UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                          Form 10-K/A (Amendment No. 1)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                   For the Fiscal Year Ended December 31, 2005
                                       Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
          For the transition period from _____________ to _____________

                          Commission File Number 0-6966


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

                        Indiana                        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 if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
 Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

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

Aggregate market value of common stock held by nonaffiliates of the registrant
as of July 9, 2005 based on the closing sale price as reported on the NASDAQ
National Market System: $123,376,213
<PAGE>

The number of shares of Registrant's common stock (no par value) outstanding as
of February 21, 2006: 13,011,142


                       DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant's Proxy Statement relating to its annual
meeting of stockholders scheduled to be held on April 22, 2006 are incorporated
by reference into Part III of this Report.

                                       2
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES

                                Table of Contents

                                                                           Page
--------------------------------------------------------------------------------
Explanatory Note

Part I


   Item 1.      Business                                                      5

   Item 1A.     Risk Factors                                                  8

   Item 1B.     Unresolved Staff Comments                                    12

   Item 2.      Properties                                                   12

   Item 3.      Legal Proceedings                                            12

   Item 4.      Submission of Matters to a Vote of Security Holders          13



Part II


   Item 5.      Market for the Registrant's Common Equity, Related
                   Stockholder Matters and Issuer Purchases of Equity
                   Securities                                                13

   Item 6.      Selected Financial Data                                      15

   Item 7.      Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                       15

   Item 7A.     Quantitative and Qualitative Disclosures About
                   Market Risk                                               22

   Item 8.      Financial Statements and Supplementary Data                  22

   Item 9.      Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure                       22

   Item 9A.    Controls and Procedures                                       22

   Item 9B.    Other Information                                             27



Part III


   Item 10.     Directors and Executive Officers of the Registrant           27

   Item 11.     Executive Compensation                                       27

   Item 12.     Security Ownership of Certain Beneficial Owners and
                   Management and Related Stockholder Matters                28

   Item 13.     Certain Relationships and Related Transactions               28

   Item 14.     Principal Accounting Fees and Services                       28



Part IV


   Item 15.     Exhibits, Financial Statement Schedules                      28


                                       3
<PAGE>

                                Explanatory Note


This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K for the
fiscal year ended December 31, 2005, filed with the Securities and Exchange
Commission (SEC) on March 10, 2006 is being filed to restate the 2005 and 2004
consolidated financial statements and other financial information to give effect
to adjustments resulting from the identification of errors related to the over
statement of the provision for income taxes and the over statement of employee
benefit costs. On February 13, 2007, the Audit Committee of the Board of
Directors of Escalade, Incorporated ("Escalade"), upon the recommendation of
Escalade's management and in conjunction with Escalade's independent registered
public accounting firm, BKD, LLP, determined that the errors identified were
material to the financial statements for the years ended December 31, 2005 and
December 25, 2004 and that, as a result, the previously issued financial
statements for those periods should no longer be relied on. A new footnote (Note
2) has been added to the restated consolidated financial statements to discuss
the restatement effects and the original footnotes have been renumbered. This
Form 10-K/A (Amendment No.1) amends and restates Items 1, 1A , 6, 7, 8, 9A , and
15 of the March 10, 2006 filing. Only the adjustments described herein and no
other material information in our March 10, 2006 filing is amended hereby.
Except for the foregoing amended information, this Form 10-K/A does not reflect
events occurring after March 10, 2006, nor does it modify or update those
disclosures, except as discussed above or in Note 2 to the Consolidated
Financial Statements. Management is not aware of any subsequent events that
would affect the 2005 or 2004 consolidated financial statements.


                                       4
<PAGE>

                                     Part I


ITEM 1--BUSINESS

General

Escalade, Incorporated ("Escalade" or "Company") operates in two business
segments: sporting goods and office products. Escalade and its predecessors have
more than 75 years of manufacturing and selling experience in these two
industries.

The following table presents the percentages contributed to Escalade's net sales
by each of its business segments:

                                            2005           2004          2003
--------------------------------------------------------------------------------


Sporting goods                                65%           64%            63%
Office/graphic arts                           35            36             37
                                            ----          ----           ----
Total net sales                              100%          100%           100%
                                            ====          ====           ====


For additional segment information, see Note 14 - Operating Segment and
Geographic Information in the consolidated financial statements.

Sporting Goods

Headquartered in Evansville, Indiana, Escalade Sports manufactures and
distributes widely recognized brands in family game room and outdoor sporting
goods products through traditional department stores, mass merchandise
retailers, and sporting goods specific retailers. Escalade is the world's
largest producer of table tennis tables, the world's largest unit producer of
pool tables, and the largest game table importer in the United States. Some of
the Company's most recognized brands include:

<TABLE>
<CAPTION>
 Product Segment                            Brand Names
 ---------------                            -----------
<S>                                         <C>
 Table Tennis                               Ping-Pong(R), STIGA(R)
 Pool Tables and accessories                Mizerak(TM), Murrey(R), Mosconi(TM), Black Widow(TM)
 Basketball Backboards and Goals            Goalrilla(TM), Goaliath(R), Silverback(TM)
 Game Tables (Air Hockey and Soccer)        Harvard Game(R), Rhino(TM), Murrey Game(TM)
 Archery                                    Fred Bear(R), Indian Archery(R), Jennings(R)
 Fitness                                    The STEP(R), USWeight(TM)
 Play Systems                               ChildLife(R)
</TABLE>

The largest sporting goods customer is Sears Roebuck & Co. ("SEARS"), which
accounted for 33%, 42% and 38% of total sporting goods revenues in 2005, 2004
and 2003, respectively. On a consolidated basis, SEARS accounted for 22%, 27%
and 24% of Escalade revenues in 2005, 2004 and 2003, respectively. Escalade
Sports has been a preferred supplier of sporting goods products to SEARS for
more than 30 years, winning numerous awards for delivering outstanding products
and service. Although the Company does not have long-term supplier contracts
with SEARS, the strong relationship with SEARS supports the Company's belief
that SEARS will continue to be a significant customer far into the future.

Escalade Sports manufactures in the U.S.A. and Mexico; and imports product from
China, where the Company employs a number of contract manufacturers.

Certain products produced by Escalade Sports are subject to regulation by the
Consumer Product Safety Commission. The Company believes it is in full
compliance with all applicable regulations.

                                       5
<PAGE>

Office Products

Operating under the Martin Yale name, the office product business gained a
worldwide presence with the 2003 acquisition of a manufacturer and distributor
of data shredding equipment headquartered in Germany. In addition to data
shredding equipment and accessories, Martin Yale products include: paper
trimmers, folding machines, paper drills, collators, bursting machines, letter
openers, and office related products such as keyboard drawers and hole punches.
Martin Yale brands include Martin Yale(TM), Premier(R), Master(TM), Mead
Hatcher(TM), Intimus(R), and Paper Monster(R).

Martin Yale manufactures product in the United States, Germany and China. In
addition to the sales offices located at manufacturing plants, Martin Yale also
has offices in the United Kingdom and France. Products are sold throughout the
world to office products retailers, wholesalers and catalog distributors. No
single customer accounted for more than 10% of sales during 2005.

Marketing and Product Development

In both the sporting goods and office product business segments, Escalade has
rigorously developed strategic plans to enhance and promote product branding.
The Company constantly evaluates the quality-to-price paradigm of its customers,
and then designs and redesigns its products to achieve the best fit. Marketing
efforts are then initiated through its retail partners in the form of
advertising and other promotion allowances. In general, the Company does not
directly advertise to end-users.

In order to meet customer needs, each operating segment conducts its own
independent research and development efforts to design new products and enhance
already existing products. On a consolidated basis, the Company incurred
research and development costs of approximately $2.0 million, $2.3 million and
$2.9 million in 2005, 2004 and 2003, respectively.

Competition

Escalade is subject to competition with various manufacturers in each product
line produced or sold by Escalade. The Company is not aware of any other single
company that is engaged in both the same industries as Escalade or that produces
the same range of products as Escalade within such industries. Nonetheless,
competition exists for many Escalade products within both the sporting goods and
office product industries and some competitors are larger and have substantially
greater resources than the Company. Escalade believes that its long-term success
depends on its ability to strengthen its relationship with existing customers,
attract new customers and develop new products that satisfy the quality and
price requirements of sporting goods and office product customers.

Licenses, Trademarks and Brand Names

Escalade Sports has an agreement and contract with Sweden Table Tennis AB for
the exclusive right and license to distribute and produce table tennis equipment
under the brand name STIGA(R) for the United States and Canada.

Escalade is the owner of several registered trademarks and brand names. In the
sporting goods segment, the Company holds the Ping-Pong(R), Harvard(R),
Accudart(R), Indian Archery(R) and Goaliath(R), registered trademarks and
utilizes the Goalrilla(TM), Silverback(TM), Rhino Play(TM), U. S. Weight(TM),
The Step(R), Murrey(R), Mosconi(R), and Mizerak(R) brand names. In the
office/graphic arts segment, the Company owns the Premier(R) and Intimus(R)
registered trademark and utilizes the Martin Yale(TM), Master Products(TM), Mead
Hatcher(TM), Taros(TM), and Paper Monster(TM) brand names.

                                       6
<PAGE>

Backlog and Seasonality

Sales are based primarily on standard purchase orders and in most cases orders
are shipped within the same month received. Unshipped orders at the end of the
fiscal year (backlog), were not material, and therefore not an indicator of
future results. Consumer demand for sporting goods is extremely seasonal and
driven by Christmas season demand. Over the past three years approximately 61%
of sporting goods sales has come in the second half of the year. The Company
expects sporting goods sales to continue to be seasonal in the future. Demand
for Office Products has not been seasonal and is not expected to be so in the
future.


Employees

The number of employees at December 31, 2005 and December 25, 2004 for each
business segment were as follows:

                                                     2005       2004
          ------------------------------------------------------------
          Sporting Goods
              USA                                       335        341
              Mexico                                    207        160
                                                   --------   --------
                                                        542        501
                                                   --------   --------
          Office/Graphic Arts
              USA                                       120        121
              Mexico                                     --         96
              Europe                                    137        171
              Asia                                        6         --
                                                   --------   --------
                                                        263        388
                                                   --------   --------
          Total                                         805        889
                                                   ========   ========

The International Union of Electronic, Electrical, Salaried, Machine and
Furniture Workers AFL-CIO represent hourly rated employees at the Escalade
Sports' Evansville, Indiana factory; approximately 109 employees at December 31,
2005. Labor contract negations to renew the current 3-year contract which
expires April 27, 2006 will begin in March 2006. Management acknowledges that
differences between Company offers and union demands during negotiations can
occur, but has no reason to expect such differences to result in protracted
conflicts.

Escalade believes that its employee relations are satisfactory.

Sources of Supplies

Raw materials for Escalade's various product lines consist of wood, steel,
plastics, fiberglass and packaging. Escalade relies upon suppliers in various
countries and upon various third party Asian manufacturers for certain of its
game tables and non-security paper shredders. The Company believes that these
sources will continue to provide adequate supplies as needed and that all other
materials needed for the Company's various operations are available in adequate
quantities from a variety of domestic and foreign sources.

SEC Reports

Our Internet site (www.escaladeinc.com) makes available free of charge to
interested parties our annual report on Form 10-K, quarterly reports on Form
10-Q, and current reports on Form 8-K, and all amendments to those reports, as
well as all other reports and schedules we file electronically with the
Securities and Exchange Commission (the "Commission"), as soon as reasonably
practicable after such material is electronically filed with or furnished to the
Commission. Interested parties may also find reports, proxy and information
statements and other information on issuers that file electronically with the
Commission at the Commission's internet site (http://www.sec.gov).

                                       7
<PAGE>

ITEM 1A--RISK FACTORS

Failure to improve and maintain the quality of internal controls over financial
reporting could materially and adversely affect the Company's ability to provide
timely and accurate financial information about the Company, which could harm
the Company's reputation and share price.


In connection with the preparation of the financial statements for the year
ended December 30, 2006, Management identified a deficiency in the internal
controls over financial reporting relating to the calculation of income tax
provisions which rose to the level of a "material weakness." The errors resulted
in an overstatement of income tax expense and an understatement of net income of
$1.0 million and $0.4 million for the years ended December 31, 2005 and December
25, 2004, respectively and an increase of $0.7 million to the December 28, 2003
retained earnings balance. The financial statements for these fiscal years have
been restated and the assessment of internal controls over financial reporting
as of December 31, 2005 has been revised to reflect this material weakness in
this Form 10-K/A (Amendment No. 1). Management cannot be certain that other
deficiencies will not arise or be identified or that the Company will be able to
correct and maintain adequate controls over financial processes and reporting in
the future. Any failure to maintain adequate controls or to adequately implement
required new or improved controls could harm operating results or cause failure
to meet reporting obligations in a timely and accurate manner. Ineffective
internal controls over financial reporting could also cause investors to lose
confidence in the Company's reported financial information, which could
adversely affect the trading price of the Company's common stock.


The Company's disclosure controls and procedures are designed to provide
reasonable assurance of achieving their objectives. However, Management,
including the Chief Executive Officer and Chief Financial Officer, do not expect
that disclosure controls and procedures will prevent all errors and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected.

Our markets are highly competitive and we may not continue to compete
successfully.

The sporting goods and office products markets are highly competitive. We
compete with a variety of regional, national and international manufacturers for
customers, employees, products, services and other important aspects of our
business. Some of our current and potential competitors are larger than we are
and have substantially greater financial resources that may be devoted to
sourcing, promoting and selling their products. It is possible that increased
competition or improved performance by our competitors may reduce our market
share, profit margin and projected operating results, and may adversely affect
our business and financial performance in other ways.

A large portion of our sales are to a major customer, the loss of which could
have a material adverse impact on the Company.

SEARS is our largest customer, which accounted for 22%, 27% and 24% of our total
consolidated revenues in 2005, 2004 and 2003, respectively. We have been a
preferred supplier of sporting goods products to SEARS for more than 30 years
and we have won numerous awards from SEARS for delivering outstanding products
and services. However, we have never had a long-term supplier contract with
SEARS and do not expect to obtain any such contract in the future. In addition,
SEARS continues to reshape its product mix and positioning in the consumer
market, and we have no control over decisions that could adversely affect our
sales to SEARS. We believe that sales to SEARS will continue, but there can be
no assurances that this will occur.

Our business is seasonal and our annual results are highly dependent on the
success of our second half sales.

                                       8
<PAGE>

Our business is highly seasonal in nature. Our highest sales and operating
income historically occur during the third and fourth fiscal quarters, which is
due largely to the holiday selling season. In 2005, approximately 61% of our
sporting goods sales has come in the second half of the year. Any decrease in
our second half sales, whether because of a slow holiday selling season or
otherwise, could have a material adverse effect on our business, financial
condition and operating results for the entire fiscal year.

We may pursue strategic acquisitions, which could have an adverse impact on our
business.

We may from time to time acquire complementary companies or businesses.
Acquisitions may result in difficulties in assimilating acquired companies, and
may result in the diversion of our capital and our management's attention from
other business issues and opportunities. We may not be able to successfully
integrate operations that we acquire, including their personnel, financial
systems, distribution, operations and general store operating procedures. If we
fail to successfully integrate acquisitions, our business could suffer. In
addition, the integration of any acquired business, and their financial results,
into ours may adversely affect our operating results. We expect to do additional
acquisitions in the future, but we currently do not have any agreements with
respect to any such acquisitions.

Our ability to expand our business will be dependent upon the availability of
adequate capital.

The rate of our expansion will also depend on the availability of adequate
capital, which in turn will depend in large part on cash flow generated by our
business and the availability of equity and debt capital. We cannot assure you
that we will be able to obtain equity or debt capital on acceptable terms or at
all.

Our growth may strain our resources, which could adversely affect our business
and financial performance.

Both our sporting goods and office products businesses have grown over the past
several years through strategic acquisitions. Our growth places additional
demands on our management and our operational systems. If we are not successful
in continuing to support our operational and financial systems, expanding our
management team and increasing and effectively managing our customers and
suppliers, our growth may result in operational inefficiencies and ineffective
management of the business, which could adversely affect our business and
financial performance.

Our expanding international operations expose us to the unique risks inherent in
foreign operations.

We have operations in Mexico and Europe, and rely on Asian suppliers for various
raw materials and products. Our foreign operations encounter risks similar to
those faced by our U.S. operations, as well as risks inherent in foreign
operations, such as local customs and regulatory constraints, foreign trade
policies, competitive conditions, foreign currency fluctuations and unstable
political and economic conditions. Our acquisition of Schleicher in Germany and
our business relationships in Asia have increased our exposure to these foreign
operating risks, which could have an adverse impact on our international income
and worldwide profitability.

Our business may be adversely affected by the actions of and risks associated
with our third-party suppliers.

The raw materials that we purchase for our own manufacturing operations and many
of the products that we sell are sourced from a wide variety of third-party
suppliers. We cannot control the supply, design, function or cost of many of the
products that we offer for sale and are dependent on the availability and
pricing of key materials and products. Disruptions in the availability of raw
materials used in production of these products may adversely affect our sales
and result in customer dissatisfaction. In addition, global sourcing of many of
the products we sell is an important factor in our financial performance. Our
ability to find qualified suppliers and access products in a timely and
efficient manner is a significant challenge, especially with respect to goods
sourced outside the United States. Political instability, the financial

                                       9
<PAGE>

instability of suppliers, merchandise quality issues, trade restrictions,
tariffs, currency exchange rates, transport capacity and costs, inflation and
other factors relating to foreign trade are beyond our control.

