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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the Fiscal Year Ended June 30, 2008
 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 No. 1-15289
 Sport Supply Group, Inc.
  Delaware
    
    22-2795073(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)1901 Diplomat Drive, Farmers Branch, Texas
    
    75234(Address of Principal Executive Offices)
    
    (Zip Code)
 (972) 484-9484
 Securities Registered Pursuant to Section 12(b) of the Act:
 Name of Each ExchangeTitle of Each Class
    
    On Which RegisteredCommon Stock
    
    The Nasdaq Stock Market
 Securities Registered Pursuant to Section 12(g) of the Act:
  o þ
  o þ
  þ o
 o
  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
   DOCUMENTS INCORPORATED BY REFERENCE:
 The information required by Part III of this report, to the extent not set forth herein, is
incorporated by reference from the Registrants definitive fiscal 2009 Proxy Statement to be filed
with the SEC.




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##### 



Sport Supply Group, Inc.
FORM 10-K
Fiscal Year Ended June 30, 2008
TABLE OF CONTENTS
 PagePART IItem 1. Business.
    
    
    2Item 1A. Risk Factors.
    
    
    10Item 1B. Unresolved Staff Comments.
    
    
    19Item 2. Properties.
    
    
    20Item 3. Legal Proceedings.
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    21PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
    
    
    22Item 6. Selected Financial Data.
    
    
    23Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    24Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    37Item 8. Financial Statements and Supplementary Data.
    
    
    38Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
    
    
    64Item 9AT. Controls and Procedures.
    
    
    64Item 9B. Other Information.
    
    
    65PART IIIItem 10. Directors, Executive Officers and Corporate Governance.
    
    
    66Item 11. Executive Compensation.
    
    
    66Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
    
    
    66Item 13. Certain Relationships and Related Transactions, and Director Independence.
    
    
    66Item 14. Principal Accounting Fees and Services.
    
    
    66PART IVItem 15. Exhibits, Financial Statement Schedules.
    
    
    67SIGNATURES
    
    
    72Exhibit 10.4Exhibit 12Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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FORM 10-K ANNUAL REPORT
 This Annual Report on Form 10-K contains forward-looking statements that are based on Sport
Supply Group, Inc.s and its consolidated subsidiaries (Sport Supply Group, we, us, our,
or the Company) current expectations or forecasts of future events. Actual results in future
periods may differ materially from those expressed or implied by those forward-looking statements
because of a number of risks and uncertainties. For a discussion of risk factors affecting Sport
Supply Groups business and prospects, see Item 1A  Risk Factors.
 Our fiscal year ends on June 30 of each year. Accordingly, references in this report to
fiscal 2005, fiscal 2006, fiscal 2007, fiscal 2008, and fiscal 2009 refer to our fiscal
years ended or ending, as the case may be, June 30, 2005, 2006, 2007, 2008 and 2009, respectively.
 
 PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 Our Business
 soft goods
  
    
    our unique, informative catalogs and fliers that we distribute to potential customers;
    
    our strategically located road sales professionals;
    
    our telemarketers;
    
    the Internet; and
    
    our appearance at trade shows and other sales events.
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Corporate History; Additional Information
 Salkeld Kesslers OTS Dixie Tomark Old SSG
  SEC
 Corporate Strategy
     - 3 -




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Fiscal 2007
 
    
    Old SSG in November 2006  completed the acquisition of the remaining 26.8% of
the capital stock of Old SSG that we did not already own. Old SSG was a direct
marketer and Business-To-Business (B2B) e-commerce supplier of sporting goods
and physical education equipment to the institutional and youth sports markets;
 Fiscal 2006
 
    
    Old SSG in July 2005  acquired 53.2% of the outstanding capital stock of Old
SSG in July 2005. During the second quarter of fiscal 2006, we acquired an additional
20% of the outstanding capital stock of Old SSG bringing our total ownership to 73.2%;
    
    The operating assets of Team Print in August 2005  a leading embroiderer and
screen printer of sporting goods apparel and accessories, which was acquired from one
of the former stockholders of Salkeld;
 Fiscal 2005
 
    
    Dixie in July 2004  a leading supplier of soft goods and sporting goods
equipment throughout the Mid-Atlantic region of the United States, with a road sales
force of approximately 56 employees;
    
    OTS in December 2004  a leading supplier of soft goods and sporting goods
equipment throughout the State of Florida with a road sales force of approximately 13
employees; and
    
