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                                 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, 2000
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934.

      For the transition period from                  to

                         Commission file number 0-15767

                           -------------------------

                          THE SPORTSMAN'S GUIDE, INC.
             (Exact name of registrant as specified in its charter)

                                   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
                    (Address of principal executive offices)

                                 (651) 451-3030
              (Registrant's telephone number, including area code)

                           -------------------------

        Securities registered pursuant to Section 12(b) of the Act: NONE

          Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     As of March 21, 2001, the aggregate market value of the registrant's Common
Stock held by non-affiliates was approximately $3,269,544 based on the last
reported sale price of the Common Stock on such date on the NASDAQ SmallCap
Market.

     As of March 21, 2001, there were 4,748,810 shares of the registrant's
Common Stock outstanding.
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                                     PART I

ITEM 1. BUSINESS

     We are a leading marketer of value priced outdoor gear and general
merchandise, with a special emphasis on outdoor clothing, equipment and
footwear. We market and sell our merchandise through two primary channels:

     - main and specialty catalogs; and

     - a network of e-commerce Web sites.

     Our main and specialty catalogs as well as our Web sites offer high quality
products at low prices. Our catalogs are advertised as The "Fun-to-Read"
Catalog(R) and our primary Web site is advertised as the "Fun-to-Browse"
Website(R). Our network of Web sites includes www.sportsmansguide.com, our
online retail store modeled on our print catalogs; www.bargainoutfitters.com,
our online liquidation outlet; and www.guideoutdoors.com, our new
community/destination portal for the outdoor enthusiast.

     Our business was started in 1970. We were incorporated under the laws of
the State of Minnesota on March 23, 1977. Our principal executive offices are
located at 411 Farwell Avenue, South St. Paul, Minnesota 55075 and our telephone
number is (651) 451-3030.

INDUSTRY OVERVIEW

     THE OUTDOOR SPORTS INDUSTRY. Statistics from the National Sporting Goods
Association estimate the total annual outdoors market at $7.0 to $8.0 billion.
In terms of sports, camping is the leading individual category, followed by
hiking and hunting, biking and fishing. In terms of participation, fishing is
the leader appealing to 29.1% of Americans 16 years of age and older, biking
draws 28.6% of this population, and camping and hiking draw 26.8% and 23.8%,
respectively. In addition, 17% of men age 16 and older hunt.

     THE CATALOG INDUSTRY. The catalog shopping industry has experienced
substantial growth over the past several years. According to the Direct
Marketing Association, 113 million Americans will order more that $75 billion
worth of goods via catalog this year. The majority of our sales fall within two
large product segments of the U.S. catalog market: apparel and sporting goods.
Together, the apparel and sporting goods segments represent approximately 30% of
the total dollar volume of catalog sales in the United States. Since most direct
mail catalogs are targeted to women, we believe the male catalog customer is an
underserved segment of the market that represents a significant opportunity. We
believe that our niche marketing focus on the value-oriented outdoor enthusiast,
together with our product offerings and growing sales of general merchandise,
have positioned us to continue to take advantage of opportunities within this
large and expanding market.

     GROWTH OF THE INTERNET AND E-COMMERCE. The Internet has emerged as a global
medium, enabling millions of people to share information, communicate and
conduct business electronically. Forrester Research estimates that over 160
million people worldwide are now logging on the Internet. International Data
Corporation estimates that 9 million computer users will order $5.4 billion
worth of products via the Internet in 2000.

OUR CATALOGS

     We publish main and specialty editions of The Sportsman's Guide catalog. We
mailed approximately 62 million catalogs to existing and prospective customers
in 2000.

     FORMAT. Our catalogs are designed to be fun and entertaining. Every
merchandise offering uses a highly promotional format that features various
items at sale prices. Unique to us is our product description, or copy. The
catalogs make creative and expansive use of art and copy to extensively describe
products with humorous text, call-outs, photos, photo captions and caricatures.
Copy is written in the first person from Gary Olen to the reader. The catalogs
are perceived by customers as having entertainment value and are advertised as
The "Fun-to-Read" Catalog(R).
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     TYPES AND PURPOSES. Main catalog editions are mailed monthly and offer
selections of our best selling products in a variety of product categories. We
also use our main catalog as our primary prospecting catalog to test new names
and new products. Response data from main catalog mailings are used to create
specialty catalogs. New customers continue to receive monthly main catalogs in
addition to specialty catalogs featuring the product categories in which they
have shown an interest through past purchases.

     Specialty catalogs contain wide selections of products from a single
product category. We identify the product categories for our specialty catalogs
based on demand generated for certain categories in our main catalogs. During
2000, we published 28 specialty catalogs targeting buyers of footwear and
apparel, deer hunting equipment, shooting supplies, military surplus, camping
equipment and holiday gifts.

     The specialty titles allow us to utilize a customized marketing plan for
individual consumer groups thereby maximizing response rates and minimizing
advertising costs as a percentage of sales. We believe that our specialty
catalog titles have been an important component in our sales growth and have
allowed us to expand our sales to existing customers and to broaden sales to new
customers beyond our historical customer profile.

     CREATIVE. All catalogs are created and designed in-house by our creative
services department which produces the advertising copy and layouts for each
catalog. Substantially all of the photographs used in the catalogs are taken at
our in-house photo studio. Artwork and copy for the catalog are transmitted in
digital format from our desktop publishing systems to a pre-press vendor and
then to the printer, which prints and mails the catalogs. These capabilities
allow us to preserve the catalog's distinctive character and allow us greater
control of the catalog production schedule, which reduces the lead time
necessary to produce catalogs. We are able to prepare and mail a catalog in
approximately 75 days. This allows us to offer new merchandise quickly to our
customers, thereby maximizing pricing opportunities while minimizing inventory
carrying costs. Because we use a value-oriented sales approach, we are able to
use a lower weight and grade of paper than our competitors to reduce our catalog
production and postage costs.

OUR WEB SITES

     Our network of Web sites, The GuideOutdoors Network(TM), includes those
that offer online shopping as well as an online destination site with
content-rich resources and information for the outdoor enthusiast. Our online
retail stores generated over $23.0 million in sales in 2000 compared to $1.3
million in 1998. Product sales on the sites accounted for over 18% of our sales
in the fourth quarter of 2000 compared to less than 1% for all of 1998. The
GuideOutdoors Network(TM) includes the following Web sites:

     - SPORTSMANSGUIDE.COM, our online retail store;

     - BARGAINOUTFITTERS.COM, our online liquidation outlet; and

     - GUIDEOUTDOORS.COM, our community/destination portal for the outdoor
       enthusiast.

     SPORTSMANSGUIDE.COM. Our sportsmansguide.com site is our online retail
store which was launched in April 1998. We began posting our catalogs and full
product offerings on the site in February 1999.

     Our sportsmansguide.com site is modeled on our print catalogs. The site
translates the distinctive look and editorial voice of our print catalog onto
the Internet, adding interactive functionality to make shopping an entertaining
experience. The site is designed to be fun-to-read and easy to use, enabling the
ordering process to be completed with a minimum of customer effort. The site is
advertised as The "Fun-to-Browse" Website(R). The site allows customers to order
merchandise from print media, view current catalogs and request mailed catalog
copies. E-mail addresses are collected through an optional program. E-mail
broadcast messages, which include a variety of specialized product offerings,
are delivered to 360,000 participating customers on a weekly basis.

     Through our relationship with Banta Digital Group, we have automated the
process of converting our printed catalog pages for publication on our Web site.
The digital pre-press of our catalog pages automatically flows to the Web site,
enabling us to post entire catalogs on the site quickly.

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     BARGAINOUTFITTERS.COM. Our bargainoutfitters.com site is our online
liquidation outlet launched in November 1999. The site offers clothing and
footwear products as well as home and garden, tools and automotive and
electronic products that are deeply discounted, discontinued or overstocked.

     GUIDEOUTDOORS.COM. Our guideoutdoors.com site is our community/destination
portal offering e-commerce and content for the online outdoor enthusiast. The
site was launched in the second quarter of 2000. We believe the site is unique
in its combination of name brand quality, discount pricing and breadth of
product offerings, all within a community environment. The site offers full-line
selections of camping, fishing, footwear, clothing, hunting, archery, marine,
and hiking products at discount prices. The community content provides a broad
and deep selection of resources and information updated regularly covering all
aspects of the outdoor experience. Personalized Web pages include articles on
hunting, fishing and camping experiences, DNR information, local and national
weather forecasts, tips and hints on planning an upcoming outdoor event, photo
galleries and maps. The site includes links to our online retail store and
liquidation outlet sites. Our plans are to merge the guideoutdoors.com web pages
with the sportsmansguide.com in 2001.

MERCHANDISING

     Our products originally were limited to a small selection of merchandise
targeted to the deer hunter. Our product offerings have gradually evolved to a
broader range of merchandise intended to appeal to the value-oriented
outdoorsman. We offer a changing mix of products.

     PRODUCTS. We offer a large selection of high value products at low prices.
These products include clothing, footwear, hunting and shooting accessories,
camping and outdoor recreation equipment, optics, electronics, personal
accessory items and a diverse range of additional offerings. Within the
sportsmansguide.com and guideoutdoors.com Web sites, we are able to carry deeper
and more diverse product lines and merchandise categories than we have
traditionally offered through the catalog. In the last five years, we have
aggressively pursued a strategy to provide manufacturers' close-outs of name
brand shoes, boots, apparel and general merchandise, as well as government
surplus from around the world and private label products through our direct
import programs. Over time, our product offerings and marketing efforts have
broadened to include those interested in pursuing and living the outdoor
lifestyle in general and the value-oriented outdoorsman in particular. The table
below indicates our percentage of sales by product category for 2000.

<TABLE>
<CAPTION>
         PRODUCT CATEGORY             % OF SALES
------------------------------------------------
<S>                                   <C>
Clothing and Accessories..........      24.2%
Footwear..........................      22.8%
Hunting and Shooting
  Accessories.....................      12.3%
Camping and Outdoor Recreation....       9.4%
Optics............................       5.3%
</TABLE>

<TABLE>
------------------------------------------------
<CAPTION>
         PRODUCT CATEGORY             % OF SALES
<S>                                   <C>
Electronics.......................       3.7%
Personal Accessories..............       3.3%
Furniture.........................       3.0%
Novelty and Collectibles..........       2.9%
Other.............................      13.1%
</TABLE>

     MERCHANDISE MIX. We historically offered a changing mix of in-line
products. In-line products are those products regularly available from
manufacturers. As a complement to our value pricing approach, in 1996 we began
aggressively pursuing manufacturers' close-outs of name brand shoes, boots,
clothing, watches and other merchandise, which we offer to our customers at
savings of 25% to 60% from original retail prices. We also offer military
surplus from around the world, providing customers a low-cost alternative for
items such as wool coats and pants, shirts, gloves, underwear, blankets, boots,
sleeping bags, jackets, backpacks, skis and snowshoes.

     Our merchandising strategy has been to shift our merchandise mix to a
larger percentage of manufacturers' close-outs, military surplus, private label
products and other higher margin product categories including apparel and
footwear, and to minimize the number of lower price point items, while
maintaining a broad selection of products. This strategy has added to our
customer base value-oriented customers who may not otherwise be identified as
pure outdoorsmen.

     SOURCING. Our buyers actively seek sources for products they believe will
interest our targeted customers. We seek to maintain existing and develop new
relationships with vendors to provide ongoing access to manufacturers'
close-outs, military surplus, direct imports and other items. Buyers regularly
attend trade

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shows, meet with vendors and make mass mailings and cold calls to locate high
quality, low price, name brand merchandise as well as unusual or unique
products. We frequently purchase large quantities of close-outs and other
individual items on an opportunistic or when-available basis. The capability to
purchase large quantities in a short time period makes us a unique and desirable
outlet for manufacturers looking to sell overstocked or discontinued products.

     We purchase our merchandise from more than 1,000 suppliers and generally
purchase all of our product needs for a particular item from one vendor. No
single supplier accounted for more than 5% of our purchases during 2000, and we
believe there are numerous sources for products in our merchandise categories.

     SELECTION. Our buyers and merchandising staff collectively select the
merchandise to be offered to customers by evaluating product availability,
pricing, historical demand, emerging merchandise trends and expected product
profitability. Each product is hand-picked, and most are field tested by our
buyers to ensure quality, functionality and proper sizing in order to maximize
appeal to customers.

     INVENTORY MANAGEMENT. Once merchandise has been selected, our rebuyers are
responsible for ordering all merchandise, determining the quantity and arrival
date, managing inventory levels, assessing customer demand, adjusting estimates,
canceling orders for slow-moving merchandise and reordering merchandise.
Utilizing our information systems, buyers and rebuyers monitor product sales on
a daily basis and take responsive action. Slow-moving merchandise is actively
promoted through Web sites, telemarketing, clearance sales, package stuffers or,
when possible, is returned to the vendor.

     As part of our merchandise liquidation strategy, we maintain a retail
outlet store at our primary warehouse and distribution facility in South St.
Paul from which we sell discontinued, overstocked, returned and regular catalog
merchandise. The retail store along with our bargainoutfitters.com Web site
provide a liquidation outlet and serve to minimize inventory mark-downs.

