##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K


(Mark One)


|  |                                                                                          
|- | -----------------------------------------------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2005


or


|  |                                                                                              
|- | ---------------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.








THE SPORTSMANS GUIDE, INC.




|                                                                            |  |                                               
|--------------------------------------------------------------------------- |  | ----------------------------------------------
|Minnesota(State or other jurisdiction of
    incorporation or organization) |  | 41-1293081(I.R.S. Employer Identification No.)

411 Farwell Avenue, South St. Paul, Minnesota 55075




(651) 451-3030







None




Common Stock, par value $.01 per share




o x


o x


x o


S-K 10-K 10-K. x


12b-2


o x o


12b-2 o x






Documents Incorporated by Reference


10-K.


Available Information


10-K, 10-Q, 8-K,










---

TABLE OF CONTENTS



|                                                           |                                                                                                                      |  |  |  |  |  |  | 
|---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                    
|                                                           | Item 1. Business                                                                                                    
|                                                           | Item 1A. Risk Factors                                                                                               
|RISK FACTORS                                              
|                                                           | Item 1B. Unresolved Staff Comments                                                                                  
|                                                           | Item 2. Properties                                                                                                  
|                                                           | Item 3. Legal Proceedings                                                                                           
|                                                           | Item 4. Submission of Matters to a Vote of Security Holders                                                         
|PART II                                                   
|                                                           | Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|                                                           | Item 6. Selected Financial Data                                                                                     
|                                                           | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations                       
|                                                           | Item 7A. Quantitative and Qualitative Disclosure About Market Risk                                                  
|                                                           | Item 8. Financial Statements and Supplementary Data                                                                 
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   
|CONSOLIDATED BALANCE SHEETS                               
|CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
|CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|SCHEDULE II                                               
|                                                           | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        
|                                                           | Item 9A. Controls and Procedures                                                                                    
|                                                           | Item 9B. Other Information                                                                                          
|PART III                                                  
|                                                           | Item 10. Directors and Executive Officers of the Registrant                                                         
|                                                           | Item 11. Executive Compensation                                                                                     
|                                                           | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters             
|                                                           | Item 13. Certain Relationships and Related Transactions                                                             
|                                                           | Item 14. Principal Accountant Fees and Services                                                                     
|PART IV                                                   
|                                                           | Item 15. Exhibits and Financial Statement Schedules                                                                 
|SIGNATURES                                                
|First Amendment to Credit Agreement                       
|Second Amendment to Credit Agreement                      
|Consent of Independent Registered Public Accounting Firm  
|Powers of Attorney                                        
|Rule 13a-14(a)/15d-14(a) Certifications                   
|Section 1350 Certifications                               



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##### Table of Contents






PART I





Item 1. Business






Industry Overview


Outdoor Sports and Sporting Goods.


Golf Equipment.


Baseball and Softball Equipment.


Catalog Sales.


Online Sales.


Growth Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Capitalize on Complementary Business Opportunities. We
    actively seek and evaluate opportunities to develop or acquire
    businesses within attractive outdoor product categories or with
    a similar customer base. We believe that our experience in the
    catalog business can create strong synergies with pure-play
    ecommerce companies that do not fully utilize the catalog
    channel. Additionally, we intend to leverage our operating
    expertise, vendor relationships and balance sheet to create
    value through acquisition opportunities. In June of 2004, we
    acquired TGW, through which we have been able to apply our
    catalog expertise and scales of economy to their existing
    channel. By acquiring TGW, we have also received greater
    exposure to the online marketplace.

2



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Expand Product Offerings and Merchandise Categories. We
    have selectively expanded our merchandise categories and
    anticipate further expansion in the future. We continue to focus
    on consumers who regularly shop online and through catalogs for
    outdoor gear and golf merchandise. Our recent category
    expansions include all-terrain vehicles and truck accessories
    and footwear at TSG and casual apparel and baseball equipment at
    TGW. In addition, we emphasize offering high-quality,
    value-priced merchandise with a convenient and easy shopping
    experience.                                                                                                                                                                                                                                                                                         
|
| |  | Increase Our Percentage of Online Business. We are
    working to expand our online sales, as conducting business
    through our websites instead of through the catalog and phone
    order systems provides a benefit to our customers of greater
    merchandise selection, while simultaneously lowering our
    operating costs. Over the past four years our business mix has
    shifted from approximately 22% of our orders online in 2001 to
    approximately 53% of our consolidated orders in 2005. We seek to
    grow our online business by focusing on the most efficient
    methods to acquire new customers and to increase conversions of
    existing catalog customers and online visitors. We plan to
    continue to use targeted email marketing, affiliate marketing
    programs and sponsored listings through partner websites to
    drive traffic to our websites.
|
| |  | Broaden Our Factory Direct Vendor Relationships. As our
    percentage of business conducted online has increased, we have
    increased our use of factory direct relationships. Through these
    relationships, we are able to significantly expand our product
    offerings without increasing our capital investment requirements
    or exposure to inventory risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Increase TSGs Buyers Club Memberships. One of
    our most successful marketing programs for TSG has been the
    Buyers Club, where members pay an annual fee to receive
    discounts on all regular priced merchandise, special edition
    catalogs and other members only promotions. The purchase
    activity, on average, of our Buyers Club customer is two
    to three times greater than that of a non-club member.
    Consequently, we are continually developing new marketing
    promotions to increase the number of new club members and retain
    our current membership base. At the end of 2005, we had
    approximately 413,000 members in our Buyers Club, an 8%
    increase compared to the end of 2004.                                                                                                                                                         

Our Catalogs




| |                      
| | ---------------------
| | The Sportsmans Guide



Format. ®


Types and Purposes.




3



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##### Table of Contents



tm tm


Creative.




| |                   
| | ------------------
| | The Golf Warehouse





Our Websites




| |                      
| | ---------------------
| | The Sportsmans Guide



sportsmansguide.com.


fun-to Fun-to ®


4



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##### Table of Contents





bargainoutfitters.com.




| |                   
| | ------------------
| | The Golf Warehouse

TGW.com.




baseballsavings.com.


Merchandising




| |                      
| | ---------------------
| | The Sportsmans Guide

Products.


5



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##### Table of Contents





|                                |  |            |      |  
|------------------------------- |  | ---------- | ---- | -
|Product Category                |  | % of Sales |     
|                                | 
|Footwear                        |  |            | 15.9 | %
|Clothing and Accessories        |  |            | 12.8 |  
|Shooting Accessories            |  |            | 12.7 |  
|Domestics and Furniture         |  |            | 9.1  |  
|Tools and Truck/SUV Accessories |  |            | 7.2  |  
|Optics                          |  |            | 6.8  |  
|Government Surplus              |  |            | 6.3  |  
|Camping and Outdoor Recreation  |  |            | 5.5  |  
|Hunting Accessories             |  |            | 4.9  |  
|Lawn and Garden                 |  |            | 3.8  |  
|Gifts                           |  |            | 3.0  |  
|Other                           |  |            | 12.0 |  

Merchandise Mix. Guide
Gear ®




Sourcing.




Selection.


Inventory Management.


6



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##### Table of Contents







| |                   
| | ------------------
| | The Golf Warehouse

Products. ® ® ® ® ® ® ® ® ® ® ®




|                 |  |            |      |  
|---------------- |  | ---------- | ---- | -
|Product Category |  | % of Sales |     
|                 | 
|Clubs            |  |            | 48.4 | %
|Apparel          |  |            | 21.1 |  
|Footwear         |  |            | 7.8  |  
|Balls            |  |            | 6.9  |  
|Bags             |  |            | 5.0  |  
|Accessories      |  |            | 10.8 |  

® ® ® ®




Marketing




| |                      
| | ---------------------
| | The Sportsmans Guide

Customer Database.


Customer Selection.


List Development.


7



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##### Table of Contents





Marketing Programs and Promotional Formats.






30-day


Customer Service.




| |                   
| | ------------------
| | The Golf Warehouse

Customer Database.


Marketing and Promotional Programs.


8



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##### Table of Contents







Customer Service. 30-day 30-day


Online Marketing Efforts




| |                                             
| | --------------------------------------------
| | The Sportsmans Guide and The Golf Warehouse



Search.


Comparison Shopping Engines.


Natural Search.


Affiliate Program.


Opt-in Email Campaigns.


Shopping and Auction Portals.


9



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##### Table of Contents



Operations and Fulfillment




| |                      
| | ---------------------
| | The Sportsmans Guide

Inbound Calls.






Order Entry.


Fulfillment.




Returns.




| |                   
| | ------------------
| | The Golf Warehouse



Call Center.


Fulfillment.


10



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##### Table of Contents





Information Systems and Technology




| |                      
| | ---------------------
| | The Sportsmans Guide











| |                   
| | ------------------
| | The Golf Warehouse







Competition




| |                      
| | ---------------------
| | The Sportsmans Guide





| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | other outdoor/hunting mail order catalogs, including Bass Pro
    Shops Inc. and Cabelas Inc.;                   
|
| |  | large format sporting goods stores and chains such as Gander
    Mountain Company and Dicks Sporting Goods, Inc.;

11



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| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | mass merchandisers, warehouse clubs, discount stores and
    department stores, such as Wal-Mart Stores, Inc. and Target
    Corporation; and
|
| |  | online retailers of footwear, clothing and outdoor gear such as
    Amazon.com, Overstock.com and Sierra Trading Post, Inc.                  



The Golf Warehouse






Regulation










Service Marks


Fun-to




12



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##### Table of Contents



Employees




Financial Information About Segments







Item 1A. Risk Factors





RISK FACTORS


You should carefully consider the risk factors described
below as well as the other information in our SEC filings before
making an investment in The Sportsmans Guide, Inc. common
stock.


Risks Related to Our Business


We are subject to multiple risks and uncertainties
associated with our catalog and online retailing businesses, any
of which could materially impact our operating results and cash
flows.






| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | lower and less predictable response rates for catalogs and
    emails sent to prospective and existing customers;                                                                                                  
|
| |  | increases in U.S. Postal Service rates, paper costs and
    printing costs resulting in higher catalog production costs and
    lower profit margins;                                                              
|
| |  | failures to properly design, print and mail our catalogs in a
    timely manner;                                                                                                                                   
|
| |  | failures to timely fill customer orders;                                                                                                                                                                           
|
| |  | changes in consumer preferences, willingness to purchase goods
    through catalogs or the Internet, weak economic conditions and
    economic uncertainty, and unseasonable weather in key geographic
    markets;
|
| |  | increases in software filters that may inhibit our ability to
    market our products through email messages to our customers and
    increases in consumer privacy concerns relating to the Internet;             
|
| |  | changes in applicable federal and state regulation, such as the
    Federal Trade Commission Act, the Childrens Online Privacy
    Act, the Fair Credit Reporting Act and the Gramm-Leach-Bliley
    Act;         
|
| |  | breaches of Internet security; and                                                                                                                                                                                 
|
| |  | failures in our Internet infrastructure or the failure of
    systems of third parties, such as telephone or electric power
    service, resulting in website downtime, call center closures or
    other problems.



13



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##### Table of Contents



We must successfully anticipate changing consumer
preferences and buying trends, order and manage our inventory to
reflect customer demand and manage backorders or our net sales
and profitability will be adversely affected.






We depend on vendors and service providers to operate our
business and any disruption of their supply of products and
services could have an adverse impact on our net sales and
profitability.






| |   |                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | vendors to supply our merchandise in sufficient quantities at
    competitive prices in a timely manner;                                                                                                                                     
|
| |  | outside printers and catalog production vendors to print and
    mail our catalogs;                                                                                                                                                          
|
| |  | shipping companies, such as United Parcel Service, the
    U.S. Postal Service and common carriers, for timely
    delivery of our catalogs, shipment of merchandise to our
    customers and delivery of merchandise from our vendors to us;
|
| |  | telephone companies to provide telephone service to our in-house
    and outside call centers;                                                                                                                                               
|
| |  | outside call centers to handle inbound customer telephone orders;                                                                                                                                                                            
|
| |  | communications providers to provide our Internet users with
    access to our websites; and                                                                                                                                                  
|
| |  | factory direct vendors for timely fulfillment of merchandise
    orders.                                                                                                                                                                     



Because we do not have long-term contracts with our
suppliers, we may not have continued access to necessary
products and our net sales may suffer.