    Salkeld in May 2005  a leading supplier of soft goods and sporting goods
equipment throughout the State of Illinois, with a particular concentration in Chicago
and a road sales force of approximately 13 employees.
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Products and Services
   Product
    
    Brand NameTeam sports apparel (soft goods)
    
    Nike, Rawlings, Wilson,
Under Armour and ChampionBatting cages, soccer goals, basketball goals
    
    FunNets, Mark One, MacGregor and AlumagoalCamping and related accessories
    
    Mark OneTennis nets and court equipment
    
    Edwards, Rol-Dri and Tidi-CourtBaseballs, caps, softballs, bats, gloves and
accessories
    
    Diamond, Mark One, New Era,
Ryan Express, Wilson, MacGregor, Rawlings, Easton and Pro BaseFootball helmets, footballs, pads and accessories
    
    Schutt, Pro Down and RiddellBasketballs
    
    Mark One, Spalding, MacGregor and VoitPhysical education and recreation
    
    Voit, Gamecraft and GSCExercise equipment
    
    Champion Barbell and Brute ForceTrack and field
    
    Port-A-Pit
 Team Sports Apparel (soft goods). Nike Rawlings, Wilson, Under Armour Champion
 Cages, Goals and Camping Equipment FunNets Mark One Alumagoal MacGregor ®
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Tennis Edwards Edwards Rol-Dri Tidi-Court
 Baseball and Softball. Diamond, Rawlings, Easton, New Era Wilson Diamond Wilson MarkOne New Era New Era New Era Ryan Express. Pro Base
 Football. Schutt Riddell Schutt Riddell Pro Down
 Basketball. Spalding Spalding MarkOne, Voit MacGregor ®
 Physical Education and Recreation. Gamecraft GSC
 Exercise Equipment. Champion Barbell Brute Force
 Track and field. Port-A-Pit
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Adidas® New Era®, Nike® Rawlings®,Champion®, Schutt® Spalding® Wilson® Under Armour® Edwards®, Rol-Dri® Mark One®, MacGregor®, Voit®,
Alumagoal® FunNets® New Era
 Sales and Marketing
    Customers
  GSA
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Seasonal Nature of Business; Backlog
   Manufacturing; Foreign Sourcing and Raw Materials
   
    
    shipment delays;
    
    fluctuations in exchange rates that result in our suppliers charging higher prices;
    
    increases in freight cost and import duties;
    
    increases in import cost of goods;
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
    
    changes in customs regulations;
    
    adverse economic conditions in foreign countries;
    
    social, political and economic instability;
    
    acts of war and terrorism;
    
    strikes by the International Longshore and Warehouse Union (the ILWU)
(union of dock workers that move cargo, such as import containers, along the West
Coast);
    
    lockout of the ILWU by the Pacific Maritime Association (group of global ship
owners and terminal operators); and
    
    having to carry extra inventory due to long lead times for receiving products.
  Competition
  Government Regulation
  Employees
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ITEM 1A. RISK FACTORS.
  Weak general economic conditions may adversely impact our business.
  
    
    reduced school and other government supported budgets;
    
    increased costs for raw materials and imported products; and
    
    higher fuel costs and fuel surcharges imposed by our suppliers and by the third-party
carriers upon which we rely to deliver our catalogs and products.
  We are dependent on competitive pricing from our suppliers.
  Our success depends upon our ability to develop new, and enhance our existing relationships with,
customers and suppliers.
  
    
    effectively develop new relationships and maintain and better penetrate existing
relationships with our suppliers, advertisers and customers;
    
    provide quality products at competitive prices;
    
    respond to competitive developments;
    
    attract, retain and motivate qualified personnel; and
    
    anticipate and respond to merchandise trends and consumer demands.
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We may be unable to make acquisitions on attractive terms or successfully integrate them into our
operations.
   
    
    the difficulties related to assimilating the management, products, personnel,
financial controls and other systems of an acquired business and to integrating
distribution and information systems and other operational capabilities;
    
    the difficulties related to combining previously separate businesses into a single
unit;
    
    the substantial diversion of managements attention from day-to-day operations;
    
    the assumption of liabilities of an acquired business, including unforeseen
liabilities;
    
    unanticipated costs associated with business acquisitions;
    
    the failure to realize anticipated benefits, such as cost savings, revenue
enhancements and profitability objectives;
    
    the dilution of existing stockholders due to the issuance of equity securities,
utilization of cash reserves, or incurrence of debt in order to fund the acquisitions;
    
    the potential to have to write-down or write-off the value of acquired assets;
    
    the potential substantial transaction costs associated with completed acquisitions
or cost of pursuing acquisitions that are not completed;
    
    the loss of any key personnel of the acquired company; and
    
    maintaining customer, supplier or other favorable business relationships of
acquired operations.
 Our success depends on our ability to manage our growth.
  
