SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
Escalade, Incorporated
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 14, 2003
To the Stockholders of
Escalade, Incorporated
You are hereby notified that the Annual Meeting of the Stockholders of
Escalade, Incorporated will be held at the offices of the Company, 817 Maxwell
Avenue, Evansville, Indiana, on Saturday, April 26, 2003 at 9:00 A.M., local
time, for the following purposes:
1. To elect to the Board six (6) Directors as set forth herein;
2. To approve the appointment of the firm BKD LLP, to serve as
independent auditors for the Company for the year 2003; and
3. To transact such other business that may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on February 28, 2003 will
be entitled to vote at the meeting.
ALL PERSONS WHO FIND IT CONVENIENT TO DO SO ARE CORDIALLY INVITED TO ATTEND
THE MEETING IN PERSON. IN ANY EVENT, PLEASE SIGN, MARK AND RETURN THE PROXY
ENCLOSED WITH THIS NOTICE AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors
JOHN R. WILSON
Vice President & Chief Financial Officer
PROXY STATEMENT
The Board of Directors of Escalade, Incorporated (hereinafter referred to
as "Escalade" or the "Company"), 817 Maxwell Avenue, Evansville, Indiana 47711
((812) 467-1200) is soliciting proxies, the form of which is enclosed, for the
Annual Meeting of Stockholders to be held on Saturday, April 26, 2003, at 9:00
a.m. local time. Each of the 6,509,006 shares of common stock outstanding on
February 28, 2003 is entitled to one vote on all matters acted upon at the
meeting and only Stockholders of record on the books of the Company at the close
of business on February 28, 2003 will be entitled to vote at the meeting, either
in person or by proxy.
The shares represented by all properly executed proxies which are sent to
the Company will be voted as designated and each not designated will be voted
affirmatively. Unless discretionary authority is withheld, all other matters
coming before the meeting will be voted according to the best judgment of the
proxies. Any proxy given by a shareholder of record may be revoked at any time
before it is voted by written notice to the Company's Secretary, by execution of
a later dated proxy or by a personal vote at the Annual Meeting. This proxy
statement is being mailed to shareholders on or about March 14, 2003.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but may also be solicited by Directors,
Officers, and other regular employees of the Company, who will receive no
compensation therefor in addition to their regular salaries. Bankers and others
who hold stock in trust will be asked to send proxy materials to the beneficial
owners of the stock, and the Company may reimburse them for their expenses.
The holders of a majority of the Company's outstanding Common Stock must be
present or represented by proxy at the Annual Meeting to constitute a quorum.
The six nominees receiving the greatest number of votes cast at the Annual
Meeting upon the presence of a quorum will be elected as directors. A properly
executed proxy marked "Withhold Authority to Vote" with respect to the election
of one or more directors will not be voted with respect to the director or
directors indicated, although it will be counted for purposes of determining
whether there is a quorum present at the Annual Meeting. The persons named as
proxies in the enclosed proxy will vote for the election of the nominees named
below unless authority to vote is withheld.
For each other item presented at the Annual Meeting, the affirmative vote
of the holders of a majority of the Company's shares present or represented by
proxy at the Annual Meeting and entitled to vote on the item will be required
for approval. A properly executed proxy marked "Abstain" with respect to any
such matter will not be voted, although it will be counted for purposes of
determining whether there is a quorum present at the Annual Meeting.
Accordingly, an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other nominee,
your broker or nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon. Thus, if you do not give your
broker or nominee specific instructions, your shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval. Shares represented by such "broker non-votes" will, however, be
counted in determining whether there is a quorum.
The Annual Report of the Company for the year of 2002 is being mailed to
you with this proxy statement, but such report and financial statements are not
a part of this proxy statement.