14



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We will consider acquisitions as part of our growth
strategy, and failure to adequately evaluate or integrate any
acquisitions could harm our business.






| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | difficulties in integrating newly acquired or newly developed
    businesses into existing operations;                                       
|
| |  | our current and planned facilities, computer systems and
    personnel and controls may not be adequate to support our future
    operations;
|
| |  | problems maintaining uniform standards, procedures, controls and
    policies;                                                               
|
| |  | unanticipated costs associated with the acquisition;                                                                                         
|
| |  | diversion of managements attention from our existing
    business;                                                                          
|
| |  | adverse effects on existing business relationships with
    suppliers and customers;                                                         
|
| |  | risks associated with entering product categories in which we
    have no or limited prior experience;                                       
|
| |  | the risk that we will face competition from established or
    larger competitors in the new markets we may enter; and                       
|
| |  | potential loss of key employees of acquired organizations.                                                                                   

day-to


We source our private label merchandise internationally,
which subjects us to tariffs, duties and currency fluctuations
as well as other risks and could increase our costs and,
therefore, decrease our gross profits as well as decrease our
ability to ship our merchandise in a timely manner.






| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | burdens associated with doing business overseas, including
    tariffs and import duties, import/export controls or regulations
    and quotas;                                                  
|
| |  | if shipping is delayed, backorders may result or orders may be
    cancelled;                                                                                                                    
|
| |  | difficulty in identifying and supervising vendors in foreign
    countries;                                                                                                                      
|
| |  | declines in the value of the U.S. dollar relative to
    foreign currencies, which could negatively affect the ability of
    foreign vendors to provide merchandise at favorable
    prices; and

15



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| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | changing or uncertain economic conditions in foreign countries
    and, in certain countries, political unrest, war or health
    epidemics.



Due to the seasonality of our business, our annual
operating results would be adversely affected if our net sales
during the third and fourth quarters were substantially below
expectations.




A decline in discretionary consumer spending could reduce
our sales.






| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | unfavorable general business conditions;                                                   
|
| |  | increases in gas and energy prices;                                                        
|
| |  | increases in interest rates;                                                               
|
| |  | increases in inflation;                                                                    
|
| |  | war, terrorism or fears of war or terrorism;                                               
|
| |  | increases in consumer debt levels and decreases in the
    availability of consumer credit;
|
| |  | adverse or unseasonable weather conditions;                                                
|
| |  | adverse changes in applicable laws and regulations;                                        
|
| |  | increases in taxation;                                                                     
|
| |  | adverse unemployment trends; and                                                           
|
| |  | other factors that adversely influence consumer confidence and
    spending.               



If we fail to develop and maintain our proprietary mailing
list, our sales and operating results would suffer.




16



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##### Table of Contents





The loss of our senior management or other key personnel
could harm our current and future operations and
prospects.




If use of the Internet, particularly with respect to
online commerce, declines or does not continue to increase as
rapidly as we anticipate, our sales may not grow to desired
levels.






| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | actual or perceived lack of security of information or privacy
    protection;                                
|
| |  | possible disruptions, computer viruses or other damage to the
    Internet servers or to users computers; and
|
| |  | excessive governmental regulations.                                                                           



Intense competition in the outdoor recreation and golf
markets could reduce our sales and profitability.






| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | other outdoor/hunting mail order catalogs, including Bass Pro
    Shops Inc. and Cabelas Inc.;                                                           
|
| |  | large-format sporting goods stores and chains, such as Gander
    Mountain Company and Dicks Sporting Goods, Inc.;                                       
|
| |  | other specialty off-course retailers of golf equipment such as
    Golfsmith International, Inc., Edwin Watts Golf, Golf Galaxy and
    Pro Golf Discount;

17



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##### Table of Contents





| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | mass merchandisers, warehouse clubs, discount stores and
    department stores, such as Wal-Mart Stores, Inc. and Target
    Corporation;           
|
| |  | online retailers of footwear, clothing, outdoor gear and golf
    equipment such as Amazon.com, Overstock.com and Sierra Trading
    Post, Inc.; and
|
| |  | on-course pro shops.                                                                                                                                



Our success depends on the continued popularity of outdoor
recreation, particularly camping, golf and hunting, and the
growth of the market for these products. If these activities
decline in popularity, our sales could materially
decline.






TGWs sales and products may be adversely affected if
its vendors fail to successfully develop and introduce new
products.




Temporary or permanent disruption at our fulfillment
facilities could prevent timely shipment of customer orders and
hurt our sales.




18



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##### Table of Contents





We intend to increase our reliance on our vendors to
fulfill orders, which may increase the risks associated with our
fulfillment process and decrease our ability to control the
timing of shipments and customer satisfaction.




Our systems may not be able to support increased online
and catalog sales, which would harm our business and operating
results.




Technological risks related to the Internet, including
security and reliability issues, are largely outside our control
and may hurt our reputation or sales.






Our failure to protect confidential information of our
customers and our network against security breaches could damage
our reputation and brands and subject us to legal
liability.




19



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##### Table of Contents





If we are unable to provide satisfactory telephone-based
customer support, we could lose customers.




In order to increase our online sales and to sustain or
increase profitability, we must attract online customers in a
cost-effective manner.




Fluctuations in the price of paper and a rise in postage
rates may increase our operating costs and make our expenses
difficult to predict.






20



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##### Table of Contents



We guarantee lifetime returns for TSG purchases and more
limited returns of TGW merchandise. Excessive merchandise
returns could harm our operating results.


30-day 30-day


Our failure to address risks associated with credit card
fraud could damage our reputation and brands.




We may incur costs from litigation or increased regulation
relating to products that we sell, which could adversely affect
our sales and profitability.




Current and future government regulation may negatively
impact demand for our products and our ability to conduct our
business.






| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Federal Trade Commission regulations governing the manner in
    which orders may be solicited and prescribing other obligations
    in fulfilling orders and consummating sales;                      
|
| |  | laws and regulations that prohibit or limit the sale, in certain
    states and localities, of certain items we offer such as black
    powder firearms, ammunition, bows, knives and similar products;
|
| |  | The Bureau of Alcohol, Tobacco, Firearms and Explosives
    governing the manner in which we sell ammunition;                                                                                          

21



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##### Table of Contents





| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | laws and regulations governing hunting and fishing;                                                                                                                                  
|
| |  | laws and regulations relating to the collecting and sharing of
    non-public customer information; and                                                                              
|
| |  | customs laws and regulations pertaining to proper item
    classification, quotas, payment of duties and tariffs, and
    maintenance of documentation and internal control programs.



Assertions by third parties of infringement by us of their
intellectual property rights could result in significant costs
and substantially harm our business and results of
operations.




Our sales may decrease if we are required to collect taxes
on purchases.






Government regulation of the Internet and online commerce
is evolving and unfavorable changes could substantially harm our
business and results of operations.




22



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##### Table of Contents










|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings










|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



Executive Officers of the Registrant




|                    |  |     |    |  |          |                                                                                                                       
|------------------- |  | --- | -- |  | -------- | ----------------------------------------------------------------------------------------------------------------------
|Name                |  | Age |    |  | Position
|                    |  |     |    |  |         
|Executive Officers: |  |     |    |  |          |                                                                                                                       
|Gregory R. Binkley  |  |     | 57 |  |          | President, Chief Executive Officer and Director                                                                       
|Charles B. Lingen   |  |     | 61 |  |          | Executive Vice President of Finance and Administration, Chief
    Financial Officer, Secretary, Treasurer and Director
|John M. Casler      |  |     | 55 |  |          | Executive Vice President of Merchandising, Marketing and
    Creative Services                                        
|Key Employees:      |  |     |    |  |          |                                                                                                                       
|Dale D. Monson      |  |     | 41 |  |          | Vice President of Information Systems and Technology and Chief
    Information Officer                                
|Douglas E. Johnson  |  |     | 50 |  |          | Vice President of Marketing                                                                                           
|Mark S. Marney      |  |     | 52 |  |          | Chief Executive Officer of The Golf Warehouse, Inc.                                                                   
|R. Michael Marney   |  |     | 53 |  |          | President of The Golf Warehouse, Inc.                                                                                 

23



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##### Table of Contents



Gregory R. Binkley


Charles B. Lingen


John M. Casler


Dale D. Monson


Douglas E. Johnson


Mark S. Marney


R. Michael Marney


24



---



##### Table of Contents






PART II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities





|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|               |  | High |       |  | Low |  
|               |  |      |       |  |     |  
|2004           |  |      |       |  |     |   |       | 
|First Quarter  |  | $    | 14.98 |  |     | $ | 11.41 | 
|Second Quarter |  |      | 15.91 |  |     |   | 11.55 | 
|Third Quarter  |  |      | 15.87 |  |     |   | 13.04 | 
|Fourth Quarter |  |      | 16.79 |  |     |   | 13.71 | 
|2005           |  |      |       |  |     |   |       | 
|First Quarter  |  | $    | 17.43 |  |     | $ | 14.72 | 
|Second Quarter |  |      | 20.24 |  |     |   | 16.43 | 
|Third Quarter  |  |      | 27.94 |  |     |   | 17.99 | 
|Fourth Quarter |  |      | 27.69 |  |     |   | 22.23 | 

Holders




Dividends




Stock Repurchase Program










25



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##### Table of Contents





Issuer Purchases of Equity Securities


|                      |  |              |         |  |                |                    |                     |                 |                    |                    |                    |  |  |  |         | 
|--------------------- |  | ------------ | ------- |  | -------------- | ------------------ | ------------------- | --------------- | ------------------ | ------------------ | ------------------ |  |  |  | ------- | 
|                      |  |              |         |  |                | Total Number of    |                     |                 | Maximum Number     |                   
|                      |  |              |         |  |                | Shares Repurchased |                     |                 | of Shares that May |                   
|                      |  | Total Number |         |  |                |                    | as Part of Publicly |                 |                    | Yet be Repurchased |                   
|                      |  | of Shares    |         |  | Average Price  |                    |                     | Announced Plans |                    |                    | Under the Plans or | 
|Period                |  | Repurchased  |         |  | Paid per Share |                    |                     | or Programs     |                    |                    | Programs           | 
|                      |  |              |         |  |                |                    |                     |                 |                    |                    |                    | 
|October 1  31, 2005  |  |              |        |  |                |                    |                    |                 |                    |                    |                   |  |  |  | 672,558 | 
|November 1  30, 2005 |  |              | 120,210 |  |                | $                  | 24.72               |                 |                    |                    | 120,210            |  |  |  | 552,348 | 
|December 1  31, 2005 |  |              |        |  |                |                    |                    |                 |                    |                    |                   |  |  |  | 552,348 | 
|                      |  |              |         |  |                |                    |                     |                 |                    |                    |                    | 
|Total                 |  |              | 120,210 |  |                | $                  | 24.72               |                 |                    |                    | 120,210            |  |  |  | 552,348 | 
|                      |  |              |         |  |                |                    |                     |                 |                    |                    |                    | 