     CATALOG AND WEB SITE CONTENT. The merchandise offered in our catalogs and
Web sites is determined based on estimated consumer demand and product
availability. Close-outs and military surplus merchandise purchased in large
quantities are normally placed in our main catalogs as well as our online retail
stores. If a supply of merchandise is limited, it is usually offered in a
specialty catalog or is included in a multiple page insert in the main catalog
mailed to a targeted customer segment or is offered on our online retail stores.
Product sales are analyzed item by item to identify trends and help plan future
merchandise offerings.

MARKETING

     Our marketing programs are based on gathering, analyzing and organizing
information on our customers. We believe that because we offer such a broad mix
of merchandise, it is particularly important for us to fully understand our
customers.

     CUSTOMER DATABASE. We maintain a proprietary customer database in which we
store detailed information on each customer in our customer list, including
demographic data and purchasing history. Our customer database contains over 4.6
million names, including over 1.0 million customers who have made purchases
within the last 12 months and 360,000 customers who have provided their e-mail
addresses. The customer database is updated regularly with information as new
purchases are recorded.

     CUSTOMER SELECTION. We have developed our own customer selection models to
segment our customer list according to many variables, allowing our marketing
department to analyze each segment's buying patterns. We review the results of
each of our catalog mailings and such catalog results are used to further update
the customer database to refine the frequency and selectivity of our catalog
mailings in an effort to maximize response rates and profitability.

     LIST DEVELOPMENT. Our new customer acquisition program is designed to
cost-effectively identify and capture new customers that fit our customer
profile. New customers are acquired principally through the use of targeted
mailings to individuals identified through mailing lists rented or exchanged
from other catalog companies, retail subscription lists, and lists of names
compiled from businesses whose customers have interests similar to those of our
customers. We are generally entitled to make one mailing to each name

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obtained through a rented or exchanged mailing list. If the prospect responds,
the name is added to our database and may be freely used by us in the future.
Through the Internet, we have captured new customers as a result of the
affiliate marketing programs implemented throughout 2000. We also implemented a
successful sweepstakes marketing program in 2000 to convert our catalog
customers to online purchasers and to increase the overall number of our e-mail
addresses. We continue to pursue new sources of prospective customers, such as
those who request catalogs through advertising, through our Web site or from
customer referrals. New customers accounted for approximately 15% of our sales
during 2000.

     Once new customers are acquired, our objective is to maximize the long-term
profit potential from these customers. With ongoing refinements in our approach
to merchandising and marketing, we have increased the frequency and quantity of
mailings and e-mail broadcasts to the most profitable segments of our existing
customer list. Analyses of historical purchasing patterns of existing customers,
including recency, frequency and monetary activity, are performed to assist in
merchandising and customer targeting and to increase sales to existing
customers. Existing customers accounted for approximately 85% of our sales
during 2000.

     MARKETING PROGRAMS AND PROMOTIONAL FORMATS. We strive to develop
promotional formats that will stimulate customer purchases from our catalogs and
Web sites. Successful promotional formats include different catalog wraps,
percent off coupons, dollar discounts on specific order size, and promotional
tag lines such as "last chance" offers. Since our inception on the Internet, we
have marketed our online retail store in our catalogs. In 2000, over 60 million
catalog covers advertised our online retail store. This marketing channel has
been the principal marketing mechanism to reach our online target audience.

     We employ a disciplined approach to our marketing activities. We test a
sample of names before mailing to a new customer group, test price and shipping
charge changes and test marketing programs and promotional formats before
full-scale implementation to ensure customer acceptance and cost-effectiveness.
Two significant, successful marketing programs implemented by us are a buyer's
club and an installment payment plan.

     - BUYER'S CLUB. Our buyer's club offers its members exclusive merchandise
       not offered to other customers. These exclusive product offers are
       limited quantity items selected for club members. Club members are
       presented with sneak previews of merchandise offers and given the
       opportunity to buy limited quantity items prior to non-club customers.
       Club members also receive member's only bargains in the catalogs and on
       the Web site.

      Customers can purchase a one-year membership in our buyer's club for a
       $29.99 fee. For this annual fee, club members can take advantage of and
       receive additional savings in the form of a 10% discount on all regularly
       priced items except for ammunition which is limited to a 5% discount and
       clearance items which have no discount off the advertised price.

      We have found through detailed reporting and analyses that the purchase
       activity, on average, of our buyer's club customer is two to three times
       greater than a non-club member. Consequently, we have developed new
       marketing promotions that should significantly increase the number of new
       club members. In November and December of 2000, with these new
       promotional programs in place, we more than doubled the number of new
       club members compared to the prior year. At the end of 2000, we had more
       than 130,000 members in our buyer's club.

     - INSTALLMENT PAYMENT PLAN. Our installment payment plan, known as the
       "Painless 4-Pay Plan," is available to credit card customers with orders
       of $100 or more. Payments under the plan consist of 25% of the
       merchandise charges, plus 100% of any shipping charges and buyer's club
       fees, if applicable, at the time of shipment with three equal
       installments in 30 day increments, which are automatically charged to the
       customer's credit card. No interest or additional fees are charged to
       customers who elect the 4-Pay Plan.

     CUSTOMER SERVICE. A key element of our marketing strategy is our commitment
to customer service. We have a toll-free customer service telephone line
separate from our inbound ordering lines. We maintain a separate customer
service department staffed with full-time customer service representatives who
answer

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customer inquiries, reply to complaints and assist customers in returning
merchandise. The customer service department personally responds to all customer
correspondence and e-mails. Our commitment to customer service is supported by
our unconditional guarantee which allows customers to return merchandise for any
reason and at any time for refund or exchange if they are not satisfied with the
merchandise.

OPERATIONS AND FULFILLMENT

     INBOUND CALLS. We maintain an in-house call center. Approximately 68% of
customer orders are placed through our toll-free telephone lines which are
staffed 24 hours per day, seven days a week, while 17% of orders are received by
mail or facsimile and 15% of orders are received at our Web site. Our telephone
system consists of an expandable AT&T GR3 digital switch. We are currently using
twelve T-1 lines for incoming and outgoing phone service. Computer telephony
integration software identifies the caller and, if known, accesses the
customer's records simultaneously with answering the call. When fully staffed,
our in-house call center has the capacity of handling up to 2,750 calls per hour
on average.

     We also contract with outside call centers to handle calls on an as-needed
basis. If calls become backlogged or in the event of telephone system failure,
back-up systems and rerouting capabilities allow the outside call centers to
handle inbound telephone orders. The outside call centers have access to
inventory availability and allow us to maintain our call standards.

     ORDER ENTRY. Our telemarketing department is staffed with individuals who
are familiar with the products offered in the catalogs and can offer assistance
to customers on availability, color, size, and other information. Telemarketers
use a catalog sales system with pre-written merchandise descriptions and sales
offers and are provided monetary incentives to sell additional merchandise to
customers who order by phone. During 2000, add-on sales averaging $9 per order
were made to approximately 31% of all inbound phone orders taken by our in-house
call center.

     Processing of customer orders is coordinated and handled by our on-line
order entry system. Telephone orders and Internet orders are entered directly
into the system. Mail orders are batched and, after payment is verified, are
then entered into the system. The system is also used in connection with all
other order entry and fulfillment tasks including credit authorization, order
picking, packing and shipment. During 2000, our on-line order processing system
handled in excess of 1.9 million orders.

     CREDIT AND PAYMENT TERMS. Customers can pay for orders by major credit card
or check. Orders are shipped after credit card charges are approved or checks
are received. Charges are not billed to customer credit cards until the orders
are ready for shipment.

     PICKING AND PACKING. Through our fulfillment and delivery methods, we
strive to be a low cost operator. We use an integrated computer-driven picking,
packing and shipping system. The system edits orders and generates warehouse
pick tickets and packing slips. Packers are provided monetary incentives to
ensure accuracy of orders, which has contributed to our distribution accuracy
rate in excess of 99% during 2000. We are able to fulfill and ship in excess of
25,000 packages per day. We believe we have sufficient additional capacity
available for the foreseeable future which can be utilized by adding more shifts
and weekends.

     SHIPPING. Our processes allow next business day shipping on orders received
by 6 p.m. CST for in-stock merchandise and same day shipping for orders taken by
11 a.m. CST via the Internet. Virtually all of our merchandise is stocked at,
and shipped from, our two warehouse and distribution facilities in South St.
Paul and Mendota Heights, Minnesota, although a small percentage of merchandise
is drop-shipped directly to the customer by specific vendors. We primarily
utilize the U.S. Postal Service and, to a lesser extent, United Parcel Service
for shipment of merchandise to customers. Ammunition is shipped exclusively via
United Parcel Service. We utilize a consolidating shipper for delivery of
merchandise to the U.S. Postal Service. A shipping and handling fee is charged
on each customer order based on the total dollar amount ordered. We will
expedite shipping for an additional fee.

     INVENTORY CONTROL. Our merchandise mix results in our maintaining a broad
selection of products as well as large quantities of individual products.
Consequently, inventory management is an important component of our operations.
We employ a cycle count, or perpetual inventory, procedure utilizing R/F (radio
frequency)
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technology which eliminates wall-to-wall physical counts and resulted in 99.9%
inventory accuracy during 2000.

     RETURNS. We maintain an unconditional return policy which permits customers
to return merchandise for any reason at any time for refund or exchange.
Returned merchandise is restocked, sold in the retail outlet, returned to the
supplier or scrapped. Returns processors are provided monetary incentives to
ensure accuracy of returns processing.

     SEASONAL STAFFING. We adjust the number of employees to meet variable
demand levels, particularly during the peak selling season, which includes the
months of November and December. To meet increased order volume during our peak
selling season, we hire a significant number of temporary employees.

INFORMATION SYSTEMS AND TECHNOLOGY

     We have developed an integrated management information system. In addition
to on-line order entry and processing, the information system also provides
support for merchandising, inventory management, marketing, and financial and
management reporting. The on-line access to information allows management to
monitor daily trends and the performance of merchandise and planning functions.

     Our main hardware platform is the IBM RISC 6000 series of computers with
redundant components and mirrored disk technology to ensure optimal data
protection.

     Our Web site servers were upgraded in 2000 in preparation for increased
volume in 2001. The hardware platform utilizes a mix of Sun servers and NT
servers with mirrored disk drives for data protection.

COMPETITION

     The direct marketing industry includes a wide variety of specialty and
general merchandise retailers in a highly competitive and fragmented business
environment. We sell our products to customers in all 50 states and compete in
the purchase and sale of merchandise with all retailers. Our competitors
include:

     - other outdoor/hunting mail order catalogs, including Bass Pro Shops Inc.
       and Cabela's Inc.;

     - discount retailers such as Wal-Mart Stores, Inc. or Kmart Corporation;

     - Web sites maintained by online retailers of footwear, clothing and
       outdoor gear; and

     - Internet portals and online service providers that feature shopping
       services, such as America Online, Inc., Yahoo! Inc., Excite Inc. and
       Lycos, Inc.

     Some of our competitors are larger and have substantially greater
financial, marketing and other resources than us.

REGULATION

     We are subject to federal, state and local laws and regulations which
affect our catalog mail order operations. Federal Trade Commission regulations,
in general, govern the solicitation of orders, the information provided to
prospective customers, and the timeliness of shipments and refunds. In addition,
the Federal Trade Commission has established guidelines for advertising and
labeling many of the products we sell.

     We are also subject to a variety of state laws and regulations relating to,
among other things, advertising, pricing, charging and collecting state sales or
use tax and product safety/restrictions. Some of these laws prohibit or limit
the sale, in certain states and locations, of certain items we offer such as
black powder firearms, ammunition, bows, knives and similar products. State and
local government regulation of hunting can also affect our business.

     Because we import products for sale, we are subject to U.S. customs laws
and regulations pertaining to proper item classification, quotas, payment of
duties and tariffs, and maintenance of documentation and internal control
programs.

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     There are few laws and regulations directed specifically at electronic
commerce on the Internet. However, given the increased use of the Internet for
both mass communications and commerce, new laws and regulations may be adopted
covering a variety of areas such as collection and use of data from Web site
visitors and related privacy issues, pricing, content, copyrights, distribution
and quality of goods and services.

SERVICE MARKS

     Our service marks "The Sportsman's Guide," "The 'Fun-to-Read' Catalog" and
"The 'Fun-to Browse' Website" have been registered with the United States Patent
and Trademark Office. "The Sportsman's Guide" mark has also been registered in
Canada. Applications to register "GuideOutdoors" and "Bargain Outfitters" in the
U.S. are pending. A service mark is a word or symbol used to identify,
distinguish and indicate the source of services.

EMPLOYEES

     As of December 31, 2000, we employed 653 associates, including full-time
and part-time staff. None of our employees are currently covered by a collective
bargaining agreement. We consider our employee relations to be good.

ITEM 2. PROPERTIES

     Our principal offices are located at 411 Farwell Avenue, South Saint Paul,
Minnesota 55075. We lease approximately 330,000 square feet at this facility
under a net lease expiring March 2004 and lease an additional distribution
facility of approximately 202,000 square feet in Mendota Heights, Minnesota
under a net lease expiring July 2003.