2
CERTAIN BENEFICIAL OWNERS
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Under Rule 13(d) of the Securities Exchange Act of 1934, a beneficial owner
of a security is any person who directly or indirectly has or shares voting
power or investment power over such security. Such beneficial owner under this
definition needs not enjoy the economic benefit of such securities. The
following table sets forth certain information regarding beneficial ownership of
the Company's Common Stock by its Executive Officers and by the only
stockholders deemed to be beneficial owners of 5% or more of the Common Stock of
the Company as of February 28, 2003.
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE
CLASS OF BENEFICIAL OWNER OF OWNERSHIP OF CLASS
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EXECUTIVE OFFICERS
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Common Stock Robert E. Griffin 1,661,578 (1) 25.5% (1)
817 Maxwell Avenue
Evansville, Indiana 47717
Common Stock C. W. "Bill" Reed 465,564 (2) 7.2% (2)
251 Wedcor Avenue
Wabash, Indiana 46992
Common Stock John R. Wilson 134,250 (3) 2.1% (3)
817 Maxwell Avenue
Evansville, Indiana 47717
OTHER 5% STOCKHOLDERS
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Common Stock Andrew and Charmenz Guagenti 564,006 (4) 8.7% (4)
216 Water Street
Newburgh, Indiana 47630
(1) Includes 472,158 shares held by a Family Limited Partnership and 631,960
shares held by his children. Mr. Griffin disclaims beneficial ownership of
those shares. Also includes 9,005 shares issuable upon the exercise of
outstanding stock options.
(2) Includes 128,554 shares issuable upon the exercise of outstanding stock
options.
(3) Includes 40,875 shares held by his spouse. Mr. Wilson disclaims beneficial
ownership of those shares. Also includes 52,500 shares issuable upon
exercise of outstanding stock options.
(4) Includes 525,228 shares held by a Family Limited Partnership and 9,108
shares owned by Mr. Guagenti directly and in his directed IRA and 29,670
shares owned by Mrs. Guagenti directly in her directed IRA and as Trustee.
Mr. and Mrs. Guagenti each disclaims beneficial ownership of the shares
held by the other.
3
ITEM NO. 1
ELECTION OF DIRECTORS
The Board of Directors voted to set the size of the Board at six members.
All persons proposed for election to the Board of Directors are presently
Directors. Those persons whose names are set forth below are standing for
election. The term of office of the Directors standing for election at the
Annual Meeting will be until the next annual meeting of the stockholders and
until their successors are elected and qualified.
SHARES OF COMMON
Information with respect to each of the Directors is set forth as follows: STOCK OF THE COMPANY
BENEFICIALLY OWNED ON
FEBRUARY 28, 2003
DIRECTOR PERCENT OF
NAME AND PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS SINCE (1) AGE NUMBER CLASS
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YALE A. BLANC - Private Investor, Co-Founder of Martin Yale 1972 81 25,239(2) .4%(2)
Industries, Inc. (a subsidiary of the Company) . . . . . . . . . . . .
ROBERT E. GRIFFIN - Chairman since May, 1999, Previously
Chairman and Chief Executive Officer of the Company
since February 1994, Previously President and Chief
Executive Officer since 1976 . . . . . . . . . . . . . . . . . . . . . 1973 68 1,661,578(4) 25.5%(4)
BLAINE E. MATTHEWS, JR. - Director and Corporate Secretary
of Matthews 1812 House, Inc. since 1979, a mail order
supplier of cakes and food gifts . . . . . . . . . . . . . . . . . . . 1965 65 184,674(5) 2.8%(5)
C. W. "BILL" REED - President and Chief Executive Officer
since May, 1999, Previously President and Chief Operating
Officer of the Company since February, 1994 and President
of Martin Yale Industries, Inc. since 1980 . . . . . . . . . . . . . . 1997 56 465,564(6) 7.2%(6)
A. GRAVES WILLIAMS, JR. - Private Investor, President and
Director of The Irwin Company, Wilmington, Ohio, a
manufacturer of drill bits, screwdrivers, measuring tapes
and similar tools, from 1978 to 1993. (3) . . . . . . . . . . . . . . 1958 70 69,757(7) 1.1%(7)
KEITH P. WILLIAMS - President of Good Earth Tools, Inc.,
Crystal City, Missouri since 1964, a company specializing
in wear-proofing with tungsten carbide. (3) . . . . . . . . . . . . . 1982 75 195,915(8) 3.0%(8)
All (7) Directors and Executive Officers as a Group . . . . . . . . . 2,736,977 42.0%
(1) On March 8, 1973 the Board of Directors of the Williams Manufacturing
Company became the Board of Directors of Escalade, Incorporated pursuant to
an Agreement and Plan of Reorganization under which the Williams
Manufacturing Company merged into Escalade. The nominees whose period began
prior to 1973 were directors of Williams since the dates shown.
