##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 1-11988
 (SPECTRUM LOGO)
 SPECTRUM GROUP INTERNATIONAL, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
(State of Incorporation)
    
    22-2365834
(IRS Employer I.D. No.)
 Irvine, CA 92614  (Address of Principal Executive Offices) (Zip Code)
 (949) 955-1250
 o þ
 o þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ
 o þ




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##### 



SPECTRUM GROUPS INTERNATIONAL, INC.
FORM 10-Q
For the Quarter Ended September 30, 2009
 Table of Contents
 PagePart I.
    
    Financial InformationItem 1.
    
    Condensed Consolidated Financial Statements (UNAUDITED):Condensed Consolidated Balance Sheets as of September 30, 2009 and June 30, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2009
and 2008
    
    
    4Condensed Consolidated Statements of Stockholders Equity for the Three Months Ended September
30, 2009.
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months ended September 30, 2009
and 2008
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.
    
    Controls and Procedures
    
    
    35Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    36Item 1A.
    
    Risk Factors
    
    
    36Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 5.
    
    Other Information
    
    
    36Item 6.
    
    Exhibits
    
    
    36Signatures
    
    
    
    
    37ExhibitsExhibits 31.1
    
    Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    38Exhibits 31.2
    
    Certification of Chief Financial
Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    39Exhibits 32.1
    
    Chief Executive Officer Certification Under Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    40Exhibits 32.2
    
    Chief Financial Officer Certification Under Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    41EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART IFINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
 September 30,
    
    
    June 30,2009
    
    
    2009(1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,666
    
    
    $
    17,545Restricted cash
    
    
    650
    
    
    
    650Short-term investments and marketable securities
    
    
    1,338
    
    
    
    8,175Receivables and secured loans, net  trading operations
    
    
    48,067
    
    
    
    46,214Accounts receivable and consignor advances, net  collectibles operations
    
    
    9,885
    
    
    
    7,006Inventory, net
    
    
    116,304
    
    
    
    115,654Prepaid expenses and other assets
    
    
    2,348
    
    
    
    2,028Total current assets
    
    
    202,258
    
    
    
    197,272Property and equipment, net
    
    
    2,467
    
    
    
    2,668Goodwill
    
    
    5,960
    
    
    
    5,960Other purchased intangibles, net
    
    
    8,117
    
    
    
    8,301Other assets
    
    
    262
    
    
    
    126Income tax receivables
    
    
    4,947
    
    
    
    3,424Deferred tax assets
    
    
    2,307
    
    
    
    398Total assets
    
    $
    226,318
    
    
    $
    218,149LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, customer deposits and consignor payables
    
    $
    36,928
    
    
    $
    20,788Liability on borrowed metals
    
    
    24,034
    
    
    
    15,100Accrued expenses and other current liabilities
    
    
    13,265
    
    
    
    22,970Accrued litigation settlement
    
    
    6,556
    
    
    
    6,556Income taxes payable
    
    
    6,361
    
    
    
    6,582Line of credit
    
    
    42,750
    
    
    
    52,750Deferred tax liability
    
    
    3,864
    
    
    
    1,920Other current liabilities
    
    
    164
    
    
    
    191Total current liabilities
    
    
    133,922
    
    
    
    126,857Deferred tax liability
    
    
    
    
    
    
    189Total liabilities
    
    
    133,922
    
    
    
    127,046Commitments, contingencies and subsequent eventsStockholders equity:Spectrum Group International, Inc. stockholders equity:Preferred stock, $.01 par value, authorized 10,000 shares; issued and outstanding: none
    
    
    
    
    
    
    Common stock, $.01 par value, authorized 40,000 shares; issued and outstanding: 28,481
and 28,309 at September 30, 2009 and June 30, 2009, respectively
    
    
    285
    
    
    
    283Additional paid-in capital
    
    
    233,685
    
    
    
    233,385Accumulated other comprehensive income
    
    
    9,729
    
    
    
    8,419Accumulated deficit
    
    
    (161,030
    )
    
    
    (161,298
    )Total Spectrum Group International, Inc. stockholders equity
    
    
    82,669
    
    
    
    80,789Noncontrolling interest
    
    
    9,727
    
    
    
    10,314Total stockholders equity
    
    
    92,396
    
    
    
    91,103Total liabilities and stockholders equity
    
    $
    226,318
    
    
    $
    218,149
 
 (1)
    
    The condensed consolidated balance sheet as of June 30, 2009 has been
derived from the audited consolidated financial statements included in the Companys 2009
Annual Report on Form 10-K.  3




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SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008Revenues:Sales of precious metals
    
    $
    930,472
    
    
    $
    1,006,993Collectibles revenues:Sales of inventory
    
    
    44,173
    
    
    
    34,133Auction commissions earned
    
    
    4,072
    
    
    
    3,926Total revenue
    
    
    978,717
    
    
    
    1,045,052Cost of sales:Cost of precious metals sold
    
    
    926,026
    
    
    
    999,607Cost of collectibles sold
    
    
    40,270
    
    
    
    32,620Total cost of sales
    
    
    966,296
    
    
    
    1,032,227Gross profit
    
    
    12,421
    
    
    
    12,825Operating expenses:General and administrative
    
    
    7,028
    
    
    
    6,180Salaries and wages
    
    
    6,116
    
    
    
    5,944Depreciation and amortization
    
    
    461
    
    
    
    437Total operating expenses
    
    
    13,605
    
    
    
