##### 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 December 31, 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 GROUP INTERNATIONAL, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    22-2365834(State of Incorporation)
    
    (IRS Employer I.D. No.)
 (Address of Principal Executive Offices) (Zip Code)
 
 o þ
 o þ
  Large
accelerated filer oAccelerated Filer oNon-accelerated filer o(Do not check if smaller reporting company)Smaller reporting company þ o þ




---



##### 



SPECTRUM GROUPS INTERNATIONAL, INC.
FORM 10-Q
For the Quarter Ended December 31, 2009
 Table of Contents
 PagePart I.
    
    Financial InformationItem 1.
    
    Condensed Consolidated Financial Statements (UNAUDITED):Condensed Consolidated Balance Sheets as of December 31, 2009 and June 30, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2009 and 2008
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Six Months Ended December 31, 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months ended December 31, 2009 and 2008
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    39Part II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    40Item 1A.
    
    Risk Factors
    
    
    41Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 3.
    
    Defaults Upon Senior Securities
    
    
    41Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    41Item 5.
    
    Other Information
    
    
    42Item 6.
    
    Exhibits
    
    
    42Signature
    
    
    
    
    43ExhibitsExhibits 31.1
    
    Certification of Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    44Exhibits 31.2
    
    Certification of Chief Financial Officer Under Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    45Exhibits 32.1
    
    Certification of Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    46Exhibits 32.2
    
    Certification of Chief Financial Officer Under Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    47EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 
 SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
 December 31,
    
    
    June 30,2009
    
    
    2009(1)(Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    16,934
    
    
    $
    17,545Restricted cash
    
    
    
    
    
    
    650Short-term investments and marketable securities
    
    
    5,375
    
    
    
    8,175Receivables and secured loans, net  trading operations
    
    
    47,990
    
    
    
    46,214Accounts receivable and consignor advances, net  collectibles operations
    
    
    7,125
    
    
    
    7,006Inventory, net
    
    
    129,178
    
    
    
    115,654Prepaid expenses and other assets
    
    
    2,305
    
    
    
    2,028Total current assets
    
    
    208,907
    
    
    
    197,272Property and equipment, net
    
    
    2,505
    
    
    
    2,668Goodwill
    
    
    6,208
    
    
    
    5,960Other purchased intangibles, net
    
    
    8,033
    
    
    
    8,301Other assets
    
    
    297
    
    
    
    126Income tax receivables
    
    
    6,584
    
    
    
    3,424Deferred tax assets
    
    
    125
    
    
    
    398Total assets
    
    $
    232,659
    
    
    $
    218,149LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable, customer deposits and consignor payables
    
    $
    30,690
    
    
    $
    20,788Liability on borrowed metals
    
    
    32,712
    
    
    
    15,100Accrued expenses and other current liabilities
    
    
    10,784
    
    
    
    22,970Accrued litigation settlement
    
    
    
    
    
    
    6,556Income taxes payable
    
    
    6,691
    
    
    
    6,582Line of credit
    
    
    48,350
    
    
    
    52,750Deferred tax liability
    
    
    181
    
    
    
    1,920Other current liabilities
    
    
    109
    
    
    
    191Total current liabilities
    
    
    129,517
    
    
    
    126,857Deferred tax liability
    
    
    2,018
    
    
    
    189Total liabilities
    
    
    131,535
    
    
    
    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: 31,893
and 28,309 at December 31, 2009 and June 30, 2009, respectively
    
    
    319
    
    
    
    283Additional paid-in capital
    
    
    240,549
    
    
    
    233,385Accumulated other comprehensive income
    
    
    9,063
    
    
    
    8,419Accumulated deficit
    
    
    (159,016
    )
    
    
    (161,298
    )Total Spectrum Group International, Inc. stockholders equity
    
    
    90,915
    
    
    
    80,789Noncontrolling interest
    
    
    10,209
    
    
    
    10,314Total stockholders equity
    
    
    101,124
    
    
    
    91,103Total liabilities and stockholders equity
    
    $
    232,659
    
    
    $
    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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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    

December 31, 2009
    
    
    December 31, 2008Revenues:Sales of precious metals
    
    $
    1,664,296
    
    
    $
    973,251
    
    
    $
    2,593,176
    
    
    $
    1,979,189Collectibles revenues:Sales of inventory
    
    
    37,445
    
    
    
    30,326
    
    
    
    79,919
    
    
    
    64,459Auction commissions earned
    
    
    5,763
    
    
    
    5,555
    
    
    
    10,847
    
    
    
    9,093Total revenue
    
    
    1,707,504
    
    
    
    1,009,132
    
    
    
    2,683,942
    
    
    
    2,052,741Cost of sales:Cost of precious metals sold
    
    
    1,658,153
    
    
    
    957,868
    
    
    
    2,582,713
    
    
    
    1,956,420Cost of collectibles sold
    
    
    34,413
    
    
    
    27,973
    
    
    
    73,779
    
    
    
    60,485Total cost of sales
    
    
    1,692,566
    
    
    
    985,841
    
    
    
    2,656,492
    
    
    
    2,016,905Gross profit
    
    
    14,938
    
    
    
    23,291
    
    
    
    27,450
    
    
    
    35,836Operating expenses:General and administrative
    
    
    5,597
    
    
    
    7,454
    
    
    
    12,956
    
    
    
    13,354Salaries and wages
    
    
    7,931
    
    
    
    10,117
    
    
    
    14,047
    
    
    
    16,061Depreciation and amortization
    
    
    409
    
    
    
    454
    
    
    
    870
    
    
    
    891Total operating expenses
    
    
    13,937
    
    
    
    18,025
    
    
    
    27,873
    
    
    
    30,306Operating income (loss)
    
    
    1,001
    
    
    
    5,266
    
    
    
    (423
    )
    
    
    5,530Interest and other income (expense):Interest income
    
    
    1,476
    
    
    
    1,115
    
    
    
    2,869
    
    
    
    2,319Interest expense
    
    
    (431
    )
    
    
    (607
    )
    
    
    (800
    )
    
    
    (1,460
    )Other income (expense), net
    
    
    (458
    )
    
    
    31
    
    
    
    80
    
    
    
    734Unrealized (losses) gains on foreign exchange
    
    
    484
    
    
    
    639
    
    
    
    (533
    )
    
    
    2,971Total interest and other income
    
    
    1,071
    
    
    
    1,178
    
    
    
    1,616
    
    
    
    4,564Income before income taxes
    
    
    2,072
    
    
    
    6,444
    
    
    
    1,193
    
    
    
    10,094Income tax provision (benefit)
    
    
    (424
    )
    
    
    1,243
    
    
    
    (1,984
    )
    
    
    1,811Net income
    
    
    2,496
    
    
    
    5,201
    
    
    
    3,177
    
    
    
    8,283Less: Net income attributable to the
noncontrolling interests
    
    
    (482
    )
    
    
    (1,325
    )
    
    
    (895
    )
    
    
    (2,056
    )Net income attributable to Spectrum
Group International, Inc.
    