(2) Includes 999 shares issuable upon the exercise of outstanding stock
options.
(3) Mr. A. Graves Williams, Jr. and Mr. Keith P. Williams are first cousins.
Each disclaims beneficial ownership of shares held by the other.
(4) See note (1) under "Certain Beneficial Owners".
4
(5) Includes 42,000 shares held by his spouse. Mr. Matthews disclaims
beneficial ownership of those shares. Also includes 2,352 shares issuable
upon the exercise of outstanding stock options.
(6) See note (2) under "Certain Beneficial Owners".
(7) Includes 69,706 shares held by his spouse. Mr. Williams disclaims
beneficial ownership of those shares.
(8) Includes 11,487 shares held by his spouse. Mr. Williams disclaims
beneficial ownership of those shares. Also includes 4,765 shares issuable
upon the exercise of outstanding stock options.
While there is no reason to believe that any of the persons nominated will,
prior to the date of the meeting, refuse or be unable to accept the nomination,
should any person nominated so refuse or become unable to accept, it is the
intention of the persons named in the proxy to vote for such other person or
persons as the Directors recommend.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the names and ages of all of the executive
officers of the Company indicating all positions and offices held by each such
person as of the date of this Report. Each of the executive officers has served
the Company in various executive capacities throughout the past five years. All
such persons have been elected to serve until the next annual election of
officers and their successors are elected, or until their earlier resignation or
removal.
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Name Age as of February 28, 2003 Offices and Positions Held First Elected as Officer
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Robert E. Griffin 68 Chairman 12/76
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C. W. "Bill" Reed 56 CEO and President 2/94
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John R. Wilson 61 Vice President and CFO 12/76
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BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS, AND FUNCTIONS
The Board of Directors of the Company currently consists of two members who
are executive officers (Robert E. Griffin and C.W. ("Bill") Reed) and four
non-employee members (Yale A. Blanc, Blaine E. Matthews, Jr., A. Graves
Williams, Jr., and Keith P. Williams).
During 2002 the Board of Directors had six meetings. All Directors attended
100% of the Board of Director and Committee meetings on which he served.
The Company has a standing Audit Committee of the Board of Directors. The
Audit Committee is composed of Blaine E. Matthews, Jr., Yale A. Blanc and A.
Graves Williams, Jr. Each of these members meets the requirements for
independence set forth in the Listing Standards of the National Association of
Securities Dealers, Inc. The Audit Committee as a whole held one meeting in 2002
and the Committee Chair, as the Committee's authorized representative, met with
the independent auditors and management on three separate occasions to review
the interim financial information contained in each quarterly earnings
announcement.. The main functions performed by the Audit Committee are to (1)
review with the independent auditors their observations on internal controls of
the Company and the competency of financial accounting personnel, (2) review
with the chief accounting officer and independent auditors, the accounting for
specific items or transactions as well as alternative accounting treatments and
their effects on earnings, and (3) recommend the firm of independent certified
public accountants to be engaged by the Company. The Audit Committee is in the
process of reviewing its charter to ensure that the Committee will satisfy all
of the new requirements applicable to it upon final adoption of new and pending
SEC rules and Nasdaq National Market rules.