Historically, instability in the political and economic environments of the
countries in which we or our suppliers obtain products and raw materials has not
had a material adverse effect on our operations. However, we cannot predict the
effect that future changes in economic or political conditions in such foreign
countries may have on our operations. In the event of disruptions or delays in
supply due to economic or political conditions in foreign countries, such
disruptions or delays could adversely affect our results of operations unless
and until alternative supply arrangements could be made. In addition, products
and materials purchased from alternative sources may be of lesser quality or
more expensive than the products and materials we currently purchase abroad.

These and other issues affecting our suppliers could adversely affect our
business and financial performance.

A deterioration in our relationships with our suppliers or in the financial
condition of our suppliers could adversely affect our liquidity, financial
position and results of operations.

Our access to equipment, parts and supplies is dependent upon close
relationships with our suppliers and our ability to purchase products from our
principal suppliers on competitive terms. We do not enter into long-term supply
contracts with these suppliers, and we have no current plans to do so in the
future. These suppliers are not required to use us to distribute their equipment
and are free to change the prices and other terms at which they sell to us. Any
deterioration or change in our relationships with, or in the financial condition
of, our significant suppliers, including some of our competitors, could have an
adverse impact on our ability to generate equipment sales and to provide
maintenance services. If one of these suppliers terminated or significantly
curtailed its relationship with us, or if one of these suppliers ceased
operations, we would be forced to expand our relationship with other suppliers,
seek out new relationships with other suppliers or risk a loss in market share
due to diminished product offerings and availability. Any change in one or more
of these suppliers' willingness or ability to continue to supply us with their
products could have an adverse impact on our liquidity, financial position and
results of operations.

Our quarterly operating results are subject to fluctuation.

Our operating results have fluctuated from quarter to quarter in the past, and
we expect that they will continue to do so in the future. Our earnings may not
continue to grow at rates similar to the growth rates achieved in recent years
and may fall short of either a prior fiscal period or market expectations.
Factors that could cause these quarterly fluctuations include the following:
international, national and local general economic and market conditions; the
size and growth of the overall sporting goods and office products markets;
intense competition among manufacturers, marketers, distributors and sellers of
our products; demographic changes; changes in consumer preferences; popularity
of particular designs, categories of products and sports; seasonal demand for
our products; the size, timing and mix of purchases of our products;
fluctuations and difficulty in forecasting operating results; our ability to
sustain, manage or forecast our growth and inventories; new product development
and introduction; our ability to secure and protect trademarks, patents and
other intellectual property; performance and reliability of our products; our
customer service; the loss of significant customers or suppliers; our dependence
on distributors; business disruptions; increased costs of freight and
transportation to meet delivery deadlines; changes in our business strategy or
development plans; general risks associated with doing business outside the
United States, including, without limitation, import duties, tariffs, quotas and
political and economic instability; changes in government regulations; any
liability and other claims asserted against us; our ability to attract and
retain qualified personnel; and other factors referenced or incorporated by
reference in this Form 10-K and any other filings with the Securities and
Exchange Commission.

Our operating results may be impacted by changes in the economy that impact
business and consumer spending.

In general, our sales depend on discretionary spending by our customers. A
deterioration of current economic conditions or an economic downturn in any of
our major markets or in general could result in declines in sales and impair our

                                       10
<PAGE>

growth. Accordingly, our operating results are directly impacted by the health
of the North American, European and Asian economies. Our business and financial
performance may be adversely affected by current and future economic conditions,
including unemployment levels, energy costs, interest rates, recession,
inflation, the impact of natural disasters and terrorist activities, and other
matters that influence business and consumer spending.

Our failure to improve our operational efficiency and reduce our administrative
costs could have a material adverse effect on our liquidity, financial position
and results of operations.

Our ability to improve our profit margins is largely dependent on the success of
our initiatives to streamline our infrastructure, improve our operational
efficiency and the reduction of administrative costs at every level of the
Company. Our failure to implement these initiatives successfully, or the failure
of such initiatives to result in improved profitability, could have a material
adverse effect on our liquidity, financial position and results of operations.

Our stock price may fluctuate based on market expectations.

The public trading of our stock is based in large part on market expectations
that our business will continue to grow and that we will achieve certain levels
of net income. If our quarterly financial performance does not meet market
expectations, our stock price would likely decline. Any decrease in our stock
price may be disproportionate to any shortfall in our financial performance.

Our intellectual property rights are valuable, and any inability to protect them
could reduce the value of our products.

We obtain patents, trademarks and copyrights for our intellectual property,
which represent important assets to the Company. If we fail to adequately
protect our intellectual property through patents, trademarks and copyrights,
our intellectual property rights may be misappropriated by others, invalidated
or challenged, and our competitors could duplicate our products or may otherwise
limit any competitive design or manufacturing advantages we may have. We believe
that our success is likely to depend upon continued innovation, technical
expertise, marketing skills and customer support and services rather than on
legal protection of our intellectual property rights. However, we intend to
aggressively assert our intellectual property rights when necessary.

We may be subject to product liability claims and our insurance may not be
sufficient to cover damages related to those claims.

We may be subject to lawsuits resulting from injuries associated with the use of
sporting goods equipment and office products that we sell. We may incur losses
relating to these claims or the defense of these claims. There is a risk that
claims or liabilities will exceed our insurance coverage. In addition, we may be
unable to retain adequate liability insurance in the future. In addition, we are
subject to regulation by the Consumer Product Safety Commission and similar
state regulatory agencies. If we fail to comply with government and industry
safety standards, we may be subject to claims, lawsuits, fines and adverse
publicity that could have a material adverse effect on our business, results of
operations and financial condition.

These risks are not exhaustive.

Other sections of this Form 10-K may include additional factors which could
adversely impact our business and financial performance. Moreover, we operate in
a very competitive and rapidly changing environment. New risk factors emerge
from time to time and it is not possible for our management to predict all risk
factors, nor can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place undue reliance
on forward-looking statements as a prediction of actual results.

                                       11
<PAGE>

ITEM 1B--UNRESOLVED STAFF COMMENTS

None.


ITEM 2--PROPERTIES

At December 31, 2005, the Company operated from the following locations:

<TABLE>
<CAPTION>
                                           Square      Owned or
Location                                   Footage      Leased      Use
------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>         <C>
Sporting Goods
--------------
     Evansville, Indiana, USA              346,000      Owned       Manufacturing and distribution; sales
                                                                    and marketing; administration
     Evansville, Indiana, USA              122,000      Leased      Warehousing
     Olney, Illinois, USA                  121,100      Leased      Manufacturing and distribution
     Gainesville, Florida, USA             155,000      Owned       Manufacturing and distribution
     National City, California, USA         51,000      Leased      Warehousing and distribution
     Rosarito, Mexico                       70,000      Owned       Manufacturing and distribution
     Rosarito, Mexico                       83,000      Leased      Manufacturing
     Reynosa, Mexico                       128,000      Owned       Manufacturing and distribution

Office Products
---------------
     Wabash, Indiana, USA                  141,000      Owned       Manufacturing and distribution; sales
                                                                    and marketing; administration
     Sanford, N. Carolina, USA               4,100      Leased      Sales and marketing
     Markdorf, Germany                      70,300      Owned       Manufacturing and distribution; sales
                                                                    and marketing; administration
     Paris, France                          13,000      Leased      Distribution; sales and marketing
     Crawley, UK                             8,300      Leased      Sales and marketing
</TABLE>

The Company has no idle facilities, and believes that its facilities are in
excellent condition and suitable for their respective operations. The Company
also believes that it is in compliance with all applicable environmental
regulations and is not subject to any proceeding by any federal, state or local
authorities regarding such matters. The Company provides regular maintenance and
service on its plants and machinery as required.

During 2005 the Company concluded a facility consolidation effort in the Office
Product business that consolidated a Tijuana, Mexico facility into the Wabash,
Indiana facility.

During 2005 the Company began and substantially completed construction of a new
manufacturing facility in Reynosa, Mexico. Certain Sporting Goods products
currently manufactured in the Rosarito, Mexico facility will be transitioned to
this new plant. The transition is expected to be complete in the second quarter
of 2006.

ITEM 3--LEGAL PROCEEDINGS

The Company is involved in litigation arising in the normal course of its
business, but the Company does not believe that the disposition or ultimate
resolution of such claims or lawsuits will have a material adverse affect on the
business or financial condition of the Company.

The Company is not aware of any probable or levied penalties against the Company
relating to the American Jobs Creation Act.

                                       12
<PAGE>

ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                     Part II


ITEM 5--MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's common stock is traded under the symbol "ESCA" on the NASDAQ
National Market. The following table sets forth, for the calendar periods
indicated, the high and low sales prices of the Common Stock as reported by the
NASDAQ National Market:

Prices                                                  High              Low
--------------------------------------------------------------------------------
   2005
   Fourth quarter ended December 31, 2005              $13.45            $11.29
   Third quarter ended October 1, 2005                  15.18             12.67
   Second quarter ended July 9, 2005                    15.00             12.52
   First quarter ended March 19, 2005                   15.15             11.78

   2004
   Fourth quarter ended December 25, 2004              $16.96            $11.80
   Third quarter ended October 2, 2004                  17.67             10.47
   Second quarter ended July 10, 2004                   23.64             15.43
   First quarter ended March 20, 2004                   20.58             14.25

The closing market price on February 21, 2006 was $12.18 per share.

Depending on profitability and cash flows from operations, the Board of
Directors anticipates issuing annual dividends. Dividends issued/declared over
the last three years are as follows:

       Record Date             Payment Date             Amount per Common Share
       -------------------------------------------------------------------------
       March 5, 2004           March 12, 2004                    $0.12
       March 11, 2005          March 18, 2005                    $0.15
       March 17, 2006          March 21, 2006                    $0.20


On April 18, 2004, The Board of Directors declared a 2 for 1 stock split payable
to stockholders of record on May 11, 2004, which was distributed on May 25,
2004. All per share amounts have been adjusted to reflect the 2 for 1 stock
split.

There were approximately 248 holders of record of the Company's Common Stock at
February 21, 2006. The approximate number of stockholders, including those held
by depository companies for certain beneficial owners, was 1,367.

                                       13
<PAGE>

<TABLE>
<CAPTION>

ISSUER PURCHASES OF EQUITY SECURITIES

------------------------------------------------------------------------------------------------------
                                                                       (c) Total      (d) Maximum
                                                                       Number of       Number (or
                                                                       Shares (or      Approximate
                                                                         Units)      Dollar Value) of
                                                                       Purchased       Shares (or
                              (a) Total                                as Part of    Units) that May
                              Number of                                Publicly          Yet Be
                              Share (or         (b) Average            Announced        Purchased
                               Units)          Price Paid per          Plans or      Under the Plans
Period                        Purchased        Share (or Unit)         Programs        or Programs
------------------------------------------------------------------------------------------------------
<S>                             <C>              <C>                    <C>              <C>
Share purchases prior to
 10/01/2005 under the
 current repurchase
 program                        385,350          $     8.92             385,350          $1,724,971
------------------------------------------------------------------------------------------------------

Fourth quarter purchases:
------------------------------------------------------------------------------------------------------
10/02/2005 - 10/29/2005           7,740          $    12.73               7,740          $   98,530
------------------------------------------------------------------------------------------------------
10/30/2005 - 11/26/2005            None                None                None                None
------------------------------------------------------------------------------------------------------
11/27/2005 - 12/31/2005          56,874          $    12.00              56,874          $  682,488
------------------------------------------------------------------------------------------------------

Total share purchases under
 the current program            449,964          $     9.38             449,964          $3,000,000
------------------------------------------------------------------------------------------------------
</TABLE>

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, the Board of
Directors increased the remaining amount 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.

                                       14
<PAGE>

ITEM 6--SELECTED FINANCIAL DATA
(In thousands, except per share data)
Certain 2005 and 2004 amounts below have been restated to reflect adjustments
resulting from errors made in calculating income tax expense and employee
benefit expense in 2005 and 2004 - see Note 2 to the consolidated financial
statements in Item 8.

<TABLE>
<CAPTION>
                                 December 31,   December 25,   December 27,   December 28,   December 29,
At and For Years Ended              2005           2004           2003           2002           2001
                                 (Restated)     (Restated)
-----------------------------------------------------------------------------------------------------------
<S>                             <C>            <C>            <C>            <C>            <C>
Income Statement Data
   Net sales
     Sporting goods             $    120,996   $    141,644   $    134,750   $    122,628   $    118,867

     Office and graphic
       arts products                  64,621         76,040         81,518         27,596         29,986
       Total net sales               185,617        217,684        216,268        150,224        148,853

   Net income                         12,916          8,180         14,850         11,138         11,139

   Weighted-average shares            13,055         12,980         12,968         12,972         12,894

Per Share Data
   Basic earnings per share     $       0.99   $       0.63   $       1.15   $       0.86   $       0.86
   Cash dividends               $       0.15   $       0.12              0              0              0

Balance Sheet Data
   Working capital                    42,350         36,852         24,657         27,041         13,574
   Total assets                      124,860        134,969        134,437         96,788         76,111
   Short-term bank debt                  711         11,638         21,568         11,223          9,770
   Long-term bank debt                18,487         15,542         15,020         16,700          6,800

   Total stockholders' equity         76,623         71,034         61,283         45,875         34,396

</TABLE>

Fiscal year 2005 was adversely impacted by lower sales to SEARS, a major
sporting goods customer, and the rationalization of certain products in the
Office Products business. These events are more fully described in Management's
Discussion and Analysis of Financial Condition and Results of Operations.

Fiscal year 2004 was negatively impacted by restructuring charges and a goodwill
impairment loss which are more fully described in Management's Discussion and
Analysis of Financial Condition and Results of Operations.


ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS

As discussed more fully in Note 2, Restatement of Financial Statements, in Item
8 of this form 10-K/A (Amendment No. 1), previously issued consolidated
financial statements for 2005 and 2004 have been restated. The following section
should be read in conjunction with Item 1: Business; Item 1A: Risk Factors; Item
6: Selected Financial Data; and Item 8: Financial Statements and Supplementary
Data.

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.

                                       15
<PAGE>

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 substantial market presence in
niche markets. This strategy is heavily dependent on brand recognition and
excellent customer service. The Company's strategic advantage is established
relationships with major retailers which allow the Company to bring new products
to the market in a very cost effective manner. In addition to strategic customer
relations, the Company has over 75 years of manufacturing and sourcing
experience that enable it to be a low cost supplier.

Where the Company has a strong market position in mature product lines such as
table tennis tables and basketball, the Company does not expect significant
internal growth. However, in product lines such as paper shredders, wooden swing
sets, archery and billiards, the Company is not among the market leaders and
consequently anticipates significant internal growth potential. To enhance
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 strong brand recognition that
the Company can take to market through its established distribution channels.
Significant synergies are achieved through assimilation of acquired product
lines into the existing company structure. Management believes that key
indicators in measuring the success of this strategy are revenue growth and
earnings growth. The following table sets forth the percentage growth in
revenues and net income over the past three years:

                                          2005           2004           2003
                                       (Restated)     (Restated)
        ------------------------------------------------------------------------

        Net revenue
             Sporting Goods              -14.6%           5.1%           9.9%
             Office Products             -15.0%          -6.7%         195.4%
             Total                       -14.7%           0.7%          44.0%

        Net Income                        57.9%         -44.9%          33.3%


Results of Operations

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

<TABLE>
<CAPTION>
                                                                2005             2004              2003
                                                             (Restated)       (Restated)
        ---------------------------------------------------------------------------------------------------
<S>                                                             <C>               <C>               <C>

        Net revenue                                             100.0%            100.0%            100.0%
        Cost of products sold                                    70.0%             72.8%             71.4%
                                                              -------           -------           -------
        Gross margin                                             30.0%             27.2%             28.6%
        Selling, administrative and general expenses             19.6%             18.3%             18.9%
        Restructuring costs                                      -0.3%             -1.1%              0.0%
        Goodwill impairment loss                                  0.0%              0.6%              0.0%
                                                              -------           -------           -------
        Operating income                                         10.7%              7.2%              9.7%
                                                             ========           =======           =======
</TABLE>


Consolidated Revenue and Gross Margin

In 2005, a primary objective was improving profitability in the Office Products
business that was reorganized in 2004. As a direct result, operating income in
2005 increased 57.9% over that achieved in 2004 and as a percentage of sales,
operating income increased from 7.2% in 2004 to 10.7% in 2005; higher than the
results achieved in 2003 - a year before the restructuring. Net sales in 2005
were down compared to 2004 and 2003 in both Sporting Goods and Office Products.
In Sporting Goods the decline was primarily related to lower sales at SEARS, the

                                       16
<PAGE>

Company's largest retail customer. The decline in Office Products is attributed
to the planned rationalization of non-core, low margin third party products and
unprofitable customers. At the end of 2004 the Company announced it would begin
seeking acquisitions in the Sporting Goods market. During 2005 the Company
acquired substantially all of the assets of ChildLife, a premier supplier of
wooden swing sets which contributed approximately $4.5 million to net sales in
2005.