26



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |        | 
|----------------------------------------------------------------------------- | ---------------------------- | ---------------------------------------- | ------- | ------ | ------- | - | ------- | ------ |  | - | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                                                                              |                              | Years Ended December 31,(1)              |        
|                                                                              |                              |                                          |        
|                                                                              |                              | 2005                                     |         |        | 2004(2) |   |         | 2003   |  |   | 2002    |        |  | 2001 |        
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              |                              | (In thousands, except per share amounts) |        
|Consolidated Statement of Operations Data:                                    |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|Net sales                                                                     |                              | $                                        | 285,120 |        |         | $ | 232,465 |        |  | $ | 194,757 |        |  | $    | 179,005 |        |  | $ | 167,820 |       
|Cost of sales                                                                 |                              |                                          | 194,267 |        |         |   | 158,081 |        |  |   | 130,639 |        |  |      | 120,707 |        |  |   | 113,086 |       
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Gross profit                 |                                          |         | 90,853 |         |   |         | 74,384 |  |   |         | 64,118 |  |      |         | 58,298 |  |   |         | 54,734 | 
|Selling, general and administrative expenses                                  |                              |                                          | 72,789  |        |         |   | 62,122  |        |  |   | 54,467  |        |  |      | 51,983  |        |  |   | 51,344  |       
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Earnings from operations     |                                          |         | 18,064 |         |   |         | 12,262 |  |   |         | 9,651  |  |      |         | 6,315  |  |   |         | 3,390  | 
|Interest expense                                                              |                              |                                          | (304    | )      |         |   | (361    | )      |  |   |        |        |  |      | (1      | )      |  |   | (237    | )     
|Miscellaneous income (expense), net                                           |                              |                                          | 326     |        |         |   | (2      | )      |  |   | 24      |        |  |      | (297    | )      |  |   | (349    | )     
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Earnings before income taxes |                                          |         | 18,086 |         |   |         | 11,899 |  |   |         | 9,675  |  |      |         | 6,017  |  |   |         | 2,804  | 
|Income tax expense                                                            |                              |                                          | 6,633   |        |         |   | 4,306   |        |  |   | 3,482   |        |  |      | 2,198   |        |  |   | 668     |       
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Net earnings                 |                                          | $       | 11,453 |         |   | $       | 7,593  |  |   | $       | 6,193  |  |      | $       | 3,819  |  |   | $       | 2,136  | 
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|Net earnings per share(3):                                                    |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|                                                                              | Basic                        |                                          | $       | 1.58   |         |   | $       | 1.07   |  |   | $       | .86    |  |      | $       | .54    |  |   | $       | .30    | 
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Diluted                      |                                          | $       | 1.38   |         |   | $       | .95    |  |   | $       | .78    |  |      | $       | .51    |  |   | $       | .30    | 
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|Weighted average shares outstanding(3):                                       |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|                                                                              | Basic                        |                                          |         | 7,228  |         |   |         | 7,078  |  |   |         | 7,178  |  |      |         | 7,129  |  |   |         | 7,123  | 
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|                                                                              | Diluted                      |                                          |         | 8,290  |         |   |         | 7,985  |  |   |         | 7,935  |  |      |         | 7,501  |  |   |         | 7,138  | 
|                                                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |        
|Selected Operating Data:                                                      |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|Gross profit as a percentage of net sales                                     |                              |                                          | 31.9    | %      |         |   | 32.0    | %      |  |   | 32.9    | %      |  |      | 32.6    | %      |  |   | 32.6    | %     
|Selling, general and administrative expenses as a percentage of
    net sales |                              |                                          | 25.5    | %      |         |   | 26.7    | %      |  |   | 28.0    | %      |  |      | 29.0    | %      |  |   | 30.6    | %     
|Total catalogs mailed(4)                                                      |                              |                                          | 55,108  |        |         |   | 50,482  |        |  |   | 46,359  |        |  |      | 45,762  |        |  |   | 47,989  |       
|Total active customers(5)                                                     |                              |                                          | 1,271   |        |         |   | 1,255   |        |  |   | 1,005   |        |  |      | 977     |        |  |   | 1,039   |       
|Consolidated Balance Sheet Data:                                              |                              |                                          |         |        |         |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|Cash and cash equivalents                                                     |                              | $                                        | 14,050  |        |         | $ | 8,616   |        |  | $ | 32,054  |        |  | $    | 17,152  |        |  | $ | 8,592   |       
|Working capital                                                               |                              |                                          | 11,823  |        |         |   | 4,533   |        |  |   | 23,555  |        |  |      | 16,841  |        |  |   | 11,923  |       
|Total assets                                                                  |                              |                                          | 93,890  |        |         |   | 80,914  |        |  |   | 64,468  |        |  |      | 50,178  |        |  |   | 42,641  |       
|Note payable-bank                                                             |                              |                                          |        |        |         |   | 5,000   |        |  |   |        |        |  |      |        |        |  |   |        |       
|Shareholders equity                                                          |                              |                                          | 41,969  |        |         |   | 29,872  |        |  |   | 25,616  |        |  |      | 19,394  |        |  |   | 15,314  |       






|    |                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our fiscal year ends on the Sunday nearest December 31, but
    for clarity of presentation, we describe all periods as if the
    year end is December 31. Fiscal years 2005, 2003, 2002 and
    2001 each consisted of 52 weeks and fiscal year 2004
    consisted of 53 weeks.
|   
|(2) | On June 29, 2004, we acquired The Golf Warehouse, L.L.C.
    The third quarter of 2004 was the first quarter for inclusion of
    The Golf Warehouses net sales, operations and earnings.                                                                                       
|   
|(3) | See Note A-12 in the notes to consolidated financial
    statements. Per share amounts and shares outstanding have been
    adjusted to give effect to a 3-for-2 stock split of our common
    stock paid on April 15, 2005 to shareholders of record on
    March 25, 2005.     

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|    |                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Total catalogs mailed reflects the total number of catalogs
    expensed during the applicable period.                                                                                                                                                                                            
|   
|(5) | An active customer is defined as a customer who has
    purchased merchandise from us within 12 months preceding
    the end of the period indicated. Specific individuals with
    multiple contact names or multiple contact addresses may be
    considered as more than one active customer.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Overview




tm




Fiscal Year




Critical Accounting Policies and Use of Estimates




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| |                    
| | -------------------
| | Revenue Recognition









| |                                            
| | -------------------------------------------
| | Promotional Materials and Advertising Costs







| |              
| | -------------
| | Stock Options

Accounting for Stock Issued to
Employees,


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| |             
| | ------------
| | Income Taxes

Accounting for Income Taxes.




Results of Operations




|                                             |                              |                          |       |      |      |  |       |      |   |  |       |      |  
|-------------------------------------------- | ---------------------------- | ------------------------ | ----- | ---- | ---- |  | ----- | ---- | - |  | ----- | ---- | -
|                                             |                              | Years Ended December 31, |      
|                                             |                              |                          |      
|                                             |                              | 2005                     |       |      | 2004 |  |       | 2003 |  
|                                             |                              |                          |       |      |      |  |       |      |  
|Net sales                                    |                              |                          | 100.0 | %    |      |  | 100.0 | %    |   |  | 100.0 | %   
|Cost of sales                                |                              |                          | 68.1  |      |      |  | 68.0  |      |   |  | 67.1  |     
|                                             |                              |                          |       |      |      |  |       |      |  
|                                             | Gross profit                 |                          |       | 31.9 |      |  |       | 32.0 |   |  |       | 32.9 |  
|Selling, general and administrative expenses |                              |                          | 25.5  |      |      |  | 26.7  |      |   |  | 28.0  |     
|                                             |                              |                          |       |      |      |  |       |      |  
|                                             | Earnings from operations     |                          |       | 6.4  |      |  |       | 5.3  |   |  |       | 4.9  |  
|Interest and miscellaneous expense, net      |                              |                          |      |      |      |  | 0.1   |      |   |  |      |     
|                                             |                              |                          |       |      |      |  |       |      |  
|                                             | Earnings before income taxes |                          |       | 6.4  |      |  |       | 5.2  |   |  |       | 4.9  |  
|Income tax expense                           |                              |                          | 2.4   |      |      |  | 1.9   |      |   |  | 1.8   |     
|                                             |                              |                          |       |      |      |  |       |      |  
|                                             | Net earnings                 |                          |       | 4.0  | %    |  |       | 3.3  | % |  |       | 3.1  | %
|                                             |                              |                          |       |      |      |  |       |      |  

Comparison of Years Ended December 31, 2005 and 2004


|                         |  |                       |         |  |                    |   |         |              |  |   |        |  |  |      |        |  |      |   |         |  |  |   |         | 
|------------------------ |  | --------------------- | ------- |  | ------------------ | - | ------- | ------------ |  | - | ------ |  |  | ---- | ------ |  | ---- | - | ------- |  |  | - | ------- | 
|                         |  | The Sportsmans Guide |         |  | The Golf Warehouse |   |         | Consolidated | 
|                         |  |                       |         |  |                    |   |         |              | 
|                         |  | 2005                  |         |  | 2004               |   |         | 2005         |  |   | 2004   |  |  | 2005 |        |  | 2004 |  
|                         |  |                       |         |  |                    |   |         |              |  |   |        |  |  |      |        |  |      |  
|Net sales                |  | $                     | 219,092 |  |                    | $ | 207,224 |              |  | $ | 66,028 |  |  | $    | 25,241 |  |      | $ | 285,120 |  |  | $ | 232,465 | 
|Earnings from operations |  | $                     | 12,322  |  |                    | $ | 10,695  |              |  | $ | 5,742  |  |  | $    | 1,567  |  |      | $ | 18,064  |  |  | $ | 12,262  | 

Net Sales.


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Gross Profit.


Selling, General and Administrative Expenses.








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tm






Earnings from Operations.


Interest Expense.


Income Taxes.


Net Earnings.


Comparison of Years Ended December 31, 2004 and 2003


|                         |  |                       |         |          |           |   |              |      |  |   |        |  |      |   |   |      |  |   |         |  |  |   |         | 
|------------------------ |  | --------------------- | ------- | -------- | --------- | - | ------------ | ---- |  | - | ------ |  | ---- | - | - | ---- |  | - | ------- |  |  | - | ------- | 
|                         |  |                       |         | The Golf |           |  
|                         |  | The Sportsmans Guide |         |          | Warehouse |   | Consolidated |     
|                         |  |                       |         |          |           |   |              |     
|                         |  | 2004                  |         |          | 2003      |   |              | 2004 |  |   | 2003   |  | 2004 |   |   | 2003 | 
|                         |  |                       |         |          |           |   |              |      |  |   |        |  |      |   |   |      | 
|Net sales                |  | $                     | 207,224 |          |           | $ | 194,757      |      |  | $ | 25,241 |  |      | $ |  |      |  | $ | 232,465 |  |  | $ | 194,757 | 
|Earnings from operations |  | $                     | 10,695  |          |           | $ | 9,651        |      |  | $ | 1,567  |  |      | $ |  |      |  | $ | 12,262  |  |  | $ | 9,651   | 

Net Sales.






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Gross Profit.


Selling, General and Administrative Expenses.






tm tm






Earnings from Operations.


Interest Expense.


Income Taxes.


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Net Earnings.


Seasonality and Quarterly Results








|                         |         |                                       |        |     |                |   |        |               |  |   |                |     |  |   |        |     | 
|------------------------ | ------- | ------------------------------------- | ------ | --- | -------------- | - | ------ | ------------- |  | - | -------------- | --- |  | - | ------ | --- | 
|                         |         | First Quarter                         |        |     | Second Quarter |   |        | Third Quarter |  |   | Fourth Quarter |    
|                         |         |                                       |        |     |                |   |        |               |  |   |                |    
|                         |         | (In thousands, except per share data) |       
|2005                     |         |                                       |        |     |                |   |        |               |  |   |                |     |  |   |        |    
|Net sales                |         | $                                     | 64,578 |     |                | $ | 63,778 |               |  | $ | 61,549         |     |  | $ | 95,215 |    
|Gross profit             |         |                                       | 20,034 |     |                |   | 19,444 |               |  |   | 19,489         |     |  |   | 31,886 |    
|Earnings from operations |         |                                       | 3,562  |     |                |   | 3,968  |               |  |   | 3,506          |     |  |   | 7,028  |    
|Net earnings             |         |                                       | 2,257  |     |                |   | 2,507  |               |  |   | 2,189          |     |  |   | 4,500  |    
|Net earnings per share:  |         |                                       |        |     |                |   |        |               |  |   |                |     |  |   |        |    
|                         | Basic   |                                       |        | .32 |                |   |        | .35           |  |   |                | .30 |  |   |        | .61 | 
|                         | Diluted |                                       |        | .28 |                |   |        | .31           |  |   |                | .26 |  |   |        | .53 | 
|2004                     |         |                                       |        |     |                |   |        |               |  |   |                |     |  |   |        |    
|Net sales                |         | $                                     | 44,811 |     |                | $ | 39,553 |               |  | $ | 57,039         |     |  | $ | 91,062 |    
|Gross profit             |         |                                       | 14,345 |     |                |   | 12,829 |               |  |   | 16,900         |     |  |   | 30,310 |    
|Earnings from operations |         |                                       | 1,999  |     |                |   | 1,900  |               |  |   | 2,336          |     |  |   | 6,027  |    
|Net earnings             |         |                                       | 1,308  |     |                |   | 1,240  |               |  |   | 1,377          |     |  |   | 3,668  |    
|Net earnings per share:  |         |                                       |        |     |                |   |        |               |  |   |                |     |  |   |        |    
|                         | Basic   |                                       |        | .18 |                |   |        | .18           |  |   |                | .20 |  |   |        | .52 | 
|                         | Diluted |                                       |        | .16 |                |   |        | .16           |  |   |                | .17 |  |   |        | .46 | 





|      |                                                                                                                                                                                                  
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | The acquisition of The Golf Warehouse, L.L.C. was effective
    June 29, 2004. The third quarter of 2004 was the first
    quarter for inclusion of TGWs net sales, operations and
    earnings.

Liquidity and Capital Resources


Working Capital.






34



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|                            |  |                       |       |     |       |   |       |       |  |           |         |  |  |   |   | 
|--------------------------- |  | --------------------- | ----- | --- | ----- | - | ----- | ----- |  | --------- | ------- |  |  | - | - | 
|                            |  | Payment due by period
|                            |  |                      
|                            |  |                       |       | 1-3 |       |   | 3-5   |       |  | More than
|Contractual Obligations     |  | Total                 |       |     | Years |   |       | Years |  |           | 5 Years
|                            |  |                       |       |     |       |   |       |       |  |           |        
|Operating Lease Obligations |  | $                     | 6,661 |     |       | $ | 5,778 |       |  | $         | 883     |  |  | $ |  | 
|Purchase Obligations        |  |                       | 2,000 |     |       |   | 2,000 |       |  |           |        |  |  |   |  | 
|                            |  |                       |       |     |       |   |       |       |  |           |         | 
|Total                       |  | $                     | 8,661 |     |       | $ | 7,778 |       |  | $         | 883     |  |  | $ |  | 
|                            |  |                       |       |     |       |   |       |       |  |           |         | 

Operating Activities.




Investing Activities.


Financing Activities.


