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.
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(Name of Registrant as specified in Its Charter)
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(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:
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(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):
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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.
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<PAGE>
SPORT SUPPLY GROUP, INC.
1901 Diplomat Drive
Farmers Branch, Texas 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 26, 2001
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 January 26, 2001, 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 2,
2001 as the record date for determining 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.
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 4, 2001
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED HEREIN.
<PAGE>
SPORT SUPPLY GROUP, INC.
_____________________
PROXY STATEMENT
_____________________
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 26, 2001
_____________________
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 January 26, 2001 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 2, 2001. We began mailing this
proxy statement and the enclosed proxy to our stockholders on January 4,
2001.
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 2, 2001 to vote
on each of the proposals brought before the annual meeting. At the record
date there were 7,279,165 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.
<PAGE>
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.
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.
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.
<PAGE>
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 15, 2000), business
experience and public directorships of each nominee for director are as
follows:
Year First
Principal Occupation Became
Name Age Or Employment (1) Director
------------------- --- --------------------------------- --------
Geoffrey P. Jurick 59 Chairman of the Board and Chief 1996
Executive Officer (2)
John P. Walker 37 President (3) 1996
Thomas P. Treichler 56 Chairman of the Board and Chief 1997
Executive Officer of Orient
Financial Corporation (4)
Peter G. Bunger 60 Consultant (5) 1996
Johnson C.S. Ko 49 Chairman of Universal Appliances 1996
Limited (6)
________________________
(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 44% 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."
<PAGE>
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."
(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 44% 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. Bunger has been a director since December 10, 1996. Mr.
Bunger has been a director of Emerson since July 1992. Emerson
beneficially owns approximately 44% of our issued and outstanding
common stock. See "Certain Relationships and Related Transactions" for
more information about Emerson. Presently, Mr. Bunger is a consultant
with Savarina AG, an entity engaged in the business of portfolio
management monitoring in Zurich, Switzerland. Since October 1992, Mr.
Bunger has served as a director of Savarina AG, and since 1992, as a
director of ISCS, a computer software company.
<PAGE>
(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 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..
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 15, 2000, 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 Nature Percent
of Beneficial Of
Name of Beneficial Owner Ownership Class
---------------------------------- ----------------- -------
Emerson Radio Corp. 3,673,700 (1) 44.4%
Dimensional Fund Advisors, Inc. 508,515 (2) 7.0%
Wellington Management Company, LLP 475,000 (3) 6.5%
Oaktree Capital Management, LLC 403,100 (4) 5.5%
Wentworth Hauser & Violich, Inc. 390,000 (5) 5.3%
Geoffrey P. Jurick* 3,973,700 (6) 46.4%
John P. Walker* 187,106 (7) 2.2%
Peter G. Bunger* 15,625 (8) **
Johnson C.S. Ko* 25,625 (8) **
Thomas P. Treichler* 12,500 (9) **
Terrence M. Babilla 6,856 (10) **
Robert K. Mitchell 8,468 (11) **
Eugene J.P. Grant 50,000 (12) **
Douglas Pryor 19,024 (13) **
Kenneth Corby 20,545 (14) **
Executive Officers and Directors 4,319,449 (15) 49%
as a group (10 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 a
Report on Form 4 filed with the SEC by Emerson on November 9, 2000.
Pursuant to the Report on Form 4, Emerson reported that it beneficially
owned 3,673,700 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) 979,700 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 3,673,700 shares.
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.