5
The Board of Directors has a Compensation Committee consisting of A. Graves
Williams, Jr. and Keith P. Williams. This committee met one time in 2002 to
review salaries and compensation levels within the Company. The Board of
Directors also has a Stock Option Committee consisting of Keith P. Williams and
A. Graves Williams, Jr.. This committee met one time in 2002 to review the
granting of options. The Board of Directors has no nominating committee.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the best of the Company's knowledge, all of the Company's directors,
officers and 10% or more shareholders have timely filed with the Securities and
Exchange Commission all reports required to be so filed pursuant to Section 16
of the Securities Exchange Act of 1934 for 2002, except for Mr. A. Graves
Williams, Jr., who had one delinquent filing for the month of July reporting the
sale of 1,000 shares.
EXECUTIVE COMPENSATION
SUMMARY
The following table is a summary of the compensation paid by the Company to
Messrs. Griffin, Reed and Wilson, its executive officers, for the last three
years.
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Annual Long Term
Compensation Compensation
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Name and Other Annual Stock All Other
Principal Year Salary Bonus Compensation Options Compensation
Position $ $ $ (2) (# Shares) $ (3)
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Robert E. Griffin 2000 76,137 --- 49,268 2,772 4,784
Chairman and 2001 75,927 --- 53,890 2,226 4,723
Director 2002 107,113(1) --- 58,945 2,009 3,214
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C.W. "Bill" Reed 2000 213,540 444,257 24,634 24,027 10,785
President, CEO, 2001 222,045 505,224 26,945 31,113 10,638
and Director 2002 245,704(1) 472,511 29,473 30,000 11,258
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John R. Wilson 2000 90,219 171,346 18,402 7,500 6,751
Vice President 2001 96,714 198,722 20,128 15,000 7,159
and CFO 2002 102,554(1) 185,858 22,016 15,000 7,543
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(1) Of the amounts shown, the following was deferred pursuant to the Company's
401K retirement plan: Mr. Griffin ($9,644); Mr. Reed ($11,000); and Mr.
Wilson ($11,000). This amount also includes directors fees for Mr. Griffin
($57,000) and Mr. Reed ($30,500).
(2) The amounts shown are the interest earned pursuant to the Company's
deferred compensation plan.
(3) In 2002, the amounts shown include the Company's following contributions to
the 401K retirement plan: Mr. Griffin ($3,018); Mr. Reed ($11,000); and Mr.
Wilson ($6,176). The amounts shown also include the dollar value of the
following group term life insurance premiums paid by the Company: Mr.
Griffin ($196); Mr. Reed ($258); and Mr. Wilson ($1,367).
6
STOCK OPTIONS
The following table shows information concerning individual grants of
options to purchase the Company's common stock made in 2002 to the Company's
executive officers pursuant to the 1997 Incentive Stock Option Plan.
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INDIVIDUAL GRANTS IN 2002
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Percent of Potential Realized Value
Total Options at Assumed Annual Rates of Stock
Options Granted To Exercise Price Price Appreciation for Option Term
Granted Employees in ($/Share) Expiration (5)
Name (# Shares) Fiscal Year Date -----------------------------------
5% ($) 10% ($)
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Robert E. Griffin 2,009(1) 2.43% $7.59 4/27/06 4,219(3) 9,302(3)
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C.W. "Bill" Reed 30,000(2) 36.23% $18.06 2/22/07 149,700(4) 330,900(4)
1,054(1) 1.27% $7.59 4/27/06 2,213(3) 4,880(3)
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John R. Wilson 15,000(2) 18.11% $18.06 2/22/07 74,850(4) 165,450(4)
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(1) Of the options granted pursuant to the Company's 1997 Director Stock
Compensation and Option Plan, none are exercisable in the first year and
then 100% of the grant becomes exercisable in the second year. Issued at
market price on day of grant.
