SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 1-10704
SPORT SUPPLY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2241783
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 Diplomat Drive, Farmers Branch, Texas 75234
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 484-9484
Not Applicable
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceeding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
Indicated below is the number of shares outstanding of each class
of the registrant's common stock as of August 10, 1999.
Title of Each Class of Common Stock Number Outstanding
Common Stock, $0.01 par value 7,252,606 shares
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Quarterly Report on Form 10-Q
pursuant to the Securities Exchange Act of 1934, as amended, for the
quarterly period ended July 2, 1999, as set forth in the pages attached
hereto:
Part 1, Item 1, is amended by the inclusion of such items herein.
Part 1, Item 2, is amended by the inclusion of such items herein.
<TABLE>
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF JULY 2, 1999 AND OCTOBER 2, 1998
<CAPTION>
July 2, October 2,
1999 1998
<S>
CURRENT ASSETS: <C> <C>
Cash $ 1,214,787 $ 1,035,466
Accounts receivable --
Trade, less allowance for
doubtful accounts of $721,000
in 1999 and $372,000 in 1998 16,949,540 16,151,371
Other 1,052,187 572,234
Inventories, net 21,438,914 14,102,837
Other current assets 1,152,869 943,521
Deferred tax assets - 904,318
Total current assets 41,808,297 33,709,747
DEFERRED CATALOG EXPENSES 2,276,135 1,916,035
PROPERTY, PLANT AND EQUIPMENT:
Land 8,663 8,663
Buildings 1,605,102 1,595,228
Machinery and equipment 6,168,784 5,585,710
Furniture and fixtures 3,389,963 2,683,122
Leasehold improvements 2,361,851 2,764,384
13,534,363 12,637,107
<PAGE>
Less -- Accumulated depreciation
and amortization (8,485,035) (7,574,023)
5,049,328 5,063,084
DEFERRED TAX ASSETS 4,659,189 4,659,189
COST IN EXCESS OF TANGIBLE NET
ASSETS ACQUIRED, less accumulated
amortization of $1,389,000 in 1999
and $1,240,000 in 1998 8,694,454 3,174,725
TRADEMARKS, less accumulated
amortization of $1,288,000 in 1999
and $1,136,000 in 1998 3,040,292 3,163,290
OTHER ASSETS, less accumulated
amortization of $1,037,000
in 1999 and $994,000 in 1998 7,112,823 3,117,545
$ 72,640,518 $ 54,803,615
CURRENT LIABILITIES:
Accounts Payable $ 8,017,949 $ 6,178,080
Income taxes payable - 87,250
Accrued property taxes - 218,201
Other accrued liabilities 1,652,524 893,598
Deferred Tax Payable 1,471,621 -
Notes payable and capital lease
obligations, current portion 2,925,826 1,087,809
14,067,920 8,464,938
NOTES PAYABLE AND CAPITAL LEASE
OBLIGATIONS, net of current portion 16,062,954 5,160,965
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.01,
100,000 shares authorized, no shares
outstanding in 1999 or 1998 - -
<PAGE>
Common stock, par value $0.01,
20,000,000 shares authorized,
9,307,988 and 9,243,195 shares
issued in 1999 and 1998,
7,385,306 and 7,754,703 shares
outstanding in 1999 and 1998 93,080 92,432
Paid-in capital 59,377,896 59,100,187
Retained deficit (526,231) (4,745,046)
Treasury stock, at cost,
1,922,682 shares in 1999
and 1,488,492 in 1998 (16,435,101) (13,269,861)
42,509,644 41,177,712
$ 72,640,518 $ 54,803,615
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<TABLE>
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<CAPTION>
For The Three Months Ended For the Nine Months Ended
July 2, 1999 July 3, 1998 July 2, 1999 July 3,1998
<S> <C> <C> <C> <C>
Net revenues $26,310,019 $25,340,174 $76,656,224 $72,025,265
Cost of sales 15,592,879 15,500,267 46,799,033 44,409,386
Gross profit 10,717,140 9,839,907 29,857,191 27,615,879
Selling, general and
administrative expenses 8,100,295 7,239,915 23,087,731 22,145,564
Interest before income,
other income and taxes 2,616,845 2,599,992 6,769,460 5,470,315
Interest Expense (370,774) (93,610) (870,604) (368,401)
Other income, net 583,068 128,065 881,756 517,967
<PAGE>
Earnings from continuing
operations before provision
for income taxes 2,829,139 2,634,447 6,780,612 5,619,881
Provision for Income Taxes 1,069,899 895,706 2,561,797 1,910,753
Net Earnings $1,759,240 $1,738,741 $4,218,815 $3,709,128
Earnings per common and
common equivalent share:
Net earnings $ 0.24 $ 0.22 $ 0.57 $0.46
Net earnings -
assuming dilution $ 0.22 $ 0.20 $ 0.55 $0.45
Weighted average number of
common shares outstanding 7,360,364 8,089,451 7,448,658 8,098,222
Weighted average number of
common and common equivalent
shares - assuming dilution 7,825,598 8,560,378 7,726,179 8,267,382
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
SPORT SUPPLY GROUP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<CAPTION>