    $
    2,014
    
    
    $
    3,876
    
    
    $
    2,282
    
    
    $
    6,227Earnings per share attributable to
Spectrum Group International, Inc.Basic
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.21Diluted
    
    $
    0.06
    
    
    $
    0.12
    
    
    $
    0.07
    
    
    $
    0.20Weighted average shares outstandingBasic
    
    
    31,985
    
    
    
    31,617
    
    
    
    31,851
    
    
    
    30,324Diluted
    
    
    32,953
    
    
    
    32,318
    
    
    
    32,819
    
    
    
    31,036
  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.Stock
    
    
    Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Stockholders
    
    
    Noncontrolling
    
    
    Total Stockholdersin shares
    
    
    in $
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    Equity
    
    
    Interest
    
    
    EquityBalance, June 30,
2009
    
    
    28,309
    
    
    $
    283
    
    
    $
    233,385
    
    
    $
    8,419
    
    
    $
    (161,298
    )
    
    $
    80,789
    
    
    $
    10,314
    
    
    $
    91,103Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,282
    
    
    
    2,282
    
    
    
    895
    
    
    
    3,177Changes in
unrealized gain on
marketable
securities, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (183
    )Change in
cumulative foreign
currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    827
    
    
    
    
    
    
    
    827
    
    
    
    
    
    
    
    827Dividend paid to
noncontrolling
interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )
    
    
    (1,000
    )Issuance of common
stock for vested
restricted stock
grants
    
    
    306
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Taxes paid in
exchange for
cancellation of
restricted shares
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    (110
    )Share based
compensation
    
    
    
    
    
    
    
    
    
    
    754
    
    
    
    
    
    
    
    
    
    
    
    754
    
    
    
    
    
    
    
    754Issuance of common
stock for legal
settlement
    
    
    3,278
    
    
    
    33
    
    
    
    6,523
    
    
    
    
    
    
    
    
    
    
    
    6,556
    
    
    
    
    
    
    
    6,556Balance, December
31, 2009
    
    
    31,893
    
    
    $
    319
    
    
    $
    240,549
    
    
    $
    9,063
    
    
    $
    (159,016
    )
    
    $
    90,915
    
    
    $
    10,209
    
    
    $
    101,124
  5




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008Cash flows from operating activities:Net income
    
    $
    3,177
    
    
    $
    8,283Adjustments to reconcile net income to net cash (used in) provided by
operating activitiesDepreciation and amortization
    
    
    870
    
    
    
    891Provision for bad debts
    
    
    328
    
    
    
    15Provision for inventory reserves
    
    
    263
    
    
    
    730Stock based compensation
    
    
    754
    
    
    
    435Provision for deferred income taxes
    
    
    362
    
    
    
    53Gain on sale of marketable securities
    
    
    (106
    )
    
    
    Loss on abandonment of property and equipment
    
    
    114
    
    
    
    Changes in assets and liabilities:Accounts receivable and consignor advances
    
    
    (423
    )
    
    
    (1,365
    )Receivables and secured loans
    
    
    (1,800
    )
    
    
    (8,216
    )Litigation settlement receivable
    
    
    
    
    
    
    5,975Inventory
    
    
    (13,787
    )
    
    
    30,826Prepaid expenses and other assets
    
    
    (447
    )
    
    
    1,564Accounts payable, accrued expenses and other liabilities
    
    
    (2,502
    )
    
    
    12,651Income taxes
    
    
    (3,051
    )
    
    
    3,685Accrued litigation settlement
    
    
    
    
    
    
    (6,995
    )Net cash (used in) provided by operating activities
    
    
    (16,248
    )
    
    
    48,532Cash flows from investing activities:Capital expenditures for property and equipment
    
    
    (455
    )
    
    
    (318
    )Cash paid for acquisitions, net of cash acquired
    
    
    (200
    )
    
    
    (672
    )Cash paid for other intangibles
    
    
    (20
    )
    
    
    Maturity (purchase) of short term investments
    
    
    1,885
    
    
    
    (4,929
    )(Increase) decrease in restricted cash
    
    
    650
    
    
    
    (650
    )Sales (purchases) of marketable securities
    
    
    848
    
    
    
    (1,482
    )Net cash provided by (used in) investing activities
    
    
    2,708
    
    
    
    (8,051
    )Cash flows from financing activities:Borrowings under lines of credit, net
    
    
    (4,400
    )
    
    
    (48,447
    )Liability on borrowed metals
    
    
    17,612
    
    
    
    (3,717
    )Dividend paid to noncontrolling interest
    
    
    (1,000
    )
    
    
    Taxes paid on behalf of employees with respect to vesting of restricted shares
    
    
    (110
    )
    
    
    (98
    )Net cash provided by (used in) financing activities
    
    
    12,102
    
    
    
    (52,262
    )Effects of exchange rates on cash
    
    
    827
    
    
    
    (4,677
    )Net decrease in cash and cash equivalents
    
    
    (611
    )
    
    
    (16,458
    )Cash and cash equivalents, beginning of period
    
    
    17,545
    
    
    
    35,860Cash and cash equivalents, end of period
    
    $
    16,934
    
    
    $
    19,402
  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
    Correction of an error
   7




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Correction of an error for the quarter ended September 30, 2009 and 2008:
 Quarter Ended September 30, 2009
    
    
    Quarter Ended September 30, 2008As Originally
    
    
    
    
    
    
    As
    
    

    As Originally
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    Corrected
    
    
    Reported
    
    
    Adjustment
    
    
    CorrectedRevenue:Sales of precious metals
    
    $
    930,472
    
    
    $
    (1,592
    )
    
    $
    928,880
    a
    
    $
    1,006,993
    
    
    $
    (1,055
    )
    
    $
    1,005,938
    aSales of inventory
    
    
    44,173
    
    
    
    (1,698
    )
    
    
    42,475
    c
    
    
    34,133
    
    
    
    
    
    
    
    34,133Auction commissions earned
    
    
    4,072
    
    
    
    1,011
    
    
    
    5,083
    a,c
    
    
    3,926
    
    
    
    (388
    )
    
    
    3,538
    aTotal revenue
    
    
    978,717
    
    
    
    (2,279
    )
    
    
    976,438
    
    
    
    1,045,052
    
    
    
    (1,443
    )
    
    
    1,043,609Cost of sales:Cost of precious metals sold
    
    
    926,026
    
    
    
    (1,466
    )
    
    
    924,560
    a
    
    
    999,607
    
    
    
    (1,055
    )
    
    
    998,552
    aCost of collectibles sold
    
    
    40,270
    
    
    
    (904
    )
    
    
    39,366
    b
    
    
    32,620
    
    
    
    (108
    )
    
    
    32,512
    bTotal cost of sales
    
    
    966,296
    
    
    
    (2,370
    )
    
    
    963,926
    
    
    
    1,032,227
    
    
    
    (1,163
    )
    
    
    1,031,064Gross profit
    
    
    12,421
    
    
    
    91
    
    
    
    12,512
    
    
    
    12,825
    
    
    
    (280
    )
    
    
    12,545Operating expenses:General and administrative
    
    
    7,028
    
    
    
    331
    
    
    
    7,359
    a,b,c
    
    
    6,180
    
    
    
    (280
    )
    
    
    5,900
    a,bSalaries and wages
    
    
    6,116
    
    
    
    
    
    
    
    6,116
    
    
    
    5,944
    
    
    
    
    
    
    
    5,944Depreciation and amortization
    
    
    461
    
    
    
    
    
    
    
    461
    
    
    
    437
    
    
    
    
    
    
    
    437Total operating expenses
    
    
    13,605
    
    
    
    331
    
    
    
    13,936
    
    
    
    12,561
    
    
    
    (280
    )
    
    
    12,281Operating (loss) income
    
    
    (1,184
    )
    
    
    (240
    )
    
    
    (1,424
    )
    
    $
    264
    
    
    $
    
    
    
    $
    264Interest and other income (loss):Interest income
    
    
    1,393
    
    
    
    
    
    
    
    1,393Interest expense
    
    
    (369
    )
    
    
    
    
    
    
    (369
    )Other income (expense), net
    
    
    298
    
    
    