(2) Of the options granted pursuant to the Company's 1997 Incentive Stock
Option Plan, none are exercisable in the first year and then 25% of the
grant becomes exercisable in each of the next four years. Issued at market
price on day of grant.
(3) Calculated based upon assumed stock prices for the Company's common stock
of $9.69 and $12.22, respectively, if 5% and 10% annual rates of stock
appreciation are achieved over the full term of the option.
(4) Calculated based upon assumed stock prices for the Company's common stock
of $23.05 and $29.09 respectively, if 5% and 10% annual rates of stock
appreciation are achieved over the full term of the option.
(5) The potential realizable gain equals the product of the number of shares
underlying the stock option grant and the difference between the assumed
stock price and the exercise price of each option.
The following table shows information on the Company's executive officers
exercise of stock options during 2002 and the number of outstanding stock
options held by such persons and the possible value of such options as of
December 28, 2002.
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AGGREGATED OPTION EXERCISES IN 2002 AND YEAR END OPTION VALUES
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Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options At Options At
Acquired 12/28/02 12/28/02
on Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
Name (#) $ (1) (#) $ (2)
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Robert E. Griffin 3,189 59,315 6,996 /2,009 92,093 / 23,104
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C.W. "Bill" Reed 61,113 1,102,562 41,250 / 72,304 546,450 /570,121
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John R. Wilson 18,750 210,787 18,750 / 33,750 246,488 /252,262
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(1) Value is calculated by determining the difference between the per share
exercise price and the per share fair market value of the common stock as
of the exercise date, multiplied by the number of shares acquired upon the
exercise of the options.
(2) The value of unexercised options is calculated by determining the
difference between $19.09 per share, the last reported sale price of the
common stock on the Nasdaq National Market on December 28, 2002, and the
exercise price of the option as of such date, multiplied by the number of
shares subject to the option.
7
COMPENSATION OF DIRECTORS
During 2002 all Directors of the Company except Mr. Griffin received a
retainer of $6,000 and a regular meeting fee of $3,000 for each meeting
attended. In addition, the Chairman of the Audit Committee received a $2,000
Chairman fee and the Chairman of the Compensation Committee received a $1,000
Chairman fee. Directors are reimbursed for their expenses incurred for attending
the meetings.
Mr. Griffin received $22,000 for performing his duties as Chairman of the
Board and for serving on the Board of Directors and its committees. Mr. Griffin
also receives a fee of $3,000 for each meeting attended.
Some of the Directors elected to receive some of these fees in shares of
the Company's common stock pursuant to the 1997 Director Stock Compensation and
Option Plan which was approved by shareholders at the 1997 annual meeting. Those
shares and options will not be issued until April 25, 2003. In 2002 there were
11,426 shares issued and 5,713 stock options issued pursuant to the plan. The
number of shares to be issued will be calculated based on the aggregate director
fees deferred by the director since the 2002 Annual Meeting divided by $21.35,
the closing share price on the first business day following the 2002 Annual
Meeting. Each director who elected to receive shares will also be granted stock
options in an amount equal to one half of the shares issued to the director at
an exercise price of $21.35 per share.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive compensation is determined by the Compensation Committee of the
Board of Directors. Stock option grants are determined by the Stock Option
Committee of the Board of Directors. Both committees are comprised entirely of
non-management Directors. Based on the Company's past compensation practices,
the Company does not currently believe that Section 162 (m) of the Internal
Revenue Code, which limits the deductibility of executive compensation in
certain events, will adversely affect the Company's ability to obtain a tax
deduction for compensation paid to its executive officers.
REPORT OF THE COMPENSATION COMMITTEE
The Company's compensation package for its executive officers consists
primarily of base salary, incentive profit sharing bonuses and stock option
grants. Stock option grants are determined by the Stock Option Committee and are
discussed under that Committee's separate report. Base salaries and incentive
profit sharing bonuses are determined by this Compensation Committee.