    12,561Operating (loss) income
    
    
    (1,184
    )
    
    
    264Interest and other income (expense):Interest income
    
    
    1,393
    
    
    
    1,204Interest expense
    
    
    (369
    )
    
    
    (853
    )Other income (expense), net
    
    
    298
    
    
    
    703Unrealized (losses) gains on foreign exchange
    
    
    (1,017
    )
    
    
    2,332Total interest and other income (expense)
    
    
    305
    
    
    
    3,386(Loss) income before taxes on income
    
    
    (879
    )
    
    
    3,650(Benefit) taxes on income
    
    
    (1,560
    )
    
    
    568Net income
    
    
    681
    
    
    
    3,082Less: Net income attributable to the noncontrolling interests
    
    
    (413
    )
    
    
    (731
    )Net income attributable to Spectrum Group International, Inc.
    
    $
    268
    
    
    $
    2,351Earnings per share attributable to Spectrum Group International, Inc.Basic
    
    $
    0.01
    
    
    $
    0.08Diluted
    
    $
    0.01
    
    
    $
    0.08Weighted average shares outstandingBasic
    
    
    31,736
    
    
    
    29,034Diluted
    
    
    32,141
    
    
    
    29,464
  4




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SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(in thousands)
(unaudited)
 Total SpectrumAccumulated
    
    
    
    
    
    
    GroupCommon
    
    
    Common
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    International, Inc.
    
    
    
    
    
    
    TotalStock
    
    
    Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Stockholders
    
    
    Noncontrolling
    
    
    Stockholdersin shares
    
    
    in $
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    Equity
    
    
    Interests
    
    
    EquityBalance, June 30,
2009
    
    
    28,309
    
    
    $
    283
    
    
    $
    233,385
    
    
    $
    8,419
    
    
    $
    (161,298
    )
    
    $
    80,789
    
    
    $
    10,314
    
    
    $
    91,103Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    268
    
    
    
    413
    
    
    
    681Changes in
unrealized gain on
marketable
securities, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (183
    )Change in
cumulative foreign
currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,493
    
    
    
    
    
    
    
    1,493
    
    
    
    
    
    
    
    1,493Dividend paid to
noncontrolling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )
    
    
    (1,000
    )Taxes paid in
exchange for
cancellation of
restricted shares
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )Share based
compensation
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    317Issuance of common
stock for
restricted stock
grants
    
    
    172
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, September
30, 2009
    
    
    28,481
    
    
    $
    285
    
    
    $
    233,685
    
    
    $
    9,729
    
    
    $
    (161,030
    )
    
    $
    82,669
    
    
    $
    9,727
    
    
    $
    92,396
  5




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SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008Cash flows from operating activities:Net income
    
    $
    681
    
    
    $
    3,082Adjustments to reconcile net income to net cash provided by
operating activitiesDepreciation and amortization
    
    
    461
    
    
    
    437Provision for bad debts
    
    
    15
    
    
    
    30Provision for inventory reserve
    
    
    
    
    
    
    250Stock based compensation
    
    
    317
    
    
    
    136Provision (benefit) for deferred income taxes
    
    
    (154
    )
    
    
    (2
    )Gain on sale of marketable securities
    
    
    (106
    )
    
    
    Changes in assets and liabilities:Accounts receivable and consignor advances
    
    
    (2,894
    )
    
    
    (1,380
    )Receivables and secured loans
    
    
    (1,853
    )
    
    
    (12,068
    )Litigation settlement receivable
    
    
    
    
    
    
    5,500Inventory
    
    
    (650
    )
    
    
    13,770Prepaid expenses and other assets
    
    
    (456
    )
    
    
    1,966Accounts payable, accrued expenses and other liabilities
    
    
    6,401
    
    
    
    (3,602
    )Income taxes
    
    
    (1,744
    )
    
    
    2,267Accrued litigation settlement
    
    
    
    
    
    
    (6,000
    )Net cash provided by operating activities
    
    
    18
    
    
    
    4,386Cash flows from investing activities:Capital expenditures for property and equipment
    
    
    (83
    )
    
    
    (138
    )Sales (purchases) of marketable securities
    
    
    6,759
    
    
    
    (1,758
    )Net cash provided by (used in) investing activities
    
    
    6,676
    
    
    
    (1,896
    )Cash flows from financing activities:Borrowings under lines of credit, net
    
    
    (10,000
    )
    
    
    (11,847
    )Liability on borrowed metals
    
    
    8,934
    
    
    
    2,486Dividends paid to noncontrolling interest
    
    
    (1,000
    )
    
    
    Taxes paid on behalf of employees with respect to vesting of restricted shares
    
    
    
    
    
    
    (30
    )Net cash (used in) financing activities
    
    
    (2,066
    )
    
    
    (9,391
    )Effects of exchange rates on cash
    
    
    1,493
    
    
    
    (3,887
    )Net increase (decrease) in cash and cash equivalents
    
    
    6,121
    
    
    
    (10,788
    )Cash and cash equivalents, beginning of year
    
    
    17,545
    
    
    
    35,860Cash and cash equivalents, end of year
    
    $
    23,666
    
    
    $
    25,072Supplemental disclosures of cash flow information:Cash paid during the year for:Interest expense
    
    $
    333
    
    
    $
    620Income taxes
    
    $
    699
    
    
    $
    147
  6




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SPECTRUM GROUP INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT (UNAUDITED)
 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
  Unaudited Interim Financial Information
    Business Segments
 Trading
  7