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New Accounting Pronouncements


Accounting for Stock Issued to Employees,


Forward-Looking Statements









|         |                                                          
|-------- | ---------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market Risk

Market Risk




36



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data



|                              |                                                                                                                     |      |  |    | 
|----------------------------- | ------------------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                              |                                                                                                                     | Page | 
|                              |                                                                                                                     |      | 
|Financial Statements:         |                                                                                                                     |      |  |   
|                              | Reports of Independent Registered Public Accounting Firm                                                            |      |  | 39 | 
|                              | Consolidated Balance Sheets as of December 31, 2005 and 2004                                                        |      |  | 40 | 
|                              | Consolidated Statements of Earnings for the years ended
    December 31, 2005, 2004 and 2003                        |      |  | 41 | 
|                              | Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2005, 2004 and 2003 |      |  | 42 | 
|                              | Consolidated Statements of Cash Flows for the years ended
    December 31, 2005, 2004 and 2003                      |      |  | 43 | 
|                              | Notes to Consolidated Financial Statements                                                                          |      |  | 44 | 
|Financial Statement Schedule: |                                                                                                                     |      |  |   
|                              | Schedule II  Valuation and Qualifying Accounts
    for the years ended December 31, 2005, 2004 and 2003            |      |  | 58 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














Internal Control 
Integrated Framework








38



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Internal Control 
Integrated Framework








Internal
Control  Integrated Framework Internal Control  Integrated Framework










39



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The Sportsmans Guide, Inc. and Subsidiaries







CONSOLIDATED BALANCE SHEETS


|                                     |                                                                                                                                                              |                                            |       |        |              |  |       |        |        | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ----- | ------ | ------------ |  | ----- | ------ | ------ | 
|                                     |                                                                                                                                                              | December 31,                               |       |        | December 31, | 
|                                     |                                                                                                                                                              | 2005                                       |       |        | 2004         | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | (In thousands, except share                |      
|                                     |                                                                                                                                                              | amounts)                                   |      
|ASSETS                               |                                                                                                                                                              |                                            |       |        |              |  |       |       
|Current Assets                       |                                                                                                                                                              |                                            |       |        |              |  |       |       
|                                     | Cash and cash equivalents                                                                                                                                    |                                            | $     | 14,050 |              |  | $     | 8,616  |       
|                                     | Accounts receivable  net                                                                                                                                    |                                            |       | 4,437  |              |  |       | 3,955  |       
|                                     | Inventory                                                                                                                                                    |                                            |       | 34,238 |              |  |       | 29,148 |       
|                                     | Promotional material                                                                                                                                         |                                            |       | 4,462  |              |  |       | 3,578  |       
|                                     | Prepaid expenses and other                                                                                                                                   |                                            |       | 3,761  |              |  |       | 3,123  |       
|                                     | Deferred income taxes                                                                                                                                        |                                            |       | 2,027  |              |  |       | 1,767  |       
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total current assets                       |       |        | 62,975       |  |       |        | 50,187 | 
|Property and Equipment  Net         |                                                                                                                                                              |                                            | 2,325 |        |              |  | 2,693 |       
|Other Assets                         |                                                                                                                                                              |                                            |       |        |              |  |       |       
|                                     | Goodwill                                                                                                                                                     |                                            |       | 17,205 |              |  |       | 17,176 |       
|                                     | Trade and domain name                                                                                                                                        |                                            |       | 10,200 |              |  |       | 10,200 |       
|                                     | Other intangibles                                                                                                                                            |                                            |       | 1,185  |              |  |       | 658    |       
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total other assets                         |       |        | 28,590       |  |       |        | 28,034 | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total assets                               |       | $      | 93,890       |  |       | $      | 80,914 | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                    
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                              |                                            |       |        |              |  |       |       
|Current Liabilities                  |                                                                                                                                                              |                                            |       |        |              |  |       |       
|                                     | Accounts payable                                                                                                                                             |                                            | $     | 26,687 |              |  | $     | 23,832 |       
|                                     | Accrued expenses                                                                                                                                             |                                            |       | 8,772  |              |  |       | 7,146  |       
|                                     | Income taxes payable                                                                                                                                         |                                            |       | 2,616  |              |  |       | 1,982  |       
|                                     | Deferred revenue                                                                                                                                             |                                            |       | 7,833  |              |  |       | 7,314  |       
|                                     | Returns reserve                                                                                                                                              |                                            |       | 2,045  |              |  |       | 2,318  |       
|                                     | Customer deposits and other liabilities                                                                                                                      |                                            |       | 3,199  |              |  |       | 3,062  |       
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total current liabilities                  |       |        | 51,152       |  |       |        | 45,654 | 
|Long-Term Liabilities                |                                                                                                                                                              |                                            |       |        |              |  |       |       
|                                     | Note payable  bank                                                                                                                                          |                                            |       |       |              |  |       | 5,000  |       
|                                     | Deferred income taxes                                                                                                                                        |                                            |       | 769    |              |  |       | 305    |       
|                                     | Other                                                                                                                                                        |                                            |       |       |              |  |       | 83     |       
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total long-term liabilities                |       |        | 769          |  |       |        | 5,388  | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total liabilities                          |       |        | 51,921       |  |       |        | 51,042 | 
|Commitments and Contingencies        |                                                                                                                                                              |                                            | -    |        |              |  |      |       
|Shareholders Equity                 |                                                                                                                                                              |                                            |       |        |              |  |       |       
|                                     | Common Stock  $.01 par value;
    36,800,000 shares authorized; 7,318,564 and
    7,097,746 shares issued and outstanding at
    December 31, 2005 and 2004 |                                            |       | 73     |              |  |       | 71     |       
|                                     | Additional paid-in capital                                                                                                                                   |                                            |       | 8,618  |              |  |       | 8,024  |       
|                                     | Accumulated other comprehensive income                                                                                                                       |                                            |       | 280    |              |  |       | 232    |       
|                                     | Retained earnings                                                                                                                                            |                                            |       | 32,998 |              |  |       | 21,545 |       
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total shareholders equity                 |       |        | 41,969       |  |       |        | 29,872 | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 
|                                     |                                                                                                                                                              | Total liabilities and shareholders equity |       | $      | 93,890       |  |       | $      | 80,914 | 
|                                     |                                                                                                                                                              |                                            |       |        |              | 



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The Sportsmans Guide, Inc. and Subsidiaries


CONSOLIDATED STATEMENTS OF EARNINGS


|                                                                  |         |                                       |         |       |        |   |         |       |        |   |         |       |        | 
|----------------------------------------------------------------- | ------- | ------------------------------------- | ------- | ----- | ------ | - | ------- | ----- | ------ | - | ------- | ----- | ------ | 
|                                                                  |         | Years ended December 31,              |        
|                                                                  |         |                                       |        
|                                                                  |         | 2005                                  |         |       | 2004   |   |         | 2003  |       
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  |         | (In thousands, except per share data) |        
|Net sales                                                         |         | $                                     | 285,120 |       |        | $ | 232,465 |       |        | $ | 194,757 |      
|Cost of sales                                                     |         |                                       | 194,267 |       |        |   | 158,081 |       |        |   | 130,639 |      
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  |         | Gross profit                          |         |       | 90,853 |   |         |       | 74,384 |   |         |       | 64,118 | 
|Selling, general and administrative expenses                      |         |                                       | 72,789  |       |        |   | 62,122  |       |        |   | 54,467  |      
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  |         | Earnings from operations              |         |       | 18,064 |   |         |       | 12,262 |   |         |       | 9,651  | 
|Interest expense                                                  |         |                                       | (304    | )     |        |   | (361    | )     |        |   |        |      
|Miscellaneous income (expense), net                               |         |                                       | 326     |       |        |   | (2      | )     |        |   | 24      |      
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  |         | Earnings before income taxes          |         |       | 18,086 |   |         |       | 11,899 |   |         |       | 9,675  | 
|Income tax expense                                                |         |                                       | 6,633   |       |        |   | 4,306   |       |        |   | 3,482   |      
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  |         | Net earnings                          |         | $     | 11,453 |   |         | $     | 7,593  |   |         | $     | 6,193  | 
|                                                                  |         |                                       |         |       |        |   |         |       |       
|Net earnings per share:                                           |         |                                       |         |       |        |   |         |       |        |   |         |      
|                                                                  | Basic   |                                       | $       | 1.58  |        |   | $       | 1.07  |        |   | $       | .86   |       
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  | Diluted |                                       | $       | 1.38  |        |   | $       | .95   |        |   | $       | .78   |       
|                                                                  |         |                                       |         |       |        |   |         |       |       
|Weighted average common and common equivalent shares outstanding: |         |                                       |         |       |        |   |         |       |        |   |         |      
|                                                                  | Basic   |                                       |         | 7,228 |        |   |         | 7,078 |        |   |         | 7,178 |       
|                                                                  |         |                                       |         |       |        |   |         |       |       
|                                                                  | Diluted |                                       |         | 8,290 |        |   |         | 7,985 |        |   |         | 7,935 |       
|                                                                  |         |                                       |         |       |        |   |         |       |       



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The Sportsmans Guide, Inc. and Subsidiaries







CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY


|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        |  |   |        |        |   |   |        |        | 
|----------------------------- | -------------------------------------------------- | -------------- | ----- | ---- | ---------- | ----------- | -- | ------------- | - | - | -------- | ------ | ----- | ------------- | --- | --- | ------------- | - | ------ | ------ |  | - | ------ | ------ | - | - | ------ | ------ | 
|                              |                                                    |                |       |      |            | Accumulated |    |               |   |   |          |        |      
|                              |                                                    | Common Stock   |       |      | Additional |             |    | Other         |   |   |          |        | Total |               |     |    
|                              |                                                    |                |       |      | Paid-In    |             |    | Comprehensive |   |   | Retained |        |       | Shareholders |     |     | Comprehensive |  
|                              |                                                    | Shares         |       |      | Amount     |             |    | Capital       |   |   | Income   |        |       | Earnings      |     |     | Equity        |   |        | Income | 
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|                              |                                                    | (In thousands) |      
|Balances at December 31, 2002 |                                                    |                | 7,131 |      |            | $           | 71 |               |   | $ | 11,564   |        |       | $             |    |     |               | $ | 7,759  |        |  | $ | 19,394 |        |   |   |        |       
|                              | Exercise of stock options                          |                |       | 256  |            |             |    | 3             |   |   |          | 650    |       |               |     |    |               |   |        |       |  |   |        | 653    |   |   |        |        | 
|                              | Tax benefit related to exercise of stock options   |                |       |     |            |             |    |              |   |   |          | 554    |       |               |     |    |               |   |        |       |  |   |        | 554    |   |   |        |        | 
|                              | Repurchase of common stock                         |                |       | (148 | )          |             |    | (2            | ) |   |          | (1,176 | )     |               |     |    |               |   |        |       |  |   |        | (1,178 | ) |   |        |        | 
|                              | Net earnings                                       |                |       |     |            |             |    |              |   |   |          |       |       |               |     |    |               |   |        | 6,193  |  |   |        | 6,193  |   |   | $      | 6,193  | 
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Total comprehensive income    |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        |  |   |        |        |   | $ | 6,193  |       
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Balances at December 31, 2003 |                                                    |                | 7,239 |      |            |             | 72 |               |   |   | 11,592   |        |       |               |    |     |               |   | 13,952 |        |  |   | 25,616 |        |   |   |        |       
|                              | Exercise of stock options                          |                |       | 291  |            |             |    | 3             |   |   |          | 1,088  |       |               |     |    |               |   |        |       |  |   |        | 1,091  |   |   |        |        | 
|                              | Tax benefit related to exercise of stock options   |                |       |     |            |             |    |              |   |   |          | 1,070  |       |               |     |    |               |   |        |       |  |   |        | 1,070  |   |   |        |        | 
|                              | Repurchase of common stock                         |                |       | (432 | )          |             |    | (4            | ) |   |          | (5,726 | )     |               |     |    |               |   |        |       |  |   |        | (5,730 | ) |   |        |        | 
|                              | Net earnings                                       |                |       |     |            |             |    |              |   |   |          |       |       |               |     |    |               |   |        | 7,593  |  |   |        | 7,593  |   |   | $      | 7,593  | 
|                              | Other comprehensive income  marketable securities |                |       |     |            |             |    |              |   |   |          |       |       |               |     | 232 |               |   |        |       |  |   |        | 232    |   |   |        | 232    | 
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Total comprehensive income    |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        |  |   |        |        |   | $ | 7,825  |       
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Balances at December 31, 2004 |                                                    |                | 7,098 |      |            |             | 71 |               |   |   | 8,024    |        |       |               | 232 |     |               |   | 21,545 |        |  |   | 29,872 |        |   |   |        |       
|                              | Exercise of stock options                          |                |       | 381  |            |             |    | 4             |   |   |          | 1,954  |       |               |     |    |               |   |        |       |  |   |        | 1,958  |   |   |        |        | 
|                              | Tax benefit related to exercise of stock options   |                |       |      |            |             |    |               |   |   |          | 2,424  |       |               |     |    |               |   |        |       |  |   |        | 2,424  |   |   |        |        | 
|                              | Repurchase of common stock                         |                |       | (160 | )          |             |    | (2            | ) |   |          | (3,784 | )     |               |     |    |               |   |        |       |  |   |        | (3,786 | ) |   |        |        | 
|                              | Net earnings                                       |                |       |     |            |             |    |              |   |   |          |       |       |               |     |    |               |   |        | 11,453 |  |   |        | 11,453 |   |   | $      | 11,453 | 
|                              | Other comprehensive income  marketable securities |                |       |     |            |             |    |              |   |   |          |       |       |               |     | 48  |               |   |        |       |  |   |        | 48     |   |   |        | 48     | 
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Total comprehensive income    |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        |  |   |        |        |   | $ | 11,501 |       
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 
|Balances at December 31, 2005 |                                                    |                | 7,319 |      |            | $           | 73 |               |   | $ | 8,618    |        |       | $             | 280 |     |               | $ | 32,998 |        |  | $ | 41,969 |        |   |   |        |       
|                              |                                                    |                |       |      |            |             |    |               |   |   |          |        |       |               |     |     |               |   |        |        | 