    
    these resources will be available, or be available in a cost-effective form, to us
which will allow us to sustain growth at the same levels;
    
    our current personnel, systems, procedures and controls will be adequate to support
our future operations; or
    
    we will identify, hire, train, motivate or manage required personnel.
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We face intense competition and potential competition from companies with greater resources and our
inability to compete effectively with these companies could harm our business.
  
    
    substantially greater financial resources;
    
    a larger customer base;
    
    a broader line of product offerings; and
    
    greater name recognition within the industry.
  The weak financial conditions of some of our customers may adversely affect our business.
  Our financial results vary from quarter to quarter, which could hurt our business and the market
price of our stock.
  
    
    seasonal fluctuations in demand for our products;
    
    the timing and introduction of new products by us and our competitors;
    
    the market acceptance of our products;
    
    the mix of products sold;
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
    
    the timing of significant orders from and shipments to customers;
    
    the reduction, rescheduling or cancellation of orders by our customers;
    
    product pricing and discounts;
    
    the timing of our acquisitions of other companies and businesses; and
    
    general economic conditions.
  Seasonality of our business may adversely affect our net sales and operating income.
  State and local sales tax collection may affect demand for our products.
  We depend on key personnel for our future success.
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We depend on international and domestic suppliers.
   
    
    shipment delays;
    
    fluctuation in exchange rates that result in our suppliers charging higher prices;
    
    increases in import duties;
    
    increases in freight cost;
    
    changes in customs regulations;
    
    adverse economic conditions in foreign countries;
    
    social, political and economic instability;
    
    acts of war and terrorism;
    
    strikes by the ILWU (union of dock workers that move cargo, such as import
containers, along the West Coast);
    
    lockout of the ILWU by the Pacific Maritime Association (group of global ship
owners and terminal operators); and
    
    having to carry extra inventory due to long lead times for receiving products.
  We depend on a large number of domestic suppliers for our finished goods.
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We depend on third-party carriers to deliver our catalogs and products.
  
    
    shipment delays caused by such carriers;
    
    labor strikes by the employees of such carriers;
    
    increases in shipping costs, fuel surcharges and postage rates;
    
    increased catalog cost due to increased postage rates; and
    
    other adverse economic conditions.
  We have in the past, and may continue to be subject to product liability claims if people or
property are harmed by the products we sell.
  We have a material amount of goodwill and may be required to recognize future intangible impairment
charges.
  Goodwill and Other Intangible Assets, Accounting for the Impairment or Disposal of Long-Lived Assets
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Our operations are largely dependent on our information technology systems, which require
significant expenditures and entail risk.
   Risks Related to our Corporate Structure and Stock
 Our stock price could be subject to significant volatility.
  
    
    the depth and liquidity of the market for our common stock;
    
    investor perception of our company and the industry within which we compete;
    
    analysts expectations for our future performance and our ability to meet such
expectations;
    
    quarterly variations in operating results; and
    
    general economic and market conditions.
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A large number of our outstanding shares and shares to be issued upon exercise of our outstanding
options may be sold into the market in the future, which could cause the market price of our common
stock to drop significantly, even if our business is doing well.
 Amended and Restated Plan
 Four principal stockholders own a significant amount of our outstanding common stock.
  Rights of our stockholders may be negatively affected if we issue any of the shares of preferred
stock, which our Board of Directors has authority to issue.
  Risks Related to the Senior Subordinated Notes Due 2009
 We significantly increased our leverage because of the sale of the notes.
  Notes
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The notes are subordinated and there are no financial covenants in the indenture.
    We may be unable to repay, repurchase or redeem the notes.
  Provisions of the notes could discourage an acquisition of us by a third party.
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The make whole premium on the notes tendered for repurchase upon a fundamental change may not
adequately compensate the holders for the lost option time value of notes.
  A market may not develop for the notes.
  Conversion of the notes or issuance of additional securities convertible into or exercisable for
shares of our common stock could dilute the ownership of existing stockholders.
  The price at which our common stock may be purchased on the Nasdaq Stock Market is currently lower
than the conversion price of the notes and may remain lower in the future.
  The notes are not rated.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
   - 19 -