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Collectibles
  European Operations
  Significant Accounting Policies
  Comprehensive Income (Loss)
   Three months ended
    
    
    Three months endedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Net income
    
    $
    681
    
    
    $
    3,082Other comprehensive income (loss), net of tax:Changes in unrealized gain (loss) on marketable securities, net of tax
    
    
    (183
    )
    
    
    16Foreign currency translation adjustment
    
    
    1,493
    
    
    
    (3,887
    )Other comprehensive income (loss)
    
    
    1,310
    
    
    
    (3,871
    )Less: Total comprehensive income attributable to noncontrolling interest
    
    
    (413
    )
    
    
    (731
    )Total comprehensive income (loss) attributable to Spectrum Group
International, Inc.
    
    $
    1,578
    
    
    $
    (1,520
    )
 Foreign Currency Translation
  8




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##### Table of Contents



Income Taxes
 .
    Earnings Per Share
    Three months ended
    
    Three months endedSeptember 30, 2009
    
    September 30, 2008(thousands of shares)
    
    (thousands of shares)Basic weighted average shares outstanding (1)
    
    
    31,736
    
    
    
    29,034Effect of common stock equivalents  stock
options and stock issuable under employee
compensation plans
    
    
    405
    
    
    
    430Diluted weighted average shares outstanding
    
    
    32,141
    
    
    
    29,464
 9




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##### Table of Contents



(1)
    
    Basic weighted average shares outstanding include the full effect of shares issuable
pursuant to the litigation settlement (Note 16) as of the date the settlement agreement was
executed and the effect of restricted stock that has vested and has not been issued (Note 13). Subsequent Events
  Recent Accounting Pronouncements
 Business Combinations:
  Non-Controlling Interests in Consolidated Financial Statements:
 Derivative Instruments and Hedging Activities:
 Transfers of Financial Assets:
 10




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Variable Interest Entities:
 FASB Accounting Standards Codification:
 Fair Value Measurements and Disclosures:
 2. CUSTOMER CONCENTRATIONS
  Three months ended
    
    
    Three months endedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)in
$s
    
    
    as a %
    
    
    in $s
    
    
    as a %Total Trading segment revenue
    
    $
    930,472
    
    
    
    100.0
    %
    
    $
    1,006,993
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    223,993
    
    
    
    24.1
    %
    
    $
    168,253
    
    
    
    16.7
    %Customer B
    
    
    130,582
    
    
    
    14.0
    
    
    
    122,803
    
    
    
    12.2Total
    
    $
    354,575
    
    
    
    38.1
    %
    
    $
    291,056
    
    
    
    28.9
    %
  September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %Trading segment accounts receivable
    
    $
    24,070
    
    
    
    100.0
    %
    
    $
    16,205
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    1,987
    
    
    
    8.2
    %
    
    $
    3,894
    
    
    
    24.0
    %Customer B
    
    
    378
    
    
    
    1.6
    
    
    
    2,535
    
    
    
    15.6Total
    
    $
    2,365
    
    
    
    9.8
    %
    
    $
    6,429
    
    
    
    39.6
    %
 11




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September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %Trading segment secured loans
    
    $
    15,818
    
    
    
    100.0
    %
    
    $
    17,727
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    2,869
    
    
    
    18.2
    %
    
    $
    3,043
    
    
    
    17.2
    %Customer B
    
    
    2,502
    
    
    
    15.8
    
    
    
    2,600
    
    
    
    14.7Customer C
    
    
    1,741
    
    
    
    11.0
    
    
    
    2,502
    
    
    
    14.1Total
    
    $
    7,112
    
    
    
    45.0
    %
    
    $
    8,145
    
    
    
    46.0
    %
   3. RECEIVABLES
  September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Customer trade receivables
    
    $
    4,304
    
    
    $
    9,138Wholesale trade advances
    
    
    8,150
    
    
    
    3,493Secured loans
    
    
    15,818
    
    
    
    17,727Due from brokers and other
    
    
    11,616
    
    
    
    3,574Subtotal
    
    
    39,888
    
    
    
    33,932Less: allowance for doubtful accounts
    
    
    (334
    )
    
    
    (319
    )Subtotal
    
    
    39,554
    
    
    
    33,613Derivative assets  futures contracts
    
    
    
    
    
    
    10,875Derivative assets  open purchase and sales commitments
    
    
    8,513
    
    
    
    Derivative assets  forward contracts
    
    
    
    
    
    
    1,726Receivables, net
    
    $
    48,067
    
    
    $
    46,214
      12




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September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auction and trade
    
    $
    10,403
    
    
    $
    7,555Less: allowance for doubtful accounts
    
    
    (518
    )
    
    
    (549
    )Accounts receivable from collectibles operations, net
    
    $
    9,885
    
    
    $
    7,006
   Balance, June 30, 2009
    
    $
    868Provision for loss
    
    
    15Charge off to reserve
    
    
    (87
    )Foreign currency exchange rate charges
    
    
    56Balance, September 30, 2009
    
    $
    852
 4. INVENTORIES
    13




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September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trading segment inventory
    
    $
    89,644
    
    
    $
    92,043Less: provision for loss
    
    
    (104
    )
    
    
    (104
    )Trading, net
    
    $
    89,540
    
    
    $
    91,939Collectibles segment inventory
    
    $
    29,680
    
    
    $
    26,719Less: provision for loss
    
    
    (2,916
    )
    