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CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |       |        |         |        |       |       |        |  
|-------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------ | --------------------------------------- | ----------------------------------------------------- | ----- | ------ | ------- | ------- | ----- | ------ | ------- | ------ | ----- | ----- | ------ | -
|                                                   |                                                                                           | Years ended December 31,                               |                                        
|                                                   |                                                                                           |                                                        |                                        
|                                                   |                                                                                           | 2005                                                   |                                         |                                                       | 2004  |        |         | 2003    |      
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|                                                   |                                                                                           | (In thousands)                                         |                                        
|Cash flows from operating activities:              |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |       |        |         |       
|                                                   | Net earnings                                                                              |                                                        | $                                       | 11,453                                                |       |        | $       | 7,593   |       |        | $       | 6,193  |      
|                                                   | Adjustments to reconcile net earnings to cash flows provided by
    operating activities: |                                                        |                                         |                                                       |       |        |         |         |       |        |         |        |      
|                                                   |                                                                                           | Depreciation and amortization                          |                                         |                                                       | 1,471 |        |         |         | 1,431 |        |         |        | 1,322 |      
|                                                   |                                                                                           | Deferred income taxes                                  |                                         |                                                       | 204   |        |         |         | 2,306 |        |         |        | (813  | )    
|                                                   |                                                                                           | Tax benefit related to exercise of stock options       |                                         |                                                       | 2,424 |        |         |         | 1,070 |        |         |        | 554   |      
|                                                   |                                                                                           | Change in fair value of marketable securities          |                                         |                                                       | 48    |        |         |         | 232   |        |         |        |      |      
|                                                   |                                                                                           | Other                                                  |                                         |                                                       |      |        |         |         | 9     |        |         |        | 15    |      
|                                                   |                                                                                           | Changes in assets and liabilities, net of acquisition: |                                         |                                                       |       |        |         |         |       |        |         |        |       |      
|                                                   |                                                                                           |                                                        | Accounts receivable                     |                                                       |       | (482   | )       |         |       | (842   | )       |        |       | (20   | )     
|                                                   |                                                                                           |                                                        | Inventory                               |                                                       |       | (5,090 | )       |         |       | (4,009 | )       |        |       | 1,719 |       
|                                                   |                                                                                           |                                                        | Promotional material                    |                                                       |       | (884   | )       |         |       | (842   | )       |        |       | (25   | )     
|                                                   |                                                                                           |                                                        | Prepaid expenses and other              |                                                       |       | (638   | )       |         |       | (1,091 | )       |        |       | (743  | )     
|                                                   |                                                                                           |                                                        | Other long term assets                  |                                                       |       | (710   | )       |         |       |       |         |        |       |      |       
|                                                   |                                                                                           |                                                        | Income taxes payable                    |                                                       |       | 634    |         |         |       | (1,125 | )       |        |       | 1,225 |       
|                                                   |                                                                                           |                                                        | Accounts payable                        |                                                       |       | 2,855  |         |         |       | 259    |         |        |       | 2,720 |       
|                                                   |                                                                                           |                                                        | Accrued expenses                        |                                                       |       | 1,626  |         |         |       | 964    |         |        |       | 1,995 |       
|                                                   |                                                                                           |                                                        | Customer deposits and other liabilities |                                                       |       | 316    |         |         |       | 1,460  |         |        |       | 2,212 |       
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|                                                   |                                                                                           |                                                        |                                         | Cash flows provided by operating activities           |       |        | 13,227  |         |       |        | 7,415   |        |       |       | 16,354 |  
|Cash flows from investing activities:              |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |       |        |         |       
|                                                   | Purchases of property and equipment                                                       |                                                        |                                         | (920                                                  | )     |        |         | (772    | )     |        |         | (941   | )    
|                                                   | Business acquisition                                                                      |                                                        |                                         | (29                                                   | )     |        |         | (30,442 | )     |        |         |       |      
|                                                   | Other                                                                                     |                                                        |                                         |                                                      |       |        |         |        |       |        |         | 14     |      
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|                                                   |                                                                                           |                                                        |                                         | Cash flows used in investing activities               |       |        | (949    | )       |       |        | (31,214 | )      |       |       | (927   | )
|Cash flows from financing activities:              |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |       |        |         |       
|                                                   | Proceeds from note payable to bank                                                        |                                                        |                                         |                                                      |       |        |         | 12,500  |       |        |         |       |      
|                                                   | Principal payments on note payable to bank                                                |                                                        |                                         | (5,000                                                | )     |        |         | (7,500  | )     |        |         |       |      
|                                                   | Payment of long-term debt                                                                 |                                                        |                                         | (16                                                   | )     |        |         |        |       |        |         |       |      
|                                                   | Proceeds from exercise of stock options                                                   |                                                        |                                         | 1,958                                                 |       |        |         | 1,091   |       |        |         | 653    |      
|                                                   | Repurchase of common stock                                                                |                                                        |                                         | (3,786                                                | )     |        |         | (5,730  | )     |        |         | (1,178 | )    
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|                                                   |                                                                                           |                                                        |                                         | Cash flows provided by (used in) financing activities |       |        | (6,844  | )       |       |        | 361     |        |       |       | (525   | )
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|Increase (decrease) in cash and cash equivalents   |                                                                                           |                                                        | 5,434                                   |                                                       |       |        | (23,438 | )       |       |        | 14,902  |       
|Cash and cash equivalents at beginning of the year |                                                                                           |                                                        | 8,616                                   |                                                       |       |        | 32,054  |         |       |        | 17,152  |       
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|Cash and cash equivalents at end of the year       |                                                                                           | $                                                      | 14,050                                  |                                                       |       | $      | 8,616   |         |       | $      | 32,054  |       
|                                                   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |      
|Supplemental disclosure of cash flow information   |                                                                                           |                                                        |                                         |                                                       |       |        |         |         |       |        |         |       
|                                                   | Cash paid during the year for:                                                            |                                                        |                                         |                                                       |       |        |         |         |       |        |         |        |      
|                                                   |                                                                                           | Interest                                               |                                         | $                                                     | 278   |        |         | $       | 360   |        |         | $      |      |      
|                                                   |                                                                                           | Income taxes                                           |                                         |                                                       | 3,363 |        |         |         | 3,560 |        |         |        | 2,567 |      
|                                                   | Cash received during the year for:                                                        |                                                        |                                         |                                                       |       |        |         |         |       |        |         |        |      
|                                                   |                                                                                           | Income tax refund                                      |                                         | $                                                     |      |        |         | $       | 1,505 |        |         | $      |      |      



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The Sportsmans Guide, Inc. and Subsidiaries


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES


1. Description of Business












|   |              
|-- | -------------
|2. | Consolidation





|   |                    
|-- | -------------------
|3. | Revenue Recognition

4-Pay






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The Sportsmans Guide, Inc. and Subsidiaries


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)




|                    |                                 |                          |   |         |      |  |   |         |   |  |   |        |  
|------------------- | ------------------------------- | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------ | -
|                    |                                 | Years ended December 31, |  
|                    |                                 |                          |  
|                    |                                 | 2005                     |   |         | 2004 |  |   | 2003    |  
|                    |                                 |                          |   |         |      |  |   |         |  
|Deferred revenue:   |                                 |                          |   |         |      |  |   |         |   |  |   |       
|                    | Beginning balance               |                          | $ | 7,314   |      |  | $ | 6,425   |   |  | $ | 5,566  |  
|                    | Fees received from club members |                          |   | 12,574  |      |  |   | 11,819  |   |  |   | 10,828 |  
|                    | Fees recognized in income       |                          |   | (11,955 | )    |  |   | (10,813 | ) |  |   | (9,863 | )
|                    | Provision for refunds           |                          |   | (100    | )    |  |   | (117    | ) |  |   | (106   | )
|                    | Ending balance                  |                          | $ | 7,833   |      |  | $ | 7,314   |   |  | $ | 6,425  |  
|                   
|Refund obligations: |                                 |                          |   |         |      |  |   |         |   |  |   |       
|                    | Beginning balance               |                          | $ | 41      |      |  | $ | 36      |   |  | $ | 32     |  
|                    | Provision for refunds           |                          |   | 100     |      |  |   | 117     |   |  |   | 106    |  
|                    | Refunds paid                    |                          |   | (102    | )    |  |   | (112    | ) |  |   | (102   | )
|                    | Ending balance                  |                          | $ | 39      |      |  | $ | 41      |   |  | $ | 36     |  



|   |                                                                   
|-- | ------------------------------------------------------------------
|4. | Cost of Sales and Selling, General and Administrative
    Expenses







|   |                          
|-- | -------------------------
|5. | Cash and Cash Equivalents





|   |                    
|-- | -------------------
|6. | Accounts Receivable





|   |          
|-- | ---------
|7. | Inventory

first-in,


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)






|   |                                           
|-- | ------------------------------------------
|8. | Promotional Material and Advertising Costs







|   |                       
|-- | ----------------------
|9. | Property and Equipment





|    |                                                 
|--- | ------------------------------------------------
|10. | Goodwill, Intangible and Other Long-Lived Assets









|    |              
|--- | -------------
|11. | Stock Options

Accounting for Stock
Issued to Employees,


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The Sportsmans Guide, Inc. and Subsidiaries


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)




|                                                                                                                                   |                       |                          |        |      |      |   |        |      |  |   |       |     | 
|---------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------------------ | ------ | ---- | ---- | - | ------ | ---- |  | - | ----- | --- | 
|                                                                                                                                   |                       | Years ended December 31, |       
|                                                                                                                                   |                       |                          |       
|                                                                                                                                   |                       | 2005                     |        |      | 2004 |   |        | 2003 | 
|                                                                                                                                   |                       |                          |        |      |      |   |        |      | 
|Net earnings as reported                                                                                                           |                       | $                        | 11,453 |      |      | $ | 7,593  |      |  | $ | 6,193 |    
|Deduct: Total stock-based employee compensation expense under
    the fair value method for all awards, net of related tax effects |                       |                          | (1,787 | )    |      |   | (1,089 | )    |  |   | (484  | )  
|                                                                                                                                   |                       |                          |        |      |      |   |        |      | 
|Pro-forma net earnings                                                                                                             |                       | $                        | 9,666  |      |      | $ | 6,504  |      |  | $ | 5,709 |    
|                                                                                                                                   |                       |                          |        |      |      |   |        |      | 
|Earnings per share:                                                                                                                |                       |                          |        |      |      |   |        |      |  |   |       |    
|                                                                                                                                   | Basic  as reported   |                          | $      | 1.58 |      |   | $      | 1.07 |  |   | $     | .86 | 
|                                                                                                                                   | Basic  pro-forma     |                          |        | 1.34 |      |   |        | .92  |  |   |       | .80 | 
|                                                                                                                                   | Diluted  as reported |                          | $      | 1.38 |      |   | $      | .95  |  |   | $     | .78 | 
|                                                                                                                                   | Diluted  pro-forma   |                          |        | 1.19 |      |   |        | .84  |  |   |       | .73 | 



12. Net Earnings Per Share








13. Fiscal Year




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The Sportsmans Guide, Inc. and Subsidiaries


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)


