SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [x]
Filed by a Party other than the Registrant []
Check the appropriate box:
[] Preliminary Proxy Statement
[] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SPORT SUPPLY GROUP, INC.
(Name of Registrant as specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing FEe (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
SPORT SUPPLY GROUP, INC.
1901 Diplomat Drive
Farmers Branch, Texas 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 25, 2000
As a stockholder of Sport Supply Group, Inc., you are hereby given
notice of and invited to attend in person or by proxy our Annual Meeting
of Stockholders to be held at Bent Tree Country Club, 5201 Westgrove,
Dallas, Texas 75248, on February 25, 2000, at 2:00 p.m. Central Standard
Time, for the following purposes:
1. to elect five directors to serve for a term of one year; and
2. to transact such other business as may properly come before the
annual meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on January
17, 2000 as the record date for the determination of stockholders
entitled to notice of and to vote at the annual meeting.
You are cordially invited to attend the annual meeting. However,
whether or not you expect to attend the annual meeting, we want to have
the maximum representation at the annual meeting and respectfully
request that you date, execute and mail promptly the enclosed proxy.
<PAGE>
For your convenience in mailing the enclosed proxy, we have enclosed a
stamped envelope for which no additional postage is required if mailed
in the United States. You may revoke your proxy at any time prior to
its use as specified in the enclosed proxy statement.
By Order of the Board of Directors
TERRENCE M. BABILLA,
Chief Operating Officer,
Executive Vice President,
General Counsel and Secretary
Dallas, Texas
January 21, 2000
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREIN.
SPORT SUPPLY GROUP, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 25, 2000
To Our Stockholders:
This proxy statement is furnished to our stockholders for use at
our Annual Meeting of Stockholders to be held at Bent Tree Country Club,
5201 Westgrove, Dallas, Texas 75248 on February 25, 2000 at 2:00 p.m.
Central Standard Time or any adjournments thereof.
The record of stockholders entitled to vote at the annual meeting was
taken at the close of business on January 17, 2000. We began mailing
this proxy statement and the enclosed proxy to our stockholders on
January 21, 2000.
<PAGE>
The enclosed proxy is solicited on behalf of our Board of Directors and
can be revoked by you at any time prior to the voting of the proxy.
Unless a contrary choice is indicated, all duly executed proxies that we
receive will be voted in accordance with the instructions set forth on
the back side of the proxy card.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each of our
stockholders of record at the close of business on January 17, 2000 to
vote on each of the proposals brought before the annual meeting. At the
record date there were 7,259,959 shares of our common stock, par value
$.01 per share, issued and outstanding and entitled to vote at the
annual meeting. Each outstanding share of our common stock is entitled
to one vote.
The holders of a majority of our outstanding shares of common
stock, present in person or by proxy, will constitute a quorum for the
transaction of business at the annual meeting. If a quorum is not
present, the annual meeting may be adjourned from time to time until a
quorum is obtained. Abstentions and broker non-votes are considered
stockholders who are present and entitled to vote and they count toward
the quorum. A broker non-vote occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that
proposal and has not received instructions from the beneficial owner
(despite voting on at least one other proposal for which the nominee
does have discretionary authority or for which it has received
instructions). Brokers holding shares of record for customers generally
are not entitled to vote on certain "non-routine" matters unless they
receive voting instructions from their customers.
The accompanying proxy card provides space for you to vote in favor of,
or to withhold voting for, the nominees for the Board of Directors.
Directors are elected by a plurality and the five nominees who receive
the most votes will be elected. Abstentions and broker non-votes will
not be taken into account in determining the outcome of the election of
directors.
<PAGE>
When a signed proxy card is returned with choices specified with
respect to voting matters, the proxies designated on the proxy card vote
the shares represented in accordance with the stockholder's
instructions. The proxies we have designated for the stockholders are
Geoffrey P. Jurick, John P. Walker and Terrence M. Babilla. If you
desire to name another person as your proxy, you may do so by crossing
out the names of the designated proxies and inserting the names of the
other persons to act as your proxies. In that case, it will be
necessary for you to sign the proxy card and deliver it to the person
named as your proxy and for the named proxy to be present and vote at
the annual meeting. Proxy cards so marked should not be mailed to us.
If you sign your proxy card and return it to us and you have made
no specifications with respect to voting matters, your shares will be
voted for the election of the five nominees for director and, at the
discretion of the proxies designated by us, on any other matter that may
properly come before the annual meeting.
You have the unconditional right to revoke your proxy at any time
prior to the voting of the proxy by taking any act inconsistent with the
proxy. Acts inconsistent with the proxy include notifying our Secretary
in writing of your revocation, executing a subsequent proxy, or
personally appearing at the annual meeting and casting a contrary vote.
However, no revocation shall be effective unless notice of your
revocation has been received by us at or prior to the annual meeting.
ELECTION OF DIRECTORS
Five directors are proposed to be elected at the annual meeting.
If elected, each director will hold office until the next annual meeting
of our stockholders or until his successor is elected and qualified.
The election of directors will be decided by a plurality vote. All
nominees named in this proxy statement are members of our present Board
of Directors.
All nominees have consented to serve if elected. We have no reason to
believe that any of the nominees named below will be unable to serve.
If any nominee becomes unable to serve, the shares represented by the
designated proxies will be either (1) voted for the election of a
substitute as the Board may recommend, (2) the Board may reduce the
number of directors to eliminate the vacancy, or (3) the Board may fill
the vacancy at a later date after selecting an appropriate nominee.
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Nominations for election to the Board may be made by the Board, a
nominating committee appointed by the Board or by any stockholder
entitled to vote for the election of directors. Nominations made by
stockholders must be made by written notice, certified mail, return-
receipt requested and received by our Secretary no later than 60 days
after the end of our fiscal year. If, however, we give our stockholders
less than 35 days' notice of a stockholders' meeting called for the
election of directors, nominations by stockholders must be received by
our Secretary not later than the close of business on the seventh day
following the day on which the notice was mailed.
The stockholder's notice must set forth as to each proposed nominee who
is not an incumbent director: (1) the name, age, business address and,
if known, residence address of each nominee; (2) the principal
occupation or employment of each nominee; (3) the number of shares of
our common stock that are beneficially owned by each nominee and the
nominating stockholder; and (4) any other information concerning the
nominee that must be disclosed of nominees in proxy solicitations
pursuant to Rule 14(a) of the Securities Exchange Act of 1934, as
amended ( we refer to it as the "Exchange Act").
The current Board nominated the nominees named below for election
to our Board of Directors. The name, age (as of December 31, 1999),
business experience and public directorships of each nominee for
director are as follows:
Year
Principal Occupation First Became
Name Age or Employment (1) Director
Geoffrey P. Jurick 59 Chairman of the Board and 1996
Chief Executive Officer (2)
John P. Walker 36 President (3) 1996
Thomas P. Treichler 55 Chairman of the Board and 1997
Chief Executive Officer of
Orient Financial Corporation (4)
Peter G. Bnnger 59 Consultant (5) 1996
Johnson C.S. Ko 48 Chairman of Universal 1996
Appliances Limited (6)
<PAGE>
(1) Each of the nominees has held the position listed, or a similar
position with the same or an affiliated organization, for at least the
last five years, except as otherwise provided in this proxy statement.
(2) Geoffrey P. Jurick has served as a director since December 10,
1996. Mr. Jurick has served as our Chairman of the Board since December
11, 1996 and as our Chief Executive Officer since January 23, 1997. Mr.
