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President's Message to Shareholders

February 28, 2017

The sporting goods industry will look back on 2016 as a year of dynamic transition. We witnessed contraction of brick and mortar retail with the bankruptcies of two prominent retailers, Sports Authority and Sports Chalet, offset by significant growth of online retail as consumers continue to change the way they shop and make purchases. Despite market challenges and a soft archery category, Escalade grew top-line revenue 8% vs prior year by leveraging the acquisition of Triumph Sports, driving organic growth in the basketball category, and working closely with our online retail partners to drive consumer demand.

Basketball growth was driven by new product launches in the portable basketball goal category, the integration of Goalsetter Systems, investment in our category leading Goalrilla brand and key promotions with our retail partners. Additionally, the Triumph Sports acquisition allowed us to expand our assortment with key retail partners in the indoor and outdoor games categories and broaden our customer base.

We ended 2016 with net income for the full year of $11.5 million - 1% lower than the prior year. Diluted earnings per share in 2016 were $0.80 compared to $0.82 diluted earnings per share in the prior year. While our net income was down slightly versus prior year, we offset the impact of the Sports Authority’s bankruptcy filing and re-establishment of our bad debt reserves with a gain realized on the sale of our Wabash, IN facility. Additionally, our partnerships with brick & mortar retailers and online retailers continue to strengthen, allowing us to recapture sales volume lost in 2016’s retail consolidation.

In closing, 2016 was a challenge for the sporting goods industry and the Escalade team weathered the storm by executing our strategy of growing the business through strategic acquisitions and internally developed products. As we move into 2017, we remain committed to creating value for our customers, consumers, and shareholders by driving demand through investment in our brands and developing innovative products.

Signed

Dave Fetherman
President & CEO
Escalade, Inc.



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