<PAGE>
On December 22, 2000, Emerson offered to purchase an additional
1,629,629 shares of our common stock from us. Emerson agreed to
finalize this purchase on or before January 15, 2001. Our Board agreed
that selling additional shares to Emerson and using the proceeds to pay
off our term loan was in our best interests and approved Emerson's
offer. Upon completion of this sale, Emerson will own 4,303,329
shares, or approximately 48.3%, of our issued and outstanding shares as
a result of such purchase. These additional shares are not included in
the ownership table described above. See "Certain Relationships and
Related Transactions" for a more detailed description of Emerson's
offer to purchase additional shares and 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 a letter from
Dimensional dated December 5, 2000. Dimensional is an investment
advisor registered under Section 203 of the Investment Advisors Act of
1940, and serves as investment manager to certain other investment
vehicles, including commingled group trusts. These investment
companies and investment vehicles are the "Portfolios." In its role as
investment advisor and investment manager, Dimensional possessed both
voting and investment power over 508,515 shares of our common stock as
of September 30, 2000. The Portfolios own all securities reported in
this statement, and Dimensional disclaims beneficial ownership of such
securities.
(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 a letter from Wellington dated
December 4, 2000. Wellington, a registered investment advisor,
reported that as of September 30, 2000 it has shared voting power with
respect to 475,000 shares, shared dispositive power with respect to
475,000 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.
(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 sole dispositive power with respect to all
403,100 shares.
(5) Wentworth Hauser & Violich, Inc.'s address is 333 Sacramento Street,
San Francisco, California 94111. Wentworth's beneficial ownership is
based on information set forth in a letter from Wentworth dated
December 12, 2000. Wentworth, a wholly-owned subsidiary of Laird
Norton Trust Co. and an investment adviser to certain persons, reported
it has sole voting and sole dispositive power with respect to all
390,000 shares. Laird Norton Trust Co. disclaims beneficial ownership
of all such shares.
<PAGE>
(6) Mr. Jurick's address is Sport Supply Group, Inc., 1901 Diplomat Drive,
Farmers Branch, Texas 75234. Mr. Jurick, directly and indirectly,
beneficially owns approximately 46%of the issued and 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 3,673,700 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.
(7) Consists of 36,106 shares of our common stock and 150,000 shares of our
common stock issuable upon the exercise of stock options that are
exercisable currently or within 60 days of the date hereof.
(8) Includes 15,625 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 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.
(10) Consists of 6,856 shares of our common stock.
(11) Consists of 135 shares of our common stock and 8,333 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) Consists of 50,000 shares of our common stock issuable upon the
exercise of stock options that are exercisable currently or within 60
days of the date hereof.
(13) Consists of 2,857 shares of our common stock and 16,167 shares of our
common stock issuable upon the exercise of stock options that are
exercisable currently or within 60 days of the date hereof.
(14) Consists of 545 shares of our common stock and 20,000 shares of our
common stock issuable upon the exercise of stock options that are
exercisable currently or within 60 days of the date hereof.
(15) Includes 588,250 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 (6) 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 four (4) formal meetings during
our 2000 fiscal year and acted by unanimous written consent on five (5)
occasions. During the 2000 fiscal year, each member of the Board
participated in at least 75% of the Board and committee meetings for which
he served as a director and/or committee member.
During fiscal 2000, 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. Bunger, Thomas P. Treichler and Johnson C.S. Ko. 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. All members of the Audit Committee satisfy
the requirements of independence set forth in the Audit Committee Policy of
the New York Stock Exchange. The Audit Committee held one (1) formal
meeting during fiscal 2000. For additional information concerning the Audit
Committee, see "Report of the Audit Committee."
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 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 one (1) formal
meeting during our 2000 fiscal year.
The Board of Directors did not have a standing nominating committee, or
any other committee performing similar functions during our 2000 fiscal
year. The Board of Directors performed the functions customarily
attributable to a nominating committee as a whole.
<PAGE>
Compensation of Directors
During our 2000 fiscal year, each non-management director was entitled
to receive up to $8,000 in annual director's fees. In addition, the
Chairman of the Audit Committee and the Chairman of the Compensation and
Stock Option Plan Committee each receive an additional $2,500 in annual
fees. During fiscal 2000, Dr. Treichler, Mr. Ko and Mr. Bunger received
$13,000, $8,000 and $8,000, respectively, in director's fees. Our officers
do not receive compensation for serving on our Board. Non-employee
directors are automatically granted nonqualified stock options to purchase
3,125 shares of our common stock on an annual basis.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
<TABLE>
The following table sets forth certain information regarding
compensation paid during each of our last three fiscal years to our Chief
Executive Officer and each of our other most highly compensated executive
officers, based on salary and bonus earned during fiscal 2000.