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ITEM 2. PROPERTIES.
    Lease ExpiresLocation
    
    Type of Facility
    
    Square Footage
    
    
    or is OwnedFarmers Branch, Texas
    
    Warehouse, Production and Distribution
    
    
    48,000
    
    
    
    2010Farmers Branch, Texas
    
    Warehouse, Production and Distribution
    
    
    137,600
    
    
    
    2010Farmers Branch, Texas
    
    Warehouse and Fulfillment
    
    
    181,000
    
    
    
    2010Richmond, Indiana
    
    Warehouse, Production and Distribution
    
    
    76,000
    
    
    
    2009Richmond, Virginia
    
    Warehouse, Production and Distribution
    
    
    37,300
    
    
    
    2009Corona, California
    
    Warehouse, Production and Distribution
    
    
    29,700
    
    
    
    2009Sanford, Florida
    
    Warehouse, Production and Distribution
    
    
    12,000
    
    
    
    2010Bourbonnais, Illinois
    
    Warehouse, Production and Distribution
    
    
    10,000
    
    
    
    2009Bourbonnais, Illinois
    
    Embroidering and Screen Printing
    
    
    16,000
    
    
    
    2010Anniston, Alabama
    
    Manufacturing
    
    
    35,000
    
    
    OwnedAnniston, Alabama
    
    Manufacturing
    
    
    45,000
    
    
    Owned
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ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  Votes For
    
    
    8,975,361Votes Against
    
    
    465,563Abstentions
    
    
    21,950Broker Non-Votes
    
    
    0
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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
 Market
  Fiscal 2008
    
    
    Fiscal 2007Calendar Quarter
    
    Low
    
    
    High
    
    
    Low
    
    
    HighJuly 1  September 30
    
    $
    8.99
    
    
    $
    10.24
    
    
    $
    8.23
    
    
    $
    10.75October 1  December 31
    
    
    7.00
    
    
    
    10.48
    
    
    
    9.08
    
    
    
    10.50January 1  March 31
    
    
    7.57
    
    
    
    12.93
    
    
    
    7.80
    
    
    
    9.48April 1  June 30
    
    
    9.61
    
    
    
    12.04
    
    
    
    7.44
    
    
    
    9.71
 Holders
  Dividends
  Issuer Purchase of Equity Securities
 Total Numberof Notes
    
    
    ApproximatePurchased as
    
    
    Dollar Value ofTotal
    
    
    Average
    
    
    Part of Publicly
    
    
    Notes that MayNumber of
    
    
    Price
    
    
    Announced
    
    
    yet be PurchasedNotes
    
    
    Paid per
    
    
    Plans or
    
    
    Under the PlansPurchased
    
    
    Note
    
    
    Programs
    
    
    or ProgramsJuly 1 through July 31, 2008 (1)
    
    
    101,296
    
    
    $
    13.95
    
    
    
    101,296
    
    
    $
    13,516,000August 1 through August 31,
2008 (2)
    
    
    273,038
    
    
    $
    13.99
    
    
    
    273,038
    
    
    $
    9,519,000
 (1)
    
    On July 7, 2008, the Company purchased approximately $1.5 million of its convertible
bonds through an open market purchase. The convertible bonds were purchased at a
discounted price of $95.25 per $100 value. The Company paid approximately $1.4 million in
principal and accrued interest.(2)
    
    On August 13, 2008, the Company purchased approximately $4.0 million of its convertible
bonds through an open market purchase. The convertible bonds were purchased at a
discounted price of
$95.50 per $100 value. The Company paid approximately $3.9 million in principal and accrued
interest.  - 22 -




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Transfer Agent, Registrar and Dividend Disbursing Agent for Common Stock
 
 
 ITEM 6. SELECTED FINANCIAL DATA.
  Fiscal Year Ended June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(In thousands except per share data)Results of Operations:Net sales
    
    $
    251,394
    
    
    $
    236,855
    
    
    $
    224,238
    
    
    $
    106,339
    
    
    $
    39,562Gross profit
    
    
    91,079
    
    
    
    83,560
    
    
    
    75,079
    
    
    
    35,954
    
    
    
    13,956Operating profit
    
    
    19,700
    
    
    
    12,690
    
    
    
    8,312
    
    
    
    7,303
    
    
    