ITEM 3. LEGAL PROCEEDINGS

     We are not a party to any pending proceedings other than litigation which
is incidental to our business and which we believe is not material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

EXECUTIVE OFFICERS OF THE REGISTRANT

     Information concerning our executive officers is set forth in Part III,
Item 10 of this report.

                                        9
<PAGE>   10

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock traded on the Nasdaq National Market under the symbol
"SGDE" from February 5, 1998 through February 26, 2001. Our common stock was
transferred to the Nasdaq SmallCap Market effective February 27, 2001 following
a Nasdaq Panel decision. We have filed a transfer listing application to
continue listing on the Nasdaq SmallCap Market.

     The following table sets forth, for the periods indicated, the high and low
bid prices of our common stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                              HIGH              LOW
                                                              ----              ---
<S>                                                       <C> <C>          <C> <C>
1999
First Quarter...........................................    7 3/4            4 5/8
Second Quarter..........................................    6 7/8            4 1/4
Third Quarter...........................................    6 1/8            3 1/2
Fourth Quarter..........................................    4 1/8            2 3/16
2000
First Quarter...........................................    5                2 5/32
Second Quarter..........................................    4 1/2            1 11/16
Third Quarter...........................................    2 1/8            1 1/8
Fourth Quarter..........................................    1 7/16             13/32
</TABLE>

HOLDERS

     As of March 21, 2001, there were approximately 313 holders of record of our
common stock.

DIVIDENDS

     We have not previously declared or paid any cash dividends on our common
stock. We currently intend to retain all earnings for use in our business in the
foreseeable future. We are prohibited from paying and declaring cash dividends
under the terms of our revolving credit agreement.

                                        10
<PAGE>   11

ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth certain historical financial and operating
data for the periods indicated. The Statement of Operations Data and Balance
Sheet Data as of and for each of the years ended December 31, 2000, 1999, 1998,
1997 and 1996 have been derived from our financial statements audited by Grant
Thornton LLP, independent certified public accountants. The Selected Operating
Data as of and for the periods indicated were derived or computed from our
circulation or accounting records or the Statement of Operations Data identified
above. The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our financial statements and notes thereto.

<TABLE>
<CAPTION>
                                                            YEARS ENDED DECEMBER 31,(1)
                                              --------------------------------------------------------
                                                2000        1999        1998        1997        1996
                                                ----        ----        ----        ----        ----
                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                           <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
Sales.....................................    $154,938    $188,073    $165,383    $147,950    $129,481
Cost of sales.............................     103,471     123,189     106,393      96,071      89,411
                                              --------    --------    --------    --------    --------
  Gross profit............................      51,467      64,884      58,990      51,879      40,070
Selling, general and administrative
  expenses................................      53,865      63,758      55,915      46,830      36,014
                                              --------    --------    --------    --------    --------
  Earnings (loss) from operations.........      (2,398)      1,126       3,075       5,049       4,056
Interest expense..........................      (1,673)     (1,109)       (883)     (1,266)       (981)
Miscellaneous income (expense), net.......         (53)          1         (30)         (4)         11
                                              --------    --------    --------    --------    --------
  Earnings (loss) before income taxes.....      (4,124)         18       2,162       3,779       3,086
Income tax expense (benefit)..............        (935)          6         746       1,304         759
                                              --------    --------    --------    --------    --------
  Net earnings (loss).....................    $ (3,189)   $     12    $  1,416    $  2,475    $  2,327
                                              ========    ========    ========    ========    ========
Net earnings (loss) per share(2):
  Basic...................................    $   (.67)   $     --    $    .32    $   1.06    $   1.00
                                              ========    ========    ========    ========    ========
  Diluted.................................    $   (.67)   $     --    $    .31    $    .85    $    .96
                                              ========    ========    ========    ========    ========
Weighted average shares outstanding(2):
  Basic...................................       4,749       4,748       4,434       2,336       2,334
                                              ========    ========    ========    ========    ========
  Diluted.................................       4,749       4,818       4,616       2,919       2,431
                                              ========    ========    ========    ========    ========
SELECTED OPERATING DATA:
Catalog generated sales...................    $131,218    $173,615    $164,116    $147,950    $129,481
Internet generated sales(3)...............      23,720      14,458       1,267          --          --
Gross profit as a percentage of sales.....        33.2%       34.5%       35.7%       35.1%       30.9%
Total catalogs mailed.....................      62,498      80,289      75,041      60,593      42,908
Total active customers(4).................       1,045       1,153       1,133       1,094       1,017
BALANCE SHEET DATA:
Working capital...........................    $  8,526    $ 11,222    $ 12,444    $  2,658    $  3,612
Total assets..............................      38,860      53,258      43,665      37,214      27,890
Note payable -- bank......................       5,225      12,598       5,775       1,690       1,497
Subordinated notes payable................          --          --          --       3,414       3,414
Long-term liabilities excluding
  subordinated notes payable..............           3         210         485         609         678
Shareholders' equity......................      13,590      16,776      16,757       6,365       3,875
</TABLE>

-------------------------
(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 2000, 1999, 1997 and 1996 consisted of 52 weeks and 1998
    consisted of 53 weeks.

(2) See Note A-10 in the notes to financial statements.

(3) "Internet generated sales" are defined as sales derived from our Web sites,
    catalog orders processed online and online offers placed by telephone.

(4) An "active customer" is defined as a customer who has purchased merchandise
    from us within 12 months preceding the end of the period indicated.

                                        11
<PAGE>   12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

     We are a leading marketer of value priced outdoor gear and general
merchandise, with a special emphasis on outdoor clothing, equipment and
footwear. We market and sell our merchandise through main and specialty catalogs
and a network of e-commerce Web sites. Our main and specialty catalogs as well
as our Web sites offer high quality products at low prices. Our catalogs are
advertised as The "Fun-to-Read" Catalog(R) and our primary Web site is
advertised as the "Fun-to-Browse" Website(R). Our network of Web sites includes
www.sportsmansguide.com, our online retail store modeled on our print catalogs,
www.bargainoutfitters.com, our online liquidation outlet, and
www.guideoutdoors.com, our new community/destination portal for the outdoor
enthusiast.

     Our business was started in 1970 by Gary Olen, our Chairman. Over time, our
product offerings and marketing efforts have broadened from the deer hunter to
include those interested in pursuing and living the outdoor lifestyle in general
and the value-oriented outdoorsman in particular. In 1992, we began our value
pricing strategy of offering outdoor equipment and supplies at discount prices,
later adding government surplus, manufacturers' close-outs and other merchandise
lines. In 1994, we began to publish specialty catalogs which allowed us to
utilize a customized marketing plan to individual customer groups. We believe
that our value pricing and specialty catalog titles have been an important
component in our sales growth. Our sales have increased from $43 million in 1992
to over $155 million in 2000.

     Sales generated through the Internet have grown rapidly over the last two
years. We launched our online retail store in April 1998 and began posting our
catalogs and full product offerings on the site in February 1999. Our e-commerce
offerings generated over $23.0 million in sales in 2000 compared to $1.3 million
in 1998. Product sales on the site accounted for over 18% of our sales in the
fourth quarter of 2000 compared to less than 1% for all of 1998.

FISCAL YEAR

     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 2000 and 1999 consisted of 52 weeks and 1998 consisted of 53 weeks.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, information from
our Statements of Operations expressed as a percentage of sales.

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                              -----------------------------
                                                              2000        1999        1998
                                                              ----        ----        ----
<S>                                                           <C>         <C>         <C>
Sales.......................................................  100.0%      100.0%      100.0%
Cost of sales...............................................   66.8        65.5        64.3
                                                              -----       -----       -----
  Gross profit..............................................   33.2        34.5        35.7
Selling, general and administrative expenses................   34.8        33.9        33.8
                                                              -----       -----       -----
  Earnings (loss) from operations...........................   (1.6)        0.6         1.9
Interest and miscellaneous expense, net.....................    1.1         0.6         0.6
                                                              -----       -----       -----
  Earnings (loss) before income taxes.......................   (2.7)         --         1.3
Income tax expense (benefit)................................   (0.6)         --         0.5
                                                              -----       -----       -----
  Net earnings (loss).......................................   (2.1)%        --%        0.8%
                                                              =====       =====       =====
</TABLE>

COMPARISON OF YEARS ENDED DECEMBER 31, 2000 AND 1999

     SALES. Sales for 2000 of $154.9 million were $33.2 million or 17.6% lower
than sales of $188.1 million for 1999. The decrease in sales was primarily due
to a planned decrease of 22% in catalog mailings, offset

                                        12
<PAGE>   13

somewhat by higher catalog customer response rates and higher sales generated
through the Internet. Our plan for 2000 was to improve profitability by reducing
the number of catalog mailings through the elimination of unprofitable specialty
catalog editions and monthly main catalog mailings to unprofitable customer
segments of the house customer file. As expected, this strategy yielded lower
sales compared to the prior year. However, we expected sales to decrease at a
lower rate than advertising costs, producing a higher level of profitability
through improved customer response rates.

     For the first nine months of 2000, the number of catalogs circulated was
down approximately 27% compared to the same period last year. With the
elimination of unprofitable catalog editions and customer segments, overall
customer response rates were expected to improve over the prior year. Actual
customer response rates for the first nine months of 2000 were much lower than
anticipated causing a significant shortfall to projected sales.

     At the end of the second quarter of 2000, we took additional actions to
return to profitability. In addition to certain organizational changes, largely
headcount reductions, various marketing and merchandising strategies were
revamped or changed. Our strategy was changed to refocus on the product/value
relationship (reducing retail prices selectively to stimulate improved customer
response rates), to enhance the value proposition and increase the membership of
the Company's buyer's club (a very profitable customer segment) and to implement
a more effective and profitable mail plan. The majority of these changes were
implemented in the fourth quarter of 2000. While fourth quarter operations did
benefit somewhat from these changes to our marketing and merchandising
strategies, we expect the vast majority of benefits to be realized in 2001. For
the fourth quarter catalogs, we selectively reduced retail prices and, as a
result of this action and seasonal winter weather conditions, customer response
rates increased. Also in the fourth quarter of 2000, new marketing promotions
were developed and implemented to significantly increase the number of members
in the Company's buyer's club. In November and December of 2000, with these new
promotional programs in place, we more than doubled the number of new club
members compared to the same period one year ago.

     Sales generated through the Internet increased in 2000 to approximately 15%
of sales compared to approximately 7.7% of sales in 1999. Sales generated
through the Internet are defined as those that are derived from our Web sites,
catalog orders processed online and online offers placed by telephone. We mailed
40 catalog editions, including 28 specialty editions, during 2000 compared to 51
catalog editions, including 39 specialty editions, during 1999.

     Gross returns and allowances for 2000 were $12.6 million or 7.5% of gross
sales compared to $15.8 million or 7.7% of gross sales in 1999. Gross returns
and allowances decreased as a percent of sales during the year due to a general
improvement in return rates across most product categories.

     GROSS PROFIT. Gross profit for 2000 was $51.5 million or 33.2% of sales
compared to $64.9 million or 34.5% of sales in 1999. The decrease in gross
profit as a percent of sales for the year was primarily due to higher shipping
costs and costs associated with closing one of the retail outlet stores. Product
margins for 2000 were virtually the same as in 1999. Product margins for the
first nine months of 2000 were running approximately one percentage point higher
than the prior year, but with the lowering of retail prices in the fourth
quarter, product margins ended flat for the year.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $53.9 million or 34.8% of sales during 2000
compared to $63.8 million or 33.9% of sales during 1999. The dollar decrease in
selling, general and administrative expenses was primarily due to the 22%
decrease in catalog circulation and lower fulfillment costs due to lower sales
volume. The increase in selling, general and administrative expenses during
2000, as a percentage of sales, is primarily related to executive and other
associates' severance commitments, the closing of a retail outlet, as well as
costs related to an unsuccessful equity placement.

     Total circulation was 62 million catalogs during 2000 compared to 80
million catalogs during 1999. The decrease in catalog circulation was due to the
planned reduction in the number of specialty catalog editions and the number of
main catalog mailings to unprofitable customer segments. Advertising expense for
2000 was $31.3 million or 20.2% of sales compared to $38.2 million or 20.3% of
sales for 1999.

                                        13
<PAGE>   14

     EARNINGS (LOSS) FROM OPERATIONS. Loss from operations was $(2.4) million
during 2000 compared to earnings of $1.1 million or 0.6% of sales during 1999.
The decrease in earnings was primarily due to lower than anticipated customer
response rates and $1.7 million of expenses primarily related to executive and
other associates' severance commitments, the closing of a retail outlet and the
write-off of expenses related to an unsuccessful equity placement.

     INTEREST EXPENSE. Interest expense for 2000 was $1.7 million compared to
$1.1 million for the same period last year. The increase in interest expense was
largely due to higher levels of borrowing from increased inventory levels at the
beginning and throughout 2000.

     INCOME TAXES. Income tax benefit for 2000 was $935,000 compared to expense
of $6,000 for 1999. The effective tax rate was 22.7% in 2000 compared to 34.5%
in 1999. The income tax benefit represents recovery of federal taxes paid in
1999 and 1998. The decrease in the effective rate is due to the establishment of
a valuation allowance for deferred tax assets in 2000.