The overall gross margin ratio of the Company for 2005 improved over 2004 and
2003 as a direct result of rationalizing low margin products and customers in
the Office Products business. The gross margin ratio in Sporting Goods was down
slightly compared to 2004 reflecting a change in product mix, but was unchanged
compared to 2003. The gross margin in Office Products for 2005 was up
substantially over 2004 and 2003 reflecting the elimination of low margin
products and customers as well as synergies garnered from the consolidation of
distribution and manufacturing operations in North America.

Consolidated Selling, General and Administrative Expenses

Total selling, general and administrative expenses for 2005 were down compared
to 2004 and 2003 primarily due to variable costs associated with lower sales
volume such as sales commissions. As a percentage of net revenues, selling,
general and administrative expenses for 2005 were up compared to 2004 and 2003
due to non-variable costs in the Office Products business and slightly higher
personnel costs as the Company builds a high quality management team to
accelerate growth and profitability. The ratio in Sporting Goods was relatively
unchanged from 2004 and 2003. On a continuous basis, Management aggressively
reviews cost structures to improve profitability. However, Management does not
expect significant improvement in the ratio between selling, general and
administrative expenses and net sales to come from cost reductions. Instead,
Management believes that future improvements will come from increased sales
while holding these costs in check.

Provision for Income Taxes

The effective income tax rate experienced in 2005 was 32.9%, a decline from the
41.3% rate experienced in 2004 but higher than the 30.0% rate experienced in
2003. The primary difference between 2005 and 2004 was the favorable tax
treatment for certain European operations which were profitable in 2005, but not
profitable in 2004 and as such did not receive the associated tax benefit. In
addition, the 2004 results included a charge reflecting the settlement of a
state income tax audit. The 2003 tax rate benefited from favorable tax treatment
of European operations and favorable tax treatment of intellectual property
royalties paid to wholly owned subsidiaries. The favorable tax treatment
accorded to intellectual property royalties was eliminated in the state tax
audit settlement. Consequently, in the future the Company does not expect to
achieve the same effective tax rate achieved in 2003, but rather an effective
tax rate similar to that achieved in 2005.

Sporting Goods

Net sales, operating income, and net income for the Sporting Goods business
segment for the three years ended December 31, 2005 were as follows:

      In Thousands                           2005          2004          2003
      --------------------------------------------------------------------------

        Net Sales                          $120,996      $141,644      $134,750
        Operating income                     13,283        17,926        16,507
        Net income                            7,386        10,747         9,720

The major factor in the sales decline between 2005 and 2004 was sales to SEARS
which were down roughly $19 million compared to 2004. Approximately $7 million
of this decline relates to a decision by SEARS not to carry an arcade product
that was introduced in 2004. The remainder of the shortfall, approximately $12
million, reflects a decision by SEARS in 2005, to change its focus from
increasing sales to increasing gross margins. As a result, SEARS increased
consumer prices and decreased spending on advertising which resulted in lower
overall sales volume. Other than the arcade product previously mentioned, the
Company did not lose any product placement at SEARS to competitors, but was
negatively impacted by the lower sales volume. Sporting goods sales were also

                                       17
<PAGE>

negatively impacted by consumer focus on electronics during the 2005 holiday
season which particularly impacted sales of table games such as air hockey and
soccer. These declines were partially offset by increased product placement at
specialty retailers and sales related to the ChildLife acquisition which added
$4.5 million in wooden swing set sales to 2005. Overall, year-end inventories at
major customers appear to be in line with historical balances and the Company
does not expect this to have a major impact on 2006. The Company believes that
it continues to have a very strong relationship with SEARS, and that SEARS will
continue to be a significant customer. However, the Company can not determine at
this time what impact the current SEARS strategy will have on future sales. The
Company continues to focus on diversifying product offerings through acquisition
and innovation. It is also focused on diversifying distribution channels through
increasing product placement in the specialty dealer channel. Management
anticipates that its strategy to grow the specialty dealer channel as well as
broader customer diversification in other channels will enable it to replace in
2006 a significant portion of the sales volume lost in 2005.

Revenues in 2004 were higher than 2003 due to the introduction of an arcade
product at SEARS that generated $7 million in sales to SEARS and increased sales
of Archery products related to its 2003 acquisition of Bear Archery.

As a percentage of net sales, operating income from Sporting Goods declined in
2005 to 11.0% compared to 12.7% in 2004 and 12.3% in 2003. This decline is
attributed to a change in product mix which resulted in a lower gross margin
ratio. Management anticipates improvement in this ratio as it diversifies into
higher margin products and distribution channels.

Office Products

Net sales, operating income, and net income for the Office Products business
segment for the three years ended December 31, 2005 were as follows:

      In Thousands                        2005           2004           2003
      --------------------------------------------------------------------------


        Net Sales                        $64,621        $76,040        $81,518

        Operating income                   8,760            573          5,506
        Net income (loss)                  5,683         (1,634)         4,223


Net sales in 2005 declined 15% compared to the prior year primarily due to the
rationalization of low margin products and unprofitable customers. The products
rationalized are non-core products produced by third-parties and relate to the
shredder acquisition in 2003. This rationalization was an integral part of the
restructuring plans announced in 2004. The Company also terminated relationships
with several European customers where it could not achieve profitable sales
agreements. Although a lesser factor, further reductions in government spending
on high security shredders added to the 2005 sales decline. High security
shredders sales peaked in 2003 after the introduction of new security standards
in 2002. Completion of the product rationalization plan in 2006 will result in a
further reduction of sales. However, the introduction of a new line of shredders
with a more competitive price point is expected to offset this reduction in
sales and result in 2006 net sales roughly equal to the level achieved in 2005.


Net sales in 2004 were lower than 2003 as a result of declining government
purchases of high security shredders; a declining market for the third party
products acquired with the data shredder acquisition in 2003; and higher
customer program costs that are charged against revenues as incurred.

Net operating income increased significantly in 2005 compared to 2004 as a
result of improved gross margins; synergies gained through the consolidation of
distribution and manufacturing in North America; and the absence of
restructuring costs and the goodwill impairment loss recorded in 2004. The
improved gross margin accounted for roughly $3.1 million, or 38% of the increase
in net operating income. Management believes it can sustain this level of
profitability in 2006.

Net operating income in 2004 was substantially down from 2003 due to
restructuring costs of $2.4 million; a goodwill impairment loss of $1.3 million;
and other unusual charges in the fourth quarter totaling $4.2 million.

                                       18
<PAGE>

Management believes that the restructuring charges incident to the European
operations and the manufacturing operations related to the Master Product(TM)
brands were necessary to make the Company more competitive. The goodwill
impairment loss represents an adjustment to goodwill directly associated with
the Master Product(TM) brand. The unusual write-downs in the fourth quarter of
2004 consisted of $2.2 million in inventory write-downs related to third party
products with low margins and deteriorated market demand; $0.6 million in
estimated settlement and legal costs; and $1.4 million in adjustments to assets
related to joint ventures in China and Brazil.



Financial Condition and Liquidity

The Company's continued profitability enables it to continue to maintain a very
strong balance sheet. The current ratio, a basic measure of liquidity (current
assets divided by current liabilities), increased to 2.5 as of December 31,
2005; significantly higher than 1.8 as of December 25, 2004 and 1.4 at December
27, 2003. Accounts receivable balances at the end of 2005 declined significantly
from the prior year as a direct result of the lower sales volume to SEARS and
unexpected fourth quarter order cancellations of sporting goods products
resulted in higher inventory levels at the end of 2005 compared to 2004.
Management believes that it will be able to sell this product in the first half
of 2006 without any adverse impact on operating results. Because of strong cash
flows, the Company had no short term notes payable to banks as of the end of
2005, compared to $11.6 million at the end of 2004. Long term debt, including
current portion, increased a modest $3.3 million resulting in an overall debt
reduction of $8.3 million. As a percentage of stockholders' equity, long-term
bank debt was 24% at December 31, 2005 compared to 22% at December 25, 2004.

Cash provided by net income, adjusted for non-cash related items, totaled $24.6
million in 2005; up from the $15.4 million generated in 2004, and comparable to
the $26.5 million generated in 2003. The major factors for the increase in 2005
were higher profits and a decline in accounts receivable incident to a lower
sales volume. Cash provided by operations in 2004 was lower than that recorded
in 2003 primarily due to lower profits.

Spending on property, plant and equipment in 2005 totaled $8.4 million, of which
$6.6 million related to a new manufacturing facility in Reynosa, Mexico which
will be completed during the first quarter of 2006. The Company expects to spend
an additional $0.6 million on this plant in 2006. The Company also invested $3.2
million in acquiring substantially all of the assets of ChildLife, a
manufacturer of premium wooden swing sets. The Company anticipates expenditures
for property, plant and equipment in 2006 to be roughly in line with prior
years.

On February 27, 2006, the Company acquired substantially all of the assets and
liabilities of Family Industries, Inc., a manufacturer of residential wooden
swing sets, for $7.1 million in cash. The Company is actively engaged in seeking
additional acquisitions, but cannot at this time predict whether or not it will
close any such deals in 2006.

Cash used in financing activities in 2005 was slightly higher than 2004 due
principally to the stock repurchase program under which the Company acquired
163,354 shares of its own stock.

The Company's working capital requirements are primarily funded from cash flows
from operations and revolving credit agreements with its bank. During 2005 the
Company's maximum borrowings under its primary revolving credit lines aggregated
$37.4 million and the Company met all its debt covenants. Rising interest rates
resulted in an increase in the effective interest rate in 2005 to 5.8%, compared
to 3.4% in 2004. The Company's relationship with its primary lending bank
remains strong and the Company expects to have access to the same level of
revolving credit that was available in 2005. In addition, the Company believes
it can quickly reach agreement with its current lending bank or an alternate
lending source to increase available credit should the need arise.

On March 10, 2006, The Company announced the payment of an annual dividend of
$0.20 per share to all shareholders of record on March 17, 2006, payable on
March 24, 2006.

New Accounting Pronouncements

The following new accounting pronouncements have not yet been adopted by the
Company. A more detailed description may be found in the Notes to the
Consolidated Financial Statements.

                                       19
<PAGE>

In December, 2004, the Financial Accounting Standards Board (FASB) issued SFAS
123R Stock-Based Payments (SFAS 123R), an amendment to SFAS 123 Accounting for
Stock-Based Compensation which eliminates the ability to account for share-based
compensation transactions using Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and generally requires that such
transactions be accounted for using a fair value-based method. The effective
date of this standard is fiscal years beginning after June 15, 2005. Therefore,
the effective date of this standard for the Company is January 1, 2006. SFAS
123R applies to all awards granted after the required effective date and to
awards modified, repurchased, or cancelled after that date as well as for the
unvested portion of awards existing as of the effective date. The cumulative
effect of initially applying this Statement, if any, is recognized as of the
required effective date. Beginning January 1, 2006, the Company will comply with
SFAS 123R using a modified version of prospective application. Under this
transition method, compensation cost is recognized for the portion of
outstanding awards, for which the requisite service has not yet been rendered,
based on the grant-date fair value of those awards calculated under SFAS 123 for
either recognition or pro forma disclosures. The Company will not restate
financial statements for prior periods but will continue to include pro forma
disclosures required for those periods by SFAS 123. Based on the fair value of
options outstanding as of December 31, 2005 on the respective grant dates and
the option-pricing model assumptions detailed in Note 1 to the Consolidated
Financial Statments, the Company will recognize compensation expense related to
stock options of $494 thousand in 2006, $372 thousand in 2007 and $351 thousand
in 2008. These amounts will increase depending on the number and value of
options issued in future years.

In November 2004, the FASB issued SFAS No. 151 Inventory Costs, an amendment of
ARB No. 43, chapter 4. SFAS No. 51 clarifies the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material. This
standard is effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. The Company does not believe the adoption of this standard
will have a material effect on the Company's financial statements.

Off Balance Sheet Financing Arrangements

The Company has no financing arrangements that are not recorded on the Company's
balance sheet.

Contractual Obligations

The following schedule summarizes the Company's contractual obligations as of
December 31, 2005:

<TABLE>
<CAPTION>
                                                                  Payments Due by Period
                                       ---------------------------------------------------------------------------
                                                        Less than 1                                   More than 5
Contractual Obligations                    Total            year        1 -3 years      3 - 5 years      years
------------------------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>             <C>            <C>
 Long-term debt                        $     19,553    $      1,066    $     15,787    $         --   $      2,700
 Future interest payments (1)                 3,216             961           1,419              83            753
 Future interest payments
       (receipts) under the
       Interest rate swap
       agreement (2)                           (191)            (79)           (112)             --             --
 Operating Leases                             2,424           1,240             957             202             25
 Minimum payments under
       royalty agreements                     1,150             350             700              --            100
                                       ------------    ------------    ------------    ------------   ------------
 Total                                 $     26,152    $      3,538    $     18,751    $        285   $      3,578
                                       ============    ============    ============    ============   ============
</TABLE>

Notes:
(1) Assumes that the Company will not increase borrowings under its long-term
credit agreements and that the effective interest rate experienced in 2005
(5.8%) will continue for the life of the agreements.
(2) Assumes that the LIBOR rate (4.3%) at December 31, 2005 will remain
unchanged for the term of the swap agreement.

                                       20
<PAGE>

Critical Accounting Estimates

The methods, estimates and judgments used in applying the Company's accounting
policies have a significant impact on the results reported in its financial
statements. Some of these accounting policies require difficult and subjective
judgments, often as a result of the need to make estimates of matters that are
inherently uncertain. The most critical accounting estimates are described below
and in the Notes to the Consolidated Financial Statements.

Product Warranty
The Company provides limited warranties on certain of its products, for varying
periods. Generally, the warranty periods range from 90 days to one year.
However, some products carry extended warranties of seven-year, ten-year, and
lifetime warranties. The Company records an accrued liability and expense for
estimated future warranty claims based upon historical experience and
management's estimate of the level of future claims. Changes in the estimated
amounts recognized in prior years are recorded as an adjustment to the accrued
liability and expensed in the current year. To the extent there are product
defects in current products that are unknown to management and do not fall
within historical defect rates, the product warranty reserve could be
understated and the Company could be required to accrue additional product
warranty costs thus negatively affecting gross margin.

Inventory Valuation Reserves
The Company evaluates inventory for obsolescence and excess quantities based on
demand forecasts based on specified time frames; usually one year. The demand
forecast is based on historical usage, sales forecasts and current as well as
anticipated market conditions. All amounts in excess of the demand forecast are
deemed to be excess or obsolete and a reserve is established based on the
anticipated net realizable value. To the extent that demand forecasts are
greater than actual demand and the Company fails to reduce manufacturing output
accordingly, the Company could be required to record additional inventory
reserves which would have a negative impact on gross margin.

Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based upon a review of
outstanding receivables, historical collection information and existing economic
conditions. Accounts receivable are ordinarily due between 30 and 60 days after
the issuance of the invoice. Accounts are considered delinquent when more than
90 days past due. Delinquent receivables are reserved or written off based on
individual credit evaluation and specific circumstances of the customer. To the
extent that actual bad debt losses exceed the allowance recorded by the Company,
additional reserves would be required which would increase selling, general and
administrative costs.

CO-OP Advertising
The Company offers co-operative advertising allowances to certain retailers to
encourage product promotions. These agreements are typically based on a
percentage of retailer purchases up to a maximum allowance and the Company is
never directly involved with the media provider. The Company accrues the
estimated cost of these programs based on the sales volume of the retailer and
historical trends. As costs are accrued they are recorded as a reduction in
sales. To the extent that actual co-operative advertising costs exceed the
Company's estimates, additional co-operative advertising allowances would be
required which would reduce net revenues.

Volume Rebates
The Company has various rebate programs with its retailers that are based on
purchase volume. Typically these programs are based on achieving specified sales
volumes and the rebate is calculated as a percentage of purchases. Based on the
terms of the agreement, purchase levels and historical trends the Company
accrues the estimated cost of these programs and records the same as a reduction
in sales. To the extent that actual rebate program costs exceed the Company's
estimates, additional rebate program allowances would be required which would
reduce net revenues.

Catalog Allowances
A number of large office supply dealers operate through catalogs distributed to
businesses throughout the country. Product content is decided by the dealer each
time a new catalog is issued; typically once a year. Catalog allowances are
required by the dealer as an inducement to include the Company's products. The

                                       21
<PAGE>

allowance is based on a fixed cost per page and/or a percentage of purchases by
the dealer. The fixed portion of the allowance is often paid when the catalog is
distributed and is recognized when incurred and the variable portion is accrued
based on dealer purchases and historical trends. Catalog allowances are recorded
as a reduction in sales. To the extent that actual catalog costs exceed the
estimated costs associated with variable agreement provisions, additional
catalog allowances would be required which would negatively impact net revenues.


Effect of Inflation


The Company cannot accurately determine the precise effects of inflation;
however, there were some increases in sales and costs due to inflation in 2005.
The Company attempts to pass on increased costs and expenses through price
increases when necessary. The Company is working on reducing expenses; improving
manufacturing technologies; and redesigning products to keep these costs under
control.

Capital Expenditures

As of December 31, 2005, the Company had no material commitments for capital
expenditures.

ITEM 7A -- 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 would not have resulted in a material
impact on income before taxes for the year ended December 31, 2005.