In general, base salary levels are set at the beginning of each year at
levels believed by this Committee to be sufficient to attract and retain
qualified executives when considered with the other components of the Company's
compensation structure. The primary considerations in determining whether base
salaries will be adjusted is the Company's income level generated in the
previous year and any changes in level of responsibility. The Committee also
subjectively reviews the individual performance of each executive officer. For
2002, the Committee believed that base salaries for executive officers and most
other management employees should be increased. The increases ranged from about
3% to 5%. The Committee increased Mr. Reed's base salary for 2002 by 3%.
This Committee believes that a significant portion of total annual cash
compensation should be subject to the Company's actual performance achieved in
that year. Consequently, the incentive profit sharing bonuses of the Company's
executive officers can be a significant percentage of their overall
compensation. Each of the Company's subsidiaries has in place an incentive
profit sharing plan where the amounts payable thereunder are based primarily
upon the subsidiary's Earnings Before Interest, Taxes and Amortization ("EBITA")
return on equity and EBITA return on assets. At the beginning of each year, the
Committee reviews, approves and/or modifies target levels suggested by
management for each of these components for each subsidiary.
If the subsidiary meets or exceeds its targets in one or more of the
performance components, a bonus pool is created with respect to such component
for payment to the subsidiary's employees. An additional 20.9% of any amounts
payable under the subsidiary's incentive profit sharing plan is payable to the
Company. The Company in turn distributes the incentive compensation received
from each subsidiary to the Company's executive officers based on a
pre-determined percentage.
8
Accordingly, each executive officer's incentive profit sharing is directly
linked to the performance by each of the Company's operating subsidiaries. The
percentage and amount attributable to each individual executive officer is
reviewed by this Committee on an annual basis. This Committee approved Mr.
Reed's portion, under the plan, of $472,511 for 2002.
In 2002, the Company's office and graphic arts subsidiary and the company's
sporting goods subsidiary exceeded their target levels for each of the incentive
profit sharing components and a bonus pool was created with respect to those
operations. Therefore, the 2002 bonus amounts paid to Mr. Reed and the Company's
other executive officers were generated from the Company's office and graphic
arts subsidiary and the Company's sporting goods subsidiary. After incentive
profit sharing and taxes the Company's consolidated net income of $11,138,453
generated a return on assets (on average beginning and ending assets) of 12.9%
and a return on beginning equity of 32.4%.
A. Graves Williams, Jr. Keith P. Williams
REPORT OF STOCK OPTION COMMITTEE
The Company maintains a Stock Option Committee of the Board of Directors,
whose primary purpose is to determine annual stock option grants to the
Company's executive officers and other eligible employees. The Stock Option
Committee continues to believe that stock options are an effective incentive to
encourage stock ownership by officers and key employees of the Company and its
subsidiaries so that those persons acquire or increase their proprietary
interest in the success of the Company.
Shareholders approved the 1997 Incentive Stock Option Plan at the 1997
annual meeting. Pursuant to that plan the committee felt it was appropriate to
grant stock options to certain executive officers of the Company in 2002. The
committee granted Mr. Reed 30,000 options.
Keith P. Williams A. Graves Williams, Jr.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
In 2002, Messrs. Graves Williams and Keith Williams were non-employee
Directors of the Company and comprised the Company's Compensation and Stock
Option Committees. No other Director or executive officer of the Company serves
on any board of directors or compensation committee of any entity which
compensates any of Messrs. Graves Williams or Keith Williams.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of Directors
("Board"), the Audit Committee of the Board ("Committee") assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of Escalade. All of the
Committee members are independent directors as defined under Nasdaq rules.
During the current year, the Committee met one time, and the Committee chair, as
representative of the Committee, discussed the interim financial information
contained in each quarterly earnings announcement with the Chief Financial
Officer and independent auditors prior to public release.