The information set forth in the following table is for the fiscal
years ended October 2, 1998, October 1, 1999 and September 29, 2000.
Securities
Restricted Underlying
Other Annual Stock Options/ All Other
Name and Fiscal Salary Bonus Compensation Awards SARs Compensation
Principal Position Year ($) ($) (1) ($) ($) (#) ($)
----------------------- ------ -------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Geoffrey P. Jurick, 2000 $250,000 --- --- --- --- ---
Chairman of the 1999 $250,000 $63,000 --- --- --- ---
Board and Chief 1998 $250,000 $25,000 --- --- 300,000 ---
Executive Officer (2)
John P. Walker, 2000 $330,000 --- $12,929 --- --- $113,641
President (3) 1999 $320,000 $80,000 $15,004 --- --- $2,550
1998 $260,833 $125,000 $110,518 412,500 50,000(5) $3,213
Terrence M. Babilla, 2000 $240,000 --- $28,667 --- --- $2,625
Chief Operating Officer, 1999 $235,000 $60,000 $26,901 --- 50,000(5) $2,250
Executive Vice President, 1998 $220,000 $75,000 $48,628 --- 100,000(5) $2,904
General Counsel and
Secretary (4)
Eugene J.P. Grant, 2000 $150,000 --- $6,000 --- --- $2,250
Vice President - 1999 $144,375 --- $6,000 --- --- $1,688
Strategic Planning (6) 1998 $106,811 $50,000 $6,000 --- 50,000 ---
Douglas Pryor, 2000 $ 93,000 $31,850 $8,400 --- --- $1,873
Vice President (7) 1999 $ 80,820 $ 7,500 $8,400 --- --- $1,307
1998 $ 65,126 $ 4,000 $8,400 --- --- $984
</TABLE>
<PAGE>
(1) Except for Mr. Pryor, no bonuses for the fiscal year ended September
29, 2000 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. See "Certain Relationships and Related Transactions" for
more information about Emerson.
(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, $100,000 and
$100,000 of the amount included in "Salary" for fiscal 1998, fiscal
1999 and fiscal 2000, respectively, in reimbursement of salary paid by
us to Mr. Walker for the benefit of Emerson.
The amount in "Other Annual Compensation" consists of: (a) for fiscal
2000, country club related dues and expenses of $4,380 and automobile
related expenses of $3,190, and tax gross-ups related to these expenses
of $5,359, (b) for fiscal 1999, country club related dues and expenses
of $7,166 and automobile related expenses of $7,838, and (c) 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
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 15, 2000, Mr.
Walker owned 28,418 restricted shares, which had a fair market value of
$42,627. We withheld the remaining 21,582 restricted shares for income
taxes.
The amount in "All Other Compensation" for fiscal 1998 and fiscal 1999
is comprised of matching 401(k) contributions. The amount in "All
Other Compensation" for fiscal 2000 is comprised of $2,625 in matching
401(k) contributions and $65,000 in forgiveness of indebtedness.
During 1997, the Company loaned Mr. Walker $100,000, interest free, to
purchase a residence in Texas. During fiscal 2000 Mr. Walker's loan
was restructured whereby (i) $65,000 of the loan was forgiven, (ii) the
$65,000 forgiven amount was grossed-up for taxes by 40% or $46,016, and
(iii) Mr. Walker was required to pay the remaining $35,000 of the loan
in quarterly installments of $5,000 each. There are three (3)
quarterly installments remaining to be paid, with the last quarterly
installment being due to be paid on or before June 30, 2001. See
"Executive Compensation and Other Information - Employment Agreements"
for more information about Mr. Walker's Compensation.