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 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 December 31, 2005 the aggregate
book value of long-term marketable equity securities was $3.2 million. Due to
the unpredictable nature of the equity market the Company has not employed any
hedge programs relative to these investments.


ITEM 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data required by Item 8 are set forth
in Part IV, Item 15.

                                       22
<PAGE>

ITEM 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

None.



ITEM 9A --CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


Escalade maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in 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. In connection
with the restatement discussed above in the explanatory note to this Form 10-K/A
and in Note 2 to our financial statements, the Company's Chief Executive Officer
and Chief Financial Officer reevaluated that the Company's disclosure controls
and procedures and concluded that such controls and procedures were not
effective as of December 31, 2005 because of a material weakness in internal
control over financial reporting (described below in Management's Report on
Internal Control over Financial Reporting) relating to errors in calculating the
provision for income taxes.

Management's Report on Internal Control over Financial Reporting (Revised)

Escalade's management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Company. Escalade's internal
control system was designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting of the Company includes
those policies and procedures that:

         (1) pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions of the Company;

         (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of management
and directors of the Company; and

         (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on the Company's financial statements.

All internal control systems, no matter how well designed, have inherent
limitations, including the possibility of human error or circumvention through
collusion or improper overriding of controls. Therefore, even those internal


                                       23
<PAGE>


control systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation. Further, because of changes in
conditions, the effectiveness of internal control may vary over time.

The management of Escalade assessed the effectiveness of the Company's internal
control over financial reporting as of December 31, 2005. In making its
assessment of internal control over financial reporting, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework and implemented a
process to monitor and assess both the design and operating effectiveness of the
Company's internal controls.

A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. In the Company's Annual Report on Form 10-K for the year ended
December 31, 2005, filed on March 10, 2006, management concluded that the
Company's internal control over financial reporting was effective as of December
31, 2005. Subsequently, management identified a material weakness in the
Company's internal control over financial reporting with respect to calculating
the provision for income taxes. This material weakness resulted in this
amendment to the Annual Report on Form 10-K for the year ended December 31,
2005. Solely as a result of this material weakness, management has revised its
earlier assessment and has now concluded that the Company's internal control
over financial reporting was not effective as of December 31, 2005.

Management's assessment of the effectiveness of the Company's internal control
over financial reporting as of December 31, 2005 has been audited by BKD LLP, an
independent registered public accounting firm that audited the Company's
consolidated financial statements included in this annual report. The
attestation report on management's assessment of the Company's internal control
over financial reporting prepared by the independent registered public
accounting firms are included below in this Item 9A.


<TABLE>
<CAPTION>


<S>                                                                  <C>
/s/  Daniel A. Messmer, President and Chief Executive Officer        /s/ Terry Frandsen, Chief Financial Officer
</TABLE>

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 fourth quarter of 2005. In connection
with such evaluation, there have been no changes to the Company's internal
control over financial reporting that occurred since the beginning of the
Company's fourth quarter of 2005 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders
Escalade, Incorporated
Evansville, Indiana


We have audited management's revised assessment included in the accompanying
Management's Report on Internal Control over Financial Reporting that Escalade,
Incorporated (Company) did not maintain effective internal control over
financial reporting as of December 31, 2005, because of the effect of the
material weakness related to the overstatement of the provision for income
taxes, based on criteria established in Internal Control--Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit. We did not examine the effectiveness of internal control over
financial reporting of Martin Yale International, GmbH, a wholly owned


                                       24
<PAGE>


subsidiary, whose consolidated financial statements reflect total assets and net
sales of $24,132 and $33,302 (dollars in thousands), respectively, included in
the related consolidated financial statement amounts as of and for the year
ended December 31, 2005. The effectiveness of this subsidiary's internal control
over financial reporting was audited by other accountants whose report has been
furnished to us, and our opinion, insofar as it relates to the effectiveness of
the subsidiary's internal control over financial reporting, is based solely on
the report of the other accountants.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. An audit includes obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control and performing such
other procedures as we consider necessary in the circumstances. We believe that
our audit and the report of the other accountants provide a reasonable basis for
our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America. A
company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company, (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the company, and
(3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weakness has been identified and included in
management's assessment. The Company overstated its provision for income taxes.
As a result of the material weakness, the Company's consolidated financial
statements, for the year ended December 31, 2005, and for each of the quarters
in 2005 have been restated. This material weakness was considered in determining
the nature, timing and extent of audit tests applied in our audit of the 2005
consolidated financial statements, and this report does not affect our report
dated February 17, 2006, on those consolidated financial statements, except as
to the restatement discussed in Note 2 to the 2005 consolidated financial
statements, which is as of March 13, 2007.

As stated in the 4th paragraph of Management's Report on Internal Control Over
Financial Reporting, management's assessment of the effectiveness of the
Company's internal control over financial reporting has been revised.

In our opinion, based on our audit and the report of other accountants,
management's revised assessment that Escalade, Incorporated did not maintain
effective internal control over financial reporting as of December 31, 2005, is
fairly stated, in all material respects, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also, in our opinion, based on
our audit and the report of other accountants, because of the effect of the
material weakness described above on the achievement of the objectives of the
control criteria Escalade, Incorporated has not maintained effective internal
control over financial reporting as of December 31, 2005, based on criteria
established in Internal Control--Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).


                                       25
<PAGE>


We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements of Escalade, Incorporated, and our report dated February 17, 2006,
except for Note 2, as to which the date is March 13, 2007, expressed an
unqualified opinion thereon.

Evansville, Indiana
February 17, 2006, except as to the 4th paragraph of Management's Report on
Internal Control Over Financial Reporting (Revised), which is as of March 13,
2007



Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Martin Yale International GmbH,
Markdorf/Germany

We have audited management's assessment, included in the accompanying
"Management's Report on Internal Control over Financial Reporting", that Martin
Yale International GmbH, Markdorf/Germany maintained effective internal control
over financial reporting as of December 31, 2005, based on criteria established
in Internal Control-- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that Martin Yale International GmbH,
Markdorf/Germany maintained effective internal control over financial reporting
as of December 31, 2005, is fairly stated, in all material respects, based on
criteria established in Internal Control-- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in
our opinion, Martin Yale International GmbH, Markdorf/Germany maintained, in all
material respects, effective internal control over financial reporting as of

                                       26
<PAGE>

December 31, 2005, based on criteria established in Internal Control--
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
the Company as of December 31, 2005, and the related consolidated statements of
income, and cash flows for the period ended December 31, 2005, and the related
financial statement schedule in the period ended December 31, 2005, and our
report dated February 16, 2006, expressed an unqualified opinion thereon.

/s/ FALK & Co GmbH
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
Heidelberg/Germany
February 16, 2006


ITEM 9B -- OTHER INFORMATION

None.


                                    Part III


ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required under this item with respect to Directors and Executive
Officers is contained in the registrant's Proxy Statement relating to its annual
meeting of stockholders scheduled to be held on April 22, 2006 under the
captions "Certain Beneficial Owners," "Election of Directors," and "Executive
Officers of the Registrant" and is incorporated herein by reference.

ITEM 11 -- EXECUTIVE COMPENSATION

Information required under this item is contained in the registrant's Proxy
Statement relating to its annual meeting of stockholders scheduled to be held on
April 22, 2006 under the caption "Executive Compensation" and is incorporated
herein by reference, except that the information required by Items 402(k) and
(l) of Regulation S-K which appear within such caption under the sub-headings
"Compensation and Stock Option Committees", "Report of Audit Committee" and
"Financial Performance" are specifically not incorporated by reference into this
Form 10-K or into any other filing by the registrant under the Securities Act of
1933 or the Securities Exchange Act of 1934.

                                       27
<PAGE>

ITEM 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Except for the information required by Item 201(d) of Regulation S-K, which is
included below, information required by this item is contained in the
registrant's proxy statement relating to its annual meeting of stockholders
scheduled to be held on April 22, 2006 under the caption "Certain Beneficial
Owners" and is incorporated herein by reference.

                      Equity Compensation Plan Information

<TABLE>
<CAPTION>
                                                         Number of            Weighted-Average
                                                  Securities to be Issued      Exercise Price             Number of
                                                      Upon Exercise of     of Outstanding Options,   Securities Remaining
                                                    Outstanding Options,          Warrants           Available for Future
Plan Category                                       Warrants and Rights          and Rights                Issuance
----------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                    <C>                        <C>
Equity compensation plans approved by
   security holders (1)                                     730,569                $11.95                     924,169
Equity compensation plans not approved by
   security holders                                              --                    --                          --
                                                         ----------                                        ----------
       Total                                                730,569                                           924,169
                                                         ==========                                        ==========
</TABLE>

(1) These plans are the Company's 1997 Incentive Stock Option Plan and the 1997
Director Stock Option Plan.


ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14 -- PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is contained in the registrant's proxy
statement relating to its annual meeting of stockholders scheduled to be held on
April 22, 2006 under the caption "Principal Accounting Firm Fees" and is
incorporated herein by reference.


                                     Part IV


ITEM 15--EXHIBITS, FINANCIAL STATEMENT SCHEDULES


(A) Documents filed as a part of this report:

        (1)    Financial Statements
                 Report of Independent Registered Public Accounting Firm
                 Consolidated financial statements of Escalade, Incorporated and
                 subsidiaries:
                   Consolidated balance sheets--December 31, 2005 and December
                     25, 2004
                   Consolidated statements of income--fiscal years ended
                     December 31, 2005, December 25, 2004, and December 27, 2003
                   Consolidated statements of stockholders' equity--fiscal
                     years ended December 31, 2005, December 25, 2004, and
                     December 27, 2003
                   Consolidated statements of cash flows--fiscal years ended
                     December 31, 2005, December 25, 2004 and December 27, 2003
                   Notes to consolidated financial statements

                                       28
<PAGE>

        (2)    Financial Statement Schedules
                 Report of Independent Registered Accounting Firm on financial
                 statement schedules For the three-year period ended December
                 31, 2005:
                    Schedule II--Valuation and qualifying accounts

               All other schedules are omitted because of the absence of
               conditions under which they are required or because the required
               information is given in the consolidated financial statements or
               notes thereto.

        (3)    Exhibits
                 3.1      Articles of incorporation of Escalade, Incorporated(a)
                 3.2      By-Laws of Escalade, Incorporated (a)
                 4.1      Form of Escalade, Incorporated's common stock
                          certificate (a)
                 10.1     Licensing agreement between Sweden Table Tennis AB and
                          Indian Industries, Inc. dated January 1, 1995 (d)
                 10.2     Amended and Restated Credit Agreement dated October
                          24, 2001 between Escalade, Incorporated and Bank One,
                          Indiana, N.A. dated August 29, 2002 (g)
                 10.3     First Amendment to Amended and Restated Credit
                          Agreement dated October 24, 2001 between Escalade,
                          Incorporated and Bank One, Indiana, N.A. dated August
                          29, 2002 (h)
                 10.4     Third Amendment to amend and restate the credit
                          agreement between Escalade, Incorporated and Bank One,
                          N.A. The effective date is June 1, 2003 (i)
                 10.5     Credit Agreement dated as of September 5, 2003 by and
                          between Indian-Martin, Inc. and Bank One, National
                          Association (excluding exhibits and schedules not
                          deemed to be material). The effective date is
                          September 7, 2003 (j)
                 10.6     Revolving Note dated as of September 5, 2003 in
                          principal amount of $45,000,000, executed by
                          Indian-Martin, Inc. in favor of Bank One, National
                          Association (j)
                 10.7     Pledge Agreement dated as of September 5, 2003 by and
                          between Indian-Martin, Inc. and Bank One, National
                          Association (j)
                 10.8     Collateral Assignment and Security Agreement dated as
                          of September 5, 2003 by and between Indian-Martin,
                          Inc. and Bank One, National Association (j)
                 10.9     Receivables Purchase Agreement dated as of September
                          5, 2003 by and between Indian-Martin, Inc. and
                          Indian-Martin AG (j)
                 10.10    Receivables Purchase Agreement dated as of September
                          5, 2003 by and between Indian-Martin, Inc. and Indian
                          Industries, Inc. Substantially similar Receivables
                          Purchase Agreements were also entered into by
                          Indian-Martin, Inc. and each of Escalade,
                          Incorporated's other domestic operating subsidiaries,
                          Harvard Sports, Inc., Martin Yale Industries, Inc.,
                          Master Products Manufacturing Company, Inc., U.S.
                          Weight, Inc. and Bear Archery, Inc. (j)
                 10.11    Services Agreement dated as of September 5, 2003 by
                          and between Indian-Martin, Inc. and Martin Yale
                          Industries, Inc. Substantially similar Services
                          Agreements were also entered into by Indian-Martin,
                          Inc. and each of Escalade, Incorporated's other
                          domestic operating subsidiaries, Harvard Sports, Inc.,
                          Indian Industries, Inc., Master Products Manufacturing
                          Company, Inc., U.S. Weight, Inc. and Bear Archery,
                          Inc. (j)
                 10.12    Escalade Subordination Agreement dated as of September
                          5, 2003 between Escalade, Incorporated and Bank One,
                          National Association (j)
                 10.13    Offset Waiver Agreement dated as of September 5, 2003
                          between Escalade, Incorporated, Bank One, National
                          Association, Indian-Martin, Inc., Harvard Sports,
                          Inc., Indian Industries, Inc., Martin Yale Industries,
                          Inc., Master Products Manufacturing Company, Inc.,
                          U.S. Weight, Inc. and Bear Archery, Inc. (j)
                 10.14    Loan Agreement dated September 1, 1998 between Martin
                          Yale Industries, Inc. and City of Wabash, Indiana (f)
                 10.15    Trust Indenture between the City of Wabash, Indiana
                          and Bank One Trust Company, NA as Trustee dated
                          September 1, 1998 relating to the Adjustable Rate
                          Economic Development Revenue Refunding Bonds, Series
                          1998 (Martin Yale Industries, Inc. Project) (f)
                 10.16    First Amendment to Credit Agreement dated September 5,
                          2003 by and between Indian-Martin, Inc. and Bank One,
                          National Association, a national banking association.
                          The Effective date of the Amendment was July 15, 2004.
                          (k)

                                       29
<PAGE>

                 10.17    Fourth amendment to amended and restated credit
                          agreement dated June 1, 2003 by and between Escalade,
                          Incorporated and Bank One, N.A. a national banking
                          association. The Effective date of amendment was July
                          15, 2004. (l)
                 10.18    Euro revolving note dated July 15, 2004, in principal
                          amount of (euro)2,500,000, executed by Escalade,
                          Incorporated in favor of Bank One, N.A., London
                          branch. (l)
                 10.19    Uncommitted overdraft facility not to exceed 1.0
                          million Euro and 500 thousand pounds sterling between
                          Escalade, Incorporated and Bank One, N.A., London
                          branch. (l)


        (4)    Executive Compensation Plans and Arrangements
                 10.20    The Harvard Sports/Indian Industries, Inc. 401(k) Plan
                          as amended and merged in 1993 (c)
                 10.21    Martin Yale Industries, Inc. 401(k) Retirement Plan as
                          amended in 1993 (c)
                 10.22    Incentive Compensation Plan for Escalade, Incorporated
                          and its subsidiaries (a)
                 10.23    Example of contributory deferred compensation
                          agreement between Escalade, Incorporated and certain
                          management employees allowing for deferral of
                          compensation (a)
                 10.24    1997 Director Stock Compensation and Option Plan (e)
                 10.25    1997 Incentive Stock Option Plan (e)
                 10.26    1997 Director Stock Compensation and Option Plan
                          Certificate (m)
                 10.27    1997 Incentive Stock Option Plan Certificate (m)


                 10.28    Escalade, Incorporated schedule of Directors
                          Compensation (n)
                 10.29    Escalade, Incorporated schedule of Executive Officers
                          Compensation (n)

                 21       Subsidiaries of the Registrant (n)

                 23.1     Consent of BKD, LLP
                 23.2     Consent of FALK & Co GmbH
                 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


               (a)  Incorporated by reference from the Company's Form S-2
                    Registration Statement, File No. 33-16279, as declared
                    effective by the Securities and Exchange Commission on
                    September 2, 1987
               (b)  Intentionally not used
               (c)  Incorporated by reference from the Company's 1993 Annual
                    Report on Form 10-K
               (d)  Incorporated by reference from the Company's 1995 Annual
                    Report on Form 10-K
               (e)  Incorporated by reference from the Company's 1997 Proxy
                    Statement
               (f)  Incorporated by reference from the Company's 1998 Third
                    Quarter Report on Form 10-Q
               (g)  Incorporated by reference from the Company's 2001 Third
                    Quarter Report on Form 10-Q
               (h)  Incorporated by reference from the Company's 2002 Third
                    Quarter Report on Form 10-Q
               (i)  Incorporated by reference from the Company's 2003 Second
                    Quarter Report on Form 10-Q
               (j)  Incorporated by reference from the Company's 2003 Third
                    Quarter Report on Form 10-Q
               (k)  Incorporated by reference from the Company's 2004 Second
                    Quarter Report on Form 10-Q
               (l)  Incorporated by reference from the Company's 2004 Third
                    Quarter Report on Form 10-Q
               (m)  Incorporated by reference from the Company's 2004 Annual
                    Report on Form 10-K

               (n)  Previously filed on March 10, 2006 as part of the Company's
                    2005 Annual Report on Form 10-K


                                       30
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES

                          Index to Financial Statements


The following consolidated financial statements of the Registrant and its
subsidiaries and Independent Accountants' Report are submitted herewith:

<TABLE>
<CAPTION>
                                                                                                  Page


<S>                                                                                                <C>
     Report of Independent Registered Accounting Firm...............................................32

     Consolidated financial statements of Escalade, Incorporated and
     subsidiaries:

        Consolidated balance sheets--December 31, 2005 and December 25, 2004........................34

        Consolidated statements of income--fiscal years ended December 31, 2005,
           December 25, 2004 and December 27, 2003..................................................35

        Consolidated statements of stockholders' equity--fiscal years ended December 31,
           2005, December 25, 2004 and December 27, 2003............................................36

        Consolidated statements of cash flows--fiscal years ended December 31, 2005,
           December 25, 2004 and December 27, 2003..................................................37

        Notes to consolidated financial statements..................................................38
</TABLE>


                                       31
<PAGE>

[GRAPHIC OMITTED]
    BKD LLP

             Report of Independent Registered Public Accounting Firm



Audit Committee, Board of Directors and Stockholders
Escalade, Incorporated
Evansville, Indiana


We have audited the accompanying consolidated balance sheets of Escalade,
Incorporated as of December 31, 2005, and December 25, 2004, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2005. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. We did not audit the 2005 and 2004 consolidated
financial statements of Martin Yale International, GmbH, a wholly owned
subsidiary, which consolidated statements reflect total assets and net sales of
$24,132 and $33,547 and $31,923 and $40,232 (dollars in thousands),
respectively, included in the related consolidated financial statement amounts
as of and for the years ended December 31, 2005 and December 25, 2004,
respectively. Those consolidated statements were audited by other accountants,
whose report has been furnished to us and our opinion, insofar as it relates to
the amounts included for Martin Yale International, GmbH, is based solely on the
report of the other accountants.