    240
    
    
    
    538
    a,cUnrealized
gains (loss) on foreign exchange
    
    
    (1,017
    )
    
    
    
    
    
    
    (1,017
    )Interest and other income (expense)
    
    
    305
    
    
    
    240
    
    
    
    545Income (loss) before income taxes and
noncontrolling interest
    
    $
    (879
    )
    
    $
    
    
    
    $
    (879
    )
 
 (a)
    
    Represents the elimination of intercompany transactions(b)
    
    Represents the reclassification of auction related expenses from cost of sales to selling, general and administrative(c)
    
    Represents other reclassifications including loss on sale of equipment and auction commissions 8




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Correction of an error for the year ended June 30, 2009 and 2008:
 Year Ended June 30, 2009
    
    
    Year Ended June 30, 2008As Originally
    
    
    
    
    
    
    As
    
    
    As Originally
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    Corrected
    
    
    Reported
    
    
    Adjustment
    
    
    CorrectedRevenue:Sales of precious metals
    
    $
    4,126,909
    
    
    $
    (5,750
    )
    
    $
    4,121,159
    a
    
    $
    2,681,031
    
    
    $
    542
    
    
    $
    2,681,573
    aSales of inventory
    
    
    144,320
    
    
    
    
    
    
    
    144,320
    
    
    
    148,152
    
    
    
    
    
    
    
    148,152Auction commissions earned
    
    
    22,113
    
    
    
    (1,563
    )
    
    
    20,550
    a
    
    
    27,798
    
    
    
    (1,322
    )
    
    
    26,476
    aTotal revenue
    
    
    4,293,342
    
    
    
    (7,313
    )
    
    
    4,286,029
    
    
    
    2,856,981
    
    
    
    (780
    )
    
    
    2,856,201Cost of sales:Cost of precious metals sold
    
    
    4,084,419
    
    
    
    (6,422
    )
    
    
    4,077,997
    a
    
    
    2,666,955
    
    
    
    2,991
    
    
    
    2,669,946
    a,bCost of collectibles sold
    
    
    138,589
    
    
    
    (1,357
    )
    
    
    137,232
    b
    
    
    133,295
    
    
    
    (788
    )
    
    
    132,507
    bTotal cost of sales
    
    
    4,223,008
    
    
    
    (7,779
    )
    
    
    4,215,229
    
    
    
    2,800,250
    
    
    
    2,203
    
    
    
    2,802,453Gross profit
    
    
    70,334
    
    
    
    466
    
    
    
    70,800
    
    
    
    56,731
    
    
    
    (2,983
    )
    
    
    53,748Operating expenses:General and administrative
    
    
    30,169
    
    
    
    (206
    )
    
    
    29,963
    a,b
    
    
    33,051
    
    
    
    (3,234
    )
    
    
    29,817
    a,bSalaries and wages
    
    
    29,814
    
    
    
    
    
    
    
    29,814
    
    
    
    22,140
    
    
    
    
    
    
    
    22,140Depreciation and amortization
    
    
    1,807
    
    
    
    
    
    
    
    1,807
    
    
    
    1,911
    
    
    
    
    
    
    
    1,911Litigation settlement
    
    
    860
    
    
    
    
    
    
    
    860
    
    
    
    9,020
    
    
    
    
    
    
    
    9,020Total operating expenses
    
    
    62,650
    
    
    
    (206
    )
    
    
    62,444
    
    
    
    66,122
    
    
    
    (3,234
    )
    
    
    62,888Operating (loss) income
    
    
    7,684
    
    
    
    672
    
    
    
    8,356
    
    
    
    (9,391
    )
    
    
    251
    
    
    
    (9,140
    )Interest and other income (loss):Interest income
    
    
    5,614
    
    
    
    
    
    
    
    5,614
    
    
    
    3,504
    
    
    
    
    
    
    
    3,504Interest expense
    
    
    (2,373
    )
    
    
    
    
    
    
    (2,373
    )

    
    
    (3,683
    )

    
    
    
    
    
    
    (3,683
    )Other income (expense), net
    
    
    279
    
    
    
    (672
    )
    
    
    (393
    ) a
    
    
    80
    
    
    
    (251
    )
    
    
    (171
    ) aUnrealized gains (loss) on foreign exchange
    3,068
    
    
    
    
    
    
    
    3,068
    
    
    
    (3,251
    )
    
    
    
    
    
    
    (3,251
    )Interest and other income (expense)
    
    
    6,588
    
    
    
    (672
    )
    
    
    5,916
    
    
    
    (3,350
    )
    
    
    (251
    )
    
    
    (3,601
    )Income (loss) before income taxes and noncontrolling interest
    
    $
    14,272
    
    
    $
    
    
    
    $
    14,272
    
    
    $
    (12,741
    )
    
    $
    
    

    
    $
    (12,741
    )
 
 (a)
    
    Represents the elimination of intercompany transactions(b)
    
    Represents the reclassification of auction related expenses from/to cost of sales from/to selling, general and administrative Business Segments
 Trading
  Collectibles
  9




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##### Table of Contents



European Operations
  Significant Accounting Policies
  Comprehensive Income (Loss)
   Six months ended
    
    
    Six months endedDecember 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)Net income
    
    $
    3,177
    
    
    $
    8,283Other comprehensive income (loss), net of tax:Changes in unrealized gain (loss) on marketable
securities, net of tax
    
    
    (183
    )
    
    
    (156
    )Foreign currency translation adjustment
    
    
    827
    
    
    
    (4,677
    )Other comprehensive income (loss)
    
    
    644
    
    
    
    (4,833
    )Less: Total comprehensive income attributable to
noncontrolling interest
    
    
    (895
    )
    
    
    (2,056
    )Total comprehensive income (loss) attributable to
Spectrum Group International, Inc.
    
    $
    2,926
    
    
    $
    1,394
 Foreign Currency Translation Gains (Losses)
  Income Taxes
 .
 10




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##### Table of Contents



Earnings Per Share
    Three months ended
    
    Three months ended
    
    Six months ended
    
    Six months endedDecember 31, 2009
    
    December 31, 2008
    
    December 31, 2009
    
    December 31, 2008(thousands of shares)
    
    (thousands of shares)
    
    (thousands of shares)
    
    (thousands of shares)Basic weighted average shares outstanding
    
    
    31,985
    
    
    
    31,617
    
    
    
    31,851
    
    
    
    30,324Effect of common stock equivalents  stock options
and stock issuable under employee compensation plans
    
    
    968
    
    
    
    701
    
    
    
    968
    
    
    
    712Diluted weighted average shares outstanding
    
    
    32,953
    
    
    
    32,318
    
    
    
    32,819
    
    
    
    31,036
 11




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##### Table of Contents



Subsequent Events
  Recent Accounting Pronouncements
 Recently issued accounting pronouncements:
 Recently issued accounting pronouncements not yet adopted:
 2. CUSTOMER CONCENTRATIONS
  Three months ended
    
    
    Three months ended
    
    
    Six months ended
    
    
    Six months endedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %Total Trading segment
revenue
    
    $
    1,664,296
    
    
    
    100.0
    %
    
    $
    973,251
    
    
    
    100.0
    %
    
    $
    2,593,176
    
    
    
    100.0
    %
    
    $
    1,979,189
    
    
    
    100.0
    %Trading segment customer
concentrationsCustomer A
    
    $
    517,942
    
    
    
    31.1
    %
    
    $
    207,623
    
    
    
    21.3
    %
    
    $
    741,935
    
    
    
    28.6
    %
    
    $
    375,876
    
    
    
