ESCALADE INC Revenue Disclosure

Note 14 —    Revenue from Contracts with Customers

 

Revenue Recognition – Revenue is recognized when a contract exists with a customer that specifies the goods to be provided at an agreed upon sales price and when the performance obligations under the terms of the contract are satisfied; generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of control. Sales are made on normal and customary short-term credit terms or upon delivery of point-of-sale transactions. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue.

 

The Company enters into contractual arrangements with customers in the form of customer orders that specify goods, quantity, pricing, and associated order terms. The Company does not have long-term contracts that are satisfied over time. The Company does not adjust the amount of consideration for the effects of significant financing components based on expectations that the period between when the sale of goods is recognized and when the customer pays for the goods will be one year or less. Due to the nature of the contracts, no significant judgment exists in relation to the identification of the customer contract, satisfaction of the performance obligations, or transaction price. The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts.

 

Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments and primarily fall into one of three categories; returns, warranties and customer allowances.

 

Returns – The Company records an accrued liability and reduction in sales for estimated product returns based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return authorizations that have been communicated by the customer.

 

Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued liability and reduction in sales 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 sales in the current year.

 

Customer Allowances – Customer allowances are common practice in the industry in which the Company operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and adjusts, if necessary, as additional information becomes available.

 

Contract Balances – Amounts relating to returns and customer allowances create contract liabilities. Contract balances from contracts with customers are as follows:

 

In Thousands		2025				2024
Customer co-op and volume allowances		$	1,475			$	1,543
Other customer allowances			1,614				1,898
Customer returns and defectives accrual			2,235				3,267

 

January 1, 2024 balances for customer co-op and volume allowances, other customer allowances, and customer returns and defectives accrual were $1.7 million, $1.5 million, and $2.2 million, respectively. There are no revenues recognized in 2025 on performance obligations entered into in 2024. As of December 31, 2025, there were no unperformed performance obligations.

 

Contract assets consist of accounts receivables and the January 1, 2024 balance was $50.0 million, net of allowance for credit losses.

 

Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products. These products are sold through multiple sales channels that include: mass merchants, specialty dealers, key on-line retailers (“E-commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:

 

		Years Ended
In Thousands		December 31, 2025				December 31, 2024
Gross Sales by Channel:
Mass Merchants		$	87,507			$	91,720
Specialty Dealers			77,788				81,076
E-commerce			86,944				94,675
International			11,773				13,114
Other			2,855				3,371
Total Gross Sales			266,867				283,956
Less: Gross-to-Net Sales Adjustments
Returns			6,448				8,665
Warranties			1,011				1,690
Customer Allowances			19,250				22,091
Total Gross-to-Net Sales Adjustments			26,709				32,446
Total Net Sales			240,158				251,510