    
    (3,004
    )Collectibles, net
    
    $
    26,764
    
    
    $
    23,715Total inventory, gross
    
    $
    119,324
    
    
    $
    118,762Less: provision for loss
    
    
    (3,020
    )
    
    
    (3,108
    )Net inventory
    
    $
    116,304
    
    
    $
    115,654
  Balance, June 30, 2009
    
    $
    (3,108
    )Provision for loss
    
    
    Charge off to reserve
    
    
    110Foreign currency exchange rate changes
    
    
    (22
    )Balance, September 30, 2009
    
    $
    (3,020
    )
 5. OTHER PURCHASED INTANGIBLE ASSETS
  Three months ended September 30, 2009
    
    
    Year Ended June 30, 2009Estimated
    
    
    (in thousands)
    
    
    (in thousands)Useful Lives
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Net Book
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Net Book(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Impairment
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    Impairment
    
    
    ValueTrademarks
    
    Indefinite
    
    $
    2,536
    
    
    $
    
    
    
    $
    
    
    
    $
    2,536
    
    
    $
    2,616
    
    
    $
    
    
    
    $
    (80
    )
    
    $
    2,536Customer lists
    
    
    5 - 15
    
    
    
    9,161
    
    
    
    (3,661
    )
    
    
    
    
    
    
    5,500
    
    
    
    9,161
    
    
    
    (3,500
    )
    
    
    
    
    
    
    5,661Non-compete and other
    
    
    4
    
    
    
    2,242
    
    
    
    (2,161
    )
    
    
    
    
    
    
    81
    
    
    
    2,302
    
    
    
    (2,198
    )
    
    
    
    
    
    
    104$
    13,939
    
    
    $
    (5,822
    )
    
    $
    
    
    
    $
    8,117
    
    
    $
    14,079
    
    
    $
    (5,698
    )
    
    $
    (80
    )
    
    $
    8,301
  14




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Years ending June 30:
    
    (in thousands)2010 (remaining 9 months)
    
    $
    5652011
    
    
    6462012
    
    
    5752013
    
    
    5162014
    
    
    498Thereafter
    
    
    2,781Total
    
    $
    5,581
 6. ACCOUNTS PAYABLE, CUSTOMER DEPOSITS AND CONSIGNOR PAYABLES
  September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trade payable to customers and other accounts payable
    
    $
    5,059
    
    
    $
    5,909Advances from customers
    
    
    16,666
    
    
    
    5,834Net liability on margin accounts
    
    
    7,314
    
    
    
    3,041Due to brokers
    
    
    
    
    
    
    648Derivative liabilities  futures contracts
    
    
    7,794
    
    
    
    Derivative liabilities  open purchase and sales commitments
    
    
    
    
    
    
    5,356Derivative liabilities  forward contracts
    
    
    95
    
    
    
    $
    36,928
    
    
    $
    20,788
 7. INCOME TAXES
  Three months ended
    
    
    Three months endedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Current:Federal
    
    $
    (1,481
    )
    
    $
    334State
    
    
    17
    
    
    
    157Foreign
    
    
    58
    
    
    
    79Total current tax expense (benefit)
    
    
    (1,406
    )
    
    
    570Deferred:Federal
    
    
    35
    
    
    
    (11
    )State
    
    
    10
    
    
    
    8Foreign
    
    
    (199
    )
    
    
    1Total deferred tax expense (benefit)
    
    
    (154
    )
    
    
    (2
    )Income tax expense (benefit)
    
    $
    (1,560
    )
    
    $
    568
  15




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Three months ended
    
    
    Three months endedSeptember 30, 2009
    
    
    September 30, 2008U.S.
    
    $
    (1,386
    )
    
    $
    4,486Foreign
    
    
    507
    
    
    
    (836
    )Income / (loss) before income taxes and noncontrolling interests
    
    $
    (879
    )
    
    $
    3,650
    UTBs
    
    
    FIN 48 PayableBalance as of June 30, 2009
    
    $
    26,587
    
    
    $
    2,475Increase as a result of tax positions taken during the current period
    
    
    42
    
    
    
    42Increase as a result of additional interest and penalties during the current period
    
    
    
    
    
    
    30Balance as of September 30, 2009
    
    $
    26,629
    
    
    $
    2,547
  8. FINANCING AGREEMENTS
   16




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9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
       17




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September 30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trading Inventory, net
    
    $
    89,540
    
    
    $
    91,939Less unhedgable inventory:Commemorative coins
    
    
    (3,242
    )
    
    
    (3,620
    )Premium on metals position
    
    
    (1,160
    )
    
    
    (1,477
    )Subtotal
    
    
    85,138
    
    
    
    86,842Commitments at market:Open inventory purchase commitments
    
    
    192,531
    
    
    
    132,932Open inventory sale commitments
    
    
    (81,212
    )
    
    
    (38,370
    )Margin sale commitments
    
    
    (13,719
    )
    
    
    (7,358
    )Inventory borrowed from suppliers
    
    
    (24,035
    )
    
    
    (15,100
    )Advances on industrial metals
    
    
    396
    
    
    
    700Inventory subject to price risk
    
    
    159,099
    
    
    
    159,646Inventory subject to derivative financial instruments:Precious metals forward contracts at market values
    
    
    45,050
    
    
    
    27,731Precious metals futures contracts at market values
    
    
    113,527
    
    
    