    2,847Net income
    
    $
    9,733
    
    
    $
    3,860
    
    
    $
    1,896
    
    
    $
    3,601
    
    
    $
    1,673Earnings per common
share:Basic
    
    $
    0.80
    
    
    $
    0.38
    
    
    $
    0.19
    
    
    $
    0.36
    
    
    $
    0.26Diluted
    
    $
    0.76
    
    
    $
    0.37
    
    
    $
    0.18
    
    
    $
    0.35
    
    
    $
    0.22Number of weighted average
shares outstanding:Basic
    
    
    12,123
    
    
    
    10,235
    
    
    
    10,182
    
    
    
    10,031
    
    
    
    6,325Diluted
    
    
    15,657
    
    
    
    10,374
    
    
    
    10,399
    
    
    
    10,279
    
    
    
    7,572Cash Flow and Balance
Sheet Data:Net cash provided by
(used in)
operating activities
    
    $
    22,884
    
    
    $
    18,887
    
    
    $
    (172
    )
    
    $
    (2,862
    )
    
    $
    153Cash and cash equivalents
    
    
    20,531
    
    
    
    5,670
    
    
    
    4,079
    
    
    
    40,326
    
    
    
    7,473Total assets
    
    
    167,695
    
    
    
    156,592
    
    
    
    145,721
    
    
    
    108,596
    
    
    
    46,736Long-term debt
    
    
    50,036
    
    
    
    71,386
    
    
    
    62,284
    
    
    
    50,448
    
    
    
    73Cash dividends declared
per common share
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.10Total stockholders equity
    
    $
    79,286
    
    
    $
    50,536
    
    
    $
    46,588
    
    
    $
    45,106
    
    
    $
    32,073
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Background
  Overview
      - 24 -




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
    
    We completed the following acquisition during fiscal 2007:
 
    
    acquired the remaining 26.8% of the outstanding capital stock of Old SSG.
 
    
    We completed the following two acquisitions during fiscal 2006:
 
    
    acquired 73.2% of the outstanding capital stock of Old SSG, a direct marketer
and B2B e-commerce supplier of sporting goods and physical education equipment to the
institutional and youth sports markets; and
    
    acquired the operating assets of Team Print, a leading embroiderer and screen
printer of sporting goods apparel and accessories.
 
    
    We completed the following three acquisitions during fiscal 2005:
 
    
    acquired Dixie in July 2004, a leading supplier of soft goods and sporting
goods equipment throughout the Mid-Atlantic region of the United States, with a road
sales force of approximately 56 employees at the date of acquisition;
    
    acquired OTS in December 2004, a leading supplier of soft goods and sporting
goods equipment throughout the State of Florida and a road sales force of approximately
13 employees at the date of acquisition; and
    
    acquired Salkeld in May 2005, a leading supplier of soft goods and sporting
goods equipment throughout the State of Illinois, with a particular concentration in
Chicago and a road sales force of approximately 13 employees at the date of
acquisition.
  - 25 -




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
    
    We completed the following two acquisitions during fiscal 2004:
 
    
    acquired Tomark in January 2004, a marketer, distributor, manufacturer and
installer of sporting goods and related equipment primarily to the California
institutional market with a road sales force of approximately 8 employees at the date
of acquisition; and
    
    acquired Kesslers in April 2004, a leading supplier of soft goods and sporting
goods equipment throughout the Mid-West region of the United States, with a road sales
force of approximately 85 employees at the date of acquisition.
 
    
    Each year we expanded our football and baseball product offerings, which provide the
Company with additional products for future growth opportunities.
    
    Since 2005, through our acquisition of Kesslers, Dixie, OTS and Salkeld, we engaged
approximately 167 road sales professionals and continued our ongoing efforts to grow net
sales by directing a selection of our traditional catalog customers to our road sales
professionals.
    
    In fiscal 2008, we transferred the listing of our common stock to the Nasdaq Stock
Market from the American Stock Exchange to provide the Company with enhanced exposure and
liquidity.
    
    In fiscal 2008 we successfully integrated the operations of the formerly known
Collegiate Pacific Inc. onto Old SSGs SAP ERP platform, which enhanced the Companys
operating efficiencies and technological capabilities.
    
