-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AVlLjJVhYgkjlo+I+gRChXF4VrtpNv8glubMXkBA8Nus9F/XpS3qHMO6PobmqRI9 nq+4Scr0uEf9+nTZZ+OjDA== 0000872855-99-000013.txt : 19990818 0000872855-99-000013.hdr.sgml : 19990818 ACCESSION NUMBER: 0000872855-99-000013 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990702 FILED AS OF DATE: 19990817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPORT SUPPLY GROUP INC CENTRAL INDEX KEY: 0000872855 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 752241783 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-10704 FILM NUMBER: 99694703 BUSINESS ADDRESS: STREET 1: 1901 DIPLOMAT DR CITY: FARMERS BRANCH STATE: TX ZIP: 75234 BUSINESS PHONE: 2144849484 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Amendment No. 1) (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 2, 1999. OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 1-10704 SPORT SUPPLY GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 75-2241783 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1901 Diplomat Drive, Farmers Branch, Texas 75234 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (972) 484-9484 Not Applicable Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicated below is the number of shares outstanding of each class of the registrant's common stock as of August 10, 1999. Title of Each Class of Common Stock Number Outstanding Common Stock, $0.01 par value 7,252,606 shares The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Quarterly Report on Form 10-Q pursuant to the Securities Exchange Act of 1934, as amended, for the quarterly period ended July 2, 1999, as set forth in the pages attached hereto: Part 1, Item 1, is amended by the inclusion of such items herein. Part 1, Item 2, is amended by the inclusion of such items herein. SPORT SUPPLY GROUP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF JULY 2, 1999 AND OCTOBER 2, 1998
July 2, October 2, 1999 1998 CURRENT ASSETS: Cash $ 1,214,787 $ 1,035,466 Accounts receivable -- Trade, less allowance for doubtful accounts of $721,000 in 1999 and $372,000 in 1998 16,949,540 16,151,371 Other 1,052,187 572,234 Inventories, net 21,438,914 14,102,837 Other current assets 1,152,869 943,521 Deferred tax assets - 904,318 Total current assets 41,808,297 33,709,747 DEFERRED CATALOG EXPENSES 2,276,135 1,916,035 PROPERTY, PLANT AND EQUIPMENT: Land 8,663 8,663 Buildings 1,605,102 1,595,228 Machinery and equipment 6,168,784 5,585,710 Furniture and fixtures 3,389,963 2,683,122 Leasehold improvements 2,361,851 2,764,384 13,534,363 12,637,107 Less -- Accumulated depreciation and amortization (8,485,035) (7,574,023) 5,049,328 5,063,084 DEFERRED TAX ASSETS 4,659,189 4,659,189 COST IN EXCESS OF TANGIBLE NET ASSETS ACQUIRED, less accumulated amortization of $1,389,000 in 1999 and $1,240,000 in 1998 8,694,454 3,174,725 TRADEMARKS, less accumulated amortization of $1,288,000 in 1999 and $1,136,000 in 1998 3,040,292 3,163,290 OTHER ASSETS, less accumulated amortization of $1,037,000 in 1999 and $994,000 in 1998 7,112,823 3,117,545 $ 72,640,518 $ 54,803,615 CURRENT LIABILITIES: Accounts Payable $ 8,017,949 $ 6,178,080 Income taxes payable - 87,250 Accrued property taxes - 218,201 Other accrued liabilities 1,652,524 893,598 Deferred Tax Payable 1,471,621 - Notes payable and capital lease obligations, current portion 2,925,826 1,087,809 14,067,920 8,464,938 NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS, net of current portion 16,062,954 5,160,965 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, par value $0.01, 100,000 shares authorized, no shares outstanding in 1999 or 1998 - - Common stock, par value $0.01, 20,000,000 shares authorized, 9,307,988 and 9,243,195 shares issued in 1999 and 1998, 7,385,306 and 7,754,703 shares outstanding in 1999 and 1998 93,080 92,432 Paid-in capital 59,377,896 59,100,187 Retained deficit (526,231) (4,745,046) Treasury stock, at cost, 1,922,682 shares in 1999 and 1,488,492 in 1998 (16,435,101) (13,269,861) 42,509,644 41,177,712 $ 72,640,518 $ 54,803,615
The accompanying notes are an integral part of these financial statements. SPORT SUPPLY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED
For The Three Months Ended For the Nine Months Ended July 2, 1999 July 3, 1998 July 2, 1999 July 3,1998 Net revenues $26,310,019 $25,340,174 $76,656,224 $72,025,265 Cost of sales 15,592,879 15,500,267 46,799,033 44,409,386 Gross profit 10,717,140 9,839,907 29,857,191 27,615,879 Selling, general and administrative expenses 8,100,295 7,239,915 23,087,731 22,145,564 Interest before income, other income and taxes 2,616,845 2,599,992 6,769,460 5,470,315 Interest Expense (370,774) (93,610) (870,604) (368,401) Other income, net 583,068 128,065 881,756 517,967 Earnings from continuing operations before provision for income taxes 2,829,139 2,634,447 6,780,612 5,619,881 Provision for Income Taxes 1,069,899 895,706 2,561,797 1,910,753 Net Earnings $1,759,240 $1,738,741 $4,218,815 $3,709,128 Earnings per common and common equivalent share: Net earnings $ 0.24 $ 0.22 $ 0.57 $0.46 Net earnings - assuming dilution $ 0.22 $ 0.20 $ 0.55 $0.45 Weighted average number of common shares outstanding 7,360,364 8,089,451 7,448,658 8,098,222 Weighted average number of common and common equivalent shares - assuming dilution 7,825,598 8,560,378 7,726,179 8,267,382