14. Fair Values of Financial Instruments




15. Use of Estimates in Preparing Financial
Statements




NOTE B  PROPERTY AND EQUIPMENT




|                                               |  |              |        |  |              |   |        |              |  |  |            | 
|---------------------------------------------- |  | ------------ | ------ |  | ------------ | - | ------ | ------------ |  |  | ---------- | 
|                                               |  | December 31, |        |  | December 31, |   |        | Estimated    | 
|                                               |  | 2005         |        |  | 2004         |   |        | useful lives | 
|                                               |  |              |        |  |              |   |        |              | 
|Machinery, equipment and furniture             |  | $            | 6,475  |  |              | $ | 6,044  |              |  |  | 3-7 years  | 
|Leasehold improvements                         |  |              | 2,708  |  |              |   | 2,557  |              |  |  | Lease term | 
|Computer equipment and accessories             |  |              | 3,715  |  |              |   | 3,466  |              |  |  | 3-5 years  | 
|Computer software                              |  |              | 4,565  |  |              |   | 4,476  |              |  |  | 3-5 years  | 
|                                               |  |              |        |  |              |   |        |              | 
|                                               |  |              | 17,463 |  |              |   | 16,543 |              |  |  |            | 
|Less accumulated depreciation and amortization |  |              | 15,138 |  |              |   | 13,850 |              |  |  |            | 
|                                               |  |              |        |  |              |   |        |              | 
|                                               |  | $            | 2,325  |  |              | $ | 2,693  |              |  |  |            | 
|                                               |  |              |        |  |              |   |        |              | 

NOTE C  CREDIT FACILITY






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NOTE C  CREDIT FACILITY (Continued)






|                                               |  |                          |       |   |      |   |        |      |  |   |       |  
|---------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                               |  | Years Ended December 31, |      
|                                               |  |                          |      
|                                               |  | 2005                     |       |   | 2004 |   |        | 2003 | 
|                                               |  |                          |       |   |      |   |        |      | 
|Borrowings at end of year                      |  | $                        |      |   |      | $ | 5,000  |      |  | $ |      |  
|Interest rate at end of year                   |  |                          | 6.81  | % |      |   | 4.82   | %    |  |   | 3.50  | %
|Maximum month-end borrowing during the year    |  | $                        | 9,135 |   |      | $ | 18,485 |      |  | $ |      |  
|Average daily borrowing during the year        |  | $                        | 5,177 |   |      | $ | 7,873  |      |  | $ |      |  
|Weighted average interest rate during the year |  |                          | 5.90  | % |      |   | 4.35   | %    |  |   | N/A   |  
|Outstanding letters of credit at end of year   |  | $                        | 1,504 |   |      | $ | 1,876  |      |  | $ | 2,483 |  

NOTE D  ACQUISITION






|                                |                                           |                      |   |        |        | 
|------------------------------- | ----------------------------------------- | -------------------- | - | ------ | ------ | 
|Net assets acquired, including: |                                           |                      |   |       
|                                | Current assets                            |                      | $ | 6,674  |       
|                                | Property and equipment                    |                      |   | 1,013  |       
|                                | Liabilities assumed                       |                      |   | (5,371 | )     
|                                |                                           |                      |  
|                                |                                           | Net assets acquired  |   |        | 2,316  | 
|                                | Trade and domain name                     |                      |   | 10,200 |       
|                                | Customer lists and non-compete agreements |                      |   | 750    |       
|                                | Goodwill                                  |                      |   | 17,176 |       
|                                |                                           |                      |  
|                                |                                           | Total purchase price |   | $      | 30,442 | 
|                                |                                           |                      |  



|                                              |                          |   |        |        | 
|--------------------------------------------- | ------------------------ | - | ------ | ------ | 
|Fair value of net working capital acquired    |                          | $ | 1,303  |       
|Fair value of property and equipment acquired |                          |   | 1,013  |       
|Purchase price assigned to:                   |                          |   |        |       
|                                              | Goodwill                 |   |        | 17,176 | 
|                                              | Identifiable intangibles |   |        | 10,950 | 
|                                              |                          |   |       
|Cash purchase price                           |                          | $ | 30,442 |       
|                                              |                          |   |       



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NOTE D  ACQUISITION (Continued)




|                            |  |   |                 | 
|--------------------------- |  | - | --------------- | 
|90 days after closing date  |  | $ | 500             | 
|180 days after closing date |  |   | 500             | 
|360 days after closing date |  |   | 1,500           | 
|540 days after closing date |  |   | Remaining Funds | 









|                               |  |      |         |  |      |   |         | 
|------------------------------ |  | ---- | ------- |  | ---- | - | ------- | 
|                               |  | 2004 |         |  | 2003 |  
|                               |  |      |         |  |      |  
|Net sales                      |  | $    | 259,545 |  |      | $ | 237,183 | 
|Net income                     |  |      | 8,081   |  |      |   | 6,681   | 
|Basic net earnings per share   |  |      | 1.14    |  |      |   | .93     | 
|Diluted net earnings per share |  |      | 1.01    |  |      |   | .84     | 

NOTE E  INCOME TAXES




|         |         |                          |       |       |      |   |       |       |  |   |       |       |  
|-------- | ------- | ------------------------ | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | -
|         |         | Years ended December 31, |      
|         |         |                          |      
|         |         | 2005                     |       |       | 2004 |   |       | 2003  | 
|         |         |                          |       |       |      |   |       |       | 
|Current  |         |                          |       |       |      |   |       |       |  |   |       |      
|         | Federal |                          | $     | 6,231 |      |   | $     | 1,934 |  |   | $     | 4,253 |  
|         | State   |                          |       | 198   |      |   |       | 66    |  |   |       | 42    |  
|         |         |                          |       |       |      |   |       |       | 
|         |         |                          | 6,429 |       |      |   | 2,000 |       |  |   | 4,295 |      
|Deferred |         |                          |       |       |      |   |       |       |  |   |       |      
|         | Federal |                          |       | 204   |      |   |       | 2,306 |  |   |       | (813  | )
|         |         |                          |       |       |      |   |       |       | 
|         |         | $                        | 6,633 |       |      | $ | 4,306 |       |  | $ | 3,482 |      
|         |         |                          |       |       |      |   |       |       | 

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NOTE E  INCOME TAXES (Continued)




|                            |  |                          |      |   |      |  |      |      |  |  |      |  
|--------------------------- |  | ------------------------ | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                            |  | Years ended December 31, |     
|                            |  |                          |     
|                            |  | 2005                     |      |   | 2004 |  |      | 2003 | 
|                            |  |                          |      |   |      |  |      |      | 
|U.S. federal statutory rate |  |                          | 34.0 | % |      |  | 34.0 | %    |  |  | 34.0 | %
|State taxes                 |  |                          | 1.1  |   |      |  | 0.6  |      |  |  | 0.4  |  
|Other                       |  |                          | 1.6  |   |      |  | 1.6  |      |  |  | 1.6  |  
|                            |  |                          |      |   |      |  |      |      | 
|                            |  |                          | 36.7 | % |      |  | 36.2 | %    |  |  | 36.0 | %
|                            |  |                          |      |   |      |  |      |      | 



|                                             |                                   |                                  |   |        |                   |   |   |      |       |  
|-------------------------------------------- | --------------------------------- | -------------------------------- | - | ------ | ----------------- | - | - | ---- | ----- | -
|                                             |                                   | December 31, 2005                |   |        | December 31, 2004 |  
|                                             |                                   |                                  |   |        |                   |  
|Current deferred tax assets (liabilities):   |                                   |                                  |   |        |                   |   |   |     
|                                             | Inventory                         |                                  | $ | 858    |                   |   | $ | 682  |      
|                                             | Vacation accrual                  |                                  |   | 299    |                   |   |   | 214  |      
|                                             | Returns reserve                   |                                  |   | 785    |                   |   |   | 854  |      
|                                             | Promotional material              |                                  |   | (830   | )                 |   |   | (732 | )    
|                                             | Prepaid expenses                  |                                  |   | (360   | )                 |   |   | (345 | )    
|                                             | Deferred revenue                  |                                  |   |       |                   |   |   | 645  |      
|                                             | Deferred compensation             |                                  |   | 838    |                   |   |   | 557  |      
|                                             | Other                             |                                  |   | 437    |                   |   |   | (108 | )    
|                                             |                                   |                                  |   |        |                   |  
|                                             |                                   | Current deferred tax asset       |   |        | 2,027             |   |   |      | 1,767 |  
|Long-term deferred tax assets (liabilities): |                                   |                                  |   |        |                   |   |   |     
|                                             | Internally developed software     |                                  |   |       |                   |   |   | (923 | )    
|                                             | Amortization of intangible assets |                                  |   | (1,041 | )                 |   |   | (347 | )    
|                                             | Depreciation                      |                                  |   | 272    |                   |   |   | 965  |      
|                                             |                                   |                                  |   |        |                   |  
|                                             |                                   | Long-term deferred tax liability |   |        | (769              | ) |   |      | (305  | )
|                                             |                                   |                                  |   |        |                   |  
|                                             |                                   | Net deferred tax asset           |   | $      | 1,258             |   |   | $    | 1,462 |  
|                                             |                                   |                                  |   |        |                   |  

NOTE F  COMMITMENTS AND CONTINGENCIES




| |                            
| | ---------------------------
| | Lease and Other Commitments





|     |  |   |       | 
|---- |  | - | ----- | 
|2006 |  | $ | 3,227 | 
|2007 |  |   | 2,685 | 
|2008 |  |   | 1,866 | 
|2009 |  |   | 883   | 
|     |  |   |      
|     |  | $ | 8,661 | 
|     |  |   |      



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NOTE F  COMMITMENTS AND
CONTINGENCIES (Continued)




| |                      
| | ---------------------
| | Employment Agreements









| |                    
| | -------------------
| | Profit Sharing Plan







| |                  
| | -----------------
| | Legal Proceedings







| |      
| | -----
| | Other

out-of


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE F  COMMITMENTS AND
CONTINGENCIES (Continued)




NOTE G  RECENT ACCOUNTING PRONOUNCEMENTS


Share-Based Payment, Accounting for Stock Issued to
Employees,


NOTE H  SHAREHOLDERS EQUITY




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NOTE H  SHAREHOLDERS EQUITY (Continued)




| |                         
| | ------------------------
| | Stock Repurchase Program



|                          |  |              |         |  |                |                    |                     |                 |                    |                    |                 |  |  |  |         | 
|------------------------- |  | ------------ | ------- |  | -------------- | ------------------ | ------------------- | --------------- | ------------------ | ------------------ | --------------- |  |  |  | ------- | 
|                          |  |              |         |  |                | Total Number of    |                     |                 | Maximum Number     |                   
|                          |  |              |         |  |                | Shares Repurchased |                     |                 | Of Shares that May |                   
|                          |  | Total Number |         |  |                |                    | as Part of Publicly |                 |                    | Yet be Repurchased |                
|                          |  | of Shares    |         |  | Average Price  |                    |                     | Announced Plans |                    |                    | Under the Plans | 
|Period                    |  | Repurchased  |         |  | Paid per Share |                    |                     | or Programs     |                    |                    | or Programs     | 
|                          |  |              |         |  |                |                    |                     |                 |                    |                    |                 | 
|May 6  December 31, 2005 |  |              | 159,710 |  |                | $                  | 23.70               |                 |                    |                    | 159,710         |  |  |  | 552,348 | 



|                           |  |              |        |  |                |                    |                     |                 |                    |                    |                 |  |  |  |   | 
|-------------------------- |  | ------------ | ------ |  | -------------- | ------------------ | ------------------- | --------------- | ------------------ | ------------------ | --------------- |  |  |  | - | 
|                           |  |              |        |  |                | Total Number of    |                     |                 | Maximum Number     |                   
|                           |  |              |        |  |                | Shares Repurchased |                     |                 | Of Shares that May |                   
|                           |  | Total Number |        |  |                |                    | as Part of Publicly |                 |                    | Yet be Repurchased |                
|                           |  | of Shares    |        |  | Average Price  |                    |                     | Announced Plans |                    |                    | Under the Plans | 
|Period                     |  | Repurchased  |        |  | Paid per Share |                    |                     | or Programs     |                    |                    | or Programs     | 
|                           |  |              |        |  |                |                    |                     |                 |                    |                    |                 | 
|May 13  December 31, 2004 |  |              | 43,868 |  |                | $                  | 13.28               |                 |                    |                    | 43,868          |  |  |  |  | 



|                        |  |              |         |  |                |                    |                     |                 |                    |                    |                 |  |  |  |   | 
|----------------------- |  | ------------ | ------- |  | -------------- | ------------------ | ------------------- | --------------- | ------------------ | ------------------ | --------------- |  |  |  | - | 
|                        |  |              |         |  |                | Total Number of    |                     |                 | Maximum Number     |                   
|                        |  |              |         |  |                | Shares Repurchased |                     |                 | Of Shares that May |                   
|                        |  | Total Number |         |  |                |                    | as Part of Publicly |                 |                    | Yet be Repurchased |                
|                        |  | of Shares    |         |  | Average Price  |                    |                     | Announced Plans |                    |                    | Under the Plans | 
|Period                  |  | Repurchased  |         |  | Paid per Share |                    |                     | or Programs     |                    |                    | or Programs     | 
|                        |  |              |         |  |                |                    |                     |                 |                    |                    |                 | 
|January 1  May 5, 2004 |  |              | 389,466 |  |                | $                  | 13.22               |                 |                    |                    | 389,466         |  |  |  |  | 