Jurick has served as a director of Emerson Radio Corp., a Delaware
corporation listed on the American Stock Exchange under the symbol "MSN"
since 1990, and as Emerson's Chief Executive Officer and Chairman since
July 1992 and December 1993, respectively. Emerson beneficially owns
approximately 40% of our issued and outstanding common stock. For more
information about Emerson, see "Certain Relationships and Related
Transactions."
Since December 1993, Mr. Jurick has served as a director of Fidenas
International Limited, L.L.C. and its predecessor, and, since May 1994,
as an officer and general manager of Fidenas International. Mr. Jurick
has also served as a director of Fidenas Investment Limited and Fidenas
International Bank Limited. On January 10, 1995, the Supreme Court of
the Commonwealth of the Bahamas appointed an official liquidator of
Fidenas Investment and ordered that Fidenas Investment be wound up. On
January 27, 1995, the Bahamas court appointed an official liquidator for
Fidenas International Bank and ordered, subject to the ongoing
supervision of the Bahamas court, that Fidenas International Bank's
assets be liquidated. For more information about the Fidenas companies,
see "Certain Relationships and Related Transactions."
For more than the past five years, Mr. Jurick has held a variety of
senior executive positions with several of the entities comprising the
Fidenas group of companies, whose activities encompass merchant banking,
investment banking, investment management, and corporate development.
Since May 1994, Mr. Jurick has served as a director, Chairman, and Chief
Executive Officer of GSE Multimedia Technologies Corporation, which is
traded in the over-the-counter market. Since March 1996, Mr. Jurick has
served as Chairman of Elision International Ltd., a provider of computer
and telecommunication services and an affiliate of Emerson. For more
information about Elision, see "Certain Relationships and Related
Transactions."
<PAGE>
(3) John P. Walker has served as a director since December 10, 1996 and
has served as our President since July 28, 1998. Mr. Walker served as
our Chief Financial Officer from December 11, 1996 to November 10, 1999,
as our Chief Operating Officer from July 28, 1998 to July 28, 1999 and
as an Executive Vice President from December 11, 1996 to July 28, 1998.
Mr. Walker has served as Executive Vice President and Chief Financial
Officer of Emerson since April 1996. Mr. Walker served as Emerson's
Senior Vice President from April 1994 until March 1996, Vice President-
Finance from February 1993 to April 1994, Assistant Vice President-
Finance from June 1991 to January 1993, and Director of Financial
Management from September 1989 to May 1991. Emerson beneficially owns
approximately 40% of our issued and outstanding common stock. See
"Certain Relationships and Related Transactions" for more information
about Emerson.
(4) Dr. Thomas P. Treichler has been a director since March 23, 1997.
Since 1983 Dr. Treichler has been the Chairman of the Board and Chief
Executive Officer of Orient Financial Corporation, a San Francisco based
financial and investment banking firm. Dr. Treichler is also an
independent director of the Shanghai Growth Fund, a fund for direct
investments into the greater Shanghai region that is listed on the Hong
Kong Stock Exchange.
(5) Peter G. Bnnger has been a director since December 10, 1996.
Mr. Bnnger has been a director of Emerson since July 1992. Emerson
beneficially owns approximately 40% of our issued and outstanding common
stock. See "Certain Relationships and Related Transactions" for more
information about Emerson. Presently, Mr. Bnnger is a consultant with
Savarina AG, an entity engaged in the business of portfolio management
monitoring in Zurich, Switzerland. Since October 1992, Mr. Bnnger has
served as a director of Savarina AG, and since 1992, as a director of
ISCS, a computer software company.
(6) Johnson C.S. Ko has been a director since December 10, 1996. Since
February 1994, Mr. Ko has served as the Chairman and Director of
Universal Appliances Limited, a Hong Kong corporation listed on the Hong
Kong Stock Exchange. Universal Appliance is engaged in manufacturing
and distributing consumer electronics, household electrical and
telecommunication products and printed circuit boards and in the
dissemination of international financial market information and consumer
data. Universal Appliances is a holding company for the Universal Group
that owns or controls numerous subsidiary companies. Mr. Ko has also
<PAGE>
served on certain boards of these subsidiaries since February 1994. Mr.
Ko has also served since October 1992 as the Chairman and Director of
Kwan Wing Holdings Limited, the holding company of Universal Appliances
and an investment vehicle whose activities encompass trading, real
property holdings and financial services. Kwan Wing Holdings' principal
operating company in Hong Kong is its wholly-owned subsidiary, Kwan Wing
Development Ltd., in which Mr. Ko has served as a director since 1989.
Since September 1997, Mr. Ko has served as Chairman of Cybersonic
Technology Limited, a corporation listed on the Hong Kong Stock
Exchange. Cybersonic is engaged in manufacturing and distributing
consumer electronic products and footwear products. From November 1992
to April 1995, Mr. Ko also served as Chairman and Director of Mandarin
Dragon Holdings Limited, a Hong Kong corporation listed on the Hong Kong
Stock Exchange, which is an investment holding company with business in
the manufacturing and distribution of pharmaceuticals.
THE BOARD OF DIRECTORS URGES YOU TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 1999, the
beneficial ownership of: (1) each current director; (2) each nominee for
director; (3) each of our executive officers named in the Summary
Compensation Table set forth below in "Executive Compensation and Other
Information"; (4) our directors and executive officers as a group; and
(5) each stockholder known to us to own beneficially more than 5% of our
outstanding shares of common stock.
Except as otherwise indicated and based upon our review of information
as filed with the Securities and Exchange Commission (we refer to it as
the "SEC"), we believe that the beneficial owners of the securities
listed below have sole investment and voting power with respect to such
shares, subject to community property laws, where applicable.
<PAGE>
Amount and Percent
Nature of Beneficial of
Name of Beneficial Owner Ownership Class
Emerson Radio Corp. 3,269,500 (1) 39.5%
Dimensional Fund Advisors, Inc. 424,725 (2) 5.8%
Wellington Management Company, LLP 726,800 (3) 10.0%
Oaktree Capital Management, LLC 403,100 (4) 5.5%
Geoffrey P. Jurick* 3,569,500 (5) 41.7%
John P. Walker* 161,079 (6) 2.2%
Peter G. Bunger* 12,500 (7) **
Johnson C.S. Ko* 22,500 (7) **
Thomas P. Treichler* 9,375 (8) **
Terrence M. Babilla 63,421 (9) **
Adam Blumenfeld 141,800 (10) 1.9%
Eugene J.P. Grant 33,333 (11) **
Executive Officers and Directors 4,017,428 (12) 45.0%
as a group (8 persons)
(*) Director (all current directors are nominees for director).
(**) Less than one percent
(1) Emerson's address is Nine Entin Road, Parsippany, New Jersey 07054.
Emerson's beneficial ownership is based on information set forth in an
Amendment to Schedule 13D filed with the SEC by Emerson on August 4,
1999. Pursuant to the amended Schedule 13D, Emerson reported that it
beneficially owned 3,269,500 shares of our common stock, including (a)
1,000,000 shares issuable upon exercise of warrants owned by Emerson and
exercisable within 60 days, and (b) 669,500 shares of our common stock
held by Emerson Radio (Hong Kong) Limited, a wholly-owned subsidiary of
Emerson. Emerson has sole voting and dispositive power with respect to
all 3,269,500 shares.