Our audits also included auditing the adjustments to convert the financial
statements of Martin Yale International, GmbH into accounting principles
generally accepted in the United States of America for purposes of
consolidation.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of
the other accountants provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other accountants for
2005 and 2004, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Escalade,
Incorporated as of December 31, 2005, and December 25, 2004, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 2005, in conformity with accounting principles generally
accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Escalade,
Incorporated's internal control over financial reporting as of December 31,
2005, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and our report dated February 17, 2006, except as to the 4th paragraph of
Management's Report on Internal Control Over Financial Reporting (Revised),
which is as of March 13, 2007 expressed an unqualified opinion on management's
assessment and an adverse opinion on the effectiveness of the Company's internal
control over financial reporting.




Evansville, Indiana
February 17, 2006, except for Note 2 as to which the date is March 13, 2007


                                       32
<PAGE>

FALK & Co

             Report of Independent Registered Public Accounting Firm


To the Stockholders and Board of Directors
Martin Yale International GmbH,
Markdorf/Germany

We have audited the accompanying consolidated balance sheet of Martin Yale
International GmbH, Markdorf/Germany and Subsidiaries (the Company) as of
December 31, 2005 and December 25, 2004 and the related consolidated statements
of income and cash flows for each of the year ended December 31, 2005 and
December 25, 2004. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit of 2005 and 2004 in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company as of December 31, 2005 and December 25, 2004 and the consolidated
results of its operations and its cash flows for each of the two years ended
December 31, 2005 and December 25, 2004, in conformity with accounting
principles generally accepted in Germany.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2005, based on
criteria established in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report
dated February 16, 2006, expressed an unqualified opinion on management's
assessment of, and the effective operation of, internal control over financial
reporting.

/s/ FALK & Co GmbH
Wirtschaftsprufungsgesellschaft
Steuerberatungsgesellschaft
Heidelberg/Germany,
February 16, 2006

                                       33
<PAGE>

                             ESCALADE, INCORPORATED AND SUBSIDIARIES

                                   Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                                   December 31,     December 25,
All Amounts in Thousands Except Share Information                      2005             2004
                                                                    (Restated)       (Restated)
-------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
Assets
   Current assets
     Cash and cash equivalents                                    $        3,017   $        3,050
     Receivables, less allowances of $1,544 and $2,510                    31,744           44,363
     Inventories                                                          33,049           30,482
     Prepaid expenses                                                      1,559            3,011
     Deferred income tax benefit                                           1,382            2,062
      Income tax receivable                                                   --              690
                                                                  --------------   --------------
         Total current assets                                             70,751           83,658

   Property, plant and equipment, net                                     20,307           16,498
   Intangible assets                                                       6,634            8,019
   Goodwill                                                               17,157           17,888
   Investments                                                             7,786            6,446
   Interest rate swap                                                        181             (386)
   Other assets                                                            2,044            2,846
                                                                  --------------   --------------
         Total assets                                             $      124,860   $      134,969
                                                                  ==============   ==============

Liabilities and Stockholders' Equity
   Current liabilities
     Notes payable--bank                                          $           --   $       11,638
     Current portion of long-term debt                                     1,066              354
     Trade accounts payable                                                3,518            8,034
     Accrued liabilities                                                  23,728           26,780

     Income tax payable                                                       89               --
                                                                  --------------   --------------

         Total current liabilities                                        28,401           46,806

   Long-term debt, less current portion                                   18,487           15,896
   Deferred compensation                                                   1,349            1,233
   Commitments and contingencies - see note                                   --               --
                                                                  --------------   --------------

         Total liabilities                                                48,237           63,935


   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:  2005--12,946,869 shares,
         2004--13,031,064 shares                                          12,947           13,031
     Retained earnings                                                    62,726           53,450
     Accumulated other comprehensive income                                  950            4,553
                                                                  --------------   --------------
         Total stockholders' equity                                       76,623           71,034
                                                                  --------------   --------------
         Total liabilities and stockholders' equity               $      124,860   $      134,969
                                                                  ==============   ==============
</TABLE>

See notes to consolidated financial statements.

                                       34
<PAGE>

                                  ESCALADE, INCORPORATED AND SUBSIDIARIES

                                     Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                            Years Ended
                                                         --------------------------------------------------
                                                          December 31,      December 25,      December 27,
All Amounts in Thousands Except Per Share Data                2005             2004              2003
                                                           (Restated)       (Restated)
-----------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>               <C>

Net Sales                                                $      185,617    $      217,684    $      216,268

Costs, Expenses and Other Income
   Cost of products sold                                        130,021           158,391           154,365

   Selling, administrative and general expenses                  36,401            39,933            40,907
   Restructuring costs                                             (631)            2,366                --
   Goodwill impairment loss                                          --             1,312                --
                                                         --------------    --------------    --------------

Operating Income                                                 19,826            15,682            20,996

   Interest expense                                               1,482             1,772             2,282
   Other expense (income)                                          (915)              (19)           (2,509)
                                                         --------------    --------------    --------------

Income Before Income Taxes                                       19,259            13,929            21,223

Provision for Income Taxes                                        6,343             5,749             6,373
                                                         --------------    --------------    --------------

Net Income                                               $       12,916    $        8,180    $       14,850
                                                         ==============    ==============    ==============

Earnings Per Share Data
   Basic earnings per share                              $         0.99    $         0.63    $         1.15
                                                         ==============    ==============    ==============
   Diluted earnings per share                            $         0.98    $         0.62    $         1.13
                                                         ==============    ==============    ==============
</TABLE>

See notes to consolidated financial statements.

                                       35
<PAGE>

<TABLE>
<CAPTION>
                                          ESCALADE, INCORPORATED AND SUBSIDIARIES

                                      Consolidated Statements of Stockholders' Equity

                                                                                                  Accumulated
                                                                                                     Other
                                                         Common Stock                            Comprehensive
                                                 ---------------------------       Retained          Income
All Amounts in Thousands                            Shares          Amount         Earnings          (Loss)         Total
--------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>             <C>                <C>          <C>
Balances at December 28, 2002                       13,018          13,018          32,881             (24)         45,875

   Comprehensive income
     Net income                                                                     14,850                          14,850
     Unrealized gain on securities, net
       of tax                                                                                          103             103
     Foreign Currency Translation
       Adjustment, net of tax                                                                        2,853            2853
     Unrealized Loss on Interest Rate Swap
       Agreement, net of tax                                                                          (685)           (685)
                                                                                                              ------------
     Total comprehensive income                                                                                     17,121

   Exercise of stock options                           120             120             230                             350
   Stock issued under the Director Stock
     Option Plan                                         4               4              47                              51
   Purchase of stock                                  (288)           (288)         (1,826)                         (2,114)
                                              ----------------------------------------------------------------------------

Balances at December 27, 2003                       12,854          12,854          46,182           2,247          61,283

Adjustment applicable to prior years
   (See Note 2)                                         --              --             703              --             703
                                              ----------------------------------------------------------------------------

Balances at December 27, 2003 (As                   12,854          12,854          46,885           2,247          61,986
   restated, See Note 2)

     Comprehensive income
     Net income                                                                      8,180                           8,180
     Unrealized gain on securities, net
       of tax                                                                                          102             102
     Foreign Currency Translation
     Adjustment, net of tax                                                                          1,770           1,770
   Unrealized Gain on Interest Rate Swap
     Agreement, net of tax                                                                             434             434
                                                                                                              ------------
   Total comprehensive income                                                                                       10,486

   Exercise of stock options                           226             226             814                           1,040
   Dividend Paid                                                                    (1,556)                         (1,556)
Stock issued under the Director Stock
   Option Plan                                          10              10              52                              62
Purchase of stock                                      (59)            (59)           (925)                           (984)
                                              ----------------------------------------------------------------------------

   Balances at December 25, 2004 (Restated)         13,031          13,031          53,450           4,553          71,034

     Comprehensive income
     Net income                                                                     12,916                          12,916
     Unrealized loss on securities, net
       of tax                                                                                          (78)            (78)
     Foreign Currency Translation
     Adjustment, net of tax                                                                         (3,893)         (3,893)
   Unrealized Gain on Interest Rate Swap
     Agreement, net of tax                                                                             368             368
                                                                                                              ------------
   Total comprehensive income                                                                                        9,313

   Exercise of stock options                            82              82             231                             313
   Dividend Paid                                                                    (1,961)                         (1,961)
   Stock issued under the Director Stock
     Option Plan                                         6               6              90                              96
   Purchase of Stock                                  (172)           (172)         (2,000)                         (2,172)
                                              ----------------------------------------------------------------------------


Balances at December 31, 2005 (Restated)            12,947          12,947          62,726             950          76,623
                                              ============================================================================
</TABLE>


See notes to consolidated financial statements.

                                       36
<PAGE>

<TABLE>
<CAPTION>
                                  ESCALADE, INCORPORATED AND SUBSIDIARIES
                                   Consolidated Statements of Cash Flows
                                         (All Amounts in Thousands)


Years Ended                                                    December 31     December 25     December 27
                                                                   2005            2004            2003
                                                                (Restated)      (Restated)
-----------------------------------------------------------------------------------------------------------
<S>                                                            <C>             <C>             <C>
Operating Activities
   Net income                                                  $     12,916    $      8,180    $     14,850
   Adjustments to reconcile net income to net cash
     provided by operating activities
     Depreciation and amortization                                    4,735           5,016           5,301
     Goodwill impairment                                                 --           1,312              --

     Provision for doubtful accounts                                    561           1,523             374
     Deferred income taxes                                              413             569          (1,042)

     Provision for deferred compensation                                116             132             121
     Deferred compensation paid                                          --            (307)            (50)
     (Gain) loss on disposals of assets                                 226             130             (25)
     Changes in

       Accounts receivable                                           13,553             (79)          2,834
       Inventories                                                   (2,868)           (168)          5,959
       Prepaids                                                        (122)            239             262
       Other assets                                                  (1,706)           (385)         (1,024)
       Income tax payable                                             3,066          (3,444)           (264)
       Accounts payable and accrued expenses                         (6,258)          3,031            (770)
                                                               --------------------------------------------
         Net cash provided by operating activities                   24,632          15,749          26,526
                                                               --------------------------------------------


Investing Activities
   Change in cash surrender value, net of loans and premiums             --              --            (153)
   Purchase of property and equipment                                (8,395)         (2,410)         (2,564)
   Purchase of long-term investments                                     --              --            (846)
   Acquisitions, net of cash acquired                                (3,213)           (632)        (10,730)
   Proceeds from sale of property and equipment                          70             288             207
   Equity investment in Schleicher & Co. International AG                --              --          (9,886)
                                                               --------------------------------------------
         Net cash used by investing activities                      (11,538)         (2,754)        (23,972)
                                                               --------------------------------------------


Financing Activities
   Net increase (decrease) in notes payable--bank                    (7,597)         (8,689)         (2,270)

   Proceeds from exercise of stock options                              409           1,040             350
   Reduction of long-term debt                                         (354)           (354)         (1,848)
   Purchase of stock                                                 (2,172)           (984)         (2,114)
   Cash dividend paid                                                (1,961)         (1,556)             --
                                                               --------------------------------------------

         Net cash used by financing activities                      (11,675)        (10,543)         (5,882)
                                                               --------------------------------------------


Effect of exchange rate changes on cash                              (1,452)            (50)            606
                                                               --------------------------------------------

Increase (Decrease) in Cash and Cash Equivalents                        (33)          2,402          (2,722)

Cash and Cash Equivalents, Beginning of Year                          3,050             648           3,370
                                                               --------------------------------------------

Cash and Cash Equivalents, End of Year                         $      3,017    $      3,050    $        648
                                                               ============================================

Supplemental Cash Flows Information
   Interest paid                                               $      1,815    $      1,741    $      2,285
   Income taxes paid                                                  5,561           8,418           7,207

See notes to consolidated financial statements.
</TABLE>

                                       37
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 1 -- Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations
Escalade, Incorporated and its wholly owned subsidiaries (the "Company") are
engaged in the manufacture and sale of sporting goods and office products. The
Company is headquartered in Wabash, Indiana and has manufacturing facilities in
the United States of America, Mexico, Germany and China. The Company sells
products to customers throughout the world.

Principles of Consolidation
The consolidated financial statements include the accounts of Escalade,
Incorporated and its wholly-owned subsidiaries. All material inter-company
accounts and transactions have been eliminated.

Basis of Presentation
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
books and records of Subsidiaries located in foreign countries are maintained
according to generally accepted accounting principles in those countries. Upon
consolidation the Company evaluates the differences in accounting principles and
determines whether adjustments are necessary to convert the foreign financial
statements to the accounting principles upon which the consolidated financial
statements are based. As a result of this evaluation no material adjustments
were identified.

Fiscal Year End
The Company's fiscal year is a 52 or 53 week period ending on the last Saturday
in December. Fiscal 2005 was 53 weeks long ending on December 31, 2005, while
fiscal 2004 and 2003, were each 52 weeks long ending on December 25, 2004, and
December 27, 2003, respectively.

Cash and Cash Equivalents
Highly liquid financial instruments with insignificant interest rate risk and
with original maturities of three months or less are classified as cash and cash
equivalents.

Fair Values of Financial Instruments
Fair values of cash equivalents approximate cost due to the short period of time
to maturity. Fair values of long-term investments, non-marketable debt
investments, short-term debt, long-term debt and swaps, are based on quoted
market prices or pricing models using current market rates. The Company believes
the carrying value of short-term debt and long-term debt adequately reflects the
fair value of these instruments. For the company's portfolio of non-marketable
equity securities, management believes that the carrying value of the portfolio
approximates the fair value at December 31, 2005. All of the estimated fair
values are management's estimates; however, there is no readily available market
and the estimated fair value may not necessarily represent the amounts that
could be realized in a current transaction, and these fair values could change
significantly.

Inventories
Inventory cost is computed on a currently adjusted standard cost basis (which
approximates actual cost on a current average or first-in, first-out basis).
Work in process and finished goods inventory are determined to be saleable based
on a demand forecast within a specific time horizon, generally one year or less.
Inventory in excess of saleable amounts is reserved, and the remaining inventory
is valued at the lower cost or market. This inventory valuation reserve totaled
$3.9 million and $6.3 million at fiscal year-end 2005 and 2004, respectively.
Inventories, net of the valuation reserve, at fiscal year-ends were as follows:

 In Thousands                                             2005              2004
 -------------------------------------------------------------------------------

      Raw materials                                   $  7,128          $  8,562
      Work in process                                    5,358             5,142
      Finished goods                                    20,563            16,778
                                                      --------          --------
                                                      $ 33,049          $ 30,482
                                                      ========          ========

                                       38
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements



Accounts Receivable
Revenue from the sale of the Company's products is recognized as products are
shipped to customers and accounts receivable are stated at the amount billed to
customers. Interest and late charges that are billed to customers are not
included in accounts receivable. The Company does not offer the right of return
on any of its sales and the Company does not engage in consignment or
contingency sales. The Company provides an allowance for doubtful accounts which
is described in Note 3 - Certain Significant Estimates.


Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation and
amortization are computed for financial reporting purposes principally using the
straight-line method over the following estimated useful lives: buildings, 20-30
years; leasehold improvements, term of the lease; machinery and equipment, 5-15
years; and tooling, dies and molds, 2-4 years. Property, plant and equipment
consist of the following:

In Thousands                                              2005           2004
--------------------------------------------------------------------------------

     Land                                               $   2,672     $   1,853
     Buildings and leasehold improvements                  19,520        15,799
     Machinery and equipment                               33,725        34,562
                                                        ---------     ---------
     Total cost                                            55,917        52,214
     Accumulated depreciation and amortization            (35,610)      (35,716)
                                                        ---------     ---------
                                                        $  20,307     $  16,498
                                                        =========     =========

Investments
Investments at fiscal year-ends are composed of the following:

In Thousands                                              2005           2004
--------------------------------------------------------------------------------

     Marketable equity securities available for sale    $   3,172     $   1,843
     Non-marketable equity investments (cost method)           --           587
     Non-marketable equity investments (equity method)      4,614         4,016
                                                        ---------     ---------
                                                        $   7,786     $   6,446
                                                        =========     =========

Marketable Equity Securities Available for Sale. This consists of marketable
equity securities recorded at fair value with unrealized gains and losses, net
of tax, reported in accumulated other comprehensive income. Summarized financial
data for these securities at fiscal year-end were as follows:

In Thousands                                              2005           2004
--------------------------------------------------------------------------------

     Cost basis                                         $   2,984     $   1,542
     Unrealized gain                                          188           301
                                                        ---------     ---------
     Approximate fair market value                      $   3,172     $   1,843
                                                        =========     =========

Non-Marketable Equity Investments. The Company has minority equity positions in
companies strategically related to the company's business. The Company does not
have control over these companies and the accounting method employed is
dependent on the degree of influence the Company can exert on the operations.
Where the equity interest is less than 20% and the degree of influence is not
significant, the cost method of accounting is employed. Where the equity
interest is greater than 20% but not more than 50%, the equity method of
accounting is utilized. Under the equity method, the company's proportionate
share of income or losses is recorded in other expense (income) on the
consolidated statement of income. The proportionate share of income was $1,455
thousand, $1,291 thousand, and $861 thousand in 2005, 2004 and 2003,
respectively. Total cash dividends received from these equity investments
amounted to $638 thousand, $331 thousand, and $293 thousand in 2005, 2004 and
2003, respectively. The Company considers whether the fair values of any of its

                                       39
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


equity investments have declined below their carrying value whenever adverse
events or changes in circumstances indicate that recorded values may not be
recoverable. If the Company considered any such decline to be other than
temporary (based on various factors, including historical financial results,
product development activities and overall health of the investments' industry),
a write-down is recorded to estimated fair value.

Intangible Assets
The Company has various intangible assets including consulting agreements,
patents, trademarks, non-competition agreements and goodwill. Amortization is
computed using the straight-line method over the following lives: consulting
agreements, the life of the agreement; non-compete agreements, the lesser of the
term or 5 years; and patents, 5 to 8 years. Trademarks are deemed to have
indefinite useful lives and accordingly are not amortized, but evaluated on an
annual basis to determine whether any impairment in value has occurred.

Employee Stock Option Plan
The Company has two stock-based compensation plans which were approved by the
stockholders at the Company's 1997 annual meeting. Under these plans 1,800,000
common shares are reserved for issuance under an Incentive Stock Option Plan
(ISO) and 600,000 common shares for issuance under a Director Stock Option Plan
(DSO). The following table summarizes the option activity under the two plans:

<TABLE>
<CAPTION>
                                       Incentive Stock                    Director Stock
                                 Granted         Outstanding       Granted             Outstanding
                    -------------------------------------------------------------------------------
<S>                               <C>               <C>              <C>                   <C>
                    2005          250,000           713,324          2,767                 17,245
                    2004          196,600           555,374          4,126                 23,556
                    2003          174,800           606,800          2,378                 32,590
</TABLE>

The Company accounts for these plans under the recognition and measurement
principles of APB Opinion No. 25, Accounting for Stock issued to Employees, and
related interpretations. The Company grants selected executives and other key
employees' stock option awards, which vest over four years of continued
employment. The exercise price of each option, which has a five-year life, was
equal to the market price of the Company's stock on the date of grant;
therefore, no compensation expense was recognized. Options are exercisable
commencing one year from the date of issuance to the extent vested.

In anticipation of the effective date of SFAS 123R Share-Based Payment (SFAS
123R) which requires the expensing of stock options based on fair-value
assessments, the Company elected in the fourth quarter of fiscal 2005, to
accelerate the vesting of 167,800 outstanding options where the exercise price
($19.21 per share) exceeded the market price for the Company's stock. This
resulted in the immediate recognition of the pro-forma stock-based employee
compensation costs associated with these options. Accordingly, the pro-forma
compensation expense reported in the tables below reflects the additional
stock-based employee compensation expense associated with these options.

Although the Company has elected to follow APB Opinion No. 25, Statement of
Financial Accounting Standards (SFAS) No. 123 requires pro forma disclosures of
net income and earnings per share as if the Company had accounted for its
employee stock options under that statement. The fair value of each option grant
was estimated on the grant date using an option-pricing model with the following
assumptions:

<TABLE>
<CAPTION>
                                                                     2005              2004              2003
                                                                 -------------------------------------------------
<S>                                                                 <C>              <C>               <C>
Risk-free interest rates                                             3.77%             3.07%             2.90%
Dividend yields                                                      1.20%                0%                0%
Volatility factors of expected market price of common stock          53.8%               50%               46%
Weighted average expected life of the options                       4 years          5 years           5 years
</TABLE>

                                       40
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


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

<TABLE>
<CAPTION>
In Thousands Except Per Share Amounts                          2005         2004         2003
                                                            (Restated)   (Restated)
-------------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>          <C>
     Net income, as reported                                $   12,916   $    8,180   $   14,850
     Less:  Total stock-based employee compensation cost
     determined under the fair value based method, net of
     income taxes                                               (1,823)        (801)        (440)
                                                            ----------   ----------   ----------
     Pro forma net income                                   $   11,093   $    7,379   $   14,410
                                                            ==========   ==========   ==========

     Earnings per share
     Basic--as reported                                     $     0.99   $     0.63   $     1.15
                                                            ==========   ==========   ==========
     Basic--pro forma                                       $     0.85   $     0.57   $     1.11
                                                            ==========   ==========   ==========

     Diluted--as reported                                   $     0.98   $     0.62   $     1.13
                                                            ==========   ==========   ==========
     Diluted--pro forma                                     $     0.84   $     0.56   $     1.09
                                                            ==========   ==========   ==========
</TABLE>

Foreign Currency Translation
The functional currency for the foreign operations of Escalade is the local
currency. The translation of foreign currencies into U.S. dollars is performed
for balance sheet accounts using exchange rates in effect at the balance sheet
dates and for revenue and expense accounts using a weighted average exchange
rate during the year. The gains or losses resulting from the translation are
included in Accumulated Other Comprehensive Income (Loss) in the Consolidated
Statements of Stockholders' Equity and are excluded from net income. Gains or
losses resulting from foreign currency transactions are included in Other
expense (income) in the Consolidated Statements of Income and were insignificant
in fiscal years 2005, 2004, and 2003.

Cost of Products Sold
Cost of products sold are comprised of those costs directly associated with or
allocated to the products sold and include materials, labor and factory
overhead.

Other Expense (Income)
The components of Other Expense (Income) were as follows:

In Thousands                                2005          2004          2003
--------------------------------------------------------------------------------

     Amortization of intangibles         $    1,210    $    1,224    $    1,048
     Gain from European debt abatement           --            --        (1,442)
     Investment income                       (1,628)         (601)       (1,253)
     Deferred compensation costs                116           133           (32)
     Vendor charge-backs                        (80)         (255)         (480)
     Royalty income from patents               (382)         (711)         (187)
     Other                                     (151)          191          (163)
                                         ----------    ----------    ----------
                                         $     (915)   $      (19)   $   (2,509)
                                         ==========    ==========    ==========


Income Taxes
Income tax in the consolidated statement of income includes deferred income tax
provisions or benefits for all significant temporary differences in recognizing
income and expenses for financial reporting and income tax purposes.

                                       41
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Research and Development
Research and development costs are charged to expense as incurred. Research and
development costs incurred during 2005, 2004 and 2003 were approximately $1,991
thousand, $2,299 thousand, and $2,947 thousand, respectively.

Reclassifications
Certain reclassifications have been made to the 2004 and 2003 financial
statements to conform to the 2005 financial statement presentation. These
reclassifications had no effect on net earnings.

New Accounting Pronouncements
In December, 2004, the Financial Accounting Standards Board (FASB) issued SFAS
123R Stock-Based Payment (SFAS 123R), an amendment to SFAS 123 Accounting for
Stock-Based Compensation which eliminates the ability to account for share-based
compensation transactions using Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and generally requires that such
transactions be accounted for using a fair value-based method. The effective
date of this standard is fiscal years beginning after June 15, 2005. Therefore,
the effective date of this standard for the Company is January 1, 2006. SFAS
123R applies to all awards granted after the required effective date and to
awards modified, repurchased, or cancelled after that date as well as for the
unvested portion of awards existing as of the effective date. The cumulative
effect of initially applying this Statement, if any, is recognized as of the
required effective date. Beginning January 1, 2006, the Company will comply with
SFAS 123R using a modified version of prospective application. Under this
transition method, compensation cost is recognized for the portion of
outstanding awards, for which the requisite service has not yet been rendered,
based on the grant-date fair value of those awards calculated under SFAS 123 for
either recognition or pro forma disclosures. The Company will not restate
financial statements for prior periods but will continue to include pro forma
disclosures required for those periods by SFAS 123. Based on the options
outstanding as of December 31, 2005, the Company will recognize compensation
expense related to stock options of $494 thousand in 2006, $372 thousand in 2007
and $351 thousand in 2008. These amounts will increase depending on the number
and value of options issued in future years.

In November 2004, the FASB issued SFAS No. 151 Inventory Costs, an amendment of
ARB No. 43, chapter 4. SFAS No. 51 clarifies the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material. This
standard is effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. The Company does not believe the adoption of this standard
will have a material effect on the Company's financial statements.


Note 2 -- Restatement of Financial Statements


The consolidated financial statements for the years ended December 31, 2005 and
December 25, 2004 have been restated. On February 13, 2007, the Audit Committee
of the Company's Board of Directors, upon the recommendation of management and
in consultation with the Company's registered public accounting firm, decided to
restate these financial statements to correct the overstatements of the
provision for income taxes and employee benefit costs. The effect of these
errors on the financial statements for the years prior to December 25, 2004 was
determined to be immaterial and has been reflected as an adjustment to the 2004
beginning of the year retained earnings balance. The errors causing the
restatements were the result of computational errors in calculating the tax
provision and a misapplication of the Company's year end accrual of its 401(K)
plan matching contribution.

The following tables set forth the effects of the restatement on the Company's
previously reported statements of income for the years ended December 31, 2005
and December 25, 2004:


                                       42
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>
(Amounts in thousands, except per share amounts)                       Year ended December 31, 2005
                                                     ---------------------------------------------------------------
                                                        As Previously                                        As
                                                           Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                       <C>                   <C>
Selling, administrative and general expenses               36,444                       (43)               36,401
Operating income                                           19,783                        43                19,826
Income before income taxes                                 19,216                        43                19,259
Provision for income taxes                                  7,274                      (931)                6,343
Net income                                                 11,942                       974                12,916
Basic earnings per share                                    $0.91                     $0.08                 $0.99
Diluted earnings per share                                  $0.90                     $0.08                 $0.98


(Amounts in thousands, except per share amounts)                       Year ended December 25, 2004
                                                     ---------------------------------------------------------------
                                                        As Previously                                        As
                                                           Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
Selling, administrative and general expenses               40,045                      (112)               39,933
Operating income                                           15,570                       112                15,682
Income before income taxes                                 13,817                       112                13,929
Provision for income taxes                                  5,990                      (241)                5,749
Net income                                                  7,827                       353                 8,180
Basic earnings per share                                    $0.60                     $0.03                 $0.63

Diluted earnings per share                                  $0.59                     $0.03                 $0.62



The following tables set forth the effect of the restatement on the consolidated
balance sheet as of December 31, 2005 and December 25, 2004:

(Amounts in thousands)                                                   As of December 31, 2005
                                                     ---------------------------------------------------------------
                                                        As Previously                                        As
                                                           Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
Deferred tax asset (current)                                1,818                     (436)                 1,382
Total current assets                                       71,187                     (436)                70,751
Total assets                                              125,296                     (436)               124,860
Accrued liabilities (current)                              24,429                     (701)                23,728
Income tax payable                                          1,854                   (1,765)                    89
Total current liabilities                                  30,867                   (2,466)                28,401
Total liabilities                                          50,703                   (2,466)                48,237
Retained earnings                                          60,696                    2,030                 62,726
Total stockholder's equity                                 74,593                    2,030                 76,623
Total liabilities & stockholder's equity                  125,296                     (436)               124,860
</TABLE>

                                       43
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>

(Amounts in thousands)                                                    As of December 25, 2004
                                                     ---------------------------------------------------------------
                                                        As Previously                                        As
                                                           Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                        <C>                  <C>
Deferred tax asset (current)                                2,496                     (434)                 2,062
Income tax receivable                                          --                      690                    690
Total current assets                                       83,402                      256                 83,658
Total assets                                              134,713                      256                134,969

Accrued liabilities (current)                              27,438                     (658)                26,780

Income tax payable                                            142                     (142)                     0

Total current liabilities                                  47,606                     (800)                46,806
Total liabilities                                          64,735                     (800)                63,935

Retained earnings                                          52,394                    1,056                 53,450
Total stockholder's equity                                 69,978                     1056                 71,034
Total liabilities & stockholder's equity                  134,713                      256                134,969


The restatement had no effect on net cash provided by operating activities for
the years ended December 31, 2005 and December 25, 2004. The following tables
set forth the effect on the individual line items within operating activites in
the consolidated statement of cash flows for the years ended December 31, 2005
and December 25, 2004:
<CAPTION>

                                                                   For the year ended December 31, 2005

                                                        As Previously                                        As
(Amounts of thousands)                                     Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                        <C>                 <C>
Net Income                                                11,942                      974                12,916
Changes in:
     Deferred income tax                                    (466)                       2                  (464)
     Income tax payable                                    1,426                     (933)                  493
     Account payable and accrued expenses                 (5,899)                      43                (5,942)
<CAPTION>

                                                                   For the year ended December 25, 2004

                                                        As Previously                                        As
(Amounts of thousands)                                     Reported              Adjustments              Restated
--------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                        <C>                   <C>
Net Income                                                 7,827                      353                  8,180
Changes in:
     Deferred income tax                                  (1,022)                     219                   (803)
     Income tax payable                                     (205)                    (460)                  (665)
     Account payable and accrued expenses                  3,143                     (112)                 3,031
</TABLE>


Note 3 -- Certain Significant Estimates

The preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities; the
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements; and the reported amounts of revenues and expenses during
the reporting period. These estimates and judgments are evaluated on an ongoing
basis and are based on experience; current and expected future conditions; third
party evaluations; and various other assumptions believed reasonable under the
circumstances. The results of these estimates form the basis for making
judgments about the carrying values of assets and liabilities as well as

                                       44
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


identifying and assessing the accounting treatment with respect to commitments
and liabilities. Actual results may differ from the estimates and assumptions
used in the financial statements and related notes.