    132,651Total market value of derivative financial instruments
    
    
    158,577
    
    
    
    160,382Net inventory subject to price risk
    
    $
    522
    
    
    $
    (736
    )
    10. NONCONTROLLING INTERESTS
  18




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September  30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    8,466
    
    
    $
    9,167Winter Games Bullion Ventures, LLC. 50% outside interest
    
    
    1,261
    
    
    
    1,147Total
    
    $
    9,727
    
    
    $
    10,314
  Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    299
    
    
    $
    536Winter Games Bullion Ventures, LLC. 50% interest
    
    
    114
    
    
    
    195Total
    
    $
    413
    
    
    $
    731
  September  30, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Cash
    
    $
    118
    
    
    $
    154Receivables
    
    
    344
    
    
    
    21Inventories
    
    
    3,346
    
    
    
    3,516Prepaid expenses
    
    
    40
    
    
    
    Total Assets
    
    $
    3,848
    
    
    $
    3,691Accounts payable and other liabilities
    
    $
    1,326
    
    
    $
    1,397Members equity
    
    
    2,522
    
    
    
    2,294Total liabilities and members equity
    
    $
    3,848
    
    
    $
    3,691
  Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Sales
    
    $
    10,606
    
    
    $
    3,491Cost of products sold
    
    
    10,237
    
    
    
    3,002Gross profit
    
    
    369
    
    
    
    489Operating and other expenses
    
    
    142
    
    
    
    100Net income
    
    $
    227
    
    
    $
    389
 11. COMMITMENTS AND CONTINGENCIES
   19




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12. LITIGATION
  13. STOCKHOLDERS EQUITY
 Stock Option Plan
   Employee Stock Options.
  WeightedAverageWeighted
    
    
    
    
    
    
    per shareAverage
    
    
    Intrinsic Value
    
    
    Grant DateOptions
    
    
    Exercise Price
    
    
    (in thousands)
    
    
    Fair ValueOutstanding at June 30, 2009
    
    
    604,325
    
    
    
    6.09
    
    
    $
    104
    
    
    
    4.63Granted through stock option plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2009
    
    
    604,325
    
    
    
    6.09
    
    
    $
    104
    
    
    
    4.63Shares exercisable at September 30, 2009
    
    
    604,325
    
    
    
    6.09
    
    
    $
    104
    
    
    
    4.63
 20




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    WeightedExercise Price
    
    
    Number of
    
    
    Average
    
    
    Average
    
    
    Number of
    
    
    AverageRanges
    
    
    Shares
    
    
    Remaining
    
    
    Exercise
    
    
    Shares
    
    
    ExerciseFrom
    
    
    To
    
    
    Outstanding
    
    
    Contractual Life
    
    
    Price
    
    
    Exercisable
    
    
    Price$
    1.00
    
    
    $
    5.00
    
    
    
    391,250
    
    
    
    3.6
    
    
    $
    2.29
    
    
    
    391,250
    
    
    $
    2.295.01
    
    
    
    10.00
    
    
    
    26,200
    
    
    
    4.2
    
    
    
    8.96
    
    
    
    26,200
    
    
    
    8.9610.01
    
    
    
    15.00
    
    
    
    186,875
    
    
    
    4.6
    
    
    
    13.65
    
    
    
    186,875
    
    
    
    13.65604,325
    
    
    
    4.8
    
    
    
    6.09
    
    
    
    604,325
    
    
    
    6.09
   WeightedAverage shareShares
    
    
    price at grant dateOutstanding at June 30, 2009
    
    
    676,682
    
    
    $
    2.54Shares granted
    
    
    20,000
    
    
    
    2.25Shares issued
    
    
    (171,872
    )
    
    
    2.55Shares forfeited
    
    
    
    
    
    
    Shares withheld for employee taxes
    
    
    (7,290
    )
    
    
    2.05Outstanding at September 30, 2009
    
    
    517,520
    
    
    
    2.53Vested but unissued at September 30, 2009
    
    
    282,520
 Stock Appreciation Rights.
 Certain Anti-Takeover Provisions
  21




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14. SEGMENT AND GEOGRAPHIC INFORMATION
   Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Revenue:Trading
    
    $
    930,472
    
    
    $
    1,006,993Collectibles:Coins
    
    
    42,944
    
    
    
    31,437Stamps
    
    
    4,964
    
    
    
    6,251Others
    
    
    337
    
    
    
    371Total Collectibles
    
    
    48,245
    
    
    
    38,059Total revenue
    
    $
    978,717
    
    
    $
    1,045,052
 Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Revenue by Geographic Region:United States
    
    $
    976,558
    
    
    $
    1,044,639Asia Pacific
    
    
    350
    
    
    
    3Europe
    
    
    1,809
    
    
    
    410Total revenue
    
    $
    978,717
    
    
    $
    1,045,052
 Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Operating income (loss):Trading
    
    $
    1,908
    
    
    $
    4,284Collectibles
    
    
    (600
    )
    
    
    (2,914
    )Corporate expenses
    
    
    (2,492
    )
    
    
    (1,106
    )Operating income (loss)
    
    $
    (1,184
    )
    
    $
    264
 Three Months Ended
    
    
    Three Months EndedSeptember 30, 2009
    
    
    September 30, 2008(in thousands)
    
    
    (in thousands)Depreciation and amortization:TradingDepreciation and amortization
    
    $
    178
    
    
    $
    248CollectiblesDepreciation and amortization
    
    
    283
    
    
    