<PAGE>
Pursuant to a pledge and security agreement, Emerson pledged to Congress
Financial Corporation 500,000 shares of our common stock and its
warrants for 1,000,000 shares of our common stock, together with all
proceeds, dividends and other income and distributions with respect
thereto, and all rights of Emerson to have such shares of common stock
registered under a certain registration rights agreement. See "Certain
Relationships and Related Transactions" for a more detailed description
of Emerson's ownership.
(2) Dimensional Fund Advisors, Inc.'s address is 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401. Dimensional's beneficial
ownership is based on information set forth in Schedule 13G filed with
the SEC by Dimensional on February 11, 1999. In its role as investment
advisor and investment manager, Dimensional reported it has sole voting
power and sole dispositive power with respect to all 424,725 shares.
Such shares are owned by advisory clients of Dimensional, no one of
which to the knowledge of Dimensional owns more than 5% of our common
stock. Dimensional disclaims beneficial ownership of all of such
shares.
(3) Wellington Management Company, LLP's address is 75 State Street,
Boston, Massachusetts 02109. Wellington's beneficial ownership is based
on information set forth in an amendment to Schedule 13G filed with the
SEC by Wellington on September 10, 1999. Wellington, a registered
investment advisor, reported that it has shared voting power with
respect to 676,800 shares, shared dispositive power with respect to
726,800 shares and no sole voting power or sole dispositive power with
respect to any such shares. Wellington reported that all of such shares
are owned of record by numerous investment advisory clients of
Wellington, none of which is known to have beneficial ownership of more
than 5% of our common stock.
<PAGE>
(4) Oaktree Capital Management, LLC's address
is 333 South Grand Avenue, 28th Floor, Los Angeles, California 90071.
Oaktree's beneficial ownership is based on information set forth in an
amendment to Schedule 13D filed with the SEC by Oaktree on December 2, 1999.
Oaktree, an investment advisor to institutional and individual investors,
reported it has sole voting power and sold dispositive power with respect to
all 403,100 shares.
<PAGE>
(5) Mr. Jurick's address is Sport Supply Group, Inc., 1901 Diplomat
Drive, Farmers Branch, Texas 75234. Mr. Jurick, directly and
indirectly, beneficially owns approximately 61% of the outstanding
shares of Emerson's common stock and is the Chairman of the Board and
Chief Executive Officer of Emerson and, therefore, may be deemed to
control Emerson. As a result of such control, Mr. Jurick may be deemed
to beneficially own the 3,269,500 shares of our common stock
beneficially owned by Emerson. Mr. Jurick disclaims any such beneficial
ownership. See Note (1) above and "Certain Relationships and Related
Transactions" for more information about Emerson's investment. Mr.
Jurick's beneficial ownership also includes 300,000 shares of our common
stock issuable upon the exercise of stock options that are exercisable
currently or within 60 days of the date hereof.
(6) Consists of 36,079 shares of our common stock and 125,000 shares of
our common stock issuable upon the exercise of stock options that are
exercisable currently or within 60 days of the date hereof.
(7) Includes 12,500 shares of our common stock issuable upon exercise
of stock options that are exercisable currently or within 60 days of the
date hereof.
(8) Includes 9,375 shares of our common stock issuable upon exercise of
stock options that are exercisable currently or within 60 days of the
date hereof.
(9) Consists of 3,126 shares of our common stock and 60,295 shares of
our common stock issuable upon the exercise of stock options that are
exercisable currently or within 60 days of the date hereof.
(10) Consists of 141,800 shares of our common stock issuable upon the
exercise of stock options that are exercisable currently or within 60
days of the date hereof. Mr. Blumenfeld resigned as an officer and
employee effective December 31, 1999.
(11) Consists of 33,333 shares of our common stock issuable upon the
exercise of stock options that are exercisable currently or within 60
days of the date hereof.
(12) Includes 672,928 shares of our common stock issuable upon the
exercise of stock options that are exercisable currently or within 60
days of the date hereof and 1,000,000 shares of our common stock
issuable upon exercise of the Emerson warrants. Mr. Jurick disclaims
beneficial ownership of our securities owned by Emerson. See Note (5)
above.
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The business of Sport Supply Group is managed under the direction
of our Board of Directors. The Board meets during our fiscal year to
review significant developments affecting the company and to act on
matters requiring Board approval. The Board held three formal meetings
during our 1999 fiscal year and acted by unanimous written consent on
seven occasions. During the 1999 fiscal year, each member of the Board
participated in all Board and committee meetings for which he served as
a director and/or committee member.
During fiscal 1999, our Board had an audit committee and a
compensation and stock option committee to devote attention to specific
subjects and to assist the Board in the discharge of its
responsibilities. The functions of these committees and their current
members are described below.
Audit Committee. Our Audit Committee is presently comprised of
Peter G. Bnnger and Thomas P. Treichler. The Audit Committee recommends
to the Board the appointment of a firm of certified public accountants
to conduct audits of our accounts and affairs and monitors the
performance of such firm. The Audit Committee also reviews our
accounting objectives and procedures and the findings and reports of the
independent certified public accountants, and makes reports and
recommendations to the Board as it deems appropriate. The Audit
Committee did not hold any formal meetings, nor did it act by unanimous
written consent during fiscal 1999.
Compensation and Stock Option Committee. Our Compensation and
Stock Option Committee is presently comprised of Johnson C. S. Ko and
Thomas P. Treichler (each of whom is a non-employee Director, as defined
in our stock option plan). Our Compensation and Stock Option Committee
administers our stock option plan and has full and final authority to
select the key employees, directors and consultants to whom awards are
granted, the number of shares of common stock with respect to such
awards, and the terms of such awards, including the exercise price of
the stock options and any vesting periods. In general, the Compensation
and Stock Option Committee is authorized to construe, interpret and
administer our stock option plan and the provisions of the options
granted thereunder, prescribe and amend rules for the operation of our
stock option plan, and make all other determinations necessary or
advisable for its implementation and administration. In addition, the
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Compensation and Stock Option Committee administers our employee stock
purchase plan. The Compensation and Stock Option Committee also is
responsible for recommending to the Board compensation arrangements for
our Chairman of the Board, which recommendation is subject to the
approval of a majority of the disinterested directors. The Compensation
and Stock Option Committee held two formal meetings and acted by
unanimous consent on one occasions during our 1999 fiscal year.
The Board of Directors did not have a standing nominating
committee, or any other committee performing similar functions during
our 1999 fiscal year. The Board of Directors performed the functions
customarily attributable to a nominating committee as a whole.
Compensation of Directors
During our 1999 fiscal year, each non-management director was
entitled to receive up to $6,000 in annual director's fees. In
addition, the Chairman of the Audit Committee and the Chairman of the
Compensation and Stock Option Plan Committee receive an additional
$2,500 in annual fees. During fiscal 1999, Dr. Treichler, Mr. Ko and
Mr. Bunger received $8,500, $6,000 and $6,000, respectively, in
director's fees. Our officers do not receive compensation for serving
on our Board. Non-employee directors are automatically granted
nonqualified stock options to purchase 3,125 shares of our common stock
on an annual basis.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during each of our last three fiscal years to our
Chief Executive Officer and each of our other most highly compensated
executive officers, based on salary and bonus earned during fiscal 1999.