In discharging its oversight responsibility as to the audit process, the
Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence discussions with Audit Committees," discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence. The
Committee also discussed with management, and the independent auditors the
quality and adequacy of Escalade's internal controls. The Committee reviewed
with the independent auditors their audit plan, audit scope and identification
of audit risks.
9
The Committee discussed and reviewed with the independent auditors all
communications required by auditing standards generally accepted in the United
States of America, including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees," and, with and without
management present, discussed and reviewed the results of the independent
auditors' examination of the financial statements.
The Committee reviewed the audited financial statements of Escalade as of
and for the year ended December 28, 2002, with management and the independent
auditors. Management has the responsibility for the preparation of financial
statements and the independent auditors have the responsibility for the
examination of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that Escalade's
audited financial statements be included in its Annual Report on Form 10-K for
the year ended December 28, 2002, for filing with the Securities and Exchange
Commission. The Committee also recommended the reappointment, subject to
shareholder approval, of BKD LLP, the independent auditors, and the Board
concurred in such recommendation. The Audit Committee also discussed and
considered whether the provision of non-audit services by the Company's auditors
is consistent with the auditors' independence. The Audit Committee has
determined that the provisions of such services is consistent with the auditors'
independence.
Blaine E. Matthews, Jr. Yale A. Blanc A. Graves Williams, Jr.
ACCOUNTANT'S FEES
Audit Services. The aggregate fees billed by BKD LLP for audit services
relating to the audit of the 2002 Audited Financial Statements and for reviews
of the Company's financial statements included in its Forms 10-Q for the year
2002 were $98,070.
Financial Information System Design and Implementation Fees. BKD LLP did
not bill the Company for any information technology services rendered during
2002.
All Other Fees. BKD LLP billed the Company $101,173 during 2002 for other
services which included tax consulting and preparation and other non-audit
services.
FINANCIAL PERFORMANCE
The graph below compares the Company's cumulative shareholder return on
Company common stock to a broad equity market index and to an industry index for
the past five years, assuming an initial $100 investment. The broad equity
market index selected by the Company is the CRSP Total Return Index for The
Nasdaq Stock Market (U.S. Companies) which includes all domestic companies
traded on the Nasdaq market as are the Company's shares. The published industry
index selected by the Company is the Nasdaq Total Return Industry Index for
Nasdaq Non-Financial Stock which is comprised of all Nasdaq traded companies
having the standard industrial classification (SIC) code of 1 through 59 and 70
and above, which are all of the non-financial industries SIC codes. The
Company's SIC code falls within these parameters and the Company is not aware of
any other single company that is engaged in both the same industries as
Escalade.
10
The following graph assumes the investment of $100 in the Company's common
stock on December 31, 1997 and the investment of an equal amount in each of the
above referenced indices.
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Escalade 100.000 131.578 96.842 141.263 361.473 401.894
Nasdaq U. S. 100.000 140.989 261.473 157.410 124.885 86.327
Nasdaq Non-Financial 100.000 146.746 287.802 167.750 128.187 83.846
The Company's line graph has been plotted based upon its actual year end dates
which is the last Saturday in December of each year. The line graphs for each of
the two indices have been plotted based upon the last trading date in such
calender years.
OTHER SECURITIES FILINGS
The information contained in this Proxy Statement under the sub-headings
"Compensation and Stock Option Committee Report on Executive Compensation",
"Report of the Audit Committee" and "Financial Performance" are not, and should
not be deemed to be, incorporated by reference into any prior filings by the
Company under the Securities Act of 1933 or the Securities Exchange Act of 1934
that purport to incorporate future filings or portions thereof by reference
(including this proxy statement).