     NET EARNINGS (LOSS). Net loss for 2000 was $(3.2) million compared to net
earnings of $12,000 for 1999.

COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998

     SALES. Sales for 1999 of $188.1 million were $22.7 million or 13.7% higher
than sales of $165.4 million for 1998. The increase in sales was primarily due
to a 7% increase in catalog mailings, increased sales generated through the
Internet and an increase in average order size of approximately 6%, offset
somewhat by lower catalog customer response rates. Sales generated through the
Internet increased in 1999 to 7.7% of sales compared to approximately 1% of
sales in 1998. Sales generated through the Internet are defined as those that
are derived from our Web sites, catalog orders processed online and online
offers placed by telephone. Management believes that catalog customer response
rates were impacted throughout the entire year by higher than planned saturation
resulting from the increased number of catalog editions mailed to existing
customers and by an unusually high percentage of catalogs undelivered or
delivered late by the United States Postal Service during the third and fourth
quarters. In addition, response rates were impacted by unseasonably warm weather
during the fourth quarter which lowered demand for cold weather products. We
mailed 51 catalog editions, including 39 specialty editions, during 1999
compared to 36 catalog editions, including 25 specialty editions, during 1998.

     Gross returns and allowances for 1999 were $15.8 million or 7.7% of gross
sales compared to $15.0 million or 8.3% of gross sales in 1998. Gross returns
and allowances decreased as a percent of sales during the year due to a general
improvement in return rates across most product categories versus 1998 and
actual return rates on 1998 catalogs being lower than previously estimated.

     GROSS PROFIT. Gross profit for 1999 was $64.9 million or 34.5% of sales
compared to $59.0 million or 35.7% of sales in 1998. The decrease in gross
profit as a percent of sales for the year was primarily due to higher
distribution costs and lower shipping and handling margins, offset somewhat by
higher retail product margins. Distribution expense as a percent of sales was up
primarily due to higher wage rates and higher merchandise handling costs, the
latter associated with increased inventory levels and increased number of stock
keeping units. Shipping and handling margins were down primarily due to higher
than normal backorder levels which increased the number of shipments per order,
increases in the average weight of outbound shipments and rate increases in
parcel post. Rate increases from the United States Postal Service as well as
other parcel post carriers were effective during the first quarter of 1999.
Retail product margins were up due to a larger volume of higher margin
close-outs and direct import merchandise.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $63.8 million or 33.9% of sales during 1999
compared to $55.9 million or 33.8% of sales during 1998. The dollar increase was
primarily due to the 7% increase in catalog circulation and higher facility
costs associated with increases in inventory levels. Total circulation was 80
million catalogs in 1999 compared to 75 million catalogs during 1998. The
increase in catalog circulation was due to the planned increase in the number of
specialty catalog editions. Advertising expense for 1999 was $38.2 million or
20.3% of sales compared to $33.9 million or 20.5% of sales for 1998. The
decrease in advertising expense as a percent of sales was

                                        14
<PAGE>   15

primarily due to higher average order size and sales generated through the
Internet, offset somewhat by lower catalog customer response rates.

     EARNINGS FROM OPERATIONS. Earnings from operations were $1.1 million or
0.6% of sales during 1999 compared to $3.1 million or 1.9% of sales during 1998.

     INTEREST EXPENSE. Interest expense for 1999 was $1.1 million compared to
$883,000 for the same period last year. The increase in interest expense was
largely due to increased inventory levels associated with the increase in
overall sales volume and product category expansion.

     INCOME TAXES. Income tax expense for 1999 was $6,000 compared to $746,000
during 1998. Our effective tax rate was 34.5% for both years.

     NET EARNINGS. Net earnings for 1999 were $12,000 compared to $1.4 million
or 0.8% of sales during 1998.

SEASONALITY AND QUARTERLY RESULTS

     The majority of our sales historically occur during the second half of the
year. The seasonal nature of our business is due to our focus on outdoor
merchandise and related accessories for the fall, as well as winter apparel and
gifts for the holiday season. We expect this seasonality will continue in the
future. In anticipation of increased sales activity during the third and fourth
quarters, we incur significant additional expenses for hiring employees and
building inventory levels. Management believes that sales during the fall and
winter months of 1999 were negatively impacted by unseasonably warmer than
normal temperatures.

     The following table provides certain unaudited financial information for
each of the quarters shown.

<TABLE>
<CAPTION>
                                              FIRST QUARTER    SECOND QUARTER    THIRD QUARTER    FOURTH QUARTER
                                              -------------    --------------    -------------    --------------
                                                                        (IN THOUSANDS)
<S>                                           <C>              <C>               <C>              <C>
2000
Sales.....................................       $35,946          $30,344           $29,640          $59,008
Gross profit..............................        11,591           10,429            10,001           19,446
Earnings (loss) from operations...........        (1,031)            (889)             (676)             198
Net loss..................................          (922)            (876)             (692)            (699)
Net loss per share........................          (.19)            (.18)             (.15)            (.15)
1999
Sales.....................................       $44,555          $37,799           $40,019          $65,700
Gross profit..............................        15,314           13,453            13,169           22,948
Earnings (loss) from operations...........           765              391            (1,378)           1,348
Net earnings (loss).......................           428              133            (1,146)             597
Net earnings (loss) per share.............           .09              .03              (.24)             .12
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

     WORKING CAPITAL. We had working capital of $8.5 million as of December 31,
2000 compared to $11.2 million as of December 31, 1999, with current ratios of
1.3 to 1.0 at both dates. The decrease of $2.7 million was primarily due to the
lower inventory level at the end of 2000. We purchase large quantities of
manufacturers' close-outs and direct imports, particularly in footwear and
apparel merchandise categories. The seasonal nature of the merchandise may
require that it be held for several months before being offered in a catalog.
This can result in increased inventory levels and lower inventory turnover,
thereby increasing our working capital requirements and related carrying costs.

     We offer our customers an installment credit plan with no finance fees,
known as the "Painless 4-Pay Plan." Each of the four consecutive monthly
installments is billed directly to customers' credit cards. We had installment
receivables of $2.5 million at December 31, 2000 compared to $4.1 million at
December 31, 1999. The installment plan will continue to require the allocation
of working capital which we expect to fund from operations and availability
under our revolving credit facility.

                                        15
<PAGE>   16

     In December 1999, we entered into a Credit and Security Agreement with
Wells Fargo Bank Minnesota, National Association, f/k/a/ Norwest Bank Minnesota,
National Association, providing a revolving line of credit up to $25.0 million,
subject to an adequate borrowing base, expiring in December 2002. The revolving
line of credit is for working capital and letters of credit. Letters of credit
may not exceed $10.0 million at any one time. Funding under the credit facility
consists of a collateral base of 55% of eligible inventory plus 80% of eligible
trade accounts receivable. Borrowings bear interest at the bank's prime rate.
The revolving credit line is collateralized by substantially all of the assets
of the Company.

     All borrowings are subject to various covenants. The most restrictive
covenants include a limit on monthly pretax net loss, quarterly measurement of
year-to-date earnings (loss), maximum debt to net worth ratio, maximum days
inventory levels (as defined), maximum annual spending levels for capital assets
and prohibits the payment of dividends to shareholders. As of December 31, 2000,
the Company was in compliance with all applicable covenants under the revolving
line of credit agreement with the exception of the minimum monthly pretax net
loss and the minimum annual net income covenants. These covenants were waived
for December and for the year 2000 by an amendment to the Credit and Security
Agreement dated March 7, 2001. This amendment reduces the funding on inventory
from 55% to 48% of eligible inventory and increases the interest rate to the
bank's prime rate plus 1.25%. As of December 31, 2000, we had borrowed $5.2
million against the revolving credit line compared to $12.6 million at December
31, 1999. Outstanding letters of credit were $1.9 million at the end of 2000
compared to $1.5 million at the end of 1999.

     OPERATING ACTIVITIES. Cash flows provided by operating activities during
2000 were $10.2 million compared to cash flows used in operating activities of
$6.3 million in 1999. The increase in cash provided by operations was primarily
the result of decreased inventory levels.

     Cash flows used in operating activities during 1999 were $6.3 million
compared to $5.1 million in 1998. The increase in cash used in operations was
primarily the result of decreased net earnings and increased inventory levels,
both partially offset by checks written in excess of bank balances.

     INVESTING ACTIVITIES. Cash flows used in investing activities during 2000
were $1.5 million compared to $2.8 million in 1999. During 2000, we expended
funds for software related primarily to the development of our Web sites,
licenses for a data warehouse access tool, machinery and equipment and
additional computer equipment.

     Cash flows used in investing activities during 1999 were $2.8 million
compared to $2.0 million in 1998. During 1999, we expanded our warehouse
facilities and, as a result, expended funds for leasehold improvements. We also
used funds for machinery and equipment, additional computer equipment and
software, to purchase telephone equipment that was previously leased and
expanded our creative services and photo studio departments.

     FINANCING ACTIVITIES. Cash flows used in financing activities during 2000
were $7.4 million compared to cash flows provided by financing activities of
$6.8 million during 1999. Cash flows used in financing activities during 2000
were primarily comprised of payments to reduce outstanding borrowings under the
revolving line of credit. Cash flows provided by financing activities during
1999 were primarily comprised of advances made under the revolving line of
credit. Cash flows provided by financing activities during 1998 were primarily
related to a public stock offering under which we received $8.5 million in net
proceeds. A portion of the proceeds was used to pay $3.4 million of subordinated
notes payable and to repurchase all of our Series A Preferred Stock for $1.0
million. We also received proceeds from the exercise of stock warrants and
options totaling $1.6 million.

     We believe that cash flows from operations and borrowing capacity under our
revolving credit facility will be sufficient to fund our operations for the next
12 months.

FORWARD-LOOKING STATEMENTS

     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We use words such as "may," "believe,"

                                        16
<PAGE>   17

"estimate," "plan," "expect," "intend," "anticipate" and similar expressions to
identify forward-looking statements. These forward-looking statements involve
risks and uncertainties. Actual results could differ materially from those
projected in the forward-looking statements due to a number of factors,
including general economic conditions, a changing market environment for our
products and the market acceptance of our product offerings as well as the risk
factors described in Exhibit 99 to this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

     The Company does not have any material, near-term, market rate risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The following financial statements and schedules are included herein:

<TABLE>
<CAPTION>
                                                                PAGE
                                                                ----
<S>                                                             <C>
Financial Statements:
  Report of Independent Certified Public Accountants........     18
  Balance Sheets as of December 31, 2000 and 1999...........     19
  Statements of Operations for the years ended December 31,
     2000, 1999 and 1998....................................     20
  Statements of Changes in Shareholders' Equity for the
     years ended December 31, 2000, 1999 and 1998...........     21
  Statements of Cash Flows for the years ended December 31,
     2000, 1999 and 1998....................................     22
  Notes to Financial Statements.............................     23
Financial Statement Schedule:
  Schedule II -- Valuation and Qualifying Accounts for the
     years ended December 31, 2000, 1999 and 1998...........     32
</TABLE>

                                        17
<PAGE>   18

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
The Sportsman's Guide, Inc.

     We have audited the accompanying balance sheets of The Sportsman's Guide,
Inc. as of December 31, 2000 and 1999 and the related statements of operations,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Sportsman's Guide, Inc.
as of December 31, 2000 and 1999 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America.

     We have also audited Schedule II for each of the three years in the period
ended December 31, 2000. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.

                                          Grant Thornton LLP

                                          /s/ GRANT THORNTON LLP
Minneapolis, Minnesota
February 8, 2001 (except for Note C as to which the date is March 7, 2001)

                                        18
<PAGE>   19

                          THE SPORTSMAN'S GUIDE, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                DECEMBER 31,    DECEMBER 31,
                                                                    2000            1999
                                                                ------------    ------------
                                                                 (IN THOUSANDS OF DOLLARS)
<S>                                                             <C>             <C>
                           ASSETS
Current Assets
  Cash and cash equivalents.................................      $ 1,344         $    --
  Accounts receivable -- net................................        3,718           4,897
  Inventory.................................................       22,805          37,403
  Promotional material......................................        3,635           4,435
  Prepaid expenses..........................................        1,522             759
  Income taxes receivable...................................          769              --
                                                                  -------         -------
       Total current assets.................................       33,793          47,494
Property and Equipment -- Net...............................        5,067           5,764
                                                                  -------         -------
       Total assets.........................................      $38,860         $53,258
                                                                  =======         =======
            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Checks written in excess of bank balances.................      $    --         $ 2,425
  Notes payable -- bank.....................................        5,225          12,598
  Current maturities of long-term debt......................           30              30
  Accounts payable..........................................       14,104          16,068
  Accrued expenses..........................................        2,233           1,809
  Customer deposits and other liabilities...................        3,675           3,342
                                                                  -------         -------
       Total current liabilities............................       25,267          36,272
LONG-TERM LIABILITIES
  Long-term debt............................................            3              40
  Deferred income taxes.....................................           --             170
                                                                  -------         -------
       Total liabilities....................................       25,270          36,482
COMMITMENTS AND CONTINGENCIES...............................           --              --
SHAREHOLDERS' EQUITY
  Common Stock -- $.01 par value; 36,800,000 shares
     authorized; 4,748,810 and 4,747,810 shares issued and
     outstanding at December 31, 2000 and 1999..............           47              47
  Additional paid-in capital................................       11,565          11,562
  Stock subscription receivable.............................         (238)           (238)
  Retained earnings.........................................        2,216           5,405
                                                                  -------         -------
       Total shareholders' equity...........................       13,590          16,776
                                                                  -------         -------
       Total liabilities and shareholders' equity...........      $38,860         $53,258
                                                                  =======         =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        19
<PAGE>   20

                          THE SPORTSMAN'S GUIDE, INC.