    19.0
    %Total
    
    $
    517,942
    
    
    
    31.1
    %
    
    $
    207,623
    
    
    
    21.3
    %
    
    $
    741,935
    
    
    
    28.6
    %
    
    $
    375,876
    
    
    
    19.0
    %
  December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %Trading segment accounts receivable
    
    $
    29,009
    
    
    
    100.0
    %
    
    $
    16,205
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    19,028
    
    
    
    65.6
    %
    
    $
    3,894
    
    
    
    24.0
    %Customer B
    
    
    1,964
    
    
    
    6.8
    
    
    
    2,535
    
    
    
    15.6Total
    
    $
    20,992
    
    
    
    72.4
    %
    
    $
    6,429
    
    
    
    39.6
    %
  December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)in $s
    
    
    as a %
    
    
    in $s
    
    
    as a %Trading segment secured loans
    
    $
    16,631
    
    
    
    100.0
    %
    
    $
    17,727
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    2,869
    
    
    
    17.3
    %
    
    $
    3,043
    
    
    
    17.2
    %Customer B
    
    
    2,745
    
    
    
    16.5
    
    
    
    2,600
    
    
    
    14.7Customer C
    
    
    2,502
    
    
    
    15.0
    
    
    
    2,502
    
    
    
    14.1Total
    
    $
    8,116
    
    
    
    48.8
    %
    
    $
    8,145
    
    
    
    46.0
    %
 12




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##### Table of Contents



3. RECEIVABLES
  December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Customer trade receivables
    
    $
    22,053
    
    
    $
    9,138Wholesale trade advances and other
    
    
    1,743
    
    
    
    3,493Secured loans
    
    
    16,631
    
    
    
    17,727Due from brokers
    
    
    5,213
    
    
    
    3,574Subtotal
    
    
    45,640
    
    
    
    33,932Less: allowance for doubtful accounts
    
    
    (108
    )
    
    
    (319
    )Subtotal
    
    
    45,532
    
    
    
    33,613Derivative assets  futures contracts
    
    
    1,202
    
    
    
    10,875Derivative assets  forward contracts
    
    
    1,256
    
    
    
    1,726Receivables, net
    
    $
    47,990
    
    
    $
    46,214
       December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auction and trade
    
    $
    7,626
    
    
    $
    7,555Less: allowance for doubtful accounts
    
    
    (501
    )
    
    
    (549
    )Accounts receivable from collectibles operations, net
    
    $
    7,125
    
    
    $
    7,006
  13




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##### Table of Contents



Balance, June 30, 2009
    
    $
    868Provision for loss
    
    
    328Charge off to reserve
    
    
    (612
    )Foreign currency exchange rate charges
    
    
    25Balance, December 31, 2009
    
    $
    609
 4. INVENTORIES
    14




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##### Table of Contents



December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trading segment inventory
    
    $
    103,447
    
    
    $
    92,043Less: provision for loss
    
    
    (104
    )
    
    
    (104
    )Trading, net
    
    $
    103,343
    
    
    $
    91,939Collectibles segment inventory
    
    $
    28,198
    
    
    $
    26,719Less: provision for loss
    
    
    (2,363
    )
    
    
    (3,004
    )Collectibles, net
    
    $
    25,835
    
    
    $
    23,715Total inventory, gross
    
    $
    131,645
    
    
    $
    118,762Less: provision for loss
    
    
    (2,467
    )
    
    
    (3,108
    )Net inventory
    
    $
    129,178
    
    
    $
    115,654
  Balance, June 30, 2009
    
    $
    3,108Provision for loss
    
    
    263Charge off to reserve
    
    
    (882
    )Foreign currency exchange rate changes
    
    
    (22
    )Balance, December 31, 2009
    
    $
    2,467
 5. OTHER PURCHASED INTANGIBLE ASSETS
  December 31, 2009
    
    
    June 30, 2009Estimated
    
    
    (in thousands)
    
    
    (in thousands)Useful Lives
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    
    
    
    
    Net Book(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    Impairment
    
    
    ValueTrademarks
    
    Indefinite
    
    $
    2,604
    
    
    $
    
    
    
    $
    2,604
    
    
    $
    2,616
    
    
    $
    
    
    
    $
    (80
    )
    
    $
    2,536Customer lists
    
    
    5  15
    
    
    
    9,189
    
    
    
    (3,819
    )
    
    
    5,370
    
    
    
    9,161
    
    
    
    (3,500
    )
    
    
    
    
    
    
    5,661Non-compete and other
    
    
    4
    
    
    
    2,248
    
    
    
    (2,189
    )
    
    
    59
    
    
    
    2,302
    
    
    
    (2,198
    )
    
    
    
    
    
    
    104$
    14,041
    
    
    $
    (6,008
    )
    
    $
    8,033
    
    
    $
    14,079
    
    
    $
    (5,698
    )
    
    $
    (80
    )
    
    $
    8,301
  15




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##### Table of Contents



Years ending June 30:
    
    (in thousands)2010 (remaining 6 months)
    
    $
    3922011
    
    
    6462012
    
    
    5752013
    
    
    5152014
    
    
    498Thereafter
    
    
    2,803Total
    
    $
    5,429
 6. ACCOUNTS PAYABLE, CUSTOMER DEPOSITS AND CONSIGNOR PAYABLES
  December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trade payable to customers and other accounts payable
    
    $
    1,071
    
    
    $
    5,909Advances from customers
    
    
    12,640
    
    
    
    5,834Net liability on margin accounts
    
    
    8,248
    
    
    
    3,041Due to brokers
    
    
    
    
    
    
    648Other Accounts Payable
    
    
    3,994
    
    
    
    Derivative liabilities  open purchase and sales commitments
    
    
    4,737
    
    
    
    5,356$
    30,690
    
    
    $
    20,788
 7. INCOME TAXES
  Three months ended
    
    
    Three months ended
    
    
    Six months ended
    
    
    Six months endedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Current:Federal
    
    $
    (1,586
    )
    
    $
    731
    
    
    $
    (3,067
    )
    
    $
    1,065State
    
    
    95
    
    
    
    345
    
    
    
    112
    
    
    
    502Foreign
    
    
    550
    
    
    
    172
    
    
    
    608
    
    
    
    251Total current tax provision (benefit)
    
    
    (941
    )
    
    
    1,248
    
    
    
    (2,347
    )
    
    
    1,818Deferred:Federal
    
    
    33
    
    
    
    (24
    )
    
    
    68
    
    
    
    (35
    )State
    
    
    10
    
    
    
    16
    
    
    
    22
    
    
    
    24Foreign
    
    
    474
    
    
    
    3
    
    
    
    273
    
    
    
    4Total deferred tax provision (benefit)
    
    
    517
    
    
    
    (5
    )
    
    
    363
    
    
    
    (7
    )Income tax provision (benefit)
    
    $
    (424
    )
    
    $
    1,243
    
    
    $
    (1,984
    )
    
    $
    1,811
   Three months ended
    
    
    Three months ended
    
    
    Six months ended
    
    
    Six months endedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008U.S.
    