Listed below are certain significant estimates and assumptions related to the
preparation of the consolidated financial statements:

Product Warranty
The Company provides limited warranties on certain of its products, for varying
periods. Generally, the warranty periods range from 90 days to one year.
However, some products carry extended warranties of seven-year, ten-year, and
lifetime warranties. The Company records an accrued liability and expense for
estimated future warranty claims based upon historical experience and
management's estimate of the level of future claims. Changes in the estimated
amounts recognized in prior years are recorded as an adjustment to the accrued
liability and expense in the current year. A reconciliation of the liability is
as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $  1,298       $  1,634        $  1,324
     Additions                             472          1,294           1,447
     Deductions                           (727)        (1,630)         (1,137)
                                      --------       --------        --------
     Ending balance                   $  1,043       $  1,298        $  1,634
                                      ========       ========        ========

Inventory Valuation Reserves
The Company evaluates inventory for obsolescence and excess quantities based on
demand forecasts based on specified time frames; usually one year. The demand
forecast is based on historical usage, sales forecasts and current as well as
anticipated market conditions. All amounts in excess of the demand forecast are
deemed to be excess or obsolete and a reserve is established based on the
anticipated net realizable value. A reconciliation of the reserve is as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $  6,223       $  5,465        $  1,182
     Additions                             763          2,810           5,529
     Deductions                         (3,119)        (2,052)         (1,246)
                                      --------       --------        --------
     Ending balance                   $  3,867       $  6,223        $  5,465
                                      ========       ========        ========

Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based upon a review of
outstanding receivables, historical collection information and existing economic
conditions. Accounts receivable are ordinarily due between 30 and 60 days after
the issuance of the invoice. Accounts are considered delinquent when more than
90 days past due. Delinquent receivables are reserved or written off based on
individual credit evaluation and specific circumstances of the customer. A
reconciliation of the allowance is as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $  2,510       $  1,991        $    550
     Additions                             561          1,523           2,196
     Deductions                         (1,527)        (1,004)           (755)
                                      --------       --------        --------
     Ending balance                   $  1,544       $  2,510        $  1,991
                                      ========       ========        ========

Advertising Subsidies
The Company enters agreements with certain retailers to pay for direct
advertising programs and/or provide in-store display units. These agreements are
not based on retailer purchase volumes and do not obligate the retailer to
continue carrying the Company's products. The Company determines the value of

                                       45
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


the advertising services based on its own research and history of providing such
services. The Company expenses these costs in the period in which they are
incurred as a selling expense. A reconciliation of the liability is as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $    725       $    779        $    614
     Additions                           1,579          2,885           1,973
     Deductions                         (1,313)        (2,939)         (1,808)
                                      --------       --------        --------
     Ending balance                   $    991       $    725        $    779
                                      ========       ========        ========

CO-OP Advertising
The Company offers co-operative advertising allowances to certain retailers to
encourage product promotions. These agreements are typically based on a
percentage of retailer purchases up to a maximum allowance and the Company is
never directly involved with the media provider. The Company accrues the
estimated cost of these programs based on the sales volume of the retailer and
historical trends. As costs are accrued they are recorded as a reduction in
sales. A reconciliation of the liability is as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $  3,545       $  2,782        $  1,202
     Additions                           4,081          3,238           2,766
     Deductions                         (4,832)        (2,475)         (1,186)
                                      --------       --------        --------
     Ending balance                   $  2,794       $  3,545        $  2,782
                                      ========       ========        ========

Volume Rebates
The Company has various rebate programs with its retailers that are based on
purchase volume. Typically these programs are based on achieving specified sales
volumes and the rebate is calculated as a percentage of purchases. Based on the
terms of the agreement, purchase levels and historical trends the Company
accrues the cost of these programs and records the same as a reduction in sales.
A reconciliation of the liability is as follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $  3,419       $  2,435        $  1,836
     Additions                           2,150          5,400           4,707
     Deductions                         (4,066)        (4,416)         (4,108)
                                      --------       --------        --------
     Ending balance                   $  1,503       $  3,419        $  2,435
                                      ========       ========        ========

Catalog Allowances
A number of large office supply dealers operate through catalogs distributed to
businesses throughout the country. Product content is decided by the dealer each
time a new catalog is issued; typically once a year. Catalog allowances are
required by the dealer as an inducement to include the Company's products. The
allowance is based on a fixed cost per page and/or a percentage of purchases by
the dealer. The fixed portion of the allowance is often paid when the catalog is
distributed and is recognized in the period incurred and the variable portion is
accrued based on dealer purchases and historical trends. Catalog allowances are
recorded as a reduction in sales. A reconciliation of the liability is as
follows:

In Thousands                            2005           2004            2003
--------------------------------------------------------------------------------

     Beginning balance                $    761       $  1,027        $  1,547
     Additions                           1,637          1,380           2,043
     Deductions                         (1,358)        (1,646)         (2,563)
                                      --------       --------        --------
     Ending balance                   $  1,040       $    761        $  1,027
                                      ========       ========        ========

                                       46
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 4 -- Accrued Liabilities

Accrued liabilities consist of the following:

In Thousands                                            2005             2004
                                                     (Restated)       (Restated)
--------------------------------------------------------------------------------


     Employee compensation                             $   9,041       $   9,589

     Customer related allowances and accruals             10,379          10,465
     Other accrued items                                   4,308           6,726
                                                       ---------       ---------

                                                       $  23,728       $  26,780
                                                       =========       =========



Note 5 -- Operating Leases

The Company leases warehouse and office space under non-cancelable operating
leases that expire at various dates through 2011. Terms of the leases, including
renewals, taxes, utilities, and maintenance, vary by lease. Total rental expense
included in the results of operations relating to non-cancelable leases with
terms of more than one year was $1,275 thousand, $1,998 thousand, and $2,232
thousand in 2005, 2004, and 2003, respectively.

At December 31, 2005, minimum rental payments under non-cancelable leases with
terms of more than one year were as follows:

                    In Thousands                          Amount
                    -----------------------------------------------

                    2006                                  $   1,240
                    2007                                        610
                    2008                                        347
                    2009                                        102
                    2010                                        100
                    2011 and beyond                              25
                                                          ---------
                                                          $   2,424
                                                          =========


Note 6 -- Restructuring Costs

In 2004 the Company initiated a facility consolidation plan and involuntary
employee terminations in the office product segment in order to reduce costs and
increase the competitiveness of the Company. Under this plan the Company closed
two facilities in North America and reduced its workforce by approximately 100
individuals in North America and 20 in Europe. Restructuring reserves, before
taxes, were composed of the following:

<TABLE>
<CAPTION>
                                        Severance and     Facility closure
In Thousands                            benefit costs          costs               Total
-----------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>                 <C>
     Restructuring charges incurred   $          1,656    $            710    $          2,366
     Non-cash charges                               --                (540)               (540)
     Cash payments                                (378)                 --                (378)
                                      ----------------    ----------------    ----------------
     Balance at December 25, 2004                1,278                 170               1,448
     Non-cash benefit                             (631)                 --                (631)
     Cash payments                                (448)               (170)               (618)
                                      ----------------    ----------------    ----------------
     Balance at December 31, 2005     $            199    $             --    $            199
                                      ================    ================    ================
</TABLE>
                                       47
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


In December 2005, the Company settled two employment claims relating to the
restructuring activities initiated in 2004. As a result, the Company reduced the
restructuring liability by $631.

Note 7 -- Acquired Intangible Assets and Goodwill

The carrying basis and accumulated amortization of recognized intangible assets
are summarized in the following table:

<TABLE>
<CAPTION>
                                         2005                          2004
                              ---------------------------------------------------------
                                 Gross                         Gross
                                Carrying     Accumulated      Carrying     Accumulated
In Thousands                     Amount      Amortization      Amount      Amortization
---------------------------------------------------------------------------------------
<S>                           <C>            <C>            <C>            <C>
     Patents                  $      6,078   $      2,982   $      6,078   $      2,158
     Consulting agreements             876            874            810            760
     Non-compete agreements          1,812          1,597          1,800          1,455
     Customer list                     622            360            630            271
     Trademarks                      3,180            121          3,466            121
                              ------------   ------------   ------------   ------------
                              $     12,568   $      5,934   $     12,784   $      4,765
                              ============   ============   ============   ============
</TABLE>

Amortization expense was $1,169 thousand, $1,324 thousand and $1,098 thousand
for 2005, 2004 and 2003, respectively.

Estimated amortization expense for each reporting segment for each of the
following four years is:

In Thousands                     2006         2007         2008         2009
-------------------------------------------------------------------------------

     Sporting Goods           $      949   $      885   $      852   $      652
     Office Products                 118          118           --           --
                              ----------   ----------   ----------   ----------
                              $    1,067   $    1,003   $      852   $      652
                              ==========   ==========   ==========   ==========

The Company evaluates the carrying value of its long-lived and intangible assets
on an annual basis, or whenever events and circumstances indicate that the
carrying value of the assets may be impaired. The Company determines impairment
based on the asset's ability to generate cash flow greater than the carrying
value of the asset, using a discounted probability-weighted analysis. If
projected discounted cash flows are less than the carrying value of the asset,
the asset is adjusted to its fair value.

The changes in the carrying amount of goodwill were:

<TABLE>
<CAPTION>
In Thousands                                  Sporting Goods   Office Products      Total
--------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>
     Balance at December 27, 2003              $      7,151     $     11,626    $     18,777
     Impairment charge                                   --           (1,312)         (1,312)
     Foreign currency translation adjustment             --              423             423
                                               ------------     ------------    ------------
     Balance at December 25, 2004                     7,151           10,737          17,888
     Foreign currency translation adjustment             --             (731)           (731)
                                               ------------     ------------    ------------
     Balance at December 31, 2005              $      7,151     $     10,006    $     17,157
                                               ============     ============    ============
</TABLE>

                                       48
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 8 -- Borrowings

Short-Term Debt
Short-term debt at fiscal year-ends was as follows:

In Thousands                                        2005                2004
--------------------------------------------------------------------------------

     Bank One Revolving line of credit           $       --          $   11,638
                                                 ==========          ==========

The Company's directly owned subsidiary, Indian-Martin, Inc., has a revolving
line of credit under which it can borrow funds from time to time to purchase
eligible accounts receivable from the company's operating subsidiaries which
accounts are and will be pledged to secure those borrowings. At December 31,
2005, this line of credit aggregated $30 million, of which there were no
borrowings. At the company's option, borrowings can be made under the bank's
prime interest rate minus 1.25% or LIBOR plus 1.38%. During 2005 and 2004,
weighted average daily borrowings under this line were $6,843 thousand and
$12,423 thousand with effective interest rates of 5.9% and 2.9%, respectively.

Long-Term Debt
Long-term debt at fiscal year-ends was as follows:

<TABLE>
<CAPTION>
In Thousands                                                                             2005        2004
-----------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>         <C>
     Revolving term loan of $35,000, the amount available under this revolving
         term loan is reduced by $7,000 annually starting May 19, 2006, with the
         balance due May 19, 2008. At December 31, 2005, $10,000 had an interest
         rate of London Interbank Offered Rate (LIBOR) plus 1.00%, or 5.40%, and
         $5,787 had an interest rate of prime minus .75% or 6.50%, unsecured           $ 15,787    $ 10,000

     Revolving term loan of Euro 2,500 (approximately 2,961 US Dollars), the balance
         is due July 15, 2006 and bears an interest rate of EURIBOR plus 2.00%, or
         3.85% at December 31, 2005, unsecured                                              711       2,842

     Mortgage payable (Wabash, Indiana Adjustable Rate Economic Development
         Revenue Refunding Bonds), annual installments are optional, interest
         varies with short-term rates and is adjustable weekly based on market
         conditions, maximum rate is 10.00%, rate at December 31, 2005 is 1.55%,
         due September 2028, secured by plant facility, machinery and equipment,
         and a stand-by letter of
         credit                                                                           2,700       2,700

     Contract payable for Accudart acquisition, due $167 annually beginning
         February 1, 2003 through February 1, 2006, non-interest bearing,
         secured by a stand-by
         letter of credit                                                                   167         333

     Contract payable for acquisition of equity interest in Sweden Table Tennis,
         AB, unsecured and non-interest bearing. Annual payments of $188 due
         March of
         each year                                                                          188         375
                                                                                       --------    --------
                                                                                         19,553      16,250
     Portion classified as current                                                       (1,066)       (354)
                                                                                       --------    --------
                                                                                       $ 18,487    $ 15,896
                                                                                       ========    ========
</TABLE>

Maturities of long-term debt outstanding at December 31, 2005 are as follows:
$1,066 thousand in 2006; $15,787 thousand in 2008; and $2,700 thousand in 2010
or thereafter.

                                       49
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


The mortgages payable and term loan agreements contain certain restrictive
covenants, of which the more significant include maintenance of specified net
worth and maintenance of specified ranges of debt service and leverage ratios.

Interest Rate Swap Agreement
In May 2003, the Company entered into an interest rate swap agreement having a
notional amount of $10 million and a maturity date of May 19, 2008. This swap
agreement is designated as a cash flow hedge, and effectively converts a portion
of the Company's variable rate debt to fixed rate debt with a weighted average
interest rate of 5.08%. The Company entered into this interest rate swap
agreement to manage interest costs and cash flows associated with variable
interest rates, primarily short-term changes in LIBOR; changes in the cash flows
of the interest rate swap offset changes in the interest payments on the covered
portion of the Company's revolving debt. In connection with this interest rate
swap agreement the Company recorded an after tax charge of $368 thousand in
Other Comprehensive Income (OCI). There was no impact on net income due to
ineffectiveness. The Company's exposure to credit loss on its interest rate swap
agreement in the event of non-performance by the counterparty is believed to be
remote due to the Company's requirement that the counterparty have a strong
credit rating.


Note 9 -- Earnings Per Share

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

<TABLE>
<CAPTION>
In Thousands                                                             2005         2004         2003
---------------------------------------------------------------------------------------------------------
<S>                                                                      <C>          <C>          <C>
     Weighted average common shares outstanding                          13,055       12,980       12,968
     Dilutive effect of stock options                                       153          247          248
                                                                     ----------   ----------   ----------
     Weighted average common shares outstanding, assuming
        dilution                                                         13,208       13,227       13,216
                                                                     ==========   ==========   ==========

     Number of anti-dilutive stock options                                  424          181           --
</TABLE>

Weighted average common shares outstanding, assuming dilution, includes the
incremental shares that would be issued upon the assumed exercise of stock
options outstanding.


Note 10 -- Employee Benefit Plans

The Company has an employee profit-sharing salary reduction plan, pursuant to
the provisions of Section 401(k) of the Internal Revenue Code, for non-union
employees. The Company's contribution is a matching percentage of the employee
contribution as determined by the Board of Directors annually. The Company's
expense for the plan was $490 thousand, $583 thousand, and $487 thousand for
2005, 2004 and 2003, respectively.


Note 11 -- Deferred Compensation Plan

In October 1985, the Board of Directors approved the adoption of a Contributory
Deferred Compensation Plan pursuant to which some recipients of incentive
compensation could elect to defer receipt thereof. For each dollar of deferred
compensation, the Company provided a 75% matching amount. Amounts deferred earn
interest at the rate of 9%. Such amounts are not intended to be recognized for
tax purposes until receipt. All deferrals allowed under this plan have been

                                       50
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


made. Participants have no vested rights in deferred amounts credited to their
accounts and are general creditors of the Company until such amounts are
actually paid.


Note 12 -- Stock Options

The Company has two stock-based compensation plans which are described in detail
in Note 1. Stock option transactions under these plans are summarized as
follows:

<TABLE>
<CAPTION>
                                              2005                          2004                          2003
                                 -------------------------------------------------------------------------------------------
                                                     Option                       Option                        Option
                                      Shares         Price          Shares        Price           Shares        Price
                                 -------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>           <C>             <C>           <C>
Outstanding at beginning                            $6.99 to                     $2.42 to                      $2.42 to
   of year                             578,930       19.21           639,390       10.68           596,750       9.03

                                                   $13.40 to                     $17.24 to                     $6.99 to
Issued during year                     252,767       13.88           200,726       19.21           177,178       10.68

Canceled or expired                    (20,900)                      (35,050)                      (13,900)
                                                    $2.42 to                     $2.42 to                      $2.42 to
Exercised during year                  (80,228)       6.99          (226,136)      10.68          (120,638)      9.03
                                     ---------                     ---------                     ---------
                                                    $6.99 to                     $6.99 to                      $2.42 to
Outstanding at end of year             730,569       19.21           578,930       19.21           639,390       10.68
                                     =========                     =========                     =========

Exercisable at end of year             376,502                       192,354                       256,062
                                     =========                     =========                     =========
Weighted-average fair value
   of options granted during
   the year                          $    5.61                     $    9.99                     $    3.79
                                     =========                     =========                     =========

The following table summarizes information about fixed stock options outstanding
at December 31, 2005:
<CAPTION>

                                           Options Outstanding                                 Options Exercisable
                      ------------------------------------------------------------------------------------------------------
                        Number of      Weighted-Average                                  Number of
     Range of            Shares           Remaining            Weighted-Average           Shares       Weighted-Average
 Exercise Prices                       Contractual Life         Exercise Price                          Exercise Price
----------------------------------------------------------------------------------------------------------------------------
<S>                      <C>               <C>                      <C>                   <C>               <C>
 $ 3.60 - $ 3.80          85,680           0.2 years                $ 3.62                 85,680           $ 3.62
 $ 6.99 - $10.68         221,196           1.7 years                $ 7.90                118,896           $ 8.18
 $13.40 - $19.21         423,693           3.7 years                $15.74                171,926           $19.16
                        --------                                                         --------
                         730,569                                                          376,502
                        ========                                                         ========
</TABLE>

Incentive stock options are generally exercisable at the rate of 25% over each
of the four years following the date of grant.

During fiscal year 2005 the Company issued 2,767 Director Stock Options at an
option price of $13.88. These options are exercisable after April 26, 2006 and
have an expiration date of April 27, 2009.

                                       51
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 13 -- Provision For Taxes

Income before taxes and the provision for taxes consisted of the following:

In Thousands                                 2005         2004          2003
                                          (Restated)   (Restated)
-------------------------------------------------------------------------------

     Income (loss) before taxes:
          United States of America (USA)  $   16,066   $   14,152    $   19,720
          Non USA                              3,193         (223)        1,503
                                          ----------   ----------    ----------
                                          $   19,259   $   13,929    $   21,223
                                          ==========   ==========    ==========
     Provision for taxes:
          Current
              Federal                     $    4,580   $    4,688    $    5,802
              State                              510          209         1,073
              International                      840          283           539
                                          ----------   ----------    ----------
                                               5,930        5,180         7,414
                                          ----------   ----------    ----------
          Deferred
              Federal                            334          510          (845)
              State                               79           59          (196)
                                          ----------   ----------    ----------
                                                 413          569        (1,041)
                                          ----------   ----------    ----------
                                          $    6,343   $    5,749    $    6,373
                                          ==========   ==========    ==========

The Company has not provided for USA deferred taxes or foreign withholding taxes
on undistributed earnings for non-USA subsidiaries where the company intends to
reinvest these earnings indefinitely in operations outside the USA.