    We completed a private placement of $50.0 million of convertible senior subordinated
notes in November 2004; we replaced our senior secured facility with a new senior secured
credit facility providing up to $25.0 million in the aggregate of loans and other
financial accommodations with an accordion feature that could potentially expand total
availability to $55.0 million; and in July 2007, we sold 1,830,000 shares of our common
stock in a private placement, using the proceeds to pay down the senior secured facility.
These new sources of capital provide us more opportunity and flexibility to make progress
toward our strategic objectives.
 Consolidated Results of Operations
  Fiscal 2008
    
    
    Fiscal 2007
    
    
    Fiscal 2006Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    PercentNet sales
    
    $
    251,394
    
    
    
    100.0
    %
    
    $
    236,855
    
    
    
    100.0
    %
    
    $
    224,238
    
    
    
    100.0
    %Gross profit
    
    
    91,079
    
    
    
    36.2
    %
    
    
    83,560
    
    
    
    35.3
    %
    
    
    75,079
    
    
    
    33.5
    %Selling, general and
administrative expenses
    
    
    71,379
    
    
    
    28.4
    %
    
    
    70,870
    
    
    
    29.9
    %
    
    
    66,767
    
    
    
    29.8
    %Operating profit
    
    
    19,700
    
    
    
    7.8
    %
    
    
    12,690
    
    
    
    5.4
    %
    
    
    8,312
    
    
    
    3.7
    %Net income
    
    
    9,733
    
    
    
    3.9
    %
    
    
    3,860
    
    
    
    1.6
    %
    
    
    1,896
    
    
    
    .8
    %Net income per share  basic
    
    $
    0.80
    
    
    
    
    
    
    $
    0.38
    
    
    
    
    
    
    $
    0.19Net income per share 
diluted
    
    $
    0.76
    
    
    
    
    
    
    $
    0.37
    
    
    
    
    
    
    $
    0.18
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Fiscal Year Ended June 30, 2008 Compared to Fiscal Year Ended June 30, 2007
 Net Sales.
 Gross Profit.
  Selling, General and Administrative Expense. SG&A
 
    
    personnel and group insurance related expenses (including group insurance) of
approximately $41.1 million;
    
    advertising and catalog production expenses of approximately $6.5 million;
    
    depreciation and amortization of approximately $3.6 million;
    
    rent expense of approximately $2.6 million;
    
    computer services and supplies of approximately $2.6 million;
    
    travel expenses of approximately $2.0 million;
    
    legal and accounting fees of approximately $1.6 million;
    
    outside professional services expenses of approximately $1.3 million;
    
    bank and credit card processing charges of approximately $1.2 million;
    
    general insurance related expenses of approximately $1.0 million; and
    
    bad debt expenses of approximately $1.0 million.
  - 27 -




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##### Table of Contents



Operating Profit.
 Interest Expense.
 Minority Interest
 Income Taxes.
 Net Income.
 Fiscal Year Ended June 30, 2007 Compared to Fiscal Year Ended June 30, 2006
 Net Sales.
 Gross Profit.
  Selling, General and Administrative Expense. SG&A expenses
 
    
    personnel and group insurance related expenses of approximately $38.0 million;
    
    advertising and catalog production expenses of approximately $7.6 million;
    
    depreciation and amortization of approximately $3.3 million;
  - 28 -




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
    
    rent expense of approximately $2.7 million;
    
    computer services and supplies of approximately $2.3 million;
    
    legal and accounting fees of approximately $2.2 million;
    
    travel expenses of approximately $2.1 million;
    
    bank and credit card processing charges of approximately $1.1 million;
    
    bad debt expenses of approximately $1.1 million;
    
    general insurance related expenses of approximately $852 thousand;
    
    Sarbanes-Oxley related compliance costs of approximately $635 thousand; and
    
    sales tax expenses of $871 thousand.
  Operating Profit.
 Interest Expense.
 Minority Interest
 Income Taxes.
 Net Income.
  - 29 -




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##### Table of Contents



Liquidity and Capital Resources
 Liquidity
  June 30,
    
    
    June 30,
    
    
    June 30,(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Cash and cash equivalents
    
    $
    20,531
    
    
    $
    5,670
    
    
    $
    4,079Net cash flow provided by (used in):Operating activities
    
    $
    22,884
    
    
    $
    18,887
    
    
    $
    (172
    )Investing activities
    
    
    (1,723
    )
    
    
    (27,887
    )
    
    
    (46,089
    )Financing activities
    
    
    (6,300
    )
    
    
    10,591
    
    
    