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                                --------------------------------------
                                                                   2000          1999          1998
                                                                   ----          ----          ----
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                             <C>           <C>           <C>
Sales.......................................................     $154,938      $188,073      $165,383
Cost of sales...............................................      103,471       123,189       106,393
                                                                 --------      --------      --------
     Gross profit...........................................       51,467        64,884        58,990
Selling, general and administrative expenses................       53,865        63,758        55,915
                                                                 --------      --------      --------
     Earnings (loss) from operations........................       (2,398)        1,126         3,075
Interest expense............................................       (1,673)       (1,109)         (883)
Miscellaneous income (expense), net.........................          (53)            1           (30)
                                                                 --------      --------      --------
     Earnings (loss) before income taxes....................       (4,124)           18         2,162
Income tax expense (benefit)................................         (935)            6           746
                                                                 --------      --------      --------
     Net earnings (loss)....................................     $ (3,189)           12      $  1,416
                                                                 ========      ========      ========
Net earnings (loss) per share:
  Basic.....................................................     $   (.67)     $     --      $   0.32
                                                                 ========      ========      ========
  Diluted...................................................     $   (.67)     $     --      $   0.31
                                                                 ========      ========      ========
Weighted average common and common equivalent shares
  outstanding:
  Basic.....................................................        4,749         4,748         4,434
                                                                 ========      ========      ========
  Diluted...................................................        4,749         4,818         4,616
                                                                 ========      ========      ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        20
<PAGE>   21

                          THE SPORTSMAN'S GUIDE, INC.

                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                         PREFERRED STOCK       COMMON STOCK      ADDITIONAL       STOCK
                                         ----------------    ----------------     PAID-IN      SUBSCRIPTION    RETAINED
                                         SHARES    AMOUNT    SHARES    AMOUNT     CAPITAL       RECEIVABLE     EARNINGS
                                         ------    ------    ------    ------    ----------    ------------    --------
                                                                         (IN THOUSANDS)
<S>                                      <C>       <C>       <C>       <C>       <C>           <C>             <C>
Balances at December 31, 1997........      20        $--     2,339      $23       $ 2,365         $  --        $ 3,977
  Net proceeds from sale of common
    stock............................      --        --      1,600       16         8,450            --             --
  Repurchase of preferred stock......     (20)       --         --       --        (1,000)           --             --
  Exercise of stock options and
    warrants.........................      --        --        808        8         1,584            --             --
  Other..............................      --        --         --       --           156            --             --
  Stock subscription.................      --        --         --       --            --          (238)            --
  Net earnings for the year ended
    December 31, 1998................      --        --         --       --            --            --          1,416
                                          ---        --      -----      ---       -------         -----        -------
Balances at December 31, 1998........      --        --      4,747       47        11,555          (238)         5,393
  Exercise of stock options..........      --        --          1       --             7            --             --
  Net earnings for the year ended
    December 31, 1999................      --        --         --       --            --            --             12
                                          ---        --      -----      ---       -------         -----        -------
Balances at December 31, 1999........      --        --      4,748       47        11,562          (238)         5,405
  Exercise of stock options..........      --        --          1       --             3            --             --
  Net loss for the year ended
    December 31, 2000................      --        --         --       --            --            --         (3,189)
                                          ---        --      -----      ---       -------         -----        -------
Balances at December 31, 2000........      --        $--     4,749      $47       $11,565         $(238)       $ 2,216
                                          ===        ==      =====      ===       =======         =====        =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        21
<PAGE>   22

                          THE SPORTSMAN'S GUIDE, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                                -----------------------------
                                                                 2000       1999       1998
                                                                 ----       ----       ----
                                                                       (IN THOUSANDS)
<S>                                                             <C>        <C>        <C>
Cash flows from operating activities:
  Net earnings (loss).......................................    $(3,189)   $    12    $ 1,416
  Adjustments to reconcile net earnings (loss) to net cash
     provided by (used in) operating activities:
     Depreciation and amortization..........................      2,111      1,852      1,496
     Deferred income taxes..................................       (170)      (237)       (87)
     Other..................................................         66         10        164
     Changes in assets and liabilities:
       Accounts receivable..................................      1,179     (1,013)       296
       Inventory............................................     14,598     (9,548)    (4,014)
       Promotional material.................................        800       (467)      (254)
       Prepaid expenses.....................................       (763)        83        321
       Income taxes.........................................       (769)        15        (15)
       Checks written in excess of bank balances............     (2,425)     2,425     (2,383)
       Accounts payable.....................................     (1,964)        48     (1,316)
       Accrued expenses.....................................        424        253       (683)
       Customer deposits and other liabilities..............        333        300        (66)
                                                                -------    -------    -------
          Cash flows provided by (used in) operating
            activities......................................     10,231     (6,267)    (5,125)
Cash flows from investing activities:
  Purchases of property and equipment.......................     (1,508)    (2,841)    (2,030)
  Other.....................................................         16         --         --
                                                                -------    -------    -------
          Cash flows used in investing activities...........     (1,492)    (2,841)    (2,030)
Cash flows from financing activities:
  Net proceeds from (payments on) revolving credit line.....     (7,373)     6,823      4,085
  Payments on long-term debt................................        (25)       (25)    (3,447)
  Proceeds from exercise of stock options and warrants......          3          7      1,592
  Repurchase of preferred stock.............................         --         --     (1,000)
  Net proceeds from sale of common stock....................         --         --      8,466
  Issuance of stock subscription receivable.................         --         --       (238)
                                                                -------    -------    -------
          Cash flows provided by (used in) financing
            activities......................................     (7,395)     6,805      9,458
Increase (decrease) in cash and cash equivalents............      1,344     (2,303)     2,303
Cash and cash equivalents at beginning of the year..........         --      2,303         --
                                                                -------    -------    -------
Cash and cash equivalents at end of the year................    $ 1,344    $    --    $ 2,303
                                                                =======    =======    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the years for:
     Interest...............................................    $ 1,497    $ 1,052    $   886
     Income taxes...........................................    $    71    $   161    $ 1,379
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        22
<PAGE>   23

                          THE SPORTSMAN'S GUIDE, INC.
                         NOTES TO FINANCIAL STATEMENTS

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF BUSINESS

     The Sportsman's Guide, Inc. (the "Company") is a company offering a variety
of value priced outdoor and general merchandise, with a special emphasis on
outdoor clothing, equipment and footwear sold through both catalogs and Internet
Web sites. The Company conducts its primary operations out of one office and two
warehouse facilities and one retail outlet store in Minnesota, distributes its
catalogs throughout the United States and hosts a network of e-commerce Web
sites. The Company operates in one business segment.

2. REVENUE RECOGNITION

     Sales are recorded at the time of shipment along with a provision for
anticipated merchandise returns, net of exchanges, which is recorded based upon
historical experience and current expectations. The provision charged against
sales was $9.5 million, $11.6 million and $11.0 million during the years ended
December 31, 2000, 1999 and 1998. Reserves for returns, net of exchanges, of
$0.7 million and $1.2 million were recorded in accrued expenses at December 31,
2000 and 1999.

     Amounts billed to customers for shipping and handling are recorded in
revenues. Sales includes shipping and handling revenues of $21.9 million, $25.6
million and $22.5 million for the years ended December 31, 2000, 1999 and 1998.

3. CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid temporary investments purchased
with an original maturity of three months or less to be cash equivalents. The
Company also considers credit card settlements in-transit as cash for reporting
purposes. Chargebacks from credit card companies are charged against operations
at the time initiated by the credit card company.

4. CHECKS WRITTEN IN EXCESS OF BANK BALANCES

     As a result of maintaining a consolidated cash management system, the
Company sometimes maintains overdraft positions at its primary bank. When
outstanding checks exceed bank balances, the bank overdraft is included in
current liabilities.

5. ACCOUNTS RECEIVABLE

     Accounts receivable consist primarily of amounts owed for merchandise by
customers utilizing an installment payment plan and amounts owed for list rental
and other advertising services provided by the Company to third parties. The
Company had an allowance for doubtful accounts of $54,000 and $172,000 at
December 31, 2000 and 1999.

6. INVENTORY

     Inventory consists of purchased finished merchandise available for sale and
is recorded at the lower of cost or market with the first-in, first-out method
used to determine cost.

7. PROMOTIONAL MATERIAL AND ADVERTISING COSTS

     The cost of producing and mailing catalogs is deferred and expensed over
the estimated useful lives of the catalogs. Catalog production and mailing costs
are amortized over periods ranging from four to six months from the in-home date
of the catalog. The Company estimates the in-home date to be one week from the
known mailing date of the catalog. The ongoing cost of developing and
maintaining the customer list is charged to operations as incurred. All other
advertising costs are expensed as incurred.

                                        23
<PAGE>   24
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

8. PROPERTY AND EQUIPMENT

     Property and equipment is stated at cost less accumulated depreciation and
amortization. The Company capitalizes external and incremental internal costs of
developing computer software (including Internet software) for internal use that
represent major enhancements and/or replacements of operating and management
systems. Depreciation and amortization is computed using the straight-line
method.

9. STOCK OPTIONS

     Stock options issued to employees are accounted for under the intrinsic
value method.

10. NET EARNINGS (LOSS) PER SHARE

     The Company's basic net earnings (loss) per share amounts have been
computed by dividing net earnings (loss) by the weighted average number of
outstanding common shares. Diluted net earnings per share amounts have been
computed by dividing net earnings by the weighted average number of outstanding
common shares and common share equivalents relating to stock options and
warrants, when dilutive.

     For the year ended December 31, 2000, no common share equivalents were
included in the computation of diluted net loss per share. If the Company would
have reported net income in the year ended December 31, 2000, 12,457 common
share equivalents would have been included in the computation of net earnings
per share.

     For the years ended December 31, 1999 and 1998, 70,395 and 181,362 common
share equivalents were included in the computation of diluted net earnings per
share.

     Options and warrants to purchase 650,388, 500,932 and 301,382 shares of
common stock with a weighted average exercise price of $6.01, $6.72 and $7.14
were outstanding at December 31, 2000, 1999 and 1998, but were not included in
the computation of diluted net earnings per share because the exercise price
exceeded the average market price during the period.

11. FISCAL YEAR

     The Company's fiscal year ends on the Sunday nearest December 31, but for
clarity of presentation, all periods are described as if the year end is
December 31. Fiscal years 2000 and 1999 consisted of 52 weeks and fiscal year
1998 consisted of 53 weeks.

12. FAIR VALUES OF FINANCIAL INSTRUMENTS

     Due to their short-term nature, the carrying value of the Company's current
financial assets and liabilities approximates their fair values. The fair value
of the Company's borrowings, if recalculated based on current interest rates,
would not significantly differ from the recorded amounts.

13. RECLASSIFICATIONS

     Certain 1999 and 1998 amounts have been reclassified to conform to 2000
financial statement presentation.

14. USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

     Preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and the disclosure of contingent assets and
liabilities at the date
                                        24
<PAGE>   25
                          The Sportsman's Guide, Inc.
                   NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

of the financial statements, and the amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NOTE B -- PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                             DECEMBER 31,    DECEMBER 31,     ESTIMATED
                                                                 2000            1999        USEFUL LIVES
                                                             ------------    ------------    ------------
<S>                                                          <C>             <C>             <C>
Machinery, equipment and furniture.......................       $5,265          $5,016        5-12 years
Equipment under capital leases...........................          133             133           5 years
Leasehold improvements...................................        1,760           1,746        Lease life
Computer equipment and accessories.......................        2,017           1,785         3-5 years
Computer software........................................        4,597           3,802         3-5 years
                                                                ------          ------
                                                                13,772          12,482
Less accumulated depreciation and amortization...........        8,705           6,718
                                                                ------          ------
                                                                $5,067          $5,764
                                                                ======          ======
</TABLE>

NOTE C -- REVOLVING CREDIT FACILITY

     In December 1999, the Company entered into a Credit and Security Agreement
with Wells Fargo Bank Minnesota, National Association, f/k/a Norwest Bank
Minnesota, National Association, providing a revolving line of credit up to
$25.0 million, subject to an adequate borrowing base, expiring in December 2002.
The revolving line of credit is for working capital and letters of credit.
Letters of credit may not exceed $10.0 million at any one time. Funding under
the credit facility consists of a collateral base of 55% of eligible inventory,
plus 80% of eligible trade accounts receivable. Borrowings bear interest at the
bank's prime rate. The revolving credit line is collateralized by substantially
all of the assets of the Company.