The provision for income taxes was computed based on financial statement income.
A reconciliation of the provision for income taxes to the amount computed using
the statutory rate follows:

<TABLE>
<CAPTION>
In Thousands                                                             2005          2004          2003
                                                                      (Restated)    (Restated)
------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>           <C>           <C>
Income tax at statutory rate                                          $    6,548    $    4,736    $    7,216
Increase (decrease) in income tax resulting from
     Permanent differences (goodwill impairment, investment income,
       dividends, and captive insurance earnings)                           (348)          615            (6)
     State tax expense, net of federal effect                                386           171           578
     Effect of foreign tax rates                                            (229)          359          (905)
     Research credit                                                        (121)          (69)         (111)
     Internal Revenue Service audit settlement                               278            --            --
     Other                                                                  (171)          (63)         (399)
                                                                      ----------    ----------    ----------
Recorded provision for income taxes                                   $    6,343    $    5,749    $    6,373
                                                                      ==========    ==========    ==========
</TABLE>

                                       52
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


The components of the net deferred tax asset are as follows:

<TABLE>
<CAPTION>

In Thousands                                                       2005          2004
                                                                (Restated)    (Restated)
----------------------------------------------------------------------------------------
<S>                                                             <C>           <C>

Assets
     Employee benefits                                          $      559    $      562
     Valuation reserves                                              1,250         1,927
     Deferred compensation                                             501           456
     Depreciation                                                      576           130
     Unrealized loss on interest rate swap agreement                    --           135
     Net operating loss carry forward                                  557           481
                                                                ----------    ----------
         Total assets                                                3,443         3,691
                                                                ----------    ----------
Liabilities
     Unrealized gain on sale of securities available-for-sale          (85)         (120)
     Unrealized equity investment income                            (1,156)         (517)
     Unrealized gain on interest rate swap agreement                   (62)           --
     Goodwill and intangible assets                                   (395)         (202)
                                                                ----------    ----------
         Total liabilities                                          (1,698)         (839)
                                                                ----------    ----------
Valuation Allowance
      Beginning balance                                                  0            --
                                                                ==========    ==========
      (Increase) decrease during period                               (278)           --
                                                                ==========
      Ending balance                                                  (278)           --
                                                                ----------    ----------
                                                                $    1,467    $    2,852
                                                                ==========    ==========
</TABLE>

Deferred tax assets are included in the consolidation balance sheet as follows:


 In Thousands                                             2005          2004
                                                       (Restated)    (Restated)
--------------------------------------------------------------------------------

    Deferred income tax asset - current                $    1,382    $    2,062
    Deferred income tax asset - long-term                      85           790
                                                       ----------    ----------
                                                       $    1,467    $    2,852
                                                       ==========    ==========

The Company has a US federal unused net operating loss carry-forward of
approximately $350 thousand and state unused net operating losses of
approximately $3,619 thousand of which an estimated $3,269 thousand has been
reserved as the Company does not expect to be able to utilize it. All operating
loss carry-forwards expire in various amounts through 2018. The Company also has
foreign net operating loss carry-forwards of approximately Euro 532 thousand
(approximately 630 thousand US Dollars) which have no expiration date.

                                       53
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 14 - Other Comprehensive Income

The components of other comprehensive income and related tax effects were as
follows:

<TABLE>
<CAPTION>
In Thousands                                                                 2005          2004         2003
--------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>           <C>          <C>
     Change in net unrealized value of available-from-sale investments
     net of tax of $52, $(68), and $(69), in 2005, 2004 and 2003,
     respectively                                                        $      (78)   $      102   $      103
     Change in foreign currency translation adjustment, net of tax of
     $2,592, $(1,178), and $(1,899), in 2005, 2004 and 2003,
     respectively                                                            (3,893)        1,770        2,853
     Change in unrealized gain (loss) on interest rate swap agreement
     net of tax of $(245), $(289), and $456, in 2005, 2004 and 2003,
     respectively                                                               368           434         (685)
                                                                         ----------    ----------   ----------
                                                                         $   (3,603)   $    2,306   $    2,271
                                                                         ==========    ==========   ==========

The components of accumulated other comprehensive income, net of tax, were as
follows:
<CAPTION>

In Thousands                                                           2005         2004          2003
---------------------------------------------------------------------------------------------------------
<S>                                                                 <C>          <C>           <C>
     Accumulated gain on available for sale investments             $      103   $      181    $       79
     Foreign currency translation adjustment                               730        4,623         2,853
     Unrealized gain (loss) on interest rate swap agreement                117         (251)         (685)
                                                                    ----------   ----------    ----------
                                                                    $      950   $    4,553    $    2,247
                                                                    ==========   ==========    ==========
</TABLE>

                                       54
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Note 15 -- Operating Segment and Geographic Information

The following table presents certain operating segment information.

<TABLE>
<CAPTION>
In Thousands                                                  2005          2004          2003
                                                           (Restated)    (Restated)
------------------------------------------------------------------------------------------------
<S>                                                          <C>           <C>           <C>
Sporting Goods
Net revenue                                                  120,996       141,644       134,750
Operating income                                              13,283        17,926        16,507
Interest expense                                                 874           963           906
Provision for taxes                                            4,154         6,045         5,467
Net income                                                     7,386        10,747         9,720
Identifiable assets                                           67,641        63,458        64,627
Non-marketable equity investments (equity method)                 --            --            --
Depreciation & amortization                                    2,657         3,001         3,314
Capital expenditures                                           7,403         1,109         1,363

Office Products

Net revenue                                                   64,621        76,040        81,518

Operating income                                               8,760           573         5,506
Interest expense                                                 786         1,308         1,433
Provision for taxes                                            2,432          (351)        1,490
Net income                                                     5,683        (1,634)        4,223
Identifiable assets                                           44,319        57,983        60,168
Non-marketable equity investments (equity method)                662            --            --
Depreciation & amortization                                    2,078         3,327         1,987
Capital expenditures                                             992         1,301         1,201

All Other
Net revenue                                                       --            --            --
Operating income                                              (2,217)       (2,817)       (1,017)
Interest expense                                                (178)         (499)          (57)
Provision for taxes                                             (243)           55          (584)
Net income                                                      (153)         (933)          907
Identifiable assets                                           12,900        13,528         9,642

Non-marketable equity investments (equity method)              3,952         2,015         3,001

Depreciation & amortization                                       --            --            --
Capital expenditures                                              --            --            --

Total

Net Revenue                                                  185,617       217,684       216,268

Operating income                                              19,826        15,682        20,996
Interest expense                                               1,482         1,772         2,282
Provision for taxes                                            6,343         5,749         6,373
Net income                                                    12,916         8,180        14,850
Identifiable assets                                          124,860       134,969       134,437
Non-marketable equity investments (equity method)              4,614         4,016         3,001

Depreciation & amortization                                    4,735         5,016         5,301

Capital expenditures                                           8,395         2,410         2,564
</TABLE>

Each operating segment is individually managed and has separate financial
results that are reviewed by the Company's chief operating decision-maker. Each
segment contains closely related products that are unique to the particular
segment. There were no changes to the composition of segments in 2005. The
accounting policies of the reportable segments are the same as those described
in the summary of significant accounting policies.

                                       55
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


The sporting goods segment consists of home entertainment products such as pool
tables and accessories; table tennis tables and accessories; soccer and hockey
tables; archery equipment and accessories; basketball goals; and fitness, arcade
and darting products. Customers include retailers and wholesalers located
throughout the United States and Europe.

The office product segment consists of office machinery used in the office and
graphic arts environment. Products include data shredders; folding machines; and
paper trimmers and cutters. Customers include large office product retailers,
office machine dealers, and office supply catalogs.

The All Other segment consists of general and administrative expenses not
specifically related to the operating business segments and includes investment
income from equity investments.

Interest expense is allocated to operating segments based on working capital
usage and the provision for taxes is allocated based on a combined federal and
state statutory rate of 36% adjusted for actual taxes on foreign income.
Permanent tax adjustments and timing differences are included in the All Other
segment.

Identifiable assets are principally those assets used in each segment. The
assets in the All Other segment are principally cash and cash equivalents;
deferred tax assets; marketable equity securities; investments; and the cash
surrender value of life insurance.

The company has one customer in the sporting goods segment who accounted for
22%, 27% and 24% of consolidated total revenues in 2005, 2004 and 2003,
respectively. No other customers accounted for 10% or more of consolidated
revenues. Within the sporting goods segment this customer accounted for 33%, 42%
and 38% of total revenues.

As of December 31, 2005, approximately 109 employees of the Company's labor
force were covered by a collective bargaining agreement that expires April 27,
2006. Management acknowledges that differences between Company offers and union
demands during negotiations can occur, but has no reason to expect such
differences to result in protracted conflicts.

Raw materials for Escalade's various product lines consist of wood,
particleboard, slate, standard grades of steel, steel tubing, plastic, vinyl,
steel cables, fiberglass and packaging. Escalade relies upon suppliers in Europe
and Brazil for its requirement of billiard balls and slate utilized in the
production of home pool tables and upon various Asian manufacturers for certain
of its table tennis needs and other items. Escalade sources some of its game
table product line in China.

Revenues by geographic region/country were as follows:

In Thousands                               2005          2004          2003
--------------------------------------------------------------------------------


     North America                      $  153,687    $  177,340    $  182,416

     Europe                                 25,317        34,582        28,012
     Other                                   6,613         5,762         5,840
                                        ----------    ----------    ----------

                                        $  185,617    $  217,684    $  216,268
                                        ==========    ==========    ==========


Revenues are attributed to country based on location of customer and are for
continuing operations.

                                       56
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Identified assets by geographic region/country were as follows:

In Thousands                                         2005           2004
                                                  (Restated)     (Restated)
--------------------------------------------------------------------------------

     North America                                $  100,908     $  101,422
     Europe                                           23,952         33,547
                                                  ----------     ----------
                                                  $  124,860     $  134,969
                                                  ==========     ==========



Note 16 -- Summary of Quarterly Results

<TABLE>
<CAPTION>

In thousands, except per share data (unaudited)            March 19        July 9        October 1     December 31
                                                          (Restated)     (Restated)     (Restated)     (Restated)
------------------------------------------------------------------------------------------------------------------

<S>                                                      <C>            <C>            <C>            <C>
2005
      Net sales                                          $     29,782   $     47,551   $     63,557   $     42,425
      Operating income                                          1,748          3,899          8,474          5,705
      Net income                                                1,238          2,431          5,864          3,383
      Basic earnings per share                           $       0.09   $       0.19   $       0.45   $       0.26



In thousands, except per share data (unaudited)            March 20        July 10       October 2     December 25
                                                          (Restated)     (Restated)     (Restated)     (Restated)
------------------------------------------------------------------------------------------------------------------


2004
      Net sales                                          $     34,060   $     52,516   $     75,203   $     55,905
      Operating income                                          1,492          3,303          6,807          4,080

      Net income                                                  621          2,016          4,465          1,078

      Basic earnings per share                           $       0.05   $       0.15   $       0.34   $       0.08
</TABLE>


Note 17 -- Acquisitions

All of the Company's acquisitions have been accounted for using the purchase
method of accounting.

2005

On February 28, 2005, Escalade Sports acquired substantially all of the assets
of ChildLife, Inc., a manufacturer of premium residential play systems. The
total purchase price was $3,272 thousand and included inventory, a consulting
agreement, machinery and tooling, customer lists, and a non-compete agreement.
The customer lists and non-compete agreement are being amortized over a five
year period, and the consulting agreement is being amortized over a one year
period.

2004

On October 25, 2004, Escalade Sports acquired substantially all of the assets of
Lemont Industries, Inc., a manufacturer of tractor wheel weights. The total
purchase price was $632 thousand in cash. The assets acquired included
machinery, tooling, inventory and a non-compete agreement. The manufacturing
process utilizes the same blow-molding technology currently employed by the
Company in the production of vinyl weight sets and will increase the
productivity of that product group through higher production levels.

                                       57
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


2003

On December 30, 2002 the Company increased its ownership interest to 51.2% of
the outstanding shares of Schleicher & Co. International, AG ("Schleicher"), a
manufacturer and distributor of data shredding equipment headquartered in
Germany and publicly traded on the German Stock Exchange. Escalade then
initiated and successfully completed in April 2003, a tender offer for all the
remaining shares culminating in 100% ownership. The acquisition of Schleicher
increased the Company's product offering in the office product industry and
expanded the Company's presence into Europe.

The value assigned to the Schleicher acquisition is the sum of the per share
amount paid to shareholders and amounts expended that directly relate to the
tender offer agreement. The per share price was based on the market price of the
Schleicher shares on the German stock exchange and valuation studies ordered by
the German securities regulators. The total price paid exceeded the fair market
value of Schleicher's net assets, resulting in goodwill of $4,566 thousand. No
portion of the recorded goodwill is deductible for income tax purposes.

The estimated fair values of the assets acquired and liabilities assumed as of
December 30, 2002 are as follows:

In thousands                                                           Amount
--------------------------------------------------------------------------------

     Current assets (net of cash acquired)                           $   21,211
     Property, plant and equipment                                        5,679
     Other assets                                                         2,043
     Goodwill                                                             4,566
     Investments                                                            262
                                                                     ----------
     Total assets acquired                                               33,761

     Current liabilities                                                (20,856)
     Long-term debt                                                        (424)
                                                                     ----------
     Total liabilities assumed                                          (21,280)
                                                                     ----------
     Net assets acquired                                             $   12,481
                                                                     ==========

In June 2003 the company acquired substantially all of the assets of North
American Archery Group, LLC (NAAG), a manufacturer and distributor of archery
equipment and accessories located in Gainesville, Florida. NAAG had been
operating under bankruptcy court protection since April 2002. This acquisition
increased the Company's distribution network for archery products, provided
access to significant brand names such as Fred Bear(R) and added archery
production capability.

The estimated fair values of the assets acquired and liabilities assumed as of
June 19, 2003 are as follows:

In thousands                                                           Amount
--------------------------------------------------------------------------------

     Current assets (net of cash acquired)                           $    7,427
     Property, plant and equipment                                        3,500
     Other assets                                                           484
                                                                     ----------
     Total assets acquired                                               11,411

     Current liabilities                                                 (1,556)
                                                                     ----------
     Net assets acquired                                             $    9,855
                                                                     ==========

The results of operations from the NAAG acquisition have been included in the
consolidated operating results for 2003 subsequent to the date of acquisition.

The following unaudited pro forma financial information presents results as if
the two acquisitions described above had occurred at the beginning of the
respective periods:

                                       58
<PAGE>

                     ESCALADE, INCORPORATED AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


Unaudited; in thousands except per share amounts             2003           2002
--------------------------------------------------------------------------------

     Net revenue                                       $  225,211     $  211,724
     Net income                                            13,829         15,435

     Earnings per share - basic                        $     1.07     $     1.19
     Earnings per share - diluted                      $     1.05     $     1.15

These pro forma results have been prepared for comparative purposes only and
include certain adjustments such as additional depreciation and amortization
expenses as a result of identifiable tangible and intangible assets arising from
the acquisition. The pro forma results are not necessarily indicative either of
the results of operations that actually would have resulted had the acquisition
been in effect at the beginning the respective periods or of future results.


Note 18 -- Commitments and Contingencies

At December 31, 2005, the Company had standby letters of credit issued by a bank
in the amount of $500 thousand.

Additionally, the Company has obtained a letter of credit for the benefit of a
certain mortgage holder. At December 31, 2005, the balance of the letter of
credit was $2,734 thousand. It is to be used in the event of a default in either
interest or principal payments.

The Company is involved in litigation arising in the normal course of its
business. The Company does not believe that the disposition or ultimate
resolution of existing claims or lawsuits will have a material adverse effect on
the business or financial condition of the Company.

The Company has entered into various agreements whereby it is required to make
royalty payments. At December 31, 2005, the Company had estimated minimum
royalty payments for each of the following five years as follows:

                    In Thousands                          Amount
                    ------------------------------------------------

                    2006                                 $   350
                    2007                                     350
                    2008                                     350
                    2009                                      --
                    2010                                      --
                    2011 and beyond                          100
                                                         -------
                                                         $ 1,150
                                                         =======

                                       59
<PAGE>

                                   Signatures


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

ESCALADE, INCORPORATED


By:

/s/ DANIEL A. MESSMER                                              March 9, 2007
-------------------------------------
Daniel A. Messmer
President and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/ ROBERT E. GRIFFIN              Chairman and Director           March 9, 2007
----------------------------
Robert E. Griffin

/s/ DANIEL A. MESSMER              President and Chief Executive   March 9, 2007
----------------------------       Officer (Principal Executive
Daniel A. Messmer                  Officer)


/s/ BLAINE E. MATTHEWS, JR.        Director                        March 9, 2007
----------------------------
Blaine E. Matthews, Jr.

/s/ RICHARD F. BAALMANN, JR.       Director                        March 9, 2007
----------------------------
Richard F. Baalmann, Jr.

/s/ EDWARD E. WILLIAMS             Director                        March 9, 2007
----------------------------
Edward E. Williams

/s/ RICHARD D. WHITE               Director                        March 9, 2007
----------------------------
Richard D. White

/s/ GEORGE SAVITSKY                Director                        March 9, 2007
----------------------------
George Savitsky

/s/ TERRY FRANDSEN                 Chief Financial Officer,        March 9, 2007
----------------------------       Secretary and Treasurer
Terry Frandsen                     (Principal Financial and
                                   Accounting Officer)

                                       60