    189Depreciation and amortization
    
    $
    461
    
    
    $
    437
 22




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September 30,
    
    
    June 30,2009
    
    
    2009Inventories by segment/geographic region:
    
    (in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    89,540
    
    
    $
    91,939Collectibles:United States
    
    
    24,856
    
    
    
    22,256Europe
    
    
    1,762
    
    
    
    1,277Asia
    
    
    146
    
    
    
    182Total Collectibles
    
    
    26,764
    
    
    
    23,715Total inventories
    
    $
    116,304
    
    
    $
    115,654
 September 30,
    
    
    June 30,2009
    
    
    2009Total assets by segment/geographic region:
    
    (in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    150,402
    
    
    $
    151,986Collectibles:United States
    
    
    41,940
    
    
    
    38,485Europe
    
    
    19,468
    
    
    
    19,791Asia
    
    
    1,649
    
    
    
    1,398Total Collectibles
    
    
    63,057
    
    
    
    59,674Corporate and other
    
    
    12,859
    
    
    
    6,489Total assets of continuing operations
    
    $
    226,318
    
    
    $
    218,149
 September 30,
    
    
    June 30,2009
    
    
    2009Total long term assets by segment/geographic region:
    
    (in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    10,334
    
    
    $
    10,451Collectibles:United States
    
    
    4,469
    
    
    
    4,733Europe
    
    
    756
    
    
    
    638Asia
    
    
    150
    
    
    
    152Total Collectibles
    
    
    5,375
    
    
    
    5,523Corporate and other
    
    
    6,044
    
    
    
    4,505Total long term assets of continuing operations
    
    $
    21,753
    
    
    $
    20,479
 15. FAIR VALUE MEASUREMENTS
   
    
    Defines fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date, and establishes a framework for measuring fair value;
    
    Establishes a three-level hierarchy for fair value measurements based upon the
transparency of inputs to the valuation of an asset or liability as of the measurement
date;
    
    Nullifies the guidance in Emerging Issues Task Force Issue 02-3, Issues Involved in
Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in
Energy Trading and Risk Management Activities, which required the
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deferral of profit at inception of a transaction involving a derivative financial instrument
in the absence of observable data supporting the valuation technique;
    
    Eliminates large position discounts for financial instruments quoted in active markets
and requires consideration of the Companys creditworthiness when valuing liabilities; and
    
    Expands disclosures about instruments measured at fair value.
 Valuation Hierarchy
  
    
    Level 1  inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2  inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3  inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
  Assets and Liabilities Measured at Fair Value on a Recurring Basis
 September 30, 2009(in thousands)Quoted Price inActive Markets forIdentical
    
    
    Significant Other
    
    
    SignificantInstruments
    
    
    Observable Inputs
    
    
    Unobservable(Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    Total BalanceAssets:Commodities
    
    $
    86,299
    
    
    $
    
    
    
    $
    
    
    
    $
    86,299Derivative assets  open sales and
purchase commitments
    
    
    
    
    
    
    8,513
    
    
    
    
    
    
    
    8,513Total assets valued at fair value:
    
    $
    86,299
    
    
    $
    8,513
    
    
    $
    
    
    
    $
    94,812Liabilities:Liability on borrowed metals
    
    $
    (24,035
    )
    
    $
    
    
    
    $
    
    
    
    $
    (24,035
    )Liability on margin accounts
    
    
    (7,314
    )
    
    
    
    
    
    
    
    
    
    
    (7,314
    )Derivative liabilities  futures contracts
    
    
    
    
    
    
    (7,794
    )
    
    
    
    
    
    
    (7,794
    )Derivative liabilities  forward contracts
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    (95
    )Total liabilities valued at fair value:
    
    $
    (31,349
    )
    
    $
    (7,889
    )
    
    $
    
    
    
    $
    (39,238
    )
  Marketable Securities
  Commodities
  24




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Derivatives
  Margin Liability
   16. SUBSEQUENT EVENT
  25




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD LOOKING STATEMENTS
   INTRODUCTION
  
    
    Overview.This section provides a general description of our business, as well as
recent significant transactions and events that we believe are important in understanding
the results of operations, as well as to anticipate future trends in those operations.
    
    Results of operations.This section provides an analysis of our results of operations
presented in the accompanying consolidated statements of operations by comparing the
results for the three months ended September 30, 2009 and 2008.
    
    Financial condition and liquidity and capital resources.This section provides an
analysis of our cash flows, as well as a discussion of our outstanding debt that existed as
of September 30, 2009. Included in the discussion of outstanding debt is a discussion of
the amount of financial capacity available to fund our future commitments, as well as a
discussion of other financing arrangements.
    
    Critical accounting estimates.This section discusses those accounting policies that
both are considered important to our financial condition and results, and require
significant judgment and estimates on the part of management in their application. In
addition, all of our significant accounting policies, including critical accounting
policies, are summarized in Note 1 to the accompanying consolidated financial statements.
    
