Escala Group Announces Fiscal 2006 Third-quarter and Nine-month Earnings Results (y 2)

Statements contained in this presentation that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that may cause such differences include changes in market conditions, changes in economic environment, competitive factors and the other factors discussed in the "forward-looking information" or "risk factors" sections included in ESCL's filings with the Securities and Exchange Commission, including ESCL's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, prospectuses and other documents that ESCL has filed with the Commission. In particular, any statement related to ESCL's expected revenues or earnings or ESCL's being well positioned for future profitability and growth are forward-looking statements.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. ESCL undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

(ESCL)

    
                                   ESCALA GROUP, INC.
                      Condensed Consolidated Statements of Earnings
                    For the Three and Nine Months Ended March 31, 2006
                         (thousands of US$ except per share data)
                                      (Unaudited)
                                 Three Months ended       Nine Months ended
                                      March 31,               March 31,
                                  2006        2005       2006         2005
    Aggregate Sales            $1,152,643   $74,687   $2,623,819    $210,694
                                                                        
    Operating revenues                                                  
      Sales - trading          $1,058,096       $--   $2,358,635         $--
      Sales of inventory           28,669    25,185       70,322      76,167
      Sales of inventory
       - related party             45,525    26,027      131,240      75,144
      Commissions earned            3,623     4,500       11,763      11,431
          Total revenues        1,135,913    55,712    2,571,960     162,742
                                                                        
    Cost of merchandise sold                                            
      Cost of sales - trading   1,055,278        --    2,352,731          --
      Cost of merchandise sold     24,135    23,168       60,707      70,595
      Cost of merchandise
       sold - related party        27,248    10,868       74,517      33,868
          Gross profit             29,252    21,676       84,005      58,279
                                                                        
    Operating expenses                                                  
      General and                                                        
       administrative               6,298     3,827       18,248       9,924
      Salaries and wages            5,080     3,101       13,975       9,569
      Depreciation and                                                  
       amortization                   543       299        1,507         856
      Marketing                       741     1,062        2,580       2,778
          Total operating                                                
           expenses                12,662     8,289       36,310      23,127
          Operating income         16,590    13,387       47,695      35,152
                                                                        
    Other income (expense)                                              
      Interest income                 694       268        1,592         662
      Interest expense               (816)     (234)      (1,614)       (758)
      Other                          (107)     (270)        (148)       (402)
      Earnings before income
       taxes                       16,361    13,151       47,525      34,654
    Provision for income taxes      5,769     4,963       17,410      13,677
    Minority interest - related
     party                            148        --          243          --
                                                                        
    Net income                    $10,444    $8,188      $29,872     $20,977
                                                                        
    EBITDA                        $17,572   $13,684      $50,403     $36,268

                             Three Months ended           Nine Months ended
                                  March 31,                    March 31,
    Earnings per Share                                                  
     Schedule                2005           2004           2005         2004
                                                                        
     Net Income           $10,444         $8,188        $29,872      $20,977
     Basic Earnings per                                                  
      Share
        Weighted average                                                    
         shares
         outstanding       28,027         27,438         27,832       27,393
        Basic earnings per                                                  
         share              $0.37          $0.30          $1.07        $0.77
                                                                        
     Diluted Earnings                                                    
      per Share                                                          
        Weighted average                                                    
         shares
         outstanding       29,167         28,668         29,014       28,692
        Diluted earnings                                                    
         per share          $0.36          $0.29          $1.03        $0.73
                                                                        
                                                                        
    EBITDA                                                              
    Reconciliation                                                      
     Schedule                                                            
                                                                        
     Net Income:          $10,444         $8,188        $29,872      $20,977
        Plus:
        Interest expense      816            234          1,614          758
        Provision for                                                        
         income taxes       5,769          4,963         17,410       13,677
        Depreciation          543            299          1,507          856
    EBITDA                $17,572        $13,684        $50,403      $36,268
                                                                        

Perry Hall, Senior Vice President, Corporate & Brand Communications, +1-212-421-9400