<PAGE>
(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 2000 consists of country club dues and
fees of $6,000 and automobile related expenses of $10,790 and tax
gross-ups related to these expenses of $11,887 , and 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. Mr. Babilla
voluntarily forfeited all of his options during fiscal 2000 without any
consideration being paid to him.
(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. Mr. Babilla voluntarily forfeited all of his options during
fiscal 2000 without any consideration being paid to him.
(6) 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 1998, 1999 and
2000 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.
(7) Mr. Pryor has served as our Vice President of Purchasing and
Manufacturing since January 29, 1999. Mr. Pryor served as our Director
of Purchasing from 1992 to 1998 and our Senior Buyer and Merchandiser
from 1988 to 1991. The amount in "Other Annual Compensation" for
fiscal 1998, 1999 and 2000 consists of automobile related expenses and
the amount in "All Other Compensation" is comprised of matching 401(k)
contributions.
<PAGE>
Option Grants During 2000 Fiscal Year
No options were granted to our named executive officers during fiscal
2000.
Option Exercises During 2000 Fiscal Year and Fiscal Year End Option Values
<TABLE>
The following table provides information related to options exercised
by our executive officers during the 2000 fiscal year and the number and
value of options held at the end of our 2000 fiscal year by our executive
officers. We do not have any outstanding stock appreciation rights.
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/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
------------------- -------- -------- ----------------- -------------
<S> <C> <C> <C> <C>
Geoffrey P. Jurick -0- -0- 300,000/0 $0/$0
John P. Walker -0- -0- 125,000/25,000 (2) $0/$0
Terrence M. Babilla -0- -0- 0/0 $0/$0
Eugene J.P. Grant -0- -0- 33,333/16,667 $0/$0
Douglas Pryor -0- -0- 16,667/13,333 $0/$0
__________________
</TABLE>
(1) The closing price for our common stock as reported by the New York
Stock Exchange on September 29, 2000 was $2.88. Value is calculated on
the basis of the difference between $2.88 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.
<PAGE>
Employment Agreements
John P. Walker. Effective January 14, 1998, we entered into a three
year employment agreement with John P. Walker. We amended the Employment
Agreement on February 25, 2000, which amendment extended the term of the
Employment Agreement to December 31, 2002. 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. A portion of Mr. Walker's bridge loan was forgiven in 2000. See
"Executive Compensation and Other Information - Summary Compensation Table."
Mr. Walker's employment agreement also provides for certain severance
payments if Mr. Walker is terminated without cause or constructively
discharged prior to December 31, 2002. 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."
Geoffrey P. Jurick. Effective October 18, 1997, we entered into a
three year employment agreement with Geoffrey P. Jurick. 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. Mr. Jurick's
employment agreement expired on March 31, 2000. For more information about
Mr. Jurick's compensation, see "Executive Compensation and Other
Information-Summary Compensation Table."
<PAGE>
Terrence M. Babilla. Effective January 14, 1998, we entered into a
three year employment agreement with Terrence M. Babilla. We amended the
Employment Agreement on February 25, 2000, which amendment extended the term
of the Employment Agreement to December 31, 2002. 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 December 31, 2002. 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 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.
Mr. Grant's employment agreement is scheduled to expire on March 23, 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.
<PAGE>
Severance 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 15, 2000, the maximum aggregate contingent liability under the
severance agreements was approximately $2,300,000.
Messr. Pryor. Effective February 15, 1999 we entered into a Non-
Competition, Confidentiality and Severance Agreement with Mr. Pryor.
Subject to the terms of this Agreement, if Mr. Pryor is terminated by us
without "cause" (as defined in the Agreement), we have agreed to pay Mr.
Pryor his then current bi-weekly salary for a period of twenty-four (24) bi-
weekly periods from the date of termination. As of December 15, 2000, the
maximum aggregate contingent liability under Mr. Pryor's severance agreement
was approximately $93,000.
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 2000 fiscal
year, Messrs. Treichler and Ko served as members of our Compensation
Committee.
<PAGE>
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. Bunger, 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 2000, participated
in deliberations concerning executive officer compensation.