During 1997 we changed our fiscal year-end from October 31 to the
Friday closest to September 30. As a result, fiscal 1997 is a transition
period consisting of eleven calendar months. During our 1998 and 1999
fiscal years, we operated on a 52/53-week year ending on the Friday
closest to September 30. The information set forth in the following
table is for the eleven-month fiscal year ended September 26, 1997, the
twelve-month fiscal year ended October 2, 1998 and the twelve-month
fiscal year ended October 1, 1999.
<PAGE>
<TABLE>
Securities
Other Restricted Underlying All
Annual Stock Options/ Other
Name and Fiscal Salary Bonus Compensation Awards SARs Compensation
Principal Position Year ($) ($)(1) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Geoffrey P. Jurick, 1999 $250,000 --- --- --- --- ---
Chairman of the Board 1998 $250,000 $25,000 --- --- --- ---
and Chief Executive 1997 $114,582 $280,000 --- --- 300,000 ---
Officer (2)
John P. Walker, 1999 $320,000 --- $15,004 --- 50,000(5) $2,550
President (3) 1998 $260,833 $125,000 $110,518 $412,500 --- $3,213
1997 $152,609 $200,000 $130,805 --- 100,000(5) $1,188
Terrence M. Babilla, 1999 $235,000 $50,000 $26,901 --- 50,000(5) $2,250
Chief Operating 1998 $220,000 $25,000 $48,628 --- 100,000(5) $2,904
Officer, Executive 1997 $183,333 $75,000 --- --- --- ---
Vice President,
General Counsel and
Secretary (4)
Adam Blumenfeld, 1999 $126,688 --- $6,000 --- --- $1,453
Vice President-Sales 1998 $114,792 $27,000 --- --- 45,000(6) ---
and Marketing (6) 1997 $81,639 $37,000 --- --- 100,000(6) ---
Eugene J.P. Grant, 1999 $144,375 --- $6,000 --- --- $1,688
Vice President- 1998 $106,811 $50,000 --- --- 50,000 ---
Strategic Planning (7) 1997 --- --- --- --- --- ---
</TABLE>
(1) The only bonus reflected for the fiscal year ended October 1, 1999
is a partial bonus paid to Mr. Babilla for fiscal 1999. No other
bonuses for the fiscal year ended October 1, 1999 are reflected in this
column because they were not calculable through the date of this proxy
statement.
(2) Mr. Jurick has served as our Chairman of the Board since December
10, 1996 and as our Chief Executive Officer since January 23, 1997. Mr.
Jurick has served as a director of Emerson and as Emerson's Chairman and
Chief Executive Officer since July 1992 and December 1993, respectively.
<PAGE>
We did not pay Mr. Jurick any salary directly during fiscal 1997.
However, pursuant to a Management Services Agreement by and between us
and Emerson, we paid Emerson $114,582 in reimbursement of salary paid by
Emerson to Mr. Jurick for our benefit. See "Certain Relationships and
Related Transactions" for more information about Emerson. Effective
October 18, 1997, we began paying Mr. Jurick an annualized salary of
$250,000 and ceased reimbursing Emerson for such payments.
(3) Mr. Walker has served as our President since July 28, 1998. Mr.
Walker served as Chief Financial Officer from December 11, 1996 to
November 10, 1999, as our President and Chief Operating Officer from
July 28, 1998 to July 28, 1999, and as an Executive Vice President from
December 11, 1996 to July 28, 1998. Emerson reimbursed us $70,833 and
$100,000 of the amount included in "Salary" for fiscal 1998 and fiscal
1999, respectively, in reimbursement of salary paid by us to Mr. Walker
for the benefit of Emerson. Emerson reimbursed us $50,000 of the amount
included in "Bonus" for fiscal 1997 in reimbursement of bonus paid by us
to Mr. Walker for the benefit of Emerson.
The amount in "Other Annual Compensation" consists of: (a) for fiscal
1999, country club related dues and expenses of $7,166 and automobile
related expenses of $7,838, (b) for fiscal 1998, country club related
dues and expenses of $16,071, automobile related expenses of $18,336 and
relocation expenses, including tax gross-ups relating to such expenses,
of $76,111, and (c) for fiscal 1997, $32,577 for country club initiation
fees and related dues, automobile allowance of $9,000, and relocation
expenses, including tax gross-ups relating to such expenses, of $89,228.
The amount in "Restricted Stock Awards" for fiscal 1998 relates to a
grant of 50,000 shares of our restricted common stock to Mr. Walker.
The fair market value of the restricted shares was calculated by
multiplying 50,000 times $8.25, which was the closing market price of
our common stock on the date of grant. Mr. Walker possesses all
incidents of ownership to the restricted shares, including the right to
vote and receive dividends on the restricted shares if any dividends are
issued. Mr. Walker also has certain registration rights relating to the
resale of the restricted shares. As of December 31, 1999, Mr. Walker
owned 28,418 restricted shares, which had a fair market value of
$195,516. We withheld the remaining 21,582 restricted shares for income
taxes.
The amount in "All Other Compensation" is comprised of matching 401(k)
<PAGE>
contributions. Mr. Walker also received an interest free bridge loan in
the amount of $100,000 to be used toward the purchase of a residence in
Texas. The loan is due and payable on March 31, 2000. Such loan is not
reflected in the Summary Compensation Table. See "Executive
Compensation and Other Information - Employment Agreements" for more
information about Mr. Walker's Compensation.
(4) Mr. Babilla has served as Chief Operating Officer since July 28,
1999, as General Counsel since March 13, 1995, as Secretary since May
13, 1996 and as Executive Vice President since January 13, 1998. From
September 1987 to March 1995, Mr. Babilla was an attorney with the law
firm of Hughes & Luce, L.L.P. in Dallas, Texas. The amount in "Other
Annual Compensation" for fiscal 1999 consists of country club dues and
fees of $10,248 and automobile related expenses of $16,653, and for
fiscal 1998 consists of country club initiation fees and related dues of
$36,821 and automobile related expenses of $11,807. The amount in "All
Other Compensation" is comprised of matching 401(k) contributions. See
"Executive Compensation and Other Information-Employment Agreements" for
more information regarding Mr. Babilla's compensation.
(5) The agreements governing these stock options permit the optionee to
elect for a period of 180 days following a change in control in the
company to surrender to us for cancellation all or any part of the
unexercised portion of the option. In consideration of such surrender
and cancellation, the optionee is entitled to receive for each share of
common stock as to which the surrendered portion of the option relates,
an amount in cash equal to the difference between the exercise price per
share under the option and the highest closing sales price per share of
common stock during the 360 day calendar period prior to the optionee's
election to surrender the option as described in this paragraph.
(6) Mr. Blumenfeld was Vice President of Sales and Marketing from
January 16, 1998 until his resignation from SSG effective December 31,
1999. The amount in "Other Annual Compensation" for fiscal 1999
consists of automobile related expenses and the amount in "All Other
Compensation" consists of matching 401(k) contributions. Of the
aggregate 145,000 options granted to Mr. Blumenfeld in 1997 and 1998,
130,000 were amended to permit Mr. Blumenfeld to exercise such options
for a period of one year after the sale of the shares underlying the
options was registered with the Securities and Exchange Commission. The
remaining options were terminated.
<PAGE>
(7) Mr. Grant has served as Vice President-Strategic Planning since
January 29, 1999 and as President of our wholly-owned subsidiary,
Athletic Training Equipment Company, Inc., a Delaware corporation, since
December 1997. From January 1996 to December 1997, Mr. Grant was
President of Athletic Training Equipment Company, Inc., a Nevada
corporation which filed for bankruptcy in September 1997 and which was
subsequently acquired by us in December of that year. From January 1993
to January 1996 Mr. Grant was Vice President Business Unit Manager of
Johnson Worldwide Associates, Inc., a distributor of sporting goods.
