Escala Group, Inc. Announces Fiscal Year 2006 Second Quarter and First-half Earnings (y 2)

    
    (CCBN-ESCL)
    (All Currency is in US Dollars)
                         - Financial Tables Follow -

                                ESCALA GROUP, INC.
                 Condensed Consolidated Statements of Earnings
               For the Three and Six Months Ended December 31, 2005
                        (thousands except per share data)
                                   (Unaudited)
    
                                      Three Months ended    Six Months ended
                                          December 31,         December 31,
    
                                        2005      2004       2005      2004
    
    Aggregate Sales                  $894,518   $70,765  $1,471,176 $136,007
    
    Operating revenues
       Sales -- trading              $806,237      $-    $1,300,539     $-
       Sales of inventory              21,298    28,012      41,653   50,982
       Sales of inventory --  
        related party                  45,580    27,499      85,715   49,117
       Commissions earned               3,936     3,429       8,140    6,931
             Total revenues           877,051    58,940   1,436,047  107,030
    
    Cost of merchandise sold
       Cost of sales -- trading       804,356       -     1,297,453      -
       Cost of merchandise sold        18,920    26,639      36,572   47,427
       Cost of merchandise sold --      
        related party                  26,445    12,860      47,269   23,000
             Gross profit              27,330    19,441      54,753   36,603
    
    Operating expenses
       General and administrative       5,739     2,439      11,950    6,097
       Salaries and wages               4,178     3,152       8,895    6,468
       Depreciation and amortization      556       281         964      557
       Marketing                          862       917       1,839    1,716
             Total operating expenses  11,335     6,789      23,648   14,838
             Operating income          15,995    12,652      31,105   21,765
    
    Other income (expense)
       Interest income                    570       132         898      394
       Interest expense                  (459)     (237)       (798)    (524)
       Other                               (4)     (111)        (41)    (132)
       Earnings before income taxes    16,102    12,436      31,164   21,503
    Provision for income taxes          5,921     4,781      11,641    8,714
    Minority interest -- related party     79       -            95      -
    
    Net income                        $10,102    $7,655     $19,428  $12,789
    
    EBITDA                            $17,038   $12,954     $32,831  $22,584




    
                                         Three Months ended  Six Months ended
                                               December 31,     December 31,
    Earnings per Share Schedule               2005    2004     2005     2004
    
    Net Income                              $10,102  $7,655  $19,428  $12,789
    Basic Earnings per Share
      Weighted average shares outstanding    27,778  27,389   27,736   27,363
      Basic earnings per share                $0.36   $0.28    $0.70    $0.47
    
    Diluted Earnings per Share
      Weighted average shares outstanding    28,963  28,760   28,877   28,695
      Diluted earnings per share              $0.35   $0.27    $0.67    $0.45
    
    
    
    EBITDA Reconciliation Schedule
    
    Net Income:                             $10,102  $7,655  $19,428  $12,789
      Plus:
      Interest expense                          459     237      798      524
      Provision for income taxes              5,921   4,781   11,641    8,714
      Depreciation                              556     281      964      557
    EBITDA                                   17,038  12,954   32,831   22,584

Perry Hall, +1-212-827-3771, or phall@financialrelationsboard.com, for Escala Group, Inc.