    $
    1,195
    
    
    $
    4,613
    
    
    $
    (191
    )
    
    $
    9,401Foreign
    
    
    877
    
    
    
    1,831
    
    
    
    1,384
    
    
    
    693Income before income taxes and noncontrolling interest
    
    $
    2,072
    
    
    $
    6,444
    
    
    $
    1,193
    
    
    $
    10,094
 16




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##### Table of Contents



UTBs
    
    
    FIN 48 PayableBalance as of June 30, 2009
    
    $
    26,587
    
    
    $
    2,475Increase as a result of tax positions taken during the current period
    
    
    84
    
    
    
    84Increase as a result of additional interest and penalties during the current period
    
    
    
    
    
    
    61Balance as of December 31, 2009
    
    $
    26,671
    
    
    $
    2,620
  8. FINANCING AGREEMENTS
  17




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##### Table of Contents



9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
       18




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##### Table of Contents



December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trading Inventory, net
    
    $
    103,343
    
    
    $
    91,939Less unhedgable inventory:Commemorative coins
    
    
    (2,295
    )
    
    
    (3,413
    )Premium on metals position
    
    
    (805
    )
    
    
    (1,477
    )Subtotal
    
    
    100,243
    
    
    
    87,049Commitments at market:Open inventory purchase commitments
    
    
    215,262
    
    
    
    131,844Open inventory sale commitments
    
    
    (97,984
    )
    
    
    (38,370
    )Margin sale commitments
    
    
    (19,926
    )
    
    
    (7,358
    )Premium on open commitments position
    
    
    818
    
    
    
    32Inventory borrowed from suppliers
    
    
    (32,712
    )
    
    
    (15,100
    )Advances on industrial metals
    
    
    137
    
    
    
    700Inventory subject to price risk
    
    
    165,838
    
    
    
    158,797Inventory subject to derivative financial instruments:Precious metals forward contracts at market values
    
    
    54,292
    
    
    
    27,731Precious metals futures contracts at market values
    
    
    113,764
    
    
    
    132,651Total market value of derivative financial instruments
    
    
    168,056
    
    
    
    160,382Net inventory subject to price risk, Company consolidated basis
    
    $
    (2,218
    )
    
    $
    (1,585
    )Effects of open related party transactions between A-Mark and affiliates:Net inventory subject to price risk, Company consolidated basis
    
    $
    (2,218
    )
    
    $
    (1,585
    )Open inventory purchase commitments with affiliates
    
    
    7,204
    
    
    
    1,088Open inventory sale commitments with affiliates
    
    
    (5,498
    )
    
    
    Premium on open commitments position with affiliates
    
    
    450
    
    
    
    Net inventory subject to price risk, A-Mark stand-alone basis
    
    $
    (62
    )
    
    $
    (497
    )
    19




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##### Table of Contents



10. NONCONTROLLING INTERESTS
     December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    8,929
    
    
    $
    9,167Winter Games Bullion Ventures, LLC. 50% outside interest
    
    
    1,280
    
    
    
    1,147Total
    
    $
    10,209
    
    
    $
    10,314
  Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    464
    
    
    $
    1,056
    
    
    $
    763
    
    
    $
    1,592Winter Games Bullion Ventures, LLC. 50% interest
    
    
    18
    
    
    
    269
    
    
    
    132
    
    
    
    464Total
    
    $
    482
    
    
    $
    1,325
    
    
    $
    895
    
    
    $
    2,056
  December 31, 2009
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Cash
    
    $
    113
    
    
    $
    154Receivables
    
    
    315
    
    
    
    21Inventories
    
    
    2,352
    
    
    
    3,516Prepaid expenses
    
    
    57
    
    
    
    Total Assets
    
    $
    2,837
    
    
    $
    3,691Accounts payable and other liabilities
    
    $
    278
    
    
    $
    1,397Members equity
    
    
    2,559
    
    
    
    2,294Total liabilities and members equity
    
    $
    2,837
    
    
    $
    3,691
  Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Sales
    
    $
    11,391
    
    
    $
    32,173
    
    
    $
    21,997
    
    
    $
    35,664Cost of products sold
    
    
    11,219
    
    
    
    31,360
    
    
    
    21,456
    
    
    
    34,362Gross profit
    
    
    172
    
    
    
    813
    
    
    
    541
    
    
    
    1,302Operating and other expenses
    
    
    134
    
    
    
    274
    
    
    
    276
    
    
    
    374Net income
    
    $
    38
    
    
    $
    539
    
    
    $
    265
    
    
    $
    928
 20




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##### Table of Contents



11. COMMITMENTS AND CONTINGENCIES
  12. LITIGATION
  Greg Manning v. SGI
  Security Class Action and Derivative Lawsuits Settlement
  13. STOCKHOLDERS EQUITY
 Stock Option Plan
   Employee Stock Options.
 21




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##### Table of Contents



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 December 31, 2009
    
    
    604,325
    
    
    
    6.09
    
    
    $
    104
    
    
    
    4.63Shares exercisable at December 31, 2009
    
    
    604,325
    
    
    
    6.09
    
    
    $
    104
    
    
    
    4.63
  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
    
    
    
    3.3
    
    
    
    $2.29
    
    
    
    391,250
    
    
    
    $2.295.01
    
    
    
    10.00
    
    
    
    26,200
    
    
    
    3.9
    
    
    
    8.96
    
    
    
    26,200
    
    
    
    8.9610.01
    
    
    
    15.00
    
    
    
    186,875
    
    
    
    4.3
    
    
    
    13.65
    
    
    
    186,875
    
    
    
    13.65604,325
    
    
    
    3.6
    
    
    $
    6.09
    
    
    
    604,325
    
    
    $
    6.09
   WeightedAverage shareShares
    
    
    price at grant dateOutstanding at June 30, 2009
    
    
    676,682
    
    
    $
    2.54Shares granted
    
    
    508,226
    
    
    
    2.65Shares issued
    
    
    (306,002
    )
    
    
    2.63Shares forfeited
    
    
    
    
    
    
    Shares withheld for employee taxes
    
    
    (64,011
    )
    
    
    2.66Outstanding at December 31, 2009
    
    
    814,895
    
    
    $
    2.57Vested but unissued at December 31, 2009
    
    
    92,502
 Stock Appreciation Rights.
 22




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##### Table of Contents



Certain Anti-Takeover Provisions
  14. SEGMENT AND GEOGRAPHIC INFORMATION
   Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Revenue:Trading
    
    $
    1,664,296
    
    
    $
    973,251
    
    
    $
    2,593,176
    
    
    $
    1,979,189Collectibles:Coins
    
    
    35,734
    
    
    
    25,959
    
    
    
    77,991
    
    
    
    57,008Stamps
    
    
    4,440
    
    
    
    9,682
    
    
    
    9,404
    
    
    
    15,933Others
    
    
    3,034
    
    
    
    240
    
    
    
    3,371
    
    
    
    611Total Collectibles
    
    
    43,208
    
    
    
    35,881
    
    
    
    90,766
    
    
    
    73,552Total revenue
    
    $
    1,707,504
    
    
    $
    1,009,132
    
    
    $
    2,683,942
    
    
    $
    2,052,741
 Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Revenue by Geographic Region:United States
    
    $
    1,705,008
    
    
    $
    1,004,102
    
    
    $
    2,679,287
    
    
    $
    2,047,298Asia Pacific
    
    
    348
    
    
    
    210
    
    
    
    698
    
    
    
    213Europe
    
    
    2,148
    
    
    
    4,820
    
    
    
    3,957
    
    
    
    5,230Total revenue
    
    $
    1,707,504
    
    
    $
    1,009,132
    
    
    $
    2,683,942
    
    
    $
    2,052,741
 Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Operating income (loss):Trading
    
    $
    2,063
    
    
    $
    8,323
    
    
    $
    3,971
    
    
    $
    12,607Collectibles
    
    
    1,541
    
    
    
    (1,316
    )
    
    
    701
    
    
    
    (4,230
    )Corporate expenses
    
    
    (2,603
    )
    