    10,014Net increase (decrease) in cash and
cash equivalents
    
    $
    14,861
    
    
    $
    1,591
    
    
    $
    (36,247
    )
  Operating Activities.
 
    
    net income of $9.7 million during fiscal 2008, compared to $3.9 million in fiscal
2007, which is attributable to increased sales for both the team dealer and catalog
groups, increased gross profit resulting from a shift toward a more profitable product
mix by our road sales professionals through greater sales of the Companys proprietary
products, improvements in manufacturing efficiencies, a 90 basis point improvement in
overall gross profit percentage, and improved management of the companys SG&A
expenses;
    
    an increase in accounts payable of $5.0 million during fiscal 2008, compared to a
$1.4 million increase in accounts payable during fiscal 2007, which is attributable
to improved management of the Companys financial resources;
    
    a decrease in prepaid income taxes of $3.9 million during fiscal 2008, compared
to a $1.6 million increase in prepaid income taxes during fiscal 2007, which is
primarily attributable to $1.8 million in taxes refunded; and
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Investing Activities.
 Financing Activities.
   Capital Resources
 Notes
 Indenture
 Registration Statement
  - 31 -




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##### Table of Contents



Amended Credit Agreement MLCFC
 Senior Credit Facility Revolving Facility
 Amendment No. 1
 Amendment No. 2
  EBITDA Senior
Leverage Ratio
 Fixed Charge Coverage Ratio
   - 32 -




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- 33 -




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Long-Term Financial Obligations and Other Commercial Commitments
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    5 years(dollars in thousands)Long-term debt, including current portion
    
    $
    50,144
    
    
    $
    108
    
    
    $
    50,036
    
    
    $
    
    
    
    $
    Operating leases
    
    
    6,570
    
    
    
    3,086
    
    
    
    3,305
    
    
    
    179
    
    
    
    Interest expense on long-term debt
    
    
    4,375
    
    
    
    2,908
    
    
    
    1,467
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    61,089
    
    
    $
    6,102
    
    
    $
    54,808
    
    
    $
    179
    
    
    $
    
 Purchase Commitments.
 Long-Term Debt and Advances Under Credit Facilities.
   Operating Leases.
 Off-Balance Sheet Arrangements.
 Subsequent Events
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##### Table of Contents



Recent Accounting Pronouncements
  Risk Factors Affecting Sport Supply Groups Business and Prospects
  Critical Accounting Policies and Estimates
   Inventories.
 Allowance for Doubtful Accounts.
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##### Table of Contents



Goodwill, Intangibles and Long-lived Assets.
 Accounting for Business Combinations.
 Impact of Inflation and Changing Prices
   - 36 -




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 Interest Rates
   Foreign Currency and Derivatives
   - 37 -




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 PageIndex to Consolidated Financial Statements
    
    
    38Report of Independent Registered Public Accounting Firm
    
    
    39Consolidated Balance Sheets as of June 30, 2008 and 2007
    
    
    40Consolidated Statements of Income for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    41Consolidated Statement of Stockholders Equity for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    42Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    43Notes to Consolidated Financial Statements
    
    
    44
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Report of Independent Registered Public Accounting Firm
 
     
  - 39 -




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##### Table of Contents



SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 June 30,2008
    
    
    2007(In thousands, except shareand per share amounts)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    20,531
    
    
    $
    5,670Accounts receivable, net of allowance for doubtful accounts of
$1,320 and $1,296, respectively
    
    
    34,060
    
    
    
    31,154Inventories, net
    
    
    36,318
    
    
    
    32,241Current portion of deferred income taxes
    
    
    3,866
    
    
    
    3,790Prepaid income taxes
    
    
    
    
    
    
    3,208Prepaid expenses and other current assets
    
    
    1,203
    
    
    
    1,380Total current assets
    
    
    95,978
    
    
    
    77,443PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$7,576 and $4,986, respectively
    
    
    9,715
    
    
    
    10,678DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$2,978 and $2,035, respectively
    
    
    1,389
    
    
    
    2,309INTANGIBLE ASSETS, net of accumulated amortization of
$4,431 and $3,379, respectively
    
    
    6,972
    
    
    
    8,024GOODWILL
    
    
    53,543
    
    
    
    54,949DEFERRED INCOME TAXES
    
    
    
    
    
    
    3,045OTHER ASSETS, net
    
    
    98
    
    
    
    144Total assets
    
    $
    167,695
    
    
    $
    156,592LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    21,183
    
    
    $
    16,167Accrued liabilities
    
    
    11,842
    
    
    