Report of the Compensation and Stock Option Committee on Executive
Compensation
During fiscal 2000 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 2000
was comprised of base salary, cash bonuses and long-term incentive
compensation in the form of stock options.
<PAGE>
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
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. 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 September 29, 2000 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 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. 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. No awards of stock
options were made to the named executive officers during the 2000 fiscal
year from the option plan administered by the Compensation and Stock Option
Committee.
<PAGE>
The company paid Mr. Jurick, the Chief Executive Officer, $250,000 in
base salary during fiscal 2000. The salary paid to Mr. Jurick in fiscal
2000 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.
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 2000.
Board of Directors Compensation and Stock Option Committee
------------------- ---------------------------------------
Geoffrey P. Jurick Thomas P. Treichler
John P. Walker Johnson C.S. Ko
Peter G. Bunger
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.
Report of Audit Committee
On April 20, 2000, the Board of Directors adopted the Audit Committee
Charter, a copy of which is attached to this Proxy Statement as Appendix I.
Management is responsible for the company's internal controls and financial
reporting process. The company's independent auditors are responsible for
performing an independent audit of the company's consolidated financial
statements in accordance with generally accepted auditing standards and for
issuing a report thereon. As the Audit Committee of the Board, we are
responsible for monitoring and overseeing these processes. This report
discusses certain actions we took during fiscal 2000 in connection with
those responsibilities.
<PAGE>
In this context, we have reviewed the audited consolidated financial
statements and have met and held discussions with management and Ernst &
Young, LLP, the company's independent auditors. Management has represented
to us that the company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles. We also discussed
with the independent auditors matters required to be discussed by Statement
on Auditing Standards No. 61, which includes among other items, matters
related to the conduct of the audit of the company's financial statements.
The independent auditors also provided us with written disclosures and
the letter required by Independence Standards Board Standard No. 1, which
relates to the auditor's independence from the company and its related
entities, and we discussed with the independent auditors their independence.
Based on our discussions with management and the independent auditors,
as well as our review of the representations of management and the report of
the independent auditors to us, we recommended to the Board that the
company's audited consolidated financial statements be included in the
Annual Report on Form 10-K for the fiscal year ended September 29, 2000 and
filed with the Securities and Exchange Commission.
The Audit Committee has selected Ernst & Young, LLP to be employed as
the company's independent certified public accountants to conduct the annual
audit and to report on, as may be required, the consolidated financial
statements that may be filed by the company with the Securities and Exchange
Commission during the ensuing year.
This report is submitted by the members of the Audit Committee that
were in existence at the end of fiscal 2000.
Thomas P. Treichler
Johnson C.S. Ko
Peter G. Bunger
This report 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 this report
by reference.
<PAGE>
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, 1995. The comparison assumes $100 was invested on
October 1, 1995 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. Media General Financial Services
provided the information in the graph.
[ PERFORMANCE GRAPH APPEARS HERE ]
<TABLE>
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SPORT SUPPLY GROUP, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 9/29/1995 9/30/1996 9/30/1997 10/2/1998 10/1/1999 9/29/2000
--------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sport Supply Group 100.00 45.09 64.04 58.41 67.37 24.59
Customer Selected Stock List 100.00 114.62 118.32 85.37 59.24 58.44
S&P Composite 100.00 120.34 169.01 184.30 235.54 266.83
</TABLE>
Assumes $100 Invested on Oct 1, 1995
Assumes Dividend Reinvested
Fiscal Year Ending Sept. 29, 2000
The stock price performance depicted in the above graph is not 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.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ownership by Emerson Radio Corp.
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's wholly-owned subsidiary Emerson Radio (Hong Kong) Ltd.
own 2,673,700 shares, or approximately 37%, of our issued and outstanding
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 (the "1996 Warrants").
If all the 1996 Warrants are exercised by Emerson, Emerson will own
approximately 44% of our common stock.