    Recent accounting pronouncements.This section discusses new accounting pronouncements,
dates of implementation and impact on our accompanying consolidated financial statements,
if any.
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Overview
 Business
  Trading
   Collectibles
  RESULTS OF OPERATIONS
 Overview of Results of Operations for the Three Months Ended September 30, 2009 and 2008
 Condensed Consolidated Results of Operations
  % of
    
    
    
    
    
    
    % of
    
    
    Increase/
    
    
    % of Increase/2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Revenue
    
    $
    978,717
    
    
    
    100.0
    %
    
    $
    1,045,052
    
    
    
    100.0
    %
    
    $
    (66,335
    )
    
    
    (6.3
    )%Gross profit
    
    
    12,421
    
    
    
    1.3
    
    
    
    12,825
    
    
    
    1.2
    
    
    
    (404
    )
    
    
    (3.2
    )General and administrative expenses
    
    
    7,028
    
    
    
    0.7
    
    
    
    6,180
    
    
    
    0.6
    
    
    
    848
    
    
    
    13.7Salaries and wages
    
    
    6,116
    
    
    
    0.7
    
    
    
    5,944
    
    
    
    0.6
    
    
    
    172
    
    
    
    2.9Depreciation and amortization
    
    
    461
    
    
    
    0.0
    
    
    
    437
    
    
    
    0.0
    
    
    
    24
    
    
    
    5.5Operating income (loss)
    
    
    (1,184
    )
    
    
    (0.1
    )
    
    
    264
    
    
    
    0.0
    
    
    
    (1,448
    )
    
    
    (548.5
    )Interest income
    
    
    1,393
    
    
    
    0.1
    
    
    
    1,204
    
    
    
    0.1
    
    
    
    189
    
    
    
    15.7Interest expense
    
    
    (369
    )
    
    
    (0.0
    )
    
    
    (853
    )
    
    
    (0.1
    )
    
    
    484
    
    
    
    (56.7
    )Other income (expense), net
    
    
    298
    
    
    
    0.0
    
    
    
    703
    
    
    
    0.1
    
    
    
    (405
    )
    
    
    (57.6
    )Unrealized gains(loss) on foreign exchange
    
    
    (1,017
    )
    
    
    (0.1
    )
    
    
    2,332
    
    
    
    0.2
    
    
    
    (3,349
    )
    
    
    143.6Income (loss) before income taxes
    
    
    (879
    )
    
    
    (0.1
    )
    
    
    3,650
    
    
    
    0.3
    
    
    
    (4,529
    )
    
    
    (124.1
    )Income taxes (benefit)
    
    
    (1,560
    )
    
    
    (0.2
    )
    
    
    568
    
    
    
    0.0
    
    
    
    (2,128
    )
    
    
    (374.6
    )Net income
    
    
    681
    
    
    
    0.1
    
    
    
    3,082
    
    
    
    0.3
    
    
    
    (2,401
    )
    
    
    (77.9
    )Less: Net profit attributable to the
noncontrolling interest
    
    
    (413
    )
    
    
    0.0
    
    
    
    (731
    )
    
    
    (0.1
    )
    
    
    318
    
    
    
    (43.5
    )Net income attributable to Spectrum Group
International, Inc.
    
    $
    268
    
    
    
    0.0
    %
    
    $
    2,351
    
    
    
    0.2
    %
    
    $
    (2,083
    )
    
    
    (88.6
    )%
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% of
    
    
    
    
    
    
    % of
    
    
    Increase/
    
    
    % of Increase/2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Earnings per share attributable to
Spectrum Group International, Inc.Basic
    
    $
    0.01
    
    
    
    
    
    
    $
    0.08
    
    
    
    
    
    
    $
    (0.07
    )
    
    
    (87.5
    )%Diluted
    
    $
    0.01
    
    
    
    
    
    
    $
    0.08
    
    
    
    
    
    
    $
    (0.07
    )
    
    
    (87.5
    )%Weighted average shares outstandingBasic
    
    
    31,736
    
    
    
    
    
    
    
    29,034Diluted
    
    
    32,141
    
    
    
    
    
    
    
    29,464
 Revenues and Gross Profit:
     Operating Expenses
    Interest Income
  28




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##### Table of Contents



Interest Expense
  Other Income
  Provision for Income Taxes
  Noncontrolling Interests
  Net Income
  Earnings per Share
  Trading Operations
  % of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Trading revenues
    
    $
    930,472
    
    
    
    100.0
    %
    
    $
    1,006,993
    
    
    
    100.0
    %
    
    $
    (76,521
    )
    
    
    (7.6
    )%Gross profit
    
    
    4,446
    
    
    
    0.5
    
    
    
    7,386
    
    
    
    0.7
    
    
    
    (2,940
    )
    
    
    (39.8
    )General and administrative expenses
    
    
    670
    
    
    
    0.1
    
    
    
    589
    
    
    
    0.1
    
    
    
    81
    
    
    
    13.8Salaries and wages
    
    
    1,690
    
    
    
    0.2
    
    
    
    2,265
    
    
    
    0.2
    
    
    
    (575
    )
    
    
    (25.4
    )Depreciation and amortization
    
    
    178
    
    
    
    0.0
    
    
    
    248
    
    
    
    0.0
    
    
    
    (70
    )
    
    
    (28.2
    )Operating income (loss)
    
    $
    1,908
    
    
    
    0.2
    %
    
    $
    4,284
    
    
    
    0.4
    %
    
    $
    (2,376
    )
    
    
    (55.5
    )%
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##### Table of Contents



Trading revenues
  Gross profit
  General and administrative expenses
  Salaries and wages
  Depreciation and amortization
  Collectibles Operations
  For the three months ended September 30,2009
    
    
    2008
    
    
$
    
    
%(thousands of dollars)
    