    
    (1,741
    )
    
    
    (5,095
    )
    
    
    (2,847
    )Operating income (loss)
    
    $
    1,001
    
    
    $
    5,266
    
    
    $
    (423
    )
    
    $
    5,530
 23




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##### Table of Contents



Three Months Ended
    
    
    Three Months Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Depreciation and amortization:TradingDepreciation and amortization
    
    $
    161
    
    
    $
    249
    
    
    $
    339
    
    
    $
    497CollectiblesDepreciation and amortization
    
    
    239
    
    
    
    202
    
    
    
    522
    
    
    
    391Depreciation and amortization
    
    $
    400
    
    
    $
    451
    
    
    $
    861
    
    
    $
    888
 December 31,
    
    
    June 30,Inventories by segment/geographic region:
    
    2009
    
    
    2009(in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    103,343
    
    
    $
    91,939Collectibles:United States
    
    
    24,125
    
    
    
    22,256Europe
    
    
    1,590
    
    
    
    1,277Asia
    
    
    120
    
    
    
    182Total Collectibles
    
    
    25,835
    
    
    
    23,715Total inventories
    
    $
    129,178
    
    
    $
    115,654
 December 31,
    
    
    June 30,Total assets by segment/geographic region:
    
    2009
    
    
    2009(in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    162,758
    
    
    $
    151,986Collectibles:United States
    
    
    39,129
    
    
    
    38,485Europe
    
    
    16,816
    
    
    
    19,791Asia
    
    
    1,297
    
    
    
    1,398Total Collectibles
    
    
    57,242
    
    
    
    59,674Corporate and other
    
    
    12,659
    
    
    
    6,489Total assets
    
    $
    232,659
    
    
    $
    218,149
 December 31
    
    
    June 30Total long term assets by segment/geographic region:
    
    2009
    
    
    2009(in thousands)
    
    
    (in thousands)Trading:United States
    
    $
    10,264
    
    
    $
    10,451Collectibles:United States
    
    
    4,682
    
    
    
    4,733Europe
    
    
    860
    
    
    
    638Asia
    
    
    142
    
    
    
    152Total Collectibles
    
    
    5,684
    
    
    
    5,523Corporate and other
    
    
    7,679
    
    
    
    4,505Total long term assets
    
    $
    23,627
    
    
    $
    20,479
 24




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##### Table of Contents



15. FAIR VALUE MEASUREMENTS
 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
 December 31, 2009( in thousands)Quoted Price inActive Markets forIdentical
    
    
    Significant Other
    
    
    SignificantInstruments
    
    
    Observable Inputs
    
    
    Unobservable(Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)
    
    
    Total BalanceAssets:Commodities
    
    $
    101,095
    
    
    $
    
    
    
    $
    
    
    
    $
    101,095Derivative assets  open sales and purchase commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Derivative assets  futures contracts
    
    
    
    
    
    
    1,202
    
    
    
    
    
    
    
    1,202Derivative assets  forward contracts
    
    
    
    
    
    
    1,256
    
    
    
    
    
    
    
    1,256Total assets valued at fair value:
    
    $
    101,095
    
    
    $
    2,458
    
    
    $
    
    
    
    $
    103,553Liabilities:Liability on borrowed metals
    
    $
    (32,712
    )
    
    $
    
    
    
    $
    
    
    
    $
    (32,712
    )Liability on margin accounts
    
    
    (8,248
    )
    
    
    
    
    
    
    
    
    
    
    (8,248
    )Derivative liabilities  open sales and purchase commitments
    
    
    
    
    
    
    (4,737
    )
    
    
    
    
    
    
    (4,737
    )Total liabilities valued at fair value:
    
    $
    (40,960
    )
    
    $
    (4,737
    )
    
    $
    
    
    
    $
    (45,697
    )
  Marketable Securities
  Commodities
  25




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##### Table of Contents



Derivatives
  Margin Liability
   16. SUPPLEMENTAL CASH FLOW INFORMATION
 Six Months Ended
    
    
    Six Months EndedDecember 31, 2009
    
    
    December 31, 2008(in thousands)
    
    
    (in thousands)Supplemental disclosure of cash flow information:Interest paid
    
    $
    708
    
    
    $
    1,320Income taxes paid
    
    
    701
    
    
    
    166Supplemental disclosure of non-cash transactions:Issuance of 3,277,777 shares pursuant to legal settlement
    
    $
    (6,556
    )
    
    $
    Accrual of Ponterio & Associates, Inc. earn-out
obligation
    
    
    (335
    )
    
    
    
 17. SUBSEQUENT EVENT
  26




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##### Table of Contents



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 and six months ended December 31, 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 December 31, 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.
 27




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##### Table of Contents



Overview
 Business
   Trading
   Collectibles
  RESULTS OF OPERATIONS
 Overview of Results of Operations for the Three Months and Six Months Ended December 31, 2009 and
2008
 Condensed Consolidated Results of Operations
  % of
    
    
    
    
    
    
    % of
    
    
    Increase/
    
    
    % of Increase/2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Revenue
    
    $
    1,707,504
    
    
    
    100.0
    %
    
    $
    1,009,132
    
    
    
    100.0
    %
    
    $
    698,372
    
    
    
    69.2
    %Gross profit
    
    
    14,938
    
    
    
    0.9
    
    
    
    23,291
    
    
    
    2.3
    
    
    
    (8,353
    )
    
    
    (35.9
    )General and administrative expenses
    
    
    5,597
    
    
    
    0.3
    
    
    
    7,454
    
    
    
    0.7
    
    
    
    (1,857
    )
    
    
    (24.9
    )Salaries and wages
    
    
    7,931
    
    
    
    0.5
    
    
    
    10,117
    
    
    
    1.0
    
    
    
    (2,186
    )
    
    
    (21.6
    )Depreciation and amortization
    
    
    409
    
    
    
    0.0
    
    
    
    454
    
    
    
    0.0
    
    
    
    (45
    )
    
    
    (9.9
    )Operating income (loss)
    
    
    1,001
    
    
    
    0.1
    
    
    
    5,266
    
    
    
    0.6
    
    
    
    (4,265
    )
    
    
    (81.0
    )Interest income
    
    
    1,476
    
    
    
    0.1
    
    
    
    1,115
    
    
    
    0.1
    
    
    
    361
    
    
    
    32.4Interest expense
    
    
    (431
    )
    
    
    (0.0
    )
    
    
    (607
    )
    
    
    (0.1
    )
    
    
    176
    
    
    
    (29.0
    )Other income (expense), net
    
    
    (458
    )
    
    
    0.0
    
    
    
    31
    
    
    
    0.0
    
    
    
    (489
    )
    
    
    (1,577.4
    )Unrealized gains(loss) on foreign exchange
    
    
    484
    
    
    
    0.0
    
    
    
    639
    
    
    
    0.1
    
    
    
    (155
    )
    
    
    (24.3
    )Income (loss) before income taxes
    
    
    2,072
    
    
    
    0.2
    
    
    
    6,444
    
    
    
    0.7
    
    
    
    (4,372
    )
    
    
    (67.8
    )
 28




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##### Table of Contents



% of
    
    
    
    
    
    
    % of
    
    
    Increase/
    
    
    % of Increase/2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Income taxes (benefit)
    
    
    (424
    )
    
    
    0.0
    
    
    
    1,243
    
    
    
    0.1
    
    
    
    (1,667
    )
    
    
    (134.1
    )Net income
    
    
    2,496
    
    
    
    0.2
    
    
    
    5,201
    
    
    
    0.6
    
    
    
    (2,705
    )
    
    
    (52.0
    )Less: Net profit attributable to the
noncontrolling interest
    
    
    (482
    )
    
    
    0.0
    
    
    
    (1,325
    )
    
    
    (0.1
    )
    
    
    843
    
    
    
    (63.6
    )Net income attributable to Spectrum Group
International, Inc.
    