On September 13, 2000, we amended the credit agreement governing our
credit facility. Several changes were made to the credit agreement,
including reducing the credit facility from $40 million to $27.5 million and
amending the fixed charge coverage ratio. Subsequent to the end of the
fiscal year, we were not in compliance with the revised fixed charge
coverage ratio and were, therefore, in technical default of this ratio. Our
senior lender agreed to waive this default and eliminate the fixed charge
coverage ratio pursuant to an amendment to the credit agreement if, among
other things, we agreed to pay off the remaining $2.2 million balance on our
term loan by January 15, 2001.
On December 22, 2000, Emerson offered to purchase 1,629,629 shares of
our common stock from us for $1.35 per share in cash, for a total purchase
price of $2.2 million. The $1.35 per share purchase price represented a 20%
premium to the closing price of our common stock on December 22, 2000.
Emerson's offer was contingent on Comerica making certain amendments to the
senior secured credit facility before December 28, 2000, including
eliminating the fixed charge coverage ratio. Comerica satisfied these
contingencies. Emerson agreed to finalize this purchase on or before
January 15, 2001. Our Board agreed that selling additional shares to
Emerson for $1.35 per share and using the proceeds to pay off the term loan
was in our best interests and approved Emerson's offer. Our issued and
outstanding shares will increase from 7,279,165 shares to 8,908,794 shares
upon completion of this transaction. Emerson will own 4,303,329 shares, or
approximately 48.3%, of our issued and outstanding shares as a result of
such purchase. If all of the 1996 Warrants are exercised, Emerson will own
approximately 54% of our common stock.
Emerson and Emerson HK have certain demand and incidental registration
rights with respect to the resale of the shares of Common Stock they own, as
well as on the exercise and resale of the shares of Common Stock Emerson may
acquire under the Warrant Agreement governing the 1996 Warrants.
<PAGE>
Pursuant to a Pledge and Security Agreement, Emerson has pledged to
Congress, its senior lender, 500,000 of its shares in SSG and the 1996
Warrants together with all proceeds thereof and all dividends and other
income and distributions thereon or with respect thereto and all rights
of Emerson to have the such shares (and any shares of Common Stock acquired
through the exercise of the 1996 Warrants (as permitted by Congress)
registered under the Registration Rights Agreement.
Our Board now includes the following people that are associated with
Emerson: (1) Geoffrey P. Jurick, who beneficially owns approximately 46% 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. Bunger 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 Chief
Operating Officer and General Counsel, also provides certain legal services
to Emerson.
Management Services Agreement with Emerson Radio Corp.
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 management
services agreement may be terminated by either party upon 60 days' prior
notice. During fiscal 2000, we invoiced Emerson approximately $447,000 for
services provided to Emerson, $361,000 of which has been paid. For more
information about reimbursement of salaries/bonuses of certain executive
officers, see "Executive Compensation and Other Information-Summary
Compensation Table."
Litigation Concerning Certain Officers and Directors and Emerson Radio Corp.
Mr. Jurick is the beneficial owner of approximately 46% of Emerson's
outstanding stock. On June 11, 1996, a Stipulation of Settlement and Order
(the "Settlement Agreement") was executed, which settles various legal
proceedings in Switzerland, the Bahamas and the United States between Mr.
Jurick and three of his creditors.
<PAGE>
The Settlement Agreement terminated substantially all litigation among
the parties and provided, among other things, for the payment by Mr. Jurick
and GSE Mutlimedia Technologies Corporation, Fidenas Investment Limited and
Elision International Ltd., affiliates of Mr. Jurick, of $49.5 million to
the three creditors of Mr. Jurick and his affiliates. The payment was to be
paid from the proceeds of the sale of certain of the 29,152,542 shares of
Emerson common stock (the "Settlement Shares") owned by such affiliates. In
addition, Mr. Jurick was to have been paid the sum of $3.5 million from the
sale of Settlement Shares. On March 3, 2000, the U.S. District Court of New
Jersey terminated the Settlement Agreement on the grounds that there was no
reasonable prospect that the goals of the Settlement Agreement could
be accomplished. On May 25, 2000, the Court implemented, in part,
its termination of the Settlement Agreement by approving each of the
transactions proposed by Mr. Jurick, Emerson and two of Mr. Jurick's
creditors, including the division of the Settlement Shares. Other than the
division of the Settlement Shares, the Court has not yet implemented the
termination of the Settlement Agreement as to the third creditor.