The amount in "Other Annual Compensation" for fiscal 1999 consists of
automobile related expenses and the amount in "All Other Compensation"
is comprised of matching 401(k) contributions. See "Executive
Compensation and Other Information - Employment Agreements" for more
information regarding Mr. Grant's compensation.
Option Grants During 1999 Fiscal Year
The following table provides information related to options granted
to our executive officers during fiscal 1999.
<TABLE>
Potential Realizable
Value of Assumed Annual
Rates of Stock Price
Individual Grants in Last Fiscal Year Appreciation for Option Term (1)
Number of % of Total
Securities Options/
Underlying SARs Exercise Grant
Options/ Granted to or Date
SARs Employees Base Market
Granted in Fiscal Price Price Expiration
# Year ($/Sh/2) ($/Sh/2) Date 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Terrence M. Babilla 50,000 (3) 15% $9.00 $9.00 4/12/09 $-0- $283,003 $717,184
John P. Walker 50,000 (3) 15% $9.00 1/29/09 $-0- $283,003 $717,184
</TABLE>
(1) The potential realizable value illustrates value that might be
realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on our common stock over the term of the options.
<PAGE>
(2) The option exercise price may be paid (a) in shares of our common
stock previously owned by the executive officer, (b) by withholding
shares of our common stock that would otherwise be issued upon exercise,
(c) in cash or (d) a combination of the foregoing.
(3) All of these options vest in two equal annual installments
beginning on January 13, 2000; provided, however, the options will vest
immediately upon a change in control (as defined in the option
<PAGE>
agreement)
of the company. In addition, the agreements governing these
stock options permit the optionee to elect for a period of 180 days
following a change in control in the company to surrender to us for
cancellation all or any part of the unexercised portion of the option.
In consideration of such surrender and cancellation, the optionee is
entitled to receive for each share of common stock as to which the
surrendered portion of the option relates, an amount in cash equal to
the difference between the exercise price per share under the option and
the highest closing sales price per share of common stock during the 360
day calendar period prior to the optionee's election to surrender the
option as described in this paragraph.
Option Exercises During 1999 Fiscal Year and
Fiscal Year End Option Values
The following table provides information related to options
exercised by our executive officers during the 1999 fiscal year and the
number and value of options held at the end of our 1999 fiscal year by
our executive officers. We do not have any outstanding stock
appreciation rights.
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARs Options/SARs
Acquired at FY-End at FY-End
on Value (#) ($)(1)
Exercise Realized Exercisable Exercixable
Name (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Geoffrey P. Jurick -0- -0- 200,000/100,000 $144,000/$72,000
John P. Walker -0- -0- 66,666/83,334 $48,000/$24,000
Terrence M. Babilla -0- -0- 35,294/74,714 $25,412/$17,794
Adam Blumenfeld -0- -0- 126,800/30,000 $160,612/$21,600
Eugene J.P. Grant -0- -0- 33,333/16,667 $24,000/$12,000
</TABLE>
<PAGE>
(1) The closing price for our common stock as reported by the New York
Stock Exchange on October 1, 1999 was $8.22. Value is calculated on the
basis of the difference between $8.22 and the option exercise price of
"in the money" options, multiplied by the number of shares of our common
stock underlying the option.
(2) The agreements governing these stock options permit the optionee to
elect for a period of 180 days following a change in control (as defined
in the applicable option agreements) to surrender to us for cancellation
all or any part of the unexercised portion of the option. In
consideration of such surrender and cancellation, the optionee will be
entitled to receive for each share of common stock as to which the
surrendered portion of the option relates, an amount in cash equal to
the difference between the exercise price per share under the option and
the highest closing sales price per share of common stock during the 360
day calendar period prior to the optionee's election to surrender the
option as described in this paragraph.
Employment Agreements
John P. Walker. Effective January 14, 1998, we entered into a
three year employment agreement with John P. Walker. Pursuant to Mr.
Walker's employment agreement, Mr. Walker receives base annual
compensation (subject to annual increases by our Board) of $330,000.
The employment agreement also provides for (1) an annual bonus equal to
an amount up to 30% of Mr. Walker's base salary upon attainment of our
business plan and other agreed upon benchmarks, (2) an additional annual
performance bonus to be approved at the discretion of our Board, or a
committee thereof, (3) country club dues, (4) car allowance, (5)
relocation expenses, including an interest free bridge loan in the
amount of $100,000 secured by the real estate purchased, (6)
participation in our health insurance plans, and (7) certain tax gross-
ups. Mr. Walker's employment agreement also provides for certain
severance payments if Mr. Walker is terminated without cause or
constructively discharged prior to January 13, 2001. We also agreed to
make available to Mr. Walker an interest free loan for six months to
purchase shares of our common stock underlying his stock options, which
loan would be secured by the shares of common stock. Pursuant to Mr.
Walker's employment agreement, Mr. Walker may devote up to 33% of his
working time fulfilling his obligations as an officer of Emerson.
For more information about Mr. Walker's compensation, see "Executive
Compensation and Other Information-Summary Compensation Table."
<PAGE>
Geoffrey P. Jurick. Effective October 18, 1997, we entered into an
employment agreement with Geoffrey P. Jurick, which employment agreement
is scheduled to expire on March 31, 2000. Pursuant to Mr. Jurick's
employment agreement, Mr. Jurick receives base annual compensation
(subject to increases by our Board) of $250,000. The employment
agreement also provides for (1) an annual bonus of up to 30% of Mr.
Jurick's base salary upon attainment of our business plan and other
agreed upon benchmarks, (2) an additional annual performance bonus to be
approved at the discretion of our Board, or a committee thereof, (3) the
use of a company car and certain other benefits, such as participation
in our health insurance plans, and (4) certain tax gross-ups. Pursuant
to Mr. Jurick's employment agreement, Mr. Jurick may devote up to 50% of
his working time fulfilling his obligations as an officer of Emerson.
For more information about Mr. Jurick's compensation, see "Executive
Compensation and Other Information-Summary Compensation Table."
Terrence M. Babilla. Effective January 14, 1998, we entered into a
three year employment agreement with Terrence M. Babilla. Pursuant to
Mr. Babilla's employment agreement, Mr. Babilla receives base annual
compensation (subject to annual increases by our Board) of $240,000.
The employment agreement also provides for (1) an annual bonus of up to
30% of Mr. Babilla's base salary upon attainment of our business plan
and other agreed upon benchmarks, (2) an additional annual performance
bonus to be approved at the discretion of our Board, or a committee
thereof, (3) country club dues, (4) car allowance, (5) participation in
our health insurance plans, and (6) certain tax gross-ups. Mr.
Babilla's employment agreement also provides for certain severance
payments if he is terminated without cause or constructively discharged
prior to January 13, 2001. Pursuant to Mr. Babilla's employment
agreement, Mr. Babilla may devote up to 10% of his working time
fulfilling his obligations as an employee of Emerson and Emerson will
pay any salary directly to Mr. Babilla. For more information about Mr.
Babilla's compensation, please see "Executive Compensation and Other
Information-Summary Compensation Table."
Eugene J.P. Grant. Effective March 24, 1998, we entered into a
three year employment agreement with Eugene J.P. Grant. Pursuant to Mr.