    $
    2,014
    
    
    
    0.2
    %
    
    $
    3,876
    
    
    
    0.5
    %
    
    $
    (1,862
    )
    
    
    (48.0
    )%Earnings per share attributable to
Spectrum
Group International, Inc.Basic
    
    $
    0.06
    
    
    
    
    
    
    $
    0.12
    
    
    
    
    
    
    $
    (0.06
    )
    
    
    (50.0
    )%Diluted
    
    $
    0.06
    
    
    
    
    
    
    $
    0.12
    
    
    
    
    
    
    $
    (0.06
    )
    
    
    (50.0
    )%Weighted average shares outstandingBasic
    
    
    31,985
    
    
    
    
    
    
    
    31,617Diluted
    
    
    32,953
    
    
    
    
    
    
    
    32,318
  % of
    
    
    
    
    
    
    % of
    
    
    Increase/
    
    
    % of Increase/2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Revenue
    
    $
    2,683,942
    
    
    
    100.0
    %
    
    $
    2,052,741
    
    
    
    100.0
    %
    
    $
    631,201
    
    
    
    30.7
    %Gross profit
    
    
    27,450
    
    
    
    1.0
    
    
    
    35,836
    
    
    
    1.7
    
    
    
    (8,386
    )
    
    
    (23.4
    )General and administrative expenses
    
    
    12,956
    
    
    
    0.5
    
    
    
    13,354
    
    
    
    0.6
    
    
    
    (398
    )
    
    
    (3.0
    )Salaries and wages
    
    
    14,047
    
    
    
    0.5
    
    
    
    16,061
    
    
    
    0.8
    
    
    
    (2,014
    )
    
    
    (12.5
    )Depreciation and amortization
    
    
    870
    
    
    
    0.0
    
    
    
    891
    
    
    
    0.0
    
    
    
    (21
    )
    
    
    (2.4
    )Operating income (loss)
    
    
    (423
    )
    
    
    0.0
    
    
    
    5,530
    
    
    
    0.3
    
    
    
    (5,953
    )
    
    
    (107.6
    )Interest income
    
    
    2,869
    
    
    
    0.1
    
    
    
    2,319
    
    
    
    0.1
    
    
    
    550
    
    
    
    23.7Interest expense
    
    
    (800
    )
    
    
    (0.0
    )
    
    
    (1,460
    )
    
    
    (0.1
    )
    
    
    660
    
    
    
    (45.2
    )Other income (expense), net
    
    
    80
    
    
    
    0.0
    
    
    
    734
    
    
    
    0.0
    
    
    
    (654
    )
    
    
    (89.1
    )Unrealized gains(loss) on foreign exchange
    
    
    (533
    )
    
    
    0.0
    
    
    
    2,971
    
    
    
    0.1
    
    
    
    (3,504
    )
    
    
    (117.9
    )Income (loss) before income taxes
    
    
    1,193
    
    
    
    0.1
    
    
    
    10,094
    
    
    
    0.4
    
    
    
    (8,901
    )
    
    
    (88.2
    )Income taxes (benefit)
    
    
    (1,984
    )
    
    
    (0.1
    )
    
    
    1,811
    
    
    
    0.1
    
    
    
    (3,795
    )
    
    
    (209.6
    )Net income
    
    
    3,177
    
    
    
    0.2
    
    
    
    8,283
    
    
    
    0.3
    
    
    
    (5,106
    )
    
    
    (61.6
    )Less: Net profit attributable to the
noncontrolling interest
    
    
    (895
    )
    
    
    (0.1
    )
    
    
    (2,056
    )
    
    
    (0.1
    )
    
    
    1,161
    
    
    
    (56.5
    )Net income attributable to Spectrum Group
International, Inc.
    
    $
    2,282
    
    
    
    0.1
    %
    
    $
    6,227
    
    
    
    0.2
    %
    
    $
    (3,945
    )
    
    
    (63.4
    )%Earnings per share attributable to Spectrum
Group International, Inc.Basic
    
    $
    0.07
    
    
    
    
    
    
    $
    0.21
    
    
    
    
    
    
    $
    (0.14
    )
    
    
    (66.7
    )%Diluted
    
    $
    0.07
    
    
    
    
    
    
    $
    0.20
    
    
    
    
    
    
    $
    (0.13
    )
    
    
    (65.0
    )%Weighted average shares outstandingBasic
    
    
    31,851
    
    
    
    
    
    
    
    30,324Diluted
    
    
    32,819
    
    
    
    
    
    
    
    31,036
 29




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##### Table of Contents



Revenues and Gross Profit
          Operating Expenses
 30




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##### Table of Contents



Interest Income
  Interest Expense
 Other Income (Expense)
 Provision for Income Taxes
 Noncontrolling Interests
 31




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##### Table of Contents



Net Income
 Earnings per Share
 Trading Operations
  % of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Trading revenues
    
    $
    1,664,296
    
    
    
    100.0
    %
    
    $
    973,251
    
    
    
    100.0
    %
    
    $
    691,045
    
    
    
    71.0
    %Gross profit
    
    
    6,017
    
    
    
    0.4
    
    
    
    15,382
    
    
    
    1.6
    
    
    
    (9,365
    )
    
    
    (60.9
    )General and administrative expenses
    
    
    719
    
    
    
    0.0
    
    
    
    721
    
    
    
    0.1
    
    
    
    (2
    )
    
    
    (0.3
    )Salaries and wages
    
    
    3,074
    
    
    
    0.2
    
    
    
    6,089
    
    
    
    0.6
    
    
    
    (3,015
    )
    
    
    (49.5
    )Depreciation and amortization
    
    
    161
    
    
    
    0.0
    
    
    
    249
    
    
    
    0.0
    
    
    
    (88
    )
    
    
    (35.3
    )Operating income (loss)
    
    $
    2,063
    
    
    
    0.2
    %
    
    $
    8,323
    
    
    
    0.9
    %
    
    $
    (6,260
    )
    
    
    (75.2
    )%
  % of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    %(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Trading revenues
    
    $
    2,593,176
    
    
    
    100.0
    %
    
    $
    1,979,189
    
    
    
    100.0
    %
    
    $
    613,987
    
    
    
    31.0
    %Gross profit
    
    
    10,463
    
    
    
    0.4
    
    
    
    22,768
    
    
    
    1.2
    
    
    
    (12,305
    )
    
    
    (54.0
    )General and administrative expenses
    
    
    1,389
    
    
    
    0.0
    
    
    
    1,310
    
    
    
    0.1
    
    
    
    79
    
    
    
    6.0Salaries and wages
    
    
    4,764
    
    
    
    0.2
    
    
    
    8,354
    
    
    
    0.4
    
    
    
    (3,590
    )
    
    
    (43.0
    )Depreciation and amortization
    
    
    339
    
    
    
    0.0
    
    
    
    497
    
    
    
    0.0
    
    
    
    (158
    )
    
    
    (31.8
    )Operating income (loss)
    
    $
    3,971
    
    
    
    0.2
    %
    
    $
    12,607
    
    
    
    0.7
    %
    
    $
    (8,636
    )
    
    
    (68.5
    )%
 Revenues
 Gross profit
  32




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##### Table of Contents



General and administrative expenses
 Salaries and wages
  Depreciation and amortization
 Collectibles Operations
  For the three months ended December 31,2009
    