     All borrowings are subject to various covenants. The most restrictive
covenants include a limit on monthly pretax net loss, quarterly measurement of
year-to-date earnings (loss), maximum debt to net worth ratios, maximum days
inventory levels (as defined), maximum annual spending levels for capital assets
and prohibits the payment of dividends to shareholders. As of December 31, 2000,
the Company was in compliance with all applicable covenants under the revolving
line of credit agreement with the exception of the minimum monthly pretax net
loss and the minimum annual net income covenants. These covenants were waived
for December and for the year 2000 by an amendment to the Credit and Security
Agreement dated March 7, 2001. This amendment reduces the funding on inventory
from 55% to 48% of eligible inventory and increases the interest rate to the
bank's prime rate plus 1.25%.

     The following is a summary of the credit facility (in thousands):

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                                -----------------------------
                                                                 2000       1999       1998
                                                                 ----       ----       ----
<S>                                                             <C>        <C>        <C>
Borrowings at end of year...................................    $ 5,225    $12,598    $ 5,775
Interest rate at end of year................................        9.5%      8.25%      7.25%
Maximum month-end borrowing during the year.................    $18,679    $22,685    $14,769
Average daily borrowing during the year.....................    $15,132    $13,333    $ 9,917
Weighted average interest rate during the year..............       9.96%      8.15%      8.31%
Outstanding letters of credit at end of year................    $ 1,868    $ 1,531    $ 1,094
</TABLE>

                                        25
<PAGE>   26
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE D -- LONG-TERM DEBT

     Long-term debt consists of a note payable to a government agency with
interest at 4% which is collateralized by machinery, equipment, furniture and
fixtures. At December 31, 2000, future maturities of long-term debt are $30,000
in fiscal 2001.

NOTE E -- INCOME TAXES

     The provision for income tax expense (benefit) consists of the following
(in thousands):

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                                  --------------------------
                                                                  2000       1999       1998
                                                                  ----       ----       ----
<S>                                                               <C>        <C>        <C>
Current
  Federal...................................................      $(946)     $ 238      $820
  State.....................................................        181          5        13
                                                                  -----      -----      ----
                                                                   (765)       243       833
Deferred
  Federal...................................................       (170)      (237)      (87)
                                                                  -----      -----      ----
                                                                  $(935)     $   6      $746
                                                                  =====      =====      ====
</TABLE>

     Differences between income tax expense (benefit) and amounts derived by
applying the statutory federal income tax rate to earnings before income taxes
are as follows:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                                  -------------------------
                                                                  2000       1999      1998
                                                                  ----       ----      ----
<S>                                                               <C>        <C>       <C>
U.S. federal statutory rate.................................      (34.0)%    34.0%     34.0%
State taxes.................................................        4.0        --        --
Change in valuation allowance...............................       10.4        --        --
Prior year overaccrual......................................       (2.4)       --        --
Other.......................................................       (0.7)      0.5       0.5
                                                                  -----      ----      ----
                                                                  (22.7)%    34.5%     34.5%
                                                                  =====      ====      ====
</TABLE>

                                        26
<PAGE>   27
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE E -- INCOME TAXES (CONTINUED)

     The components of deferred taxes consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  2000            1999
                                                              ------------    ------------
<S>                                                           <C>             <C>
Current deferred tax assets (liabilities):
  Inventory.................................................     $ 858           $ 825
  Vacation accrual..........................................       169             159
  Returns reserve...........................................       232             401
  Promotional material......................................      (584)           (964)
  Prepaid expenses..........................................      (267)           (182)
  Severance agreements......................................       137              --
  Deferred revenue..........................................       167              --
  Other.....................................................       146             121
                                                                 -----           -----
                                                                   858             360
  Valuation allowance.......................................      (427)             --
                                                                 -----           -----
     Deferred tax asset.....................................       431             360
Long-term deferred tax assets (liabilities):
  Internally developed software.............................      (852)           (734)
  Depreciation..............................................       421             204
                                                                 -----           -----
     Deferred tax liability.................................      (431)           (530)
                                                                 -----           -----
     Net deferred tax liability.............................     $  --           $(170)
                                                                 =====           =====
</TABLE>

NOTE F -- COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

     The Company has several long-term contracts and operating leases related to
building facilities, telecommunications and computer equipment, and
long-distance telephone services with varying terms as long as 62 months.

     At December 31, 2000, future minimum commitments under the above agreements
are as follows for the years ended December 31, (in thousands):

<TABLE>
<S>                                                             <C>
2001........................................................    $ 3,982
2002........................................................      3,882
2003........................................................      2,169
2004........................................................        387
2005........................................................         52
                                                                -------
                                                                $10,472
                                                                =======
</TABLE>

     Rent expense was $2.8 million, $2.8 million and $2.4 million for the years
ended December 31, 2000, 1999 and 1998.

EMPLOYMENT AGREEMENTS

     The Company has employment agreements with three of its officers and its
Chairman. The agreements contain various terms and conditions including a
provision for the officers to receive up to three years of base

                                        27
<PAGE>   28
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE F -- COMMITMENTS AND CONTINGENCIES (CONTINUED)

salary upon the occurrence of certain events as defined in the agreement. The
agreements provide for automatic annual renewal unless two months' prior written
notice is provided by the Company or the officer.

OTHER

     Several states, where the Company does not currently collect and remit
sales and use taxes, have attempted to enact legislation that seeks to require
out-of-state mail order companies to collect and remit such taxes. No
assessments have been made against the Company and, to its knowledge, none has
been threatened or is contemplated. The United States Supreme Court has held
that such taxes place an unconstitutional burden on interstate commerce, which
may only be resolved by actions of the United States Congress.

     The Company is not a party to any pending legal proceedings other than
litigation which is incidental to its business and which the Company believes
will not have a material effect on its financial statements.

NOTE G -- RELATED PARTY TRANSACTIONS

     The Company purchased $0.6 million, $2.8 million and $3.9 million of
inventory during the years ended December 31, 2000, 1999 and 1998 from companies
partially owned by a director of the Company.

     During 1998, the Company loaned $238,000 to an officer of the Company to be
repaid over five years with interest at 5.69% per annum. In February 2001, the
Company deferred for two years payment of the first installment due on the loan.
At December 31, 2000, the outstanding loan balance was $278,000.

NOTE H -- SHAREHOLDERS' EQUITY

     The Company has 40,000,000 authorized shares; 200,000 of Series A Preferred
Stock, 36,800,000 of Common Stock and 3,000,000 undesignated shares.

PUBLIC OFFERING OF COMMON STOCK

     On February 10, 1998, the Company received net proceeds of $8.5 million
from the sale of 1.6 million shares of its common stock through a public
offering.

STOCK OPTIONS

     The Company has a stock option plan (the "1991 Plan") which provides
participating employees the right to purchase common stock of the Company
through incentive stock options. A total of 35,000 shares of common stock are
reserved for issuance under the 1991 Plan. Options issued under the 1991 Plan
are exercisable over a ten year period from the date of grant. At December 31,
2000, 24,000 options were outstanding, of which 8,250 options were exercisable.

     The Company previously issued options to purchase 55,000 shares of the
Company's common stock at $2.50 per share to an officer of the Company. All of
the options became exercisable upon the Company's public offering of common
stock and were exercised during 1998.

     The Company has a non-qualified stock option plan (the "1994 Plan") which
provides for the issuance of options to purchase up to 100,000 shares of the
Company's common stock to certain employees, contingent upon meeting certain
quarterly pre-tax earnings levels. Options under the 1994 Plan are exercisable
over a ten year period from the date of grant. At December 31, 2000, a total of
34,876 options were outstanding, all of which were exercisable.

     The Company has an incentive stock option plan (the "1996 Plan") which
provides selected key employees the right to purchase common stock of the
Company through the exercise of options granted. A
                                        28
<PAGE>   29
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE H -- SHAREHOLDERS' EQUITY (CONTINUED)

total of 600,000 shares of common stock are reserved for issuance under the 1996
Plan. Options issued under the 1996 Plan are exercisable over a ten year period
from the date of grant. At December 31, 2000, a total of 521,980 options were
outstanding, of which 413,330 options were exercisable.

     The Company has an incentive stock option plan (the "1999 Plan") which
provides selected key employees the right to purchase common stock of the
Company through the exercise of options granted. A total of 600,000 shares of
common stock are reserved for issuance under the 1999 Plan. Options issued under
the 1999 Plan are exercisable over a ten year period from the date of grant. At
December 31, 2000, no options were outstanding.

     The following applies to options that are outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                                                      WEIGHTED AVERAGE
                                                         NUMBER          REMAINING        WEIGHTED AVERAGE
             RANGE OF EXERCISE PRICES                  OUTSTANDING    CONTRACTUAL LIFE     EXERCISE PRICE
             ------------------------                  -----------    ----------------    ----------------
<S>                                                    <C>            <C>                 <C>
$.94-$1.41.........................................       15,000          9 years              $0.94
$2.50-$3.70........................................       95,680          5 years              $2.57
$3.94-$5.88........................................      187,926          5 years              $4.83
$6.50-$8.70........................................      282,250          7 years              $6.65
                                                         -------
                                                         580,856
                                                         =======
</TABLE>

<TABLE>
<CAPTION>
                                                          NUMBER       WEIGHTED AVERAGE
              RANGE OF EXERCISE PRICES                  EXERCISABLE     EXERCISE PRICE
              ------------------------                  -----------    ----------------
<S>                                                     <C>            <C>                 <C>
$.94-$1.41..........................................        3,750           $0.94
$2.50-$3.70.........................................       95,680           $2.57
$3.94-$5.88.........................................      162,051           $4.76
$6.50-$8.70.........................................      194,975           $6.70
                                                          -------
                                                          456,456
                                                          =======
</TABLE>

     Exercise prices for all options granted were equal to or higher than the
fair value of the Company's common stock on the respective grant dates and,
therefore, no compensation expense has been recorded by the Company. A summary
of the stock option transactions during the years ended December 31, 2000, 1999
and 1998 is as follows:

<TABLE>
<CAPTION>
                                                 2000                   1999                   1998
                                          -------------------    -------------------    -------------------
                                                     WEIGHTED               WEIGHTED               WEIGHTED
                                                     AVERAGE                AVERAGE                AVERAGE
                                                     EXERCISE               EXERCISE               EXERCISE
                                          SHARES      PRICE      SHARES      PRICE      SHARES      PRICE
                                          ------     --------    ------     --------    ------     --------
<S>                                       <C>        <C>         <C>        <C>         <C>        <C>
Outstanding at beginning of year......    617,069     $5.34      502,219     $5.11      348,439     $3.53
  Granted.............................     25,000      2.14      119,600      6.33      319,500      6.31
  Exercised...........................     (1,000)     2.50       (1,250)     5.88      (91,308)     2.64
  Canceled............................    (23,200)     5.48       (2,725)     5.63      (70,287)     5.76
  Expired.............................    (37,013)     4.71         (775)     5.91       (4,125)     8.02
                                          -------     -----      -------     -----      -------     -----
Outstanding at end of year............    580,856     $5.24      617,069     $5.34      502,219     $5.11
                                          =======     =====      =======     =====      =======     =====
Options exercisable at end of year....    456,456     $5.10      370,482     $4.86      250,182     $4.40
                                          =======     =====      =======     =====      =======     =====
Weighted average fair value of options
  granted during the year.............                $1.88                  $3.27                  $3.26
</TABLE>

                                        29
<PAGE>   30
                          The Sportsman's Guide, Inc.
                   NOTES TO FINANCIAL STATEMENTS (Continued)

NOTE H -- SHAREHOLDERS' EQUITY (CONTINUED)

     The Company's pro forma net earnings (loss) and net earnings (loss) per
share for the years ended December 31, 2000, 1999 and 1998 had the fair value
based method of accounting for the issuance of stock options been used are set
forth below. These effects may not be representative of the future effects of
applying this method.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                                  --------------------------------------
                                                                    2000           1999           1998
                                                                    ----           ----           ----
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>                <C>             <C>           <C>
Net earnings (loss)........................    As reported....     $(3,189)        $  12         $1,416
                                               Pro forma......      (3,473)         (314)         1,231
Net earnings (loss) per common and common
  equivalent share
     Basic.................................    As reported....     $  (.67)        $  --         $  .32
                                               Pro forma......        (.73)         (.07)           .28
     Diluted...............................    As reported....     $  (.67)        $  --         $  .31
                                               Pro forma......         .73)         (.07)           .27
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes options-pricing model with the following weighted-average
assumptions used: zero dividend yield; expected volatility of 87 percent in 2000
and 25 percent in 1999 and 1998; risk-free interest rate of 6.15 percent in 2000
and 6.0 percent in 1999 and 1998; and expected life of 10 years for all years
presented.

WARRANTS

     During the first quarter of 1998, the Company received net proceeds of
approximately $1.4 million from the exercise of warrants to purchase 716,027
shares of common stock. In connection with the public offering of common stock
in 1998, warrants to purchase 100,000 shares of common stock at $8.45 per share
were issued. The warrants are exercisable immediately and expire February 2003.
At December 31, 2000, 100,000 warrants were outstanding, all of which were
exercisable.

PREFERRED STOCK

     On February 10, 1998, the Company repurchased all of its outstanding Series
A Preferred Stock for $1.0 million.

NOTE I -- ADVERTISING EXPENSE

     Selling, general and administrative expenses include advertising expenses
of $31.3 million, $38.2 million and $33.9 million for the years ended December
31, 2000, 1999 and 1998.