The accompanying notes are an integral part of these financial statements. SPORT SUPPLY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
For the Nine Months Ended July 2, 1999 July 3, 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 4,218,815 $ 3,709,128 Adjustments to reconcile net Earnings to net cash used in operating activities -- Depreciation and amortization 1,354,261 1,023,974 Provision for(recovery of)allowances for accounts receivable (242,645) (185,001) Changes in assets and liabilities -- (Increase) decrease in receivables (48,047) 4,356,631 Increase in inventories (5,968,900) (1,978,099) Increase in deferred catalogs and other current assets (381,228) 832,100 Increase in payables 645,076 612,208 Decrease in deferred taxes 904,318 1,783,983 Decrease in accrued liabilities (216,501) (1,285,949) Increase in other assets (4,016,258) (1,168,571) Other - (9,037) Net cash provided by (used in) operating activities (3,751,109) 6,027,167 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of property, plant & equipment (967,478) (339,027) Payments for acquisitions, net of cash acquired (4,260,100) (1,500,682) Proceeds from sale of investments 4,885 6,200 Net cash used in investing activities (5,222,693) (1,833,509) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuances of notes payable 13,526,155 2,922,599 Payments of notes payable and capital lease obligations (1,486,149) (5,454,837) Proceeds from common stock issuances 480,145 689,135 Purchase of treasury stock (3,367,028) (614,487) Net cash provided by (used in) financing activities 9,153,123 (2,457,590) Net change in cash 179,321 1,736,068 Cash, beginning of period 1,035,466 602,779 Cash, end of period $ 1,214,787 $ 2,338,847 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 818,379 $ 356,727 Cash paid during the period for income taxes $ 150,000 $ 856
The accompanying notes are an integral part of these financial statements. Item 2. Liquidity and Capital Resources The Company's working capital increased approximately $2.5 million during the nine months ended July 2, 1999, from $25.2 million at October 2, 1998 to $27.7 million at July 2, 1999. The increase in working capital is primarily a result of a $7.3 million increase in inventory associated with the seasonality of the Company's business as well as the inventory acquired from the acquisitions of Conlin in January, 1999 and Larry Black in February, 1999. This increase was partially offset by (i) a $1.8 million increase in trade payables and (ii) a $1.8 million increase in current notes payable. On April 26, 1999, the Company replaced its existing senior credit facility with a new credit facility. The Credit Agreement ("Agreement") under the new credit facility includes a revolving line of credit of $30,000,000 and term loan of $10,000,000 with a maturity date of April 26, 2002. The Agreement provides for reduced interest rates and fees as well as reduced reporting requirements. The Agreement also contains financial and net worth covenants in addition to limits on capital expenditures. As of July 2, 1999, the Company had total borrowings under its senior credit facility of approximately $17.6 million including a term loan of $9.5 million which is payable in monthly installments of principal and accrued interest of $167,000 through April 26, 2002, and outstanding letters of credit for foreign purchases of inventory of approximately $821,000. The net increase of $2.5 million in borrowings under the senior credit facility compared to October 2, 1998 reflects the cash payments for the Conlin, Larry Black, and Flag A Tag acquisitions, the stock purchased under the Company's stock buyback program, and cash paid for the system implementation. The Company believes it will satisfy its short-term and long-term liquidity needs from borrowings under its senior credit facility and cash flows from operations. On May 28, 1997, the Company approved the repurchase of up to 1,000,000 shares of its issued and outstanding common stock in the open market and/or privately negotiated transactions. On October 28, 1998, the Company approved a second repurchase program of up to an additional 1,000,000 shares of its issued and outstanding common stock in the open market and/or privately negotiated transactions. Such purchases are subject to price and availability of shares, working capital availability and any alternative capital spending programs of the Company. As of July 2, 1999, the Company repurchased approximately 1,178,000 of its issued and outstanding shares of common stock in the open market under both repurchase programs. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SPORT SUPPLY GROUP, INC. August 17, 1999 By: /s/ John P. Walker John P. Walker President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----