    
    2008
    
    
    $ Increase(thousands of dollars)
    
    $
    
    
    % to total
    
    
    $
    
    
    % to total
    
    
    (decrease)
    
    
    % to totalCollectibles Revenues
    
    $
    43,208
    
    
    
    100.0
    %
    
    $
    35,881
    
    
    
    100
    %
    
    $
    7,327
    
    
    
    20.4
    %Revenues by Collectible Type:Philatelic
    
    $
    5,127
    
    
    
    11.9
    %
    
    $
    10,070
    
    
    
    28.1
    %
    
    $
    (4,943
    )
    
    
    (49.1
    )%Numismatics
    
    
    35,047
    
    
    
    81.1
    
    
    
    25,571
    
    
    
    71.3
    
    
    
    9,476
    
    
    
    37.1Militaria, wine and other
    
    
    3,034
    
    
    
    7.0
    
    
    
    240
    
    
    
    0.6
    
    
    
    2,794
    
    
    
    1,164.2$
    43,208
    
    
    
    100.0
    %
    
    $
    35,881
    
    
    
    100
    %
    
    $
    7,327
    
    
    
    20.4
    %
  For the six months ended December 31,2009
    
    
    2008
    
    
    $ Increase(thousands of dollars)
    
    $
    
    
    % to total
    
    
    $
    
    
    % to total
    
    
    (decrease)
    
    
    % to totalCollectibles Revenues
    
    $
    90,766
    
    
    
    100.0
    %
    
    $
    73,552
    
    
    
    100
    %
    
    $
    17,214
    
    
    
    23.4
    %Revenues by Collectible Type:Philatelic
    
    $
    9,404
    
    
    
    10.4
    %
    
    $
    15,933
    
    
    
    21.7
    %
    
    $
    (6,529
    )
    
    
    (41.0
    )%Numismatics
    
    
    77,991
    
    
    
    85.9
    
    
    
    57,008
    
    
    
    77.5
    
    
    
    20,983
    
    
    
    36.8Militaria, wine and other
    
    
    3,371
    
    
    
    3.7
    
    
    
    611
    
    
    
    0.8
    
    
    
    2,760
    
    
    
    451.7$
    90,766
    
    
    
    100.0
    %
    
    $
    73,552
    
    
    
    100
    %
    
    $
    17,214
    
    
    
    23.4
    %
 Revenues
 33




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##### Table of Contents



% of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    % of(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Collectibles revenue
    
    $
    43,208
    
    
    
    100.0
    %
    
    $
    35,881
    
    
    
    100.0
    %
    
    $
    7,327
    
    
    
    20.4
    %Gross profit
    
    
    8,921
    
    
    
    20.6
    
    
    
    7,909
    
    
    
    22.0
    
    
    
    1,012
    
    
    
    12.8Selling, general and administrative expenses
    
    
    3,060
    
    
    
    7.1
    
    
    
    5,667
    
    
    
    15.8
    
    
    
    (2,607
    )
    
    
    (46.0
    )Salaries and wages
    
    
    4,077
    
    
    
    9.4
    
    
    
    3,355
    
    
    
    9.4
    
    
    
    722
    
    
    
    21.5Impairment of goodwill and intangible assets
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0Depreciation and amortization
    
    
    243
    
    
    
    0.6
    
    
    
    203
    
    
    
    0.6
    
    
    
    40
    
    
    
    19.7Operating income (loss)
    
    $
    1,541
    
    
    
    3.5
    %
    
    $
    (1,316
    )
    
    
    (3.8
    )%
    
    $
    2,857
    
    
    
    (217.1
    )%
  % of
    
    
    
    
    
    
    % of
    
    
    $
    
    
    % of(thousands of dollars)
    
    2009
    
    
    revenue
    
    
    2008
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Collectibles revenue
    
    $
    90,766
    
    
    
    100.0
    %
    
    $
    73,552
    
    
    
    100.0
    %
    
    $
    17,214
    
    
    
    23.4
    %Gross profit
    
    
    16,987
    
    
    
    18.7
    
    
    
    13,068
    
    
    
    17.8
    
    
    
    3,919
    
    
    
    30.0Selling, general and administrative expenses
    
    
    8,105
    
    
    
    8.9
    
    
    
    10,355
    
    
    
    14.1
    
    
    
    (2,250
    )
    
    
    (21.7
    )Salaries and wages
    
    
    7,659
    
    
    
    8.4
    
    
    
    6,552
    
    
    
    8.9
    
    
    
    1,107
    
    
    
    16.9Impairment of goodwill and intangible assets
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0Depreciation and amortization
    
    
    522
    
    
    
    0.6
    
    
    
    391
    
    
    
    0.5
    
    
    
    131
    
    
    
    33.5Operating income (loss)
    
    $
    701
    
    
    
    0.8
    %
    
    $
    (4,230
    )
    
    
    (5.7
    )%
    
    $
    4,931
    
    
    
    (116.6
    )%
 Gross profit
 General and administrative expense
 34




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##### Table of Contents



Salaries and wages
 Depreciation and amortization
 35




---



##### Table of Contents



FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
  (thousands of dollars)
    
    2009
    
    2008Cash provided by (used in) operating activities
    
    $
    (16,248
    )
    
    $
    48,532Cash provided by (used in) investing activities
    
    
    2,708
    
    
    
    (8,051
    )Cash (used in) financing activities
    
    
    12,102
    
    
    
    (52,262
    )
        36




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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
    
    $
    48,350
    
    
    $
    48,350
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    2,243
    
    
    
    587
    
    
    
    1,073
    
    
    
    366
    
    
    
    217
    
    
    
    Total
    
    $
    50,593
    
    
    $
    48,937
    
    
    $
    1,073
    
    
    $
    366
    
    
    $
    217
    
    
    $
    
   37




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##### Table of Contents



CRITICAL ACCOUNTING ESTIMATES
  38




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
     39




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##### Table of Contents



PART IIOTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  Greg Manning v. SGI
  Shareholder Litigation
 In Re Escala Group, Inc. Derivative
Litigation In re Escala Group, Inc. Securities Litigation
      
 ITEM 1A. RISK FACTORS
  40




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##### Table of Contents



Greg Manning v. SGI
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    Antonio Arenas
    
    For: 25,873,000
    
    Withheld: 1,291,000George Lumby
    
    For: 25,873,000
    
    Withheld: 1,291,000Jess Ravich
    
    For: 26,845,000
    
    Withheld: 319,000
  Greg Roberts
    
    For: 26,842,000
    
    Withheld: 323,000Christopher W. Nolan
    
    For: 26,845,000
    
    Withheld: 320,000
  Jeffrey Benjamin
    
    For: 26,845,000
    
    Withheld: 320,000John U. Moorhead
    
    For: 26,842,000
    
    Withheld: 323,000
   41




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##### Table of Contents



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
 42




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##### Table of Contents



SIGNATURES
  Date: February 12, 2010
    SPECTRUM GROUP INTERNATIONAL, INC.By:
    /s/ Gregory N. RobertsName:
    Gregory N. RobertsTitle:
    President and Chief Executive Officer  Signatures
    
    Title(s)
    
    Date/s/ Gregory N. Roberts

Gregory N. Roberts
    
    President, Chief
Executive Officer and
Director (Principal
Executive Officer)
    
    February 12, 2010/s/ Thor Gjerdrum

Thor Gjerdrum
    
    Chief Financial Officer
and Executive Vice
President (Principal
Financial Officer)
    
    February 12, 2010
 43