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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 12b-25
Commission File Number 1-10704
NOTIFICATION OF LATE FILING
(Check One): [ ] Form 10K [ ] Form 11-K [ ] Form 20-F [X] Form 10-Q
[ ] Form N-SAR
For Period Ended: August 2, 1996
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[ ] Transition Report on Form 10-K [ ] Transition Report on Form 10-Q
[ ] Transition Report on Form 20-F [ ] Transition Report on Form N-SAR
[ ] Transition Report on Form 11-K
For the Transition Period Ended:
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Read attached instruction sheet before preparing form. Please print
or type.
Nothing in this form shall be construed to imply that the Commission
has verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
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PART I. REGISTRANT INFORMATION
Full name of registrant Sport Supply Group, Inc.
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Former name if applicable
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Address of principal executive office (Street and number)
1901 Diplomat Drive
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City, State and Zip Code Farmers Branch, Texas 75234
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PART II. RULE 12B-25 (B) AND (C)
If the subject report could not be filed without unreasonable effort
or expense and the registrant seeks relief pursuant to Rule 12b-25 (b), the
following should be completed. (Check appropriate box)
[X] (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
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[ ] (b) The subject annual report, semi-annual report, transition report on
Form 10-K, 20-F, 11-K or Form N-SAR, or portion thereof will be filed on
or before the 15th calendar day following the prescribed due date; or the
subject quarterly report or transition report on Form 10-Q, or portion
thereof will be filed on or before the fifth calendar day following the
prescribed due date; and
[ ] (c) The accountant's statement or other exhibit required by Rule 12b-25
(c) has been attached if applicable.
PART III. NARRATIVE
State below in reasonable detail the reasons why Form 10-K, 11-K, 20-F,
10-Q, N-SAR or the transition report portion thereof could not be filed within
the prescribed time period. (Attach extra sheets if needed.)
As of August 2, 1996, the Company was in violation of certain financial
covenants contained in its senior credit facility. The Company is currently
negotiating with its senior and participating lenders to obtain a waiver for
such violation and to amend its credit agreement to provide additional
borrowing capacity to support the Company's operations. No assurance can be
given that such waiver and modifications will ultimately be obtained. In the
event SSG is unable to obtain such waiver and modifications, the Company will
be required to reclassify its indebtedness under the senior credit facility as
current. In addition, the Company may be required to agree to a retroactive
increase in the interest on such indebtedness. The results of the Company's
negotiations with its lenders may have a material impact on its Report on Form
10-Q for the quarterly period ending August 2, 1996, including the amount of
interest expense recognized in its earnings statement, the amount of interest
expense charged to discontinued operations and the Company's discussion of its
Liquidity and Capital Resources.
As a result of the above, the Company is unable to file its Report on Form
10-Q for the quarterly period ended August 2, 1996 without unreasonable effort
and expense.
In order to satisfy its short-term and long-term liquidity needs
primarily resulting from the projected expansion of the Company's revenue base,
the Company will be required to arrange additional debt or equity financing.
In this regard, the Company is evaluating various transactions which include,
among others, the following:
1. the Company is negotiating with its senior lender to amend the senior
credit facility to provide additional borrowing capacity;
2. the Company has engaged an investment banking firm to sell the assets
of its remaining golf operations in a privately negotiated
transaction;
3. the Company is in the process of engaging an investment banking firm
for the private placement of subordinated debt of approximately
$10-$15 million; and
4. a private sale of securities.
No assurance can be given that any such transactions will be consummated.
PART IV. OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Michael J. Blumenfeld (972) 484-9484
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(Name) (Area Code) (Telephone number)
(2) Have all other periodic reports required under Section 13 or 15(d)
of the Securities Exchange Act of 1934 or Section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is
no, identify report(s).
[ X ] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject report or
portion thereof?
[ X ] Yes [ ] No
If so: attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
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The Company will report its retail segment as a discontinued operation in
its Report on Form 10-Q for the quarterly period ended August 2, 1996. During
the previous fiscal year, the Company reported this segment as a continuing
operation. Accordingly, the Company's earnings statements for the three and
nine month periods of the prior year will be restated to reflect this reporting
change. In addition, as a result of the change in the Company's year end from
December 31 to October 31 effected during 1995, the results of operations for
the three and nine month periods of the prior year will reflect operating
results for periods not historically reported by the Company.
As a result of the above, the Company anticipates that its results of
operations for the three and nine month periods ended July 31, 1995 will
reflect the following (amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
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JULY 31, 1995 JULY 31, 1995
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<S> <C> <C>
Net Revenues $20,644 $52,996
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Earnings from Continuing
Operations $ 948 $ 1,755
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Earnings From
Discontinued Operations $ 684 $ 1,380
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Net Earnings $ 1,632 $ 3,134
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Earnings per share:
Continuing Operations $ 0.13 $ 0.25
Discontinued Operations $ 0.10 $ 0.20
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Net Earnings $ 0.23 $ 0.45
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</TABLE>
As discussed in Item III above, the Company is currently negotiating with
its senior lender to obtain certain modifications to the Company's senior
credit facility and to obtain waivers for violations of certain financial
covenants. The Company anticipates that these negotiations could result in a
retroactive increase in the interest rate on its current indebtedness that
would require recognition in the Company's earnings statements for the three
and nine month periods ended August 2, 1996.
On May 20, 1996, the Company sold substantially all of the assets of
its Gold Eagle Professional Golf Products Division (the "Gold Eagle Division").
Subsequent to the sale of the Gold Eagle Division, the Company adopted a plan
to dispose of its remaining retail segment operations (which previously
included the Gold Eagle Division) through a rights offering and, accordingly,
reported its retail segment as a discontinued operation in its Report on Form
10-Q for the quarterly period ended May 3, 1996 and recorded a non-cash charge
of approximately $13.2 million ($8.4 million after tax) to record the net
assets of SSG's retail segment at estimated net realizable value and to record
estimated operating losses during the disposal period. As a result of certain
factors, including, among others, management's current assessment of the
ultimate success of the proposed rights offering and estimates of the time
required to effect such transaction, as well as its projected short-term
liquidity requirements, the Company determined that a private sale of its
remaining retail segment operations is a preferable method of disposal and has
engaged an investment banking firm to assist in such transaction. As a result
of this change in method of disposal and management's current estimates of the
net proceeds to be realized from the proposed sale, the Company will report an
additional charge of approximately $5.8 million ($3.7 million after tax) during
the quarterly period ended August 2, 1996 relating to discontinued operations.
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Sport Supply Group, Inc.
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(Name of registrant as specified in charter)
Has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: September 17, 1996 By: /s/ James R. Crawford
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James R. Crawford, Principal
Accounting Officer and Principal
Financial Officer
Instruction. The form may be signed by an executive officer of the
registrant or by any other duly authorized representative. The name and
title of the person signing the form shall be typed or printed beneath the
signature. If the statement is signed on behalf of the registrant by an
authorized representative (other than an executive officer), evidence of the
representative's authority to sign on behalf of the registrant shall be
filed with the form.
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