    $
    
    
    % to total
    
    
    $
    
    
    % to total
    
    

Increase/(decrease)
    
    

Increase/(decrease)Collectibles Revenues
    
    $
    48,245
    
    
    
    100.0
    %
    
    $
    38,059
    
    
    
    100
    %
    
    $
    10,186
    
    
    
    26.8
    %Revenues by Collectible Type:Philatelic
    
    $
    4,964
    
    
    
    10.3
    %
    
    $
    6,251
    
    
    
    16.4
    %
    
    $
    (1,287
    )
    
    
    (20.6
    )%Numismatics
    
    
    42,944
    
    
    
    89.0
    
    
    
    31,437
    
    
    
    82.6
    
    
    
    11,507
    
    
    
    36.6Militaria, art and other
    
    
    337
    
    
    
    0.7
    
    
    
    371
    
    
    
    1.0
    
    
    
    (34
    )
    
    
    (9.2
    )$
    48,245
    
    
    
    100.0
    %
    
    $
    38,059
    
    
    
    100
    %
    
    $
    10,186
    
    
    
    26.8
    %
 Collectibles revenue
  30




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##### Table of Contents



% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    % of(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Collectibles revenue
    
    $
    48,245
    
    
    
    100.0
    %
    
    $
    38,059
    
    
    
    100.0
    %
    
    $
    10,186
    
    
    
    26.8
    %Gross profit
    
    
    7,975
    
    
    
    16.5
    
    
    
    5,439
    
    
    
    14.3
    
    
    
    2,536
    
    
    
    46.6Selling, general and administrative expenses
    
    
    4,714
    
    
    
    9.8
    
    
    
    4,968
    
    
    
    13.1
    
    
    
    (254
    )
    
    
    (5.1
    )Salaries and wages
    
    
    3,582
    
    
    
    7.3
    
    
    
    3,197
    
    
    
    8.4
    
    
    
    385
    
    
    
    12.0Impairment of goodwill and intangible assets
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0Depreciation and amortization
    
    
    279
    
    
    
    0.6
    
    
    
    188
    
    
    
    0.5
    
    
    
    91
    
    
    
    48.4Operating income (loss)
    
    $
    (600
    )
    
    
    (1.2
    )%
    
    $
    (2,914
    )
    
    
    (7.7
    )%
    
    $
    2,314
    
    
    
    (79.4
    )%
 Gross Profit
  General and administrative expense
  Salaries and wages
  Depreciation and amortization
  31




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##### Table of Contents



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
  (thousands of dollars)
    
    2009
    
    2008Cash provided by (used in) operating activities
    
    $
    18
    
    
    $
    4,386Cash provided by (used in) investing activities
    
    
    6,676
    
    
    
    (1,896
    )Cash (used in) financing activities
    
    
    (2,066
    )
    
    
    (9,391
    )
        32




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##### Table of Contents



Contractual Obligations, Contingent Liabilities, and Commitments
  Payment due by period2 to 3
    
    
    3 to 4
    
    
    4 to 5
    
    
    5 years and(thousands of dollars)
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    years
    
    
    thereafterBorrowings under line of credit
    
    $
    42,750
    
    
    $
    42,750
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    3,143
    
    
    
    1,091
    
    
    
    1,239
    
    
    
    532
    
    
    
    281
    
    
    
    Total
    
    $
    45,893
    
    
    $
    43,841
    
    
    $
    1,239
    
    
    $
    532
    
    
    $
    281
    
    
    $
    
   33




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##### Table of Contents



CRITICAL ACCOUNTING ESTIMATES
  34




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
     35




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##### Table of Contents



PART IIOTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 In re Escala Group, Inc. Securities
Litigation
 ITEM
3. DEFAULTS UPON SENIOR SECURITIES
  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION.
 
 ITEM 6. EXHIBITS.
 Exhibit 31.1
    
    Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley
Act of 2002Exhibit 31.2
    
    Certification of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley
Act of 2002Exhibit 32.1
    
    Chief Executive Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002Exhibit 32.2
    
    Chief Financial Officer Certification Under Section 906 of the Sarbanes-Oxley
Act of 2002
 36




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##### Table of Contents



SIGNATURES
  Date: November 13, 2009
    SPECTRUM GROUP INTERNATIONAL, INC.By:
    /s/ Gregory N. RobertsName:
    Gregory N. RobertsTitle:
    President and Chief Executive Officer  Signatures
    
    Title(s)
    
    Date/s/ Antonio Arenas

Antonio Arenas
    
    Chairman of the Board and Executive Chairman
    
    November 13, 2009/s/ Gregory N. Roberts

Gregory N. Roberts
    
    President, Chief Executive Officer and Director(Principal
Executive Officer)
    
    November 13, 2009/s/ Thor Gjerdrum

Thor Gjerdrum
    
    Chief Financial Officer and Executive Vice President
(Principal Financial Officer)
    
    November 13, 2009/s/ Jeffrey D. Benjamin

Jeffrey D. Benjamin
    
    Director
    
    November 13, 2009/s/ James M. Davin

James M. Davin
    
    Director
    
    November 13, 2009/s/ John Moorhead

John Moorhead
    
    Director
    
    November 13, 2009/s/ George Lumby

George Lumby
    
    Director
    
    November 13, 2009/s/ Christopher W. Nolan, Sr.

Christopher W. Nolan, Sr.
    
    Director
    
    November 13, 2009
 37