                                        30
<PAGE>   31
                          THE SPORTSMAN'S GUIDE, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE J -- INTERIM FINANCIAL INFORMATION (UNAUDITED)

     The following table provides certain unaudited financial information for
each of the quarters shown.

<TABLE>
<CAPTION>
                                              FIRST QUARTER    SECOND QUARTER    THIRD QUARTER    FOURTH QUARTER
                                              -------------    --------------    -------------    --------------
                                                                        (IN THOUSANDS)
<S>                                           <C>              <C>               <C>              <C>
2000
Sales.....................................       $35,946          $30,344           $29,640          $59,008
Gross profit..............................        11,591           10,429            10,001           19,446
Earnings (loss) from operations...........        (1,031)            (889)             (676)             198
Net loss..................................          (922)            (876)             (692)            (699)
Net loss per share........................          (.19)            (.18)             (.15)            (.15)
1999
Sales.....................................       $44,555          $37,799           $40,019          $65,700
Gross profit..............................        15,314           13,453            13,169           22,948
Earnings (loss) from operations...........           765              391            (1,378)           1,348
Net earnings (loss).......................           428              133            (1,146)             597
Net earnings (loss) per share.............           .09              .03              (.24)             .12
</TABLE>

     During the fourth quarter of 2000, the Company recorded expenses of $1.7
million primarily related to executive and other associates' severance
commitments, the closing of a retail outlet and the write-off of expenses
related to an unsuccessful equity placement.

                                        31
<PAGE>   32

                          THE SPORTSMAN'S GUIDE, INC.
                                  SCHEDULE II
                       VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
         COLUMN A                 COLUMN B                   COLUMN C                     COLUMN D          COLUMN E
---------------------------      ----------      ---------------------------------      ------------      -------------
                                                             ADDITIONS
                                                 ---------------------------------
                                                     (1)                (2)
                                 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)
<S>                              <C>             <C>              <C>                   <C>               <C>
RETURNS RESERVE
  December 31, 2000........        $1,180          $ 9,528               $--              $10,027*           $  681
  December 31, 1999........         1,168           11,614               --                11,602*            1,180
  December 31, 1998........         1,285           10,985               --                11,102*            1,168
</TABLE>

-------------------------
* Represents actual returns from customers.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.

                                        32
<PAGE>   33

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Set forth below is certain information concerning our directors, executive
officers and key employees.

<TABLE>
<CAPTION>
                   NAME                       AGE                         POSITION
                   ----                       ---                         --------
<S>                                           <C>    <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Gary Olen.................................     59    Chairman and Director(1)
Gregory R. Binkley........................     52    President, Chief Executive Officer and Director
Charles B. Lingen.........................     56    Executive Vice President of Finance and
                                                     Administration, Chief Financial Officer,
                                                       Secretary/Treasurer and Director
John M. Casler............................     50    Executive Vice President of Merchandising,
                                                     Marketing and Creative Services
Vincent W. Shiel..........................     67    Director(1)(2)
Mark F. Kroger............................     47    Director(3)
Leonard M. Paletz.........................     66    Director(2)(3)
William T. Sena...........................     64    Director(1)(2)(3)
KEY EMPLOYEES:
Dale D. Monson............................     36    Vice President of Information Systems and
                                                     Technology and Chief Information Officer
Douglas E. Johnson........................     45    Vice President of Marketing
</TABLE>

-------------------------
(1) Member of Executive Committee

(2) Member of Compensation Committee

(3) Member of Audit Committee

     Gary Olen is our co-founder. Mr. Olen served as Executive Vice President
and Secretary from our incorporation in 1977 until 1994, President from 1994 to
1998 and Chief Executive Officer from 1994 until his retirement in 2000. Mr.
Olen has been Chairman of the Board since 1998 and a director since our
incorporation. Mr. Olen was also the sole proprietor of our predecessor, The
Olen Company, founded in 1970.

     Gregory R. Binkley has been a director since 1995. Mr. Binkley has been an
employee since 1994 when he was elected Vice President. Mr. Binkley became
Senior Vice President of Operations and Chief Operating Officer in 1995,
Executive Vice President in 1996, President in 1998 and Chief Executive Officer
in 2000. From 1993 to 1994, Mr. Binkley worked as an independent operations
consultant. From 1990 to 1993, Mr. Binkley was Director of Distribution of
Fingerhut Companies, Inc., a mail order catalog business and from 1988 to 1990
was Director of Distribution with Cable Value Network, Inc., a cable television
retailer. Mr. Binkley worked for Donaldsons Department Stores, a division of
Allied Stores Corporation, from 1975 to 1988, serving as Vice President of
Finance and Operations from 1987 to 1988 and Vice President of Operations from
1981 to 1987.

     Charles B. Lingen has been a director since 1995. Mr. Lingen has been Chief
Financial Officer, Vice President of Finance and Treasurer since 1994. Mr.
Lingen was elected Secretary in 1995, Senior Vice President of Finance in 1996
and Executive Vice President of Finance and Administration in 2000. From 1973 to
1994, Mr. Lingen worked at Fingerhut Companies, Inc., serving as Vice President
of Finance and Controller from 1989 to 1994.

     John M. Casler has been an employee since 1996. He was elected Vice
President of Merchandising in 1997, Senior Vice President of Merchandising in
1999 and Executive Vice President of Merchandising, Marketing and Creative
Services in 2000. Mr. Casler worked for Gander Mountain, Inc, a retail mail
order catalog company, from 1989 to 1995, where he served as Division
Merchandise Manager from 1990 to 1995. Prior to that time, Mr. Casler held
merchandise management positions at Munson Sporting Goods Co., Inc. from 1985 to
1989 and at the Target Stores Division of Dayton Hudson Corp. from 1982 to 1985.

                                        33
<PAGE>   34

     Dale D. Monson has been an employee since 1997. He was elected Vice
President of Software Development in 2000 and Vice President of Information
Systems and Technology and Chief Information Officer in 2001. Mr. Monson worked
for Select Comfort Inc., a manufacturer of sleep support systems, from 1995 to
1997 as Project Manager and for Proex Photo Systems Inc., a retail photography
firm, from 1990 to 1995 as Director of Information Systems.

     Douglas E. Johnson joined us in 2000 as Vice President of Marketing. Mr.
Johnson worked at Fingerhut Companies, Inc. from 1982 to 2000, where he held
various marketing positions including Director of Customer List Marketing.

     Vincent W. Shiel, Ph.D. has been a director since 1990 and served as
Chairman of the Board from 1994 to 1998. Dr. Shiel owns an interest in and
serves as a director of ABN Sports Supply, Inc., a wholesale firearms
distributor. Dr. Shiel is a principal shareholder and has served as President
and a director of Outdoor Consulting, Inc., a management consulting firm, since
1988. From 1984 to 1988, Dr. Shiel served on the board of directors and owned a
controlling interest in Gander Mountain, Inc.

     Mark F. Kroger has been a director since 1990. He is Executive Director and
Treasurer of Rae Melton Therapeutic Equestrian Center, a nonprofit organization.
Mr. Kroger is the former Chairman of the Board, President and Chief Executive
Officer of ABN Sports Supply, Inc. where he worked from 1986 to 1997.

     Leonard M. Paletz is a co-founder and served as Chairman of the Board,
President, Chief Executive Officer, Treasurer and a director from our
incorporation in 1977 until 1994. Mr. Paletz retired as an employee in 1994.

     William T. Sena has been a director since 1990. He is an investment advisor
with Sena Weller Rohs Williams, Inc., an investment advisory firm. Mr. Sena has
been associated with the investment advisory firm and its predecessor since
1965.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and ten percent beneficial owners of our common
stock to file reports of ownership and changes of ownership of the common stock
with the Securities and Exchange Commission. We believe that during 2000 all
Section 16 filing requirements applicable to our directors, executive officers
and ten percent beneficial owners were met.

                                        34
<PAGE>   35

ITEM 11. EXECUTIVE COMPENSATION.

     The following table sets forth the cash compensation paid to the Chief
Executive Officer and to each of the other four most highly compensated
executive officers of the Company (the "Named Executive Officers") for services
rendered in all capacities for each of the years indicated.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                ANNUAL
                                                             COMPENSATION          LONG-TERM
                                                          ------------------      COMPENSATION       ALL OTHER
                                                          SALARY       BONUS        OPTIONS         COMPENSATION
       NAME AND PRINCIPAL POSITION              YEAR        ($)         ($)           (#)               ($)
       ---------------------------              ----      ------       -----      ------------      ------------
<S>                                             <C>       <C>          <C>        <C>               <C>
Gary Olen (1).............................      2000      338,570       --               --            3,000
  Chairman                                      1999      270,931       --           40,000               --
                                                1998      259,605       --           80,000               --
Gregory R. Binkley........................      2000      196,318       --               --               --
  President and Chief Executive Officer         1999      185,947       --           10,000               --
                                                1998      178,939       --           75,000               --
Charles B. Lingen.........................      2000      151,274       --               --               --
  Executive Vice President of Finance and       1999      141,795       --            7,500               --
  Administration, Chief Financial Officer       1998      136,166       --           41,000               --
  and Secretary/Treasurer
John M. Casler............................      2000..    149,205       --               --               --
  Executive Vice President of
     Merchandising,                             1999      138,114       --            7,500               --
  Marketing and Creative Services               1998      127,110       --           41,500               --
Bernard S. Bauhof (2).....................      2000      158,751       --               --               --
  Senior Vice President of Information
     Systems                                    1999      127,167       --            7,000               --
  and Technology, Chief Information
     Officer                                    1998      117,031       --            5,000               --
</TABLE>

-------------------------
(1) Amounts in the All Other Compensation column reflect directors fees paid to
    Mr. Olen.

(2) Mr. Bauhof resigned effective January 2001.

     The following table sets forth information with respect to the Named
Executive Officers concerning options held at year end 2000.

    AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
                                    SHARES                    NUMBER OF UNEXERCISED            VALUE OF UNEXERCISED
                                   ACQUIRED                     OPTIONS AT FISCAL            IN-THE-MONEY OPTIONS AT
                                      ON        VALUE              YEAR-END (#)               FISCAL YEAR-END ($)(1)
                                   EXERCISE    REALIZED    ----------------------------    ----------------------------
             NAME                    (#)         ($)       EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
             ----                  --------    --------    -----------    -------------    -----------    -------------
<S>                                <C>         <C>         <C>            <C>              <C>            <C>
Gary Olen......................      --          --          174,615         40,000            --              --
Gregory R. Binkley.............      --          --          108,513         23,750            --              --
Charles B. Lingen..............      --          --           69,465         14,000            --              --
John M. Casler.................      --          --           50,375         14,125            --              --
Bernard S. Bauhof..............      --          --           13,750          4,750            --              --
</TABLE>

-------------------------
(1) Unexercised options were in-the-money if the fair market value of the
    underlying shares exceeded the exercise price of the option at December 31,
    2000.

DIRECTOR COMPENSATION

     Directors who are not employees of the Company and Mr. Olen receive $5,000
annually for services as a director plus expenses incurred in attending board
meetings.

                                        35
<PAGE>   36

EMPLOYMENT AGREEMENTS

     The Company has entered into employment agreements with Gregory R. Binkley,
Charles B. Lingen and John M. Casler. Each agreement is automatically renewed
each December 31 for additional one year terms unless either party gives two
months' notice of nonrenewal, and terminates upon the employee's death,
disability or retirement at age 65. Upon termination of the agreement by reason
of death or disability, each of the employees or his estate is entitled to a
payment equal to 12 months of his monthly base salary, plus a pro rata portion
of the bonus that would otherwise have been payable to the employee under the
Company's bonus plan then in effect. Upon termination of the agreement (i) by
the employee for good reason (as defined in the agreement) or (ii) by the
Company without good cause or upon the Company's failure to renew the agreement,
the employee is entitled to a payment equal to 24 months of his monthly base
salary, plus a pro rata portion of the bonus that would otherwise have been
payable to the employee under the Company's bonus plan then in effect. Each
agreement also provides that if the employee is terminated, or resigns for good
reason or if the Company fails to renew the agreement within two years following
a substantial event (defined as a sale of substantially all of the Company's
assets, a merger or other reorganization resulting in the incumbent directors
constituting less than a majority of the board, or a tender offer for 50% or
more of the Company's outstanding voting stock), such employee is entitled to a
payment equal to three times his annual base salary, plus a pro rata portion of
the bonus otherwise payable to the employee.

     The Company has also entered into an employment agreement with Gary Olen
pursuant to which he serves as Chairman. The agreement continues until June 30,
2002. Upon termination of the agreement for any reason, Mr. Olen is entitled to
his remaining base salary and benefits through the end of the term.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Compensation Committee of the Board of Directors is comprised of
Vincent W. Shiel, Leonard M. Paletz and William T. Sena. Mr. Paletz is a former
Chief Executive Officer of the Company.

     During 2000, the Company purchased merchandise inventory in the amount of
$575,000 from ABN Sports Supply, Inc. Dr. Shiel is a shareholder and director of
ABN, and Mark F. Kroger was formerly a shareholder, Chairman of the Board,
President and Chief Executive Officer of ABN. The Company believes that the
terms of such purchases were as favorable as could have been obtained from an
unrelated party. ABN is currently subject to a liquidation proceeding under
Chapter 7 of the Bankruptcy Code.