In 1994, the Stellings, the third creditor, filed a complaint with the
Swiss Authorities alleging that Mr. Jurick had conducted banking operations
in Switzerland without appropriate licenses and that Messrs. Jurick and
Bunger engaged in improper financing activities. Emerson was not a party to
these proceedings. In December 1999, the Swiss Tribunal dismissed, subject
to appeal, all charges against Messrs. Jurick and Bunger. We understand
that this matter will not be further appealed by the Swiss Government. The
Swiss Tribunal did find, however, which finding is also subject to appeal,
that Mr. Jurick had engaged in banking operations in Switzerland without all
appropriate licenses and fined him approximately $12,500. We understand
Mr. Jurick is appealing the amount of his fine.
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.
Based solely on our review of the copies of such forms received by us,
we believe that, during fiscal 2000, 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 each of John P.
Walker, an officer and director and Emerson Radio Corp.
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 5,
2001 will be included in our proxy statement and form of proxy for our next
annual meeting.
<PAGE>
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 Audit Committee 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.
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 September 29, 2000 (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>
APPENDIX I
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SPORT SUPPLY GROUP, INC.
AUDIT COMMITTEE CHARTER
Purpose
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibility to
oversee management's conduct of the Company's financial reporting process,
including by overviewing the financial reports and other financial
information provided by the Company to any governmental or regulatory body,
the public or other users thereof, the Company's systems of internal
accounting and financial controls, and the annual independent audit of the
Company's financial statements.
In discharging its oversight role, the Committee is empowered to investigate
any matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose. The Board and the
Committee are in place to represent the Company's shareholders; accordingly,
the outside auditor is ultimately accountable to the Board and the
Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
Membership
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the
Audit Committee Policy of the New York Stock Exchange.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who are financially literate or who become financially literate within
a reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee will have accounting or
related financial management expertise.
<PAGE>
Key Responsibilities
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements
and that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial
management, as well as the outside auditors, have more time, knowledge and
more detailed information on the Company than do Committee members.
Consequently, in carrying out its oversight responsibilities, the Committee
is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the outside
auditor's work.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditor or to assure compliance with laws and regulations.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set
forth as a guide with the understanding that the Committee may diverge from
this guide as appropriate given the circumstances.
* The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual Report
on Form 10-K (or the Annual Report to Shareholders if distributed prior to
the filing of Form 10-K) and review and consider with the outside auditors
the matters required to be discussed by Statement of Auditing Standards
('SAS') No. 61.
* As a whole, or through the Committee chair, the Committee shall review
with the outside auditors the Company's interim financial results to be
included in the Company's quarterly reports to be filed with Securities
and Exchange Commission and the matters required to be discussed by SAS
No. 61; this review will occur prior to the Company's filing of the Form
10-Q.
* The Committee shall discuss with management and the outside auditors the
quality and adequacy of the Company's internal controls.
* The Committee shall:
* request from the outside auditors annually, a formal written statement
delineating all relationships between the auditor and the Company
consistent with Independence Standards Board Standard Number 1;
* discuss with the outside auditors any such disclosed relationships and
their impact on the outside auditor's independence; and
* recommend that the Board take appropriate action in response to the
outside auditor's report to satisfy itself of the auditor's independence.
* The Committee, subject to any action that may be taken by the full Board,
shall have the ultimate authority and responsibility to select (or
nominate for shareholder approval), evaluate and, where appropriate,
replace the outside auditor.
<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, January 26, 2001
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)
<PAGE>
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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):
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(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 2000 Annual Report and Notice of Meeting
and Proxy Statement, dated January 4, 2001, is hereby acknowledged.
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.)
