Federal
income tax. Management believes that the tax rate achieved for fiscal 2007 (34.9%)
is indicative of the overall rate that will be achieved in fiscal 2008.

Financial Condition
and Liquidity

The
following schedule summarizes the Companys total debt:

|                                 |  |               |        |               |   |                   |  |   |        | 
|-------------------------------- |  | ------------- | ------ | ------------- | - | ----------------- |  | - | ------ | 
|In
  thousands                   |  | July 12, 2008 |        | July 14, 2007 |   | December 29, 2007 | 
|                                 |  |               |        |               |   |                   | 
|                                 |  |               |        |               |   |                   | 
|Notes
  payable short-term       |  | $             | 52,345 |               | $ | 12,129            |  | $ | 13,033 | 
|Current
  portion long-term debt |  |               |       |               |   |                  |  |   |       | 
|Long
  term debt                 |  |               | 2,737  |               |   | 32,271            |  |   | 19,135 | 
|                                 |  |               |        |               |   |                   |  |   |        | 
|Total
  debt                     |  | $             | 55,082 |               | $ | 44,400            |  | $ | 32,168 | 
|                                 |  |               |        |               |   |                   |  |   |        | 

During
the first half of fiscal 2008, the Company amended its primary debt agreements
to accommodate its planned investment in a global information system and lower
earnings outlook. As anticipated, total debt as of July 12, 2008 increased $10.7
million over the comparable date last year due principally to operating losses,
slightly higher working capital levels and the investment of $3.8 million in a
global information management system. The Company expects to invest an
additional $1.4 million on this global information system this year. As part of
the Companys stock repurchase plan, the Company acquired 90,383 shares during
the second quarter of fiscal 2008.

The
Companys working capital requirements are primarily funded from operating cash
flows and revolving credit agreements with its primary 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,
subject to the Companys ability to meet or obtain waivers of certain
financial covenant requirements set forth in the loan documents as discussed
below in Part II, Item 3. In addition, the Company believes it can quickly reach agreement
to increase available credit should the need arise.

11

---



|        |                                                             
|------- | ------------------------------------------------------------
|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 has utilized derivative financial instruments, among other strategies
but is not currently utilizing any derivative financial instruments. 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 and six months ended July 12, 2008.

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 condensed
balance sheet. At July 12, 2008 the aggregate carrying value of long-term
marketable equity securities was $3.8 million. Currently, the Company does not
employ 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.

12

---



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 2008.

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 2008 that have
materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

|         |                                            
|-------- | -------------------------------------------
|PART II. | OTHER INFORMATION                          
|         |                                            
|Item 1.  | Not Required.                              
|         |                                            
|Item 1A. | 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 purchased prior to 03/22/2008 under the current repurchase
  program. |  |                                                   | 892,533 |                                              | $ | 8.93                                                                                                |  |                                                                                                                                 | 892,533     |  | $ | 3,000,000   | 
|                                                                             |  |                                                   |         |                                              |   |                                                                                                     |  |                                                                                                                                 |             |  |   |             | 
|Second quarter purchases:                                                    |  |                                                   |         |                                              |   |                                                                                                     |  |                                                                                                                                 |             |  |   |             | 
|03/23/2008  04/19/2008                                                      |  |                                                   | 83,183  |                                              | $ | 8.02                                                                                                |  |                                                                                                                                 | 975,716     |  |   | 2,024,284   | 
|04/20/2008  05/17/2008                                                      |  |                                                   | 7,200   |                                              | $ | 8.17                                                                                                |  |                                                                                                                                 | 982,916     |  |   | 1,965,460   | 
|05/18/2008  06/14/2008                                                      |  |                                                   | None    |                                              |   | None                                                                                                |  |                                                                                                                                 | No
  change |  |   | No
  change | 
|06/15/2008  07/12/2008                                                      |  |                                                   | None    |                                              |   | None                                                                                                |  |                                                                                                                                 | No
  change |  |   | No
  change | 
|                                                                             |  |                                                   |         |                                              |   |                                                                                                     |  |                                                                                                                                 |             |  |   |             | 
|                                                                             |  |                                                   |         |                                              |   |                                                                                                     |  |                                                                                                                                 |             |  |   |             | 
|Total share purchases under the current program                              |  |                                                   | 982,916 |                                              | $ | 8.84                                                                                                |  |                                                                                                                                 | 982,916     |  | $ | 1,965,460   | 
|                                                                             |  |                                                   |         |                                              |   |                                                                                                     |  |                                                                                                                                 |             |  |   |             | 

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 2008, the Board of Directors increased the remaining amount on this
plan to its original level of $3,000,000.

|        |                                  
|------- | ---------------------------------
|Item 3. | Defaults Upon Senior
  Securities

(a) As of the end of
registrants fiscal second quarter, the Company is out of compliance with its
financial covenants as to leverage ratio and debt service ratio set forth in
its bank credit facility. The Company has so notified the lender and is seeking
a waiver of such non-compliance. The lender is assessing the Companys request
and has not declared the credit facility to be in default. Although the Company
believes that its relationship with its lender is strong, there can be no
assurances that the lender will grant such a waiver and/or that the terms of
any such waiver will not be disadvantageous to the Company.

13

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

The annual meeting of the
registrant was held on April 25, 2008 at the Companys facilities in Evansville,
Indiana. Proxy materials were circulated on March 28, 2008 proposing the
election of seven members to the Board of Directors for a one year term.

Shareholders elected the
proposed directors by the following vote totals:

|                         |  |  |            |  |  |          | 
|------------------------ |  |  | ---------- |  |  | -------- | 
|                         |  |  | For        |  |  | Withheld | 
|                         |  |  |            |  |  |          | 
|Robert E. Griffin        |  |  | 11,178,633 |  |  | 333,895  | 
|Robert J. Keller         |  |  | 11,195,973 |  |  | 316,555  | 
|Blaine E. Matthews, Jr.  |  |  | 11,488,576 |  |  | 23,952   | 
|Edward E. Williams       |  |  | 11,480,895 |  |  | 31,633   | 
|Richard D. White         |  |  | 11,493,819 |  |  | 18,709   | 
|George Savitsky          |  |  | 11,494,419 |  |  | 18,109   | 
|Richard F. Baalmann, Jr. |  |  | 11,492,519 |  |  | 20,009   | 

|        |              
|------- | -------------
|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   |  | Ninth 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 31, 2008. (a)
|10.2   |  | Fourth Amendment to
  Amended and Restated Credit Agreement effective September 5, 2003 by and
  between Indian-Martin, Inc. and JPMorgan Chase Bank, NA. The effective date
  of the Amendment was May 31, 2008. (a) 

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | (a) Incorporated by
  reference from the Companys Form 8-K filed with the Securities and Exchange
  Commission on June 5, 2008.

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: | July 31, 2008 |  | /s/ Robert J. Keller                        
|      |               |  |                                             
|      |               |  | Robert J. Keller                            
|      |               |  | Chief Executive Officer                     
|      |               |  |                                             
|Date: | July 31, 2008 |  | /s/ Terry D. Frandsen                       
|      |               |  |                                             
|      |               |  | Terry D. Frandsen                           
|      |               |  | Vice President and Chief
  Financial Officer

14

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