11
ITEM NO. 2
APPROVAL OF AUDITORS
The Audit Committee proposes and recommends that the Stockholders approve
the selection of the firm of BKD LLP to serve as independent auditors for the
Company for fiscal year 2003. BKD LLP, formerly known as Olive LLP, has served
as independent auditors for the Company since 1977. Audit services performed by
BKD LLP during the fiscal year most recently completed include examinations of
the financial statements of the Company and its subsidiaries, services related
to filings with the Securities and Exchange Commission, and consultations on
matters related to accounting, financial reporting and filing of Federal and
State Income Tax Returns. Representatives of BKD LLP are expected to be present
at the Annual Meeting. They will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions.
In the event the appointment of BKD LLP, as independent auditors for 2003
is not approved by the shareholders, the adverse vote will be considered as a
direction to the Board of Directors to select other auditors for the following
year. However, because of the difficulty and expense of making any substitution
of auditors so long after the beginning of the current year, it is contemplated
that the appointment for the year 2003 will be permitted to stand unless the
Board finds other good reason for making a change. Management recommends a vote
"FOR" the approval of the appointment of BKD LLP.
RESULTS OF THE 2002 ANNUAL MEETING
5,930,550 shares or 92.3 % of the outstanding shares of the Company were
voted in person or by proxy at the 2002 annual meeting which was held April 27,
2002. The proposals to elect to the Board six Directors, and to approve the
appointment of BKD LLP to serve as independent auditors for the Company for the
year 2002 were approved by the shareholders.
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Shareholder proposals for shareholder action at the 2004 annual meeting
must be presented in writing at the offices of the Company on or before November
14, 2003. Any shareholder who intends to propose any other matter to be acted
upon at the 2004 annual meeting of shareholders must inform the Company no later
than February 27, 2004. If notice is not provided by that date, the persons
named in the Company's proxy for the 2004 annual meeting will be allowed to
exercise their discretionary authority to vote upon any such proposal without
the matter having been discussed in the proxy statement for the 2004 annual
meeting. Only such proposals as are (1) required by Securities and Exchange
Commission Rules, and are (2) permissible shareholder motions under the
Corporation law of the State of Indiana will be included on the 2004 meeting
docket.
OTHER BUSINESS
The management does not know of any other business to be presented to the
meeting and does not intend to bring any other matters before the meeting. No
shareholder has informed the Company of any intention to propose any other
matter to be acted upon at the meeting. Accordingly, the persons named in the
accompanying Proxy are allowed to exercise their discretionary authority to vote
upon any such proposal without the matter having been discussed in this proxy
statement. If any matters properly come before the meeting, it is intended that
the persons named in the accompanying Proxy will vote thereon according to their
best judgment and interest of the Company.
By order of the Board of Directors
JOHN R. WILSON
Vice-President & Chief Financial Officer
12
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ESCALADE, INCORPORATED PROXY CARD
817 MAXWELL AVENUE, EVANSVILLE, INDIANA 47711 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert E. Griffin, Yale A. Blanc, and A. Graves Williams, Jr. as Proxies, each with the power
to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of
common stock of Escalade, Incorporated, held of record by the undersigned on February 28, 2003 at the annual meeting of
shareholders to be held on April 26, 2003 or any adjournment thereof.
1. ELECTION OF DIRECTORS: For all nominees [ ] Withhold Authority to vote for [ ] Exceptions [ ]
listed below all nominees listed below.
Nominees: Yale A. Blanc, Robert E. Griffin, Blaine E. Matthews, Jr., C.W. "Bill" Reed, A. Graves Williams, Jr., Keith P. Williams
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED:)
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2. PROPOSAL TO APPROVE THE APPOINTMENT OF BKD LLP, as the independent public accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
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This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder.
If no direction is made, this proxy will be voted for Proposals 1 and 2
Please sign exactly as name appears below. When
shares are held by joint tenants, both should sign.
When signing as attorney, as executor, administra-
tor, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by President or other authorized officer. If a partner-
ship, please sign in partnership name by authorized
person.
DATED, ___________________________________________, 2003 _________________________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN _________________________________________________________
THE PROXY CARD PROMPTLY USING THE Signature if held jointly
ENCLOSED ENVELOPE.
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