Grant's employment agreement, Mr. Grant receives base annual
compensation of $127,500. The employment agreement also provides for
(1) an annual bonus of up to 60% of Mr. Grant's base salary upon
attainment of our business plan and other agreed upon benchmarks, (2) an
additional annual performance bonus to be approved at the discretion of
<PAGE>
our Board, or a committee thereof, and (3) car allowance. Mr. Grant's
employment agreement also provides for certain payments if he is
terminated without cause prior to March 24, 2001. For more information
about Mr. Grant's compensation, see "Executive Compensation and Other
Information-Summary Compensation Table."
We may terminate our obligations under any of the above employment
agreements if the employee covered by the employment agreement is
discharged for cause (as defined in each applicable agreement). Each of
the foregoing employees may be discharged without cause, provided that
we continue to pay the remaining compensation payments due under the
agreements. Each of the foregoing employees may terminate their
employment prior to expiration of the agreements and, if we have not
breached any provision of the agreements, we will be required to pay
only the compensation earned to the date of termination.
Severance and Consulting Agreements
Messrs. Walker and Babilla. In March 1999 we entered into
severance agreements with Messrs. Walker and Babilla. The severance
agreements provide that for a period of 180 days following a change in
control (as defined in each agreement) of the company, the employee has
the right to elect to receive cash compensation. The cash compensation
is equivalent to 299% of the sum of: (a) his highest annual salary at
any time during the 36 months prior to the change in control, plus (b)
the highest bonus or incentive compensation paid to him by us for any of
the last three fiscal years preceding a change in control. The cash
compensation is generally designed to compensate for the loss of the
employee's compensation, including salary and bonuses, less any amounts
the payment of which might cause adverse consequences under federal
income tax laws (as described in the agreements). In exchange for the
cash compensation, the employee will release all of his rights under his
employment agreement. As of December 31, 1999, the maximum aggregate
contingent liability under the severance agreements was approximately
$2,300,000.
Peter S. Blumenfeld. We entered into a severance agreement with Peter
S. Blumenfeld, our President and Chief Operating Officer until his
retirement on July 18, 1998. Upon a change of control of the company,
Mr. Blumenfeld's severance agreement became effective for three years.
Our issuance to Emerson on December 16, 1996 of 1,600,000 shares of our
common stock and warrants to purchase an additional 1,000,000 shares of
<PAGE>
our common stock resulted in a change in control under Mr. Blumenfeld's
severance agreement. On July 28, 1998 we paid Mr. Blumenfeld $898,650
upon his retirement (before taxes and other deductions) pursuant to the
terms of his severance agreement. In addition, we entered into a
consulting and separation agreement dated to be effective as of July 28,
1998 with Mr. Blumenfeld. Pursuant to the terms of the consulting
agreement, we have agreed to pay Mr. Blumenfeld approximately $9,700 per
month through July 31, 2000.
Anti-Takeover Effect of Certain Provisions
The provisions of the option agreements, employment agreements and
severance agreements that we have with certain of our executives may be
deemed to have an anti-takeover effect. The effect may be to delay,
defer or prevent a tender offer or takeover attempt that our
stockholders may consider to be in their best interest, including
attempts that might result in a premium over the market price for shares
of our common stock held by you.
Compensation Committee Interlocks and Insider Participation In
Compensation Decisions
The Compensation Committee is responsible for recommending to our
Board compensation arrangements for our Chairman of the Board and Chief
Executive Officer, which recommendation is subject to the approval of a
majority of the disinterested directors. The Chairman of the Board was
responsible for establishing compensation arrangements for all other
executive officers, subject to the review and approval of our Board.
During our 1999 fiscal year, Messrs. Treichler and Ko served as members
of our Compensation Committee.
Geoffrey P. Jurick serves as our Chairman of the Board and Chief
Executive Officer and also as Chairman of the Board and Chief Executive
Officer of Emerson. John P. Walker serves as our President and also as
Executive Vice President and Chief Financial Officer of Emerson. Mr.
Walker is also a member of our Board. Mr. Bnnger, who is a member of
our Board and also Emerson's Board, serves on our Compensation
Committee and also on Emerson's Compensation Committee. Messrs. Jurick
and Walker, both executive officers who were also members of our Board
during fiscal 1999, participated in deliberations concerning executive
officer compensation.
<PAGE>
Report of the Compensation and Stock Option Committee
on Executive Compensation
During fiscal 1999 the Compensation and Stock Option Committee and
Chairman of the Board shared the responsibility for establishing and
administering the company's executive compensation programs. The
Compensation and Stock Option Committee had responsibility for
determining compensation to be paid to the Chairman of the Board and
Chief Executive Officer, subject to the approval of a majority of the
disinterested directors. The Compensation and Stock Option Committee
also had responsibility for administering the company's stock option
plan, including authority regarding the selection of award recipients
and the size and terms of all option grants under the option plan. The
Chairman of the Board, subject to review and approval by the Board of
Directors, determines on an annual basis the compensation to be paid to
the executive officers of the company.
Under the supervision of the Compensation and Stock Option
Committee and the Board of Directors, the company developed and
implemented compensation policies, plans and programs that sought to
enhance the profitability of the company, and thus stockholder value, by
aligning closely the financial interests of the company's executives
with those of its stockholders. The specific objectives of the
company's executive compensation program were to:
* Support the achievement of the company's strategic operating
objectives.
* Provide compensation at competitive levels that will attract and
retain superior talent and reward executive officers based upon
performance.
* Align the executive officers' interests with the success of the
company by placing the majority of pay increases at risk (i.e. increases
that are dependent upon company performance).
The company's executive officer compensation program for fiscal
1999 was comprised of base salary, cash bonuses and long-term incentive
compensation in the form of stock options.
Base salaries for the executive officers of the company represent
compensation for the performance of defined functions and assumption of
defined responsibilities. The Compensation and Stock Option Committee
<PAGE>
reviews the base salary for the Chairman of the Board and Chief
Executive Officer on an annual basis and recommends compensation
arrangements for the company's Chairman of the Board and Chief Executive
Officer. Implementation of the Chairman and Chief Executive Officer's
compensation arrangement is subject to the approval of a majority of the
disinterested directors. The Chairman of the Board reviews the base
salary of all the other executive officers on an annual basis and
recommends compensation arrangements to the Board of Directors for such
executive officers. In determining salary adjustments, the Compensation
and Stock Option Committee and the Chairman of the Board consider the
company's growth in earnings and revenues, the reduction in expenses,
the company's results of operations as compared to the company's
business plan, and each executive's performance level, as well as other
factors relating to the executive's specific responsibilities. Also
considered are the executive's positions, experience, skills, potential
for advancement, responsibility and current salary in relation to the
expected level of pay for the positions in which the executive serves.
The Compensation and Stock Option Committee (with respect to
compensation arrangements for the Chairman and Chief Executive Officer)
and the Chairman (with respect to compensation arrangements for the
other executive officers) exercise their judgment based upon the above
criteria and do not apply a specific formula or assign a weight to each
factor considered. The company has entered into employment agreements
with each of Messrs. Jurick, Walker, Babilla and Grant. For more
information about these employment agreements, see "Executive
Compensation and Other Information -- Employment Agreements."