     Outdoor Consulting, Inc., a corporation owned by Dr. Shiel, provides
certain consulting services to the Company. Mr. Sena also provides certain
consulting services to the Company. See Item 13. Certain Relationships and
Related Transactions.

                                        36
<PAGE>   37

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of March 21, 2001 by each director,
each executive officer, all directors and executive officers as a group, and
those persons or groups known to us to beneficially own more than 5% of our
common stock.

<TABLE>
<CAPTION>
                                                                      COMMON STOCK
                                                                   BENEFICIALLY OWNED
                                                                ------------------------
                            NAME                                 NUMBER      PERCENT (1)
                            ----                                 ------      -----------
<S>                                                             <C>          <C>
DIRECTORS AND EXECUTIVE OFFICERS (2):
Vincent W. Shiel (3)........................................      522,000       11.0%
Gary Olen (4)...............................................      294,798        6.0%
Gregory R. Binkley (5)......................................      139,763        2.9%
Charles B. Lingen (6).......................................       81,590        1.7%
John M. Casler (7)..........................................       62,625        1.3%
Mark F. Kroger..............................................       78,370        1.7%
Leonard M. Paletz...........................................      204,816        4.3%
William T. Sena, as trustee of various trusts for the
  benefit of Dr. and Mrs. Shiel and their children (8)......      106,819        2.2%
All directors and executive officers as a group (8 persons)
  (9).......................................................    1,490,781       28.5%
OTHER SHAREHOLDERS OWNING MORE THAN 5% OF COMMON STOCK:
Ralph E. Heyman, Individually and as trustee of various
  trusts for the benefit of Dr. and Mrs. Shiel and their
  children and grandchildren (10)...........................      383,725        8.1%
Dimensional Fund Advisors Inc. (11)
  1299 Ocean Avenue
  11th Floor
  Santa Monica, CA 90401....................................      342,700        7.2%
Kalmar Investments Inc. (12)
  3701 Kennett Pike
  Greenville, DE 19807......................................      300,000        6.3%
E Com Ventures, Inc. and Ilia Lekach (13)
  11701 N.W. 101 Road
  Miami, FL 33178...........................................      298,900        6.3%
</TABLE>

-------------------------
 (1) Percentages are calculated on the basis of the number of shares outstanding
     on March 21, 2001 plus the number of shares issuable pursuant to options
     held by the individual which are exercisable within 60 days after March 21,
     2001.

 (2) The address of each director and executive officer is 411 Farwell Avenue,
     South St. Paul, Minnesota 55075.

 (3) Includes 420,051 shares held by the Vincent W. Shiel Family Limited
     Partnership of which the Vincent W. Shiel Revocable Trust, of which Dr.
     Shiel is trustee, owns a 99.9% limited partnership interest and a 99.8%
     interest in the general partner, and 101,949 shares held by the Helen M.
     Shiel Family Limited Partnership of which the Helen M. Shiel Revocable
     Trust, of which Mrs. Shiel is trustee, owns a 99.9% limited partnership
     interest and a 99.8% interest in the general partner. Helen M. Shiel is the
     wife of Dr. Shiel. Does not include 633,848 shares held by Dr. and Mrs.
     Shiel's children or in trusts for the benefit of Dr. and Mrs. Shiel and
     their children and grandchildren of which Dr. Shiel expressly disclaims
     beneficial ownership.

 (4) Includes 204,615 shares issuable upon the exercise of options. Does not
     include 48,000 shares held in trusts for the benefit of Mr. Olen's children
     and grandchildren of which Mr. Olen expressly disclaims beneficial
     ownership.

                                        37
<PAGE>   38

 (5) Includes 2,000 shares held in the name of Mr. Binkley's wife and 129,763
     shares issuable upon the exercise of options.

 (6) Includes 81,590 shares issuable upon the exercise of options.

 (7) Includes 62,625 shares issuable upon the exercise of options.

 (8) Includes 106,819 shares held as trustee of various trusts for the benefit
     of Dr. and Mrs. Shiel and their children, of which Mr. Sena has no
     pecuniary interest. Does not include 522,000 shares held by the Vincent W.
     Shiel Family Limited Partnership and the Helen M. Shiel Family Limited
     Partnership over which Mr. Sena shares voting and dispositive power and of
     which Mr. Sena expressly disclaims beneficial ownership.

 (9) Includes 478,593 shares issuable upon the exercise of options.

(10) Includes 382,725 shares held as trustee of various trusts for the benefit
     of Dr. and Mrs. Shiel and their children and grandchildren, of which Mr.
     Heyman has no pecuniary interest. Does not include 522,000 shares held by
     the Vincent W. Shiel Family Limited Partnership and the Helen M. Shiel
     Family Limited Partnership over which Mr. Heyman shares voting and
     dispositive power and of which Mr. Heyman expressly disclaims beneficial
     ownership. Mr. Heyman's address is 1100 Courthouse Plaza S.W., Dayton, Ohio
     45402.

(11) Based on a Schedule 13G filing dated February 2, 2001. Dimensional Fund
     Advisors Inc., a registered investment advisor, furnishes investment advice
     to four registered investment companies and serves as investment manager to
     certain other commingled group trusts and separate accounts. In its role as
     investment advisor or manager, Dimensional Fund Advisors Inc. has sole
     power to vote and dispose of 342,700 shares owned by these funds. To the
     knowledge of Dimensional Fund Advisors Inc., no one advisory client owns
     more than 5% of the class. Dimensional Fund Advisors Inc. disclaims
     beneficial ownership of the 342,700 shares.

(12) Based on a Schedule 13G filing dated January 8, 1999. Kalmar Investments
     Inc., a registered investment advisor, has sole power to dispose of 300,000
     shares but does not have the power to vote the 300,000 shares.

(13) Based on a Schedule 13D filing dated April 10, 2000. Ilia Lekach, the Chief
     Executive Officer of E Com Ventures, Inc., has sole power to vote and
     dispose of 40,000 shares and shared power to vote and dispose of 258,900
     shares owned by E Com Ventures, Inc.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In January 1990, the Company entered into a consulting agreement with
Outdoor Consulting, Inc. pursuant to which Outdoor Consulting, Inc. provides
consulting services to the Company. The initial term of the agreement expired on
December 31, 1990 and continues on a year-to-year basis until terminated by
either party upon 60 days prior written notice. The compensation payable under
the agreement is $5,000 per month. Vincent W. Shiel is the sole shareholder and
employee of Outdoor Consulting, Inc.

     In February 1998, the Company loaned Gary Olen $238,700 to pay the exercise
price of an option to purchase 55,000 shares of common stock held by Mr. Olen
(which became exercisable upon completion of the Company's public offering and
would have expired six months later) and to pay the income taxes payable by him
upon exercise of the option. The loan, approved by the Board of Directors, is
for a term of five years, bears interest at the mid-term applicable federal rate
as of the date of the loan (5.69%) and is collateralized by a pledge of the
shares acquired upon exercise. In February 2001, the Board of Directors deferred
for two years payment of the first installment due on the loan. At December 31,
2000, the outstanding loan balance was $278,000.

     In April 1998, the Company entered into a consulting agreement with William
T. Sena pursuant to which Mr. Sena provides certain investor relation and
investment advisory services as requested by the Company for a minimum of 15
hours per quarter. The initial term of the agreement expired on December 31,
1998 and continues on a quarter-to-quarter basis until terminated by either
party. Mr. Sena is paid $3,000 per quarter for services under the agreement.

                                        38
<PAGE>   39

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

     (A) 1. FINANCIAL STATEMENTS

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

           Report of Independent Certified Public Accountants

           Balance Sheets as of December 31, 2000 and 1999

           Statements of Operations for the years ended December 31, 2000, 1999
             and 1998

           Statements of Changes in Shareholders' Equity for the years ended
             December 31, 2000, 1999 and 1998

           Notes to 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, 2000, 1999 and 1998

         3. EXHIBITS

        See Exhibit Index at page 41 of this report.

     (B) REPORTS ON FORM 8-K.

        No reports on Form 8-K were filed during the quarter ended December 31,
     2000.

                                        39
<PAGE>   40

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          THE SPORTSMAN'S GUIDE, INC.

                                          By    /s/ GREGORY R. BINKLEY
                                          --------------------------------------
                                                    Gregory R. Binkley
Date: March 21, 2001                      President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                  SIGNATURE                                     CAPACITY                         DATE
                  ---------                                     --------                         ----
<C>                                                 <S>                                     <C>

           /s/ GREGORY R. BINKLEY                   President, Chief Executive
---------------------------------------------         Officer and Director (principal
             Gregory R. Binkley                       executive officer)

            /s/ CHARLES B. LINGEN                   Executive Vice President of
---------------------------------------------         Finance and Administration,
              Charles B. Lingen                       Chief Financial Officer,              March 21, 2001
                                                      Secretary/ Treasurer and
                                                      Director (principal financial
                                                      and accounting officer)

                 GARY OLEN*                         Chairman of the Board and
---------------------------------------------         Director
                  Gary Olen

              VINCENT W. SHIEL*                     Director
---------------------------------------------
              Vincent W. Shiel

               MARK F. KROGER*                      Director
---------------------------------------------
               Mark F. Kroger

             LEONARD M. PALETZ*                     Director
---------------------------------------------
              Leonard M. Paletz

              WILLIAM T. SENA*                      Director
---------------------------------------------
               William T. Sena

         *By /s/ GREGORY R. BINKLEY
     ---------------------------------------
             Gregory R. Binkley,
              Attorney-In-Fact
</TABLE>

                                        40
<PAGE>   41

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT                            DESCRIPTION                             PAGE
-------                            -----------                             ----
<C>        <S>                                                             <C>
   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)
   4.3     Form of Promissory Note dated December 27, 1999 issued by
           the Company (incorporated by reference to Exhibit 4.3 to
           Form 10-K for the year ended December 31, 1999)
  10.1     Letter of agreement between Vincent W. Shiel and the Company
           dated September 8, 1989 (incorporated by reference to
           Exhibit 19.1 to Form 10-Q for the quarter ended September
           29, 1989)
  10.2*    Consulting Agreement dated January 11, 1990 between the
           Company and Outdoor Consulting, Inc. (incorporated by
           reference to Exhibit 10.16 to Form 10-K for the year ended
           December 29, 1989)
  10.3*    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)
  10.4*    Agreement between the Company and Gary Olen dated July 1,
           1992 granting the use of Mr. Olen's name, picture and
           likeness (incorporated by reference to Exhibit 10.19 to Form
           10-K for the year ended December 31, 1993)
  10.5     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)
  10.6     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)
  10.7     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)
  10.8     Credit and Security Agreement between the Company and
           Norwest Bank Minnesota, National Association dated December
           27, 1999 (incorporated by reference to Exhibit 10.8 to Form
           10-K for the year ended December 31, 1999)
  10.9     First Amendment to Credit and Security Agreement between the
           Company and Norwest Bank Minnesota, National Association
           (incorporated by reference to Exhibit 10.1 to Form 10-Q for
           the quarter ended June 30, 2000)
 10.10     Second Amendment to Credit and Security Agreement between
           the Company and Wells Fargo Bank Minnesota, National
           Association, f/k/a Norwest Bank Minnesota, National
           Association dated August 2, 2000 (incorporated by reference
           to Exhibit 10.2 to Form 10-Q for the quarter ended June 30,
           2000)
 10.11     Third Amendment to Credit and Security Agreement between the
           Company and Wells Fargo Bank Minnesota, National
           Association, f/k/a Norwest Bank Minnesota, National
           Association dated March 7, 2001
</TABLE>

                                        41
<PAGE>   42

<TABLE>
<CAPTION>
EXHIBIT                            DESCRIPTION                             PAGE
-------                            -----------                             ----
<C>        <S>                                                             <C>
 10.12*    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)
 10.13*    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)
 10.14*    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)
 10.15*    Employment Agreement between the Company and Gary Olen dated
           July 1, 2000 (incorporated by reference to Exhibit 10.1 to
           Form 10-Q for the quarter ended September 30, 2000)
 10.16*    Description of 1997 Senior Management Stock Option Plan
           (incorporated by reference to Exhibit 10.10 to Form 10-K for
           the year ended December 28, 1997)
 10.17     Replacement Promissory Note from Gary Olen to the Company
           dated February 11, 2001
 10.18     Stock Pledge Agreement between Gary Olen and the Company
           dated February 11, 1998 (incorporated by reference to
           Exhibit 10.11 to Form 10-K for the year ended December 28,
           1997)
 10.19*    Consulting Agreement between the Company and William T. Sena
           dated April 1, 1998 (incorporated by reference to Exhibit
           10.15 to Form 10-K for the year ended January 3, 1999)
 10.20*    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)
  23.1     Consent of Grant Thornton LLP
  24.1     Powers of Attorney of each person whose name is signed to
           this report pursuant to a power of attorney
    99     Risk Factors (incorporated by reference to Exhibit 99 to
           Form 10-K for the year ended December 31, 1999)
</TABLE>

     Those exhibits marked with an asterisk (*) above constitute management
contracts or compensatory plans or arrangements for management and executive
officers of the Company.

                                        42