| |              
| | -------------
| | Stock Options





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NOTE H  SHAREHOLDERS EQUITY (Continued)












|                         |  |             |           |                  |                  |          |         |          |  |   |             |         |  |          |           |  |  |   |       | 
|------------------------ |  | ----------- | --------- | ---------------- | ---------------- | -------- | ------- | -------- |  | - | ----------- | ------- |  | -------- | --------- |  |  | - | ----- | 
|                         |  |             |           |                  |                  | Weighted |         |          |  |   | Weighted    |        
|                         |  |             |           | Weighted Average |                  |          | Average |          |  |   |             | Average | 
|                         |  | Number      |           |                  | Remaining        |          |         | Exercise |  |   | Number      |         |  | Exercise |          
|Range of Exercise Prices |  | Outstanding |           |                  | Contractual Life |          |         | Price    |  |   | Exercisable |         |  | Price    |          
|                         |  |             |           |                  |                  |          |         |          |  |   |             |         |  |          |          
|$ 1.97   2.67           |  |             | 199,005   |                  |                  |          | 5 years |          |  | $ | 2.06        |         |  |          | 199,005   |  |  | $ | 2.06  | 
|3.92   4.50             |  |             | 507,263   |                  |                  |          | 5 years |          |  |   | 4.39        |         |  |          | 507,263   |  |  |   | 4.39  | 
|10.77  15.57            |  |             | 916,996   |                  |                  |          | 9 years |          |  |   | 13.05       |         |  |          | 343,499   |  |  |   | 12.41 | 
|17.00                    |  |             | 142,500   |                  |                  |          | 9 years |          |  |   | 17.00       |         |  |          |          |  |  |   |      | 
|                         |  |             |           |                  |                  |          |         |          |  |   |             |         |  |          |          
|                         |  |             | 1,765,764 |                  |                  |          |         |          |  |   |             |         |  |          | 1,049,767 |  |  |   |       | 
|                         |  |             |           |                  |                  |          |         |          |  |   |             |         |  |          |          



|                                                               |           |        |           |          |       |   |      |        |          |  |           |          |   |          |      |       |       |  |           |          |   |   |      |       | 
|-------------------------------------------------------------- | --------- | ------ | --------- | -------- | ----- | - | ---- | ------ | -------- |  | --------- | -------- | - | -------- | ---- | ----- | ----- |  | --------- | -------- | - | - | ---- | ----- | 
|                                                               |           | 2005   |           |          | 2004  |   |      | 2003   |         
|                                                               |           |        |           |          |       |   |      |        |         
|                                                               |           |        |           | Weighted |       |   |      |        | Weighted |  |           |          |   | Weighted |     
|                                                               |           |        |           | Average  |       |   |      |        | Average  |  |           |          |   | Average  |     
|                                                               |           |        |           | Exercise |       |   |      |        | Exercise |  |           |          |   | Exercise |     
|                                                               |           | Shares |           |          | Price |   |      | Shares |          |  | Price     |          |   | Shares   |      |       | Price | 
|                                                               |           |        |           |          |       |   |      |        |          |  |           |          |   |          |      |       |       | 
|Outstanding at beginning of year                               |           |        | 2,014,318 |          |       | $ | 8.29 |        |          |  | 1,569,417 |          |   | $        | 4.80 |       |       |  | 1,575,609 |          |   | $ | 3.37 |      
|                                                               | Granted   |        |           | 154,500  |       |   |      | 16.96  |          |  |           | 736,500  |   |          |      | 13.91 |       |  |           | 276,000  |   |   |      | 10.77 | 
|                                                               | Exercised |        |           | (380,554 | )     |   |      | 5.08   |          |  |           | (291,599 | ) |          |      | 3.75  |       |  |           | (257,192 | ) |   |      | 2.54  | 
|                                                               | Canceled  |        |           | (22,500  | )     |   |      | 14.79  |          |  |           |         |   |          |      |      |       |  |           | (25,000  | ) |   |      | 3.49  | 
|                                                               |           |        |           |          |       |   |      |        |          |  |           |          |   |          |      |       |       | 
|Outstanding at end of year                                     |           |        | 1,765,764 |          |       | $ | 9.64 |        |          |  | 2,014,318 |          |   | $        | 8.29 |       |       |  | 1,569,417 |          |   | $ | 4.80 |      
|                                                               |           |        |           |          |       |   |      |        |          |  |           |          |   |          |      |       |       | 
|Options exercisable at end of year                             |           |        | 1,049,767 |          |       | $ | 6.56 |        |          |  | 973,818   |          |   | $        | 4.03 |       |       |  | 933,417   |          |   | $ | 3.48 |      
|                                                               |           |        |           |          |       |   |      |        |          |  |           |          |   |          |      |       |       | 
|Weighted average fair value of options granted during the year |           |        |           |          |       | $ | 5.74 |        |          |  |           |          |   | $        | 6.03 |       |       |  |           |          |   | $ | 8.19 |      

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NOTE I  SEGMENT INFORMATION


tm




|                              |                       |              |   |         |         |  |   |         |         | 
|----------------------------- | --------------------- | ------------ | - | ------- | ------- |  | - | ------- | ------- | 
|                              |                       | Years ended  |  
|                              |                       | December 31, |  
|                              |                       |              |  
|                              |                       | 2005         |   |         | 2004    | 
|                              |                       |              |   |         |         | 
|Net Sales                     |                       |              |   |         |         |  |   |        
|                              | The Sportsmans Guide |              | $ | 219,092 |         |  | $ | 207,224 |        
|                              | The Golf Warehouse    |              |   | 66,028  |         |  |   | 25,241  |        
|                              |                       |              |   |         |         | 
|                              |                       | Total        |   | $       | 285,120 |  |   | $       | 232,465 | 
|                              |                       |              |   |         |         | 
|Earnings From Operations      |                       |              |   |         |         |  |   |        
|                              | The Sportsmans Guide |              | $ | 12,322  |         |  | $ | 10,695  |        
|                              | The Golf Warehouse    |              |   | 5,742   |         |  |   | 1,567   |        
|                              |                       |              |   |         |         | 
|                              |                       | Total        |   | $       | 18,064  |  |   | $       | 12,262  | 
|                              |                       |              |   |         |         | 
|Depreciation and Amortization |                       |              |   |         |         |  |   |        
|                              | The Sportsmans Guide |              | $ | 1,000   |         |  | $ | 1,214   |        
|                              | The Golf Warehouse    |              |   | 471     |         |  |   | 217     |        
|                              |                       |              |   |         |         | 
|                              |                       | Total        |   | $       | 1,471   |  |   | $       | 1,431   | 
|                              |                       |              |   |         |         | 
|Capital Expenditures          |                       |              |   |         |         |  |   |        
|                              | The Sportsmans Guide |              | $ | 667     |         |  | $ | 546     |        
|                              | The Golf Warehouse    |              |   | 253     |         |  |   | 226     |        
|                              |                       |              |   |         |         | 
|                              |                       | Total        |   | $       | 920     |  |   | $       | 772     | 
|                              |                       |              |   |         |         | 
|Assets                        |                       |              |   |         |         |  |   |        
|                              | The Sportsmans Guide |              | $ | 51,563  |         |  | $ | 40,138  |        
|                              | The Golf Warehouse    |              |   | 42,327  |         |  |   | 40,776  |        
|                              |                       |              |   |         |         | 
|                              |                       | Total        |   | $       | 93,890  |  |   | $       | 80,914  | 
|                              |                       |              |   |         |         | 

NOTE J  ADVERTISING EXPENSE




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NOTE K  INTERIM FINANCIAL INFORMATION
(UNAUDITED)




|     |                          |               |   |        |                |  |   |               |     |  |                |        |     |  |   |        |     | 
|---- | ------------------------ | ------------- | - | ------ | -------------- |  | - | ------------- | --- |  | -------------- | ------ | --- |  | - | ------ | --- | 
|     |                          | First Quarter |   |        | Second Quarter |  |   | Third Quarter |     |  | Fourth Quarter |       
|     |                          |               |   |        |                |  |   |               |     |  |                |       
|2005 |                          |               |   |        |                |  |   |               |     |  |                |        |     |  |   |       
|     | Net sales                |               | $ | 64,578 |                |  | $ | 63,778        |     |  | $              | 61,549 |     |  | $ | 95,215 |    
|     | Gross profit             |               |   | 20,034 |                |  |   | 19,444        |     |  |                | 19,489 |     |  |   | 31,886 |    
|     | Earnings from operations |               |   | 3,562  |                |  |   | 3,968         |     |  |                | 3,506  |     |  |   | 7,028  |    
|     | Net earnings             |               |   | 2,257  |                |  |   | 2,507         |     |  |                | 2,189  |     |  |   | 4,500  |    
|     | Net earnings per share:  |               |   |        |                |  |   |               |     |  |                |        |     |  |   |        |    
|     |                          | Basic         |   |        | .32            |  |   |               | .35 |  |                |        | .30 |  |   |        | .61 | 
|     |                          | Diluted       |   |        | .28            |  |   |               | .31 |  |                |        | .26 |  |   |        | .53 | 
|2004 |                          |               |   |        |                |  |   |               |     |  |                |        |     |  |   |       
|     | Net sales                |               | $ | 44,811 |                |  | $ | 39,553        |     |  | $              | 57,039 |     |  | $ | 91,062 |    
|     | Gross profit             |               |   | 14,345 |                |  |   | 12,829        |     |  |                | 16,900 |     |  |   | 30,310 |    
|     | Earnings from operations |               |   | 1,999  |                |  |   | 1,900         |     |  |                | 2,336  |     |  |   | 6,027  |    
|     | Net earnings             |               |   | 1,308  |                |  |   | 1,240         |     |  |                | 1,377  |     |  |   | 3,668  |    
|     | Net earnings per share:  |               |   |        |                |  |   |               |     |  |                |        |     |  |   |        |    
|     |                          | Basic         |   |        | .18            |  |   |               | .18 |  |                |        | .20 |  |   |        | .52 | 
|     |                          | Diluted       |   |        | .16            |  |   |               | .16 |  |                |        | .17 |  |   |        | .46 | 



|      |                                                                                                                                                                                                  
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: | The acquisition of The Golf Warehouse, L.L.C. was effective
    June 29, 2004. The third quarter of 2004 was the first
    quarter for inclusion of TGWs net sales, operations and
    earnings.

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##### Table of Contents



The Sportsmans Guide, Inc. and Subsidiaries







SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                                |                   |                           |   |           |             |  |   |                  |   |  |              |     |     |               |   |        |     |  |   |       | 
|------------------------------- | ----------------- | ------------------------- | - | --------- | ----------- |  | - | ---------------- | - |  | ------------ | --- | --- | ------------- | - | ------ | --- |  | - | ----- | 
|Column A                        |                   | Column B                  |   |           | Column C    |  |   | Column D         |   |  | Column E     |    
|                                |                   |                           |   |           |             |  |   |                  |   |  |              |    
|                                |                   |                           |   | Additions |             |  |   |                  |  
|                                |                   |                           |   |           |             |  |   |                  |  
|                                |                   | Balance at                |   |           | Charged to: |  |   | Charged to:      |   |  |              |     |    
|                                |                   | Beginning                 |   |           | Costs and   |  |   | Other Accounts  |   |  | Deductions  |     |     | Balance at    |  
|Description                     |                   | of Period                 |   |           | Expenses    |  |   | Describe         |   |  | Describe     |     |     | End of Period |  
|                                |                   |                           |   |           |             |  |   |                  |   |  |              |     |     |               |  
|                                |                   | (in thousands of dollars) |  
|Allowance for Doubtful Accounts |                   |                           |   |           |             |  |   |                  |   |  |              |     |     |               |   |        |     |  |   |      
|                                | December 31, 2005 |                           | $ | 124       |             |  | $ | 115              |   |  | $            |     |     |               | $ | 192    | (A) |  | $ | 47    | 
|                                | December 31, 2004 |                           | $ | 146       |             |  | $ | 101              |   |  | $            |    |     |               | $ | 123    | (A) |  | $ | 124   | 
|                                | December 31, 2003 |                           | $ | 195       |             |  | $ | 56               |   |  | $            |    |     |               | $ | 105    | (A) |  | $ | 146   | 
|Inventory Reserves              |                   |                           |   |           |             |  |   |                  |   |  |              |     |     |               |   |        |     |  |   |      
|                                | December 31, 2005 |                           | $ | 962       |             |  | $ | 144              |   |  | $            |    |     |               | $ | 41     | (C) |  | $ | 1,065 | 
|                                | December 31, 2004 |                           | $ | 1,351     |             |  | $ | (356             | ) |  | $            | 160 | (B) |               | $ | 193    | (C) |  | $ | 962   | 
|                                | December 31, 2003 |                           | $ | 1,492     |             |  | $ | 70               |   |  | $            |    |     |               | $ | 211    | (C) |  | $ | 1,351 | 
|Returns Reserve                 |                   |                           |   |           |             |  |   |                  |   |  |              |     |     |               |   |        |     |  |   |      
|                                | December 31, 2005 |                           | $ | 2,318     |             |  | $ | 12,590           |   |  | $            |    |     |               | $ | 12,862 | (D) |  | $ | 2,046 | 
|                                | December 31, 2004 |                           | $ | 2,240     |             |  | $ | 10,570           |   |  | $            | 74  | (B) |               | $ | 10,566 | (D) |  | $ | 2,318 | 
|                                | December 31, 2003 |                           | $ | 1,738     |             |  | $ | 9,176            |   |  | $            |    |     |               | $ | 8,674  | (D) |  | $ | 2,240 | 




|    |  |                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | Represents write off of bad debts.                                                                                                            
|   
|(B) |  | Represents the addition of The Golf Warehouses inventory
    reserve and returns reserve as a result of the acquisition on
    June 29, 2004.
|   
|(C) |  | Represents loss on inventory liquidations.                                                                                                    
|   
|(D) |  | Represents actual net returns from customers.                                                                                                 






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and
Procedures




Managements Report on Internal Control Over Financial
Reporting 13a-15(f).