At the beginning of each fiscal year, management submits a business
plan to the Board of Directors and the Compensation and Stock Option
Committee. The business plan establishes performance goals of the
company for such fiscal year. Such goals may include target increases
in sales, net income and earnings per share, reduction in expenses, as
well as more subjective goals with respect to marketing, product
introduction and expansion of customer base. Cash bonuses are paid
based upon successful achievement of some or all of the foregoing
factors.
Final bonuses for the fiscal year ended October 1, 1999 are not
reflected in the Summary Compensation Table because they were not
calculable through the date of this Proxy Statement. However, the
employment agreements described above provide for an annual bonus upon
attainment of the company's business plan and other agreed upon
<PAGE>
benchmarks as well as an additional annual bonus to be approved at the
discretion of the Board of Directors or a committee thereof. For more
information about bonuses to executives, see "Executive Compensation and
Other Information-Employment Agreements."
The award of options to purchase common stock and the grant of
shares of restricted stock form the basis for the company's long-term
incentive plan for officers and key employees. Awards of stock options
were made during the 1999 fiscal year from the option plan administered
by the Compensation and Stock Option Committee. The specific objective
of all awards is to align executive and stockholder long-term interests
by creating a strong correlation between executive pay and stockholder
return. The company intends that its executives develop and maintain a
significant, long-term stock ownership position in the company's common
stock. During fiscal 1999, executive officers were granted options to
purchase 100,000 shares of common stock. The Stock Option Committee
arbitrarily determined the number of stock options granted to the
executive officers.
The company paid Mr. Jurick, the Chief Executive Officer, $250,000
in base salary during fiscal 1999. The salary paid to Mr. Jurick in
fiscal 1999 was subjectively established by the Compensation and Stock
Option Committee and not subject to specific criteria.
The Board of Directors has considered the potential impact of
Section 162(m) of the Internal Revenue Code of 1996, as amended (we
refer to it as the "Code"). Section 162(m) of the Code generally
provides that a publicly held corporation's deduction for compensation
paid to its covered employees is limited to $1 million per year,
subject to certain exceptions. Since the cash compensation of each of
the company's current covered employees is below the $1 million
threshold and the company's stock option plan has been revised to meet
the requirements of Section 162(m) of the Code, the Board of Directors
believes that Section 162(m) will not reduce the federal income tax
deduction available to the company. The company's policy is to qualify,
to the extent reasonable, its executive officers' compensation for
deductibility under applicable tax laws. However, the Board of
Directors believes that its primary responsibility is to provide a
compensation program that will attract, retain and reward the executive
talent necessary to the company's success. Consequently, the Board of
Directors recognizes that the loss of a tax deduction could be necessary
in some circumstances.
<PAGE>
This report is submitted by the members of the Board of Directors,
the Compensation Committee and the Stock Option Committee that were in
existence at the end of fiscal 1999.
Board of Directors Compensation and Stock Option Committee
Geoffrey P. Jurick Thomas P. Treicher
John P. Walker Johnson C.S. Ko
Peter G. Bnnger
Johnson C.S. Ko
Thomas P. Treichler
This report will not be deemed to be incorporated by reference in
any filing by Sport Supply Group under the Securities Act of 1933
(referred to as the "Securities Act") or the Exchange Act, except to the
extent that the company specifically incorporates this report by
reference.
COMPARE 5-YEAR OF CUMULATIVE TOTAL RETURN
AMONG SPORT SUPPLY GROUP, INC.
S&P 500 INDEX AND PEER GROUP INDEX
Corporate Performance Graph
The following graph shows a comparison of cumulative total returns
for us, the S&P 500 Composite Index and an index of peer companies for
the period since October 1, 1994. The comparison assumes $100 was
invested on October 1, 1994 in our common stock and in each of the two
indices and assumes reinvestment of dividends. Companies in the peer
group are as follows: K2, Inc. (f/k/a Anthony Industries, Inc.),
Escalade, Inc., and Johnson Worldwide Associates, Inc. Genesis Direct
was deleted from the peer group because its stock is no longer traded.
Media General Financial Services provided the information in the graph.
<TABLE>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 9/30/1994 9/29/1995 9/30/1996 9/30/1997 10/2/1998 10/1/1999
<S> <C> <C> <C> <C> <C> <C>
Sport Supply Group 100.00 90.76 40.92 58.13 53.01 61.15
Customer Selected Stock List 100.00 100.99 109.74 115.12 84.63 61.90
S&P Composite 100.00 129.74 156.13 219.28 239.12 305.61
</TABLE>
The stock price performance depicted in the above graph is not
<PAGE>
necessarily indicative of future price performance. The Corporate
Performance Graph will not be deemed to be incorporated by reference in
any filing by Sport Supply Group under the Securities Act or the
Exchange Act, except to the extent that the company specifically
incorporates the graph by reference.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Emerson Radio Corp. (we refer to it as "Emerson"), one of the
nation's largest volume consumer electronics distributors, directly and
through subsidiaries, designs, sources, imports and markets a variety of
video and audio consumer electronics and microwave oven products.
Emerson has been listed on the American Stock Exchange under the symbol
"MSN" since 1990. Emerson and Emerson Radio (Hong Kong) Ltd., Emerson's
wholly-owned subsidiary, own 2,269,500 shares or approximately 31%, of
our common stock. Emerson also owns five-year warrants to acquire an
additional 1,000,000 shares of our common stock at an exercise price of
$7.50 per share, subject to standard anti-dilution adjustments. If all
the warrants are exercised by Emerson, Emerson will own approximately
40% of our common stock.
Our Board now includes the following people that are associated
with Emerson: (1) Geoffrey P. Jurick, who beneficially owns
approximately 61% of Emerson's issued and outstanding common stock and
is Emerson's Chairman and Chief Executive Officer; (2) John P. Walker,
Emerson's Executive Vice President and Chief Financial Officer; and
(3) Peter G. Bunger, a member of Emerson's Board of Directors. Mr. Jurick
is currently our Chairman of the Board and Chief Executive Officer; Mr.
Walker is currently our President and Mr. Bnnger serves on the
Compensation Committee of each company. Mr. Jurick and Mr. Walker have
employment agreements with Emerson and us and split their time between
the two companies. Terrence M. Babilla, our General Counsel, also
provides certain legal services to Emerson.
During fiscal 1997, we entered into a management services agreement
with Emerson in an effort to utilize our excess capacity and to enable
Emerson to reduce certain costs. The management services agreement
implements a program whereby we perform certain services for Emerson in
exchange for a fee. The services include human resources, banking,
computer/management information systems, payables management, warehouse
services (including subleasing warehouse storage space), provision of
office space, design services and financial management services. The
<PAGE>
management services agreement may be terminated by either party upon 60
day's prior notice. During fiscal 1999, we invoiced Emerson
approximately $803,000 for services provided to Emerson, all of which
has been paid. For more information about reimbursement of salaries of
certain executive officers, see "Executive Compensation and Other
Information-Summary Compensation Table."
On September 29, 1993, Emerson and five of its United States
subsidiaries filed voluntary petitions for relief under the
reorganization provisions of Chapter 11 of the United States Bankruptcy
Code. Pursuant to Emerson's bankruptcy restructuring plans, on March
31, 1994, 30 million shares of Emerson's common stock were issued to GSE
Mutlimedia Technologies Corporation, Fidenas Investment Limited and
Elision International Ltd. (we refer to them as the "Affiliated
Entities"). The Affiliated Entities are all affiliates of Geoffrey
Jurick, the Chairman and Chief Executive Officer of both Emerson and us.