For the Nine Months Ended
July 2, 1999 July 3, 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,218,815 $ 3,709,128
Adjustments to reconcile net
Earnings to net cash used in
operating activities --
Depreciation and amortization 1,354,261 1,023,974
<PAGE>
Provision for(recovery of)allowances
for accounts receivable (242,645) (185,001)
Changes in assets and liabilities --
(Increase) decrease in receivables (48,047) 4,356,631
Increase in inventories (5,968,900) (1,978,099)
Increase in deferred catalogs and
other current assets (381,228) 832,100
Increase in payables 645,076 612,208
Decrease in deferred taxes 904,318 1,783,983
Decrease in accrued liabilities (216,501) (1,285,949)
Increase in other assets (4,016,258) (1,168,571)
Other - (9,037)
Net cash provided by (used in)
operating activities (3,751,109) 6,027,167
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant
& equipment (967,478) (339,027)
Payments for acquisitions, net of
cash acquired (4,260,100) (1,500,682)
Proceeds from sale of investments 4,885 6,200
Net cash used in investing activities (5,222,693) (1,833,509)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of notes
payable 13,526,155 2,922,599
Payments of notes payable and
capital lease obligations (1,486,149) (5,454,837)
Proceeds from common stock issuances 480,145 689,135
Purchase of treasury stock (3,367,028) (614,487)
Net cash provided by (used in)
financing activities 9,153,123 (2,457,590)
Net change in cash 179,321 1,736,068
Cash, beginning of period 1,035,466 602,779
Cash, end of period $ 1,214,787 $ 2,338,847
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 818,379 $ 356,727
Cash paid during the period for
income taxes $ 150,000 $ 856
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Item 2.
Liquidity and Capital Resources
The Company's working capital increased approximately $2.5 million
during the nine months ended July 2, 1999, from $25.2 million at October
2, 1998 to $27.7 million at July 2, 1999. The increase in working
capital is primarily a result of a $7.3 million increase in inventory
associated with the seasonality of the Company's business as well as the
inventory acquired from the acquisitions of Conlin in January, 1999 and
Larry Black in February, 1999. This increase was partially offset by
(i) a $1.8 million increase in trade payables and (ii) a $1.8 million
increase in current notes payable.
On April 26, 1999, the Company replaced its existing senior credit
facility with a new credit facility. The Credit Agreement ("Agreement")
under the new credit facility includes a revolving line of credit of
$30,000,000 and term loan of $10,000,000 with a maturity date of April
26, 2002. The Agreement provides for reduced interest rates and fees as
well as reduced reporting requirements. The Agreement also contains
financial and net worth covenants in addition to limits on capital
expenditures.
As of July 2, 1999, the Company had total borrowings under its senior
credit facility of approximately $17.6 million including a term loan of
$9.5 million which is payable in monthly installments of principal and
accrued interest of $167,000 through April 26, 2002, and outstanding
letters of credit for foreign purchases of inventory of approximately
$821,000. The net increase of $2.5 million in borrowings under the
senior credit facility compared to October 2, 1998 reflects the cash
payments for the Conlin, Larry Black, and Flag A Tag acquisitions, the
stock purchased under the Company's stock buyback program, and cash paid
for the system implementation.
<PAGE>
The Company believes it will satisfy its short-term and long-term
liquidity needs from borrowings under its senior credit facility and
cash flows from operations.
On May 28, 1997, the Company approved the repurchase of up to 1,000,000
shares of its issued and outstanding common stock in the open market
and/or privately negotiated transactions. On October 28, 1998, the
Company approved a second repurchase program of up to an additional
1,000,000 shares of its issued and outstanding common stock in the open
market and/or privately negotiated transactions. Such purchases are
subject to price and availability of shares, working capital
availability and any alternative capital spending programs of the
Company. As of July 2, 1999, the Company repurchased approximately
1,178,000 of its issued and outstanding shares of common stock in the
open market under both repurchase programs.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPORT SUPPLY GROUP, INC.
August 17, 1999 By: /s/ John P. Walker
John P. Walker
President and Chief Financial Officer