58



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##### Table of Contents



Internal Control  Integrated
Framework Internal
Control  Integrated Framework,


Changes in Internal Control Over Financial
Reporting





Item 9B. Other Information




59



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##### Table of Contents






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

(a) 1. Financial Statements




| |                                                                                     
| | ------------------------------------------------------------------------------------
| | The following financial statements of the Company are
    included herein at Item 8.



| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | Reports of Independent Registered Public Accounting Firm                                                           
|
| | Consolidated Balance Sheets as of December 31, 2005 and 2004                                                       
|
| | Consolidated Statements of Earnings for the years ended
    December 31, 2005, 2004 and 2003                       
|
| | Consolidated Statements of Changes in Shareholders Equity
    for the years ended December 31, 2005, 2004 and 2003
|
| | Consolidated Statements of Cash Flows for the years ended
    December 31, 2005, 2004 and 2003                     
|
| | Notes to Consolidated Financial Statements                                                                         

2. Financial Statement
Schedules




| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | The following financial statement schedule of the Company
    is included herein at Item 8.



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Schedule II  Valuation and Qualifying Accounts
    for the years ended December 31, 2005, 2004 and 2003

3. Exhibits




| |                                             
| | --------------------------------------------
| | See Exhibit Index at page 63 of this report.

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##### Table of Contents






SIGNATURES






| |                            
| | ---------------------------
| | THE SPORTSMANS GUIDE, INC.



| |    |                      
| | -- | ---------------------
| | By | /s/Gregory R. Binkley

| |                                      
| | -------------------------------------
| |                                      
| | Gregory R. Binkley                   
| | President and Chief Executive Officer





|                                         |  |                                                                                                                                                                         |  |                |  | 
|---------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                |  | Capacity                                                                                                                                                                |  | Date          
|                                         |  |                                                                                                                                                                         |  |               
|                                        
|/s/ Gregory R. BinkleyGregory R. Binkley |  | President, Chief Executive Officer and Director (principal
    executive officer)                                                                                       |  |               
|                                        
|/s/ Charles B. LingenCharles B. Lingen   |  | Executive Vice President of Finance and Administration, Chief
    Financial Officer, Secretary, Treasurer and Director (principal
    financial and accounting officer) |  | March 14, 2006
|                                        
|William T. Sena*William T. Sena          |  | Chairman of the Board of Directors                                                                                                                                      |  |               
|                                        
|Gary Olen*Gary Olen                      |  | Director                                                                                                                                                                |  |               
|                                        
|Jay A. Leitch*Jay A. Leitch              |  | Director                                                                                                                                                                |  |               
|                                        
|Darold D. Rath*Darold D. Rath            |  | Director                                                                                                                                                                |  |               
|                                        
|Ronald G. Olson*Ronald G. Olson          |  | Director                                                                                                                                                                |  |               
|                                        
|*By                                      |  | /s/ Gregory R. BinkleyGregory R. Binkley,
    Attorney-In-Fact                                                                                                          |  |                |  | 

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##### Table of Contents



EXHIBIT INDEX


|        |      |   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |      |  |  | 
|------- | ---- | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  |  | 
|Exhibit |      |   | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Page | 
|        |      |   |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |      | 
|        | 2.1  |   |             | Membership Interest Purchase Agreement dated as of June 29,
    2004 by and among TGW Acquisition Corporation, The Golf
    Warehouse, L.L.C., Sports Capital Partners, L.P., Sports Capital
    Warehouse, L.P., Sports Capital Partners (CEV), L.L.C., Marney
    Enterprises, Inc., Mark S. Marney, R. Michael Marney, and
    Richard D. Marney (incorporated by reference to Exhibit 2.1
    to Form 8-K dated July 13, 2004)                                                                                                                                                    |      |  |  | 
|        | 3.1  |   |             | Restated Articles of Incorporation as restated through
    March 5, 1997 (incorporated by reference to
    Exhibit 3.1 to Form 10-K for the year ended
    December 27, 1996, File No. 0-15767)                                                                                                                                                                                                                                                                                                                                                                                       |      |  |  | 
|        | 3.2  |   |             | Bylaws (incorporated by reference to Exhibit 3.2 to
    Form S-18 Registration Statement No. 33-4496C filed
    April 1, 1986)                                                                                                                                                                                                                                                                                                                                                                                                                                                        |      |  |  | 
|        | 4.1  |   |             | Specimen of the Companys Common Stock certificate
    (incorporated by reference to Exhibit 4.1 to Amendment
    No. 1 to Form S-18 Registration Statement
    No. 33-4496C filed May 8, 1986)                                                                                                                                                                                                                                                                                                                                                                                       |      |  |  | 
|        | 4.2  |   |             | Rights Agreement dated as of May 11, 1999 between the
    Company and Norwest Bank Minnesota, N.A., as Rights Agent
    (incorporated by reference to Exhibit 4.1 to Form 8-K
    dated May 11, 1999)                                                                                                                                                                                                                                                                                                                                                                                 |      |  |  | 
|        | 10.1 | * |             | The Companys 1991 Incentive Stock Option Plan
    (incorporated by reference to Exhibit 10.16 to
    Form 10-K for the year ended December 27, 1991)                                                                                                                                                                                                                                                                                                                                                                                                                                 |      |  |  | 
|        | 10.2 |   |             | Industrial Real Estate Lease between the Company and CB
    Commercial Real Estate Group, Inc. dated April 22, 1993
    (incorporated by reference to Exhibit 10.20 to
    Form 10-K for the year ended December 31, 1993)                                                                                                                                                                                                                                                                                                                                                            |      |  |  | 
|        | 10.3 |   |             | Amendment to Industrial Real Estate Lease between the Company
    and American Real Estate Holdings, L.P. dated February 23,
    1998 (incorporated by reference to Exhibit 10.1 to
    Form 10-Q for the quarter ended June 28, 1998)                                                                                                                                                                                                                                                                                                                                                |      |  |  | 
|        | 10.4 |   |             | Industrial Real Estate Lease between the Company and AMB
    Property, L.P. as amended May 24, 1999 (incorporated by
    reference to Exhibit 10.1 to Form 10-Q for the quarter
    ended July 4, 1999)                                                                                                                                                                                                                                                                                                                                                                               |      |  |  | 
|        | 10.5 |   |             | Lease Agreement dated November 19, 1999 between Stephen L.
    Clark, as trustee of the Steve Clark Trust, created pursuant to
    a Trust Agreement dated October 4, 1996
    (Clark) and The Golf Warehouse, L.L.C.
    (TGW) as amended by First Amendment Agreement dated
    March 1, 2003 between U.S. Business Centers, L.L.C. as
    successor to Clark and TGW and Second Amendment Agreement dated
    July 9, 2004 between U.S. Business Centers, L.L.C. and
    TGW (incorporated by reference to Exhibit 10.5 to
    Form 10-K for the year ended December 31, 2004) |      |  |  | 
|        | 10.6 |   |             | Sublease dated July 5, 2004 between Facilitech, Inc.
    dba Business Interiors and The Golf Warehouse, L.L.C.
    (incorporated by reference to Exhibit 10.6 to
    Form 10-K for the year ended December 31, 2004)                                                                                                                                                                                                                                                                                                                                                                  |      |  |  | 
|        | 10.7 |   |             | Credit Agreement by and between the Company and Wells Fargo
    Bank, National Association dated June 29, 2004
    (incorporated by reference to Exhibit 10.1 to
    Form 10-Q for the quarter ended June 30, 2004)                                                                                                                                                                                                                                                                                                                                                                   |      |  |  | 
|        | 10.8 |   |             | First Amendment to Credit Agreement by and between the Company
    and Wells Fargo Bank, National Association dated May 31,
    2005                                                                                                                                                                                                                                                                                                                                                                                                                                                  |      |  |  | 
|        | 10.9 |   |             | Second Amendment to Credit Agreement by and between the Company
    and Wells Fargo Bank, National Association dated
    December 23, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                            |      |  |  | 

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|        |       |   |             |                                                                                                                                                                                                                     |      |  |  | 
|------- | ----- | - | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- |  |  | 
|Exhibit |       |   | Description |                                                                                                                                                                                                                     | Page | 
|        |       |   |             |                                                                                                                                                                                                                     |      | 
|        | 10.10 | * |             | Form of Stock Option Agreement pursuant to the Companys
    1994 Non-Qualified Performance Option Plan (incorporated by
    reference to Exhibit 10.16 to Form 10-K for the year
    ended December 27, 1996)      |      |  |  | 
|        | 10.11 | * |             | The Companys 1996 Stock Option Plan (incorporated by
    reference to Exhibit 10.17 to Form 10-K for the year
    ended December 27, 1996)                                                                         |      |  |  | 
|        | 10.12 | * |             | Form of Employment Agreement with members of senior management
    (incorporated by reference to Exhibit 10.10 to Amendment
    No. 1 to Form S-2 Registration Statement
    No. 333-31111 filed January 2, 1998)   |      |  |  | 
|        | 10.13 | * |             | Agreement between the Company and Gary Olen dated June 28,
    2002 for the use of name, likeness and services (incorporated by
    reference to Exhibit 10.1 to Form 10-Q for the quarter
    ended June 30, 2002) |      |  |  | 
|        | 10.14 | * |             | The Companys 1999 Stock Option Plan (incorporated by
    reference to Exhibit 10.16 to Form 10-K for the year
    ended December 31, 1999)                                                                         |      |  |  | 
|        | 10.15 | * |             | The Sportsmans Guide, Inc. Deferred Compensation Plan
    effective September 1, 2002 (incorporated by reference to
    Exhibit 10.2 to Form 10-Q for the quarter ended
    September 30, 2002)                    |      |  |  | 
|        | 10.16 | * |             | The Companys 2004 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.2 to Form 10-Q for the quarter
    ended June 30, 2004)                                                                        |      |  |  | 
|        | 10.17 | * |             | Form of Stock Option Agreement under 2004 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.1 to
    Form 10-Q for the quarter ended September 30, 2004)                                            |      |  |  | 
|        | 10.18 | * |             | Annual Bonus Program (incorporated by reference to
    Exhibit 10.2 to Form 10-Q for the quarter ended
    September 30, 2004)                                                                                      |      |  |  | 
|        | 10.19 | * |             | Fees for Nonemployee Directors (incorporated by reference to
    Exhibit 10.1 to Form 8-K dated March 2, 2005)                                                                                                      |      |  |  | 
|        | 10.20 | * |             | Form of Employment Agreement between The Golf Warehouse, Inc.
    and members of TGW management (incorporated by reference to
    Exhibit 7.1(h) to Exhibit 2.1 to Form 8-K dated
    July 13, 2004)                |      |  |  | 
|        | 14.1  |   |             | Code of Business Conduct and Ethics (incorporated by reference
    to Exhibit 14.1 to Form 10-K for the year ended
    December 31, 2003)                                                                           |      |  |  | 
|        | 21.1  |   |             | Subsidiaries of the Company (incorporated by reference to
    Exhibit 21.1 to Form 10-K for the year ended
    December 31, 2004)                                                                                   |      |  |  | 
|        | 23.1  |   |             | Consent of Independent Registered Public Accounting Firm                                                                                                                                                            |      |  |  | 
|        | 24.1  |   |             | Powers of Attorney of each person whose name is signed to this
    report pursuant to a power of attorney                                                                                                           |      |  |  | 
|        | 31    |   |             | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                             |      |  |  | 
|        | 32    |   |             | Section 1350 Certifications                                                                                                                                                                                         |      |  |  | 



64