Mr. Jurick is the beneficial owner of approximately 61% of Emerson's
outstanding stock. On June 11, 1996, a stipulation of settlement and
order was executed, which settles various legal proceedings in
Switzerland, the Bahamas and the United States. The settlement
agreement provides for, among other things, the payment by Mr. Jurick
and the Affiliated Entities of $49.5 million to various claimants of Mr.
Jurick and the Affiliated Entities (we refer to them as the
"Creditors"), to be paid from the proceeds of the sale of certain shares
of Emerson's common stock owned by the Affiliated Entities (we refer to
such shares as the "settlement shares"). In addition, Mr. Jurick is to
be paid the sum of $3.5 million from the sale of the settlement shares.
The settlement agreement provides that the settlement shares are to be
sold over an indeterminate period of time by a financial advisor. Mr.
Jurick must retain beneficial ownership of voting power for a certain
number of settlement shares to avoid an event of default under Emerson's
senior credit facility with Congress and/or its senior subordinated
convertible debentures arising out of a change of control of Emerson.
All of the settlement shares secure payment of the $49.5 million
owed to the Creditors on a first priority basis. Any Creditor may apply
to the court for an order to terminate the settlement agreement if
certain events occur. Such events include, without limitation,
delisting of the settlement shares from a national securities exchange
or a determination that there is no reasonable prospect that the goals
contemplated by the settlement agreement can be achieved. In November
1997, Petra Stelling and Barclays Bank (two of the Creditors) filed a
<PAGE>
motion with the court for an order (1) terminating the settlement
agreement on the ground that there is no reasonable prospect that the
goals contemplated by the settlement agreement can be accomplished, and
(2) granting the Creditors authority to exercise all the rights and
remedies provided by the settlement and pledge agreements in the event
of termination, including authorizing the collateral agent to sell the
settlement shares to fund payment of the settlement amount and to vote
the settlement shares pending such sale, directing the entry and release
of the consent judgments, authorizing Petra Stelling to enforce a
judgment against Mr. Jurick in Switzerland, and for such other relief as
the court deems appropriate. Emerson and Mr. Jurick responded, the
Creditors replied and hearings were held in April, May and July 1998.
No decision has been rendered by the court and a further hearing has
been scheduled for January 24 and 25, 2000.
If the court enters an order terminating the settlement agreement, the
Creditors may take any action permitted by law to execute the consent
judgments given to them in connection with the settlement agreement to
collect the unpaid balance (including, without limitation, foreclosing
on the settlement shares). If the Creditors foreclose on the settlement
shares and such foreclosure results in a change of control (as defined
in the indenture governing Emerson's senior subordinated debentures) of
Emerson, such foreclosure will be deemed an event of default under
Emerson's senior credit facility, entitling the holders to accelerate
payment of such indebtedness. In addition, if a change of control (as
defined in the indenture governing Emerson's senior subordinated
debentures) occurs, each of the holders of the debentures, subject to
the right of the senior secured creditors to impose a 120 day payment
block, has the right to require Emerson to repurchase its debentures at
the par value thereof plus accrued but unpaid interest. Any such
acceleration would have a material adverse effect on Emerson and could
result in a change of control of Sport Supply Group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act (we refer to it as "Section
16(a)") requires our officers and directors, and persons who own more
than 10% of a registered class of our equity securities to file reports
of ownership and changes in ownership with the SEC and the New York
Stock Exchange. Officers, directors and greater than 10% stockholders
are required by certain regulations to furnish us with copies of all
Section 16(a) forms they file.
<PAGE>
Based solely on our review of the copies of such forms received by
us, we believe that, during fiscal 1999, our officers, directors and
greater than 10% beneficial owners have complied with all applicable
filing requirements with respect to our equity securities, except that
one statement of changes in beneficial ownership of securities (Form 4),
in which one transaction was reported, was filed late by John P. Walker,
an officer and director.
STOCKHOLDER PROPOSALS
A proper proposal submitted by one of our stockholders in
accordance with applicable rules and regulations for presentation at our
next annual meeting that is received at our principal executive office
by September 23, 2000 will be included in our proxy statement and form
of proxy for our next annual meeting. If you desire to bring a proposal
before the next annual meeting and such proposal is not timely submitted
for inclusion in our proxy statement, you can still submit the proposal
if we receive it no later than December 6, 2000.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of our Board. We will
pay the cost of soliciting proxies in the accompanying form. Our
officers may solicit proxies by mail, telephone or fax. Upon request,
we will reimburse brokers, dealers, banks and trustees, or their
nominees, for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of our shares of common stock.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent certified public accountants, has
been selected by our Board as our independent auditor for the current
year. A representative of Ernst & Young LLP is expected to be present
at the annual meeting, will have an opportunity to make a statement if
he desires to do so and is expected to be available to respond to
appropriate questions.
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented
for action at the annual meeting other than the matters set forth
herein. Should any other matter requiring a vote of our stockholders
arise, the proxies in the enclosed form confer upon the person or
persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in accordance with their best
judgment in the interest of Sport Supply Group.
FINANCIAL STATEMENTS
We will provide a copy of our Annual Report on Form 10-K for the
fiscal year ended October 1, 1999 (exclusive of exhibits), without
charge, to each person to whom a copy of this Proxy Statement is
delivered, upon the written or oral request. Requests should be
directed to Investor Relations (Attention: John P. Walker), Sport
Supply Group, Inc., 1901 Diplomat Drive, Farmers Branch, Texas 75234.
By Order of the Board of Directors,
TERRENCE M. BABILLA,
Chief Operating Officer,
Executive Vice President,
General Counsel and Secretary
<PAGE>
FRONT OF PROXY CARD
SPORT SUPPLY GROUP, INC
Board of Directors Proxy for the Annual Meeting
of Stockholders at 2:00 p.m., Friday, February 25, 2000
Bent Tree Country Club
5201 Westgrove Drive
Dallas, Texas 75248
The undersigned stockholder of Sport Supply Group, Inc. (the "Company")
hereby appoints Geoffrey P. Jurick, John P. Walker and Terrence M. Babilla,
or any of them, as proxies, each with full powers of substitution, to vote
the shares of the undersigned at the above-stated Annual Meeting and at any
adjournment(s) thereof.
(Continued on reverse side)
BACK OF PROXY CARD
(1) To elect five directors for a one-year term
FOR all nominees listed below WITHHOLD AUTHORITY
(except as provided to the to vote for all
contrary below [ ] nominees below [ ]
Geoffrey P. Jurick, John P. Walker, Peter G. Bunger,
Johnson C.S. Ko and Thomas P. Treichler
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
write that nominee's name on the space provided below):
(2) To transact such other business as may properly come before the meeting
and any adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREON. IF A CHOICE IS
NOT INDICATED WITH RESPECT TO ITEM (1), THIS PROXY WILL BE VOTED "FOR"
SUCH ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY
MATTER REFERRED TO IN ITEM (2). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE
IT IS EXERCISED.
Receipt herewith of the Company's 1999 Annual Report and Notice of Meeting
and Proxy Statement, dated January 21, 2000 is hereby acknowledged.
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
PLEASE SIGN, DATE AND MAIL TODAY.
Dated:
(Signature of Stockholder(s)
(Joint owners must EACH sign. Please
sign EXACTLY as your name(s) appear(s)
on this card. When signing as attorney,
trustee, executor, administrator,
guardian or corporate officer, please
give your FULL title.)