    10,318Dividends payable
    
    
    309
    
    
    
    259Accrued interest
    
    
    240
    
    
    
    291Current portion of long-term debt
    
    
    108
    
    
    
    3,608Income taxes payable
    
    
    677
    
    
    
    Deferred tax liability
    
    
    
    
    
    
    129Total current liabilities
    
    
    34,359
    
    
    
    30,772DEFERRED INCOME TAX LIABILITIES
    
    
    4,014
    
    
    
    3,898NOTES PAYABLE AND OTHER LONG-TERM DEBT
    
    
    50,036
    
    
    
    71,386Total liabilities
    
    
    88,409
    
    
    
    106,056COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $0.01 par value, 1,000,000 shares authorized;
no shares issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000,000 shares authorized;
12,465,986 and 10,440,586 shares issued and
12,362,060 and 10,354,560 shares outstanding, respectively
    
    
    125
    
    
    
    104Additional paid-in capital
    
    
    64,648
    
    
    
    44,276Retained earnings
    
    
    15,316
    
    
    
    6,813Treasury stock at cost, 103,926 and 86,026 shares, respectively
    
    
    (803
    )
    
    
    (657
    )Total stockholders equity
    
    
    79,286
    
    
    
    50,536Total liabilities and stockholders equity
    
    $
    167,695
    
    
    $
    156,592
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##### Table of Contents



SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 For the fiscal years ended June 30,2008
    
    
    2007
    
    
    2006(In thousands, except share and per share data)Net sales
    
    $
    251,394
    
    
    $
    236,855
    
    
    $
    224,238Cost of sales
    
    
    160,315
    
    
    
    153,295
    
    
    
    149,159Gross profit
    
    
    91,079
    
    
    
    83,560
    
    
    
    75,079Selling, general and administrative expenses
    
    
    71,379
    
    
    
    70,870
    
    
    
    66,767Operating profit
    
    
    19,700
    
    
    
    12,690
    
    
    
    8,312Other income (expense):Interest income
    
    
    290
    
    
    
    191
    
    
    
    117Interest expense
    
    
    (4,105
    )
    
    
    (6,002
    )
    
    
    (4,545
    )Other income
    
    
    124
    
    
    
    146
    
    
    
    223Total other expense
    
    
    (3,691
    )
    
    
    (5,665
    )
    
    
    (4,205
    )Income before minority interest in income of
consolidated subsidiary and income taxes
    
    
    16,009
    
    
    
    7,025
    
    
    
    4,107Income tax provision
    
    
    6,276
    
    
    
    2,634
    
    
    
    1,603Minority interest in income of consolidated subsidiary,
net of tax
    
    
    
    
    
    
    531
    
    
    
    608Net income
    
    $
    9,733
    
    
    $
    3,860
    
    
    $
    1,896Weighted average number of shares outstanding:Basic
    
    
    12,122,765
    
    
    
    10,235,308
    
    
    
    10,182,428Diluted
    
    
    15,656,672
    
    
    
    10,373,907
    
    
    
    10,399,130Net income per common share  basic
    
    $
    0.80
    
    
    $
    0.38
    
    
    $
    0.19Net income per common share  diluted
    
    $
    0.76
    
    
    $
    0.37
    
    
    $
    0.18Dividends declared per common share
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.10
   - 41 -




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##### Table of Contents



SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 For the fiscal years ended June 30, 2008, 2007 and 2006
 ADDITIONALCOMMON STOCK
    
    
    PAID-IN
    
    
    RETAINED
    
    
    TREASURY STOCKSHARES
    
    
    AMOUNT
    
    
    CAPITAL
    
    
    EARNINGS
    
    
    SHARES
    
    
    AMOUNT
    
    
    TOTAL(In thousands, except share data)Balances at July 1, 2005
    
    
    10,205,775
    
    
    
    102
    
    
    
    41,911
    
    
    
    3,750
    
    
    
    86,026
    
    
    
    (657
    )
    
    
    45,106Issuance of stock for cash
    
    
    22,950
    
    
    
    
    
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185Stock based compensation
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Issuance of stock for
business acquisitions
    
    
    86,461
    
    
    
    1
    
    
    
    1,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,007Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,020
    )
    
    
    
    
    
    
    
    
    
    
    (1,020
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,896
    
    
    
    
    
    
    
    
    
    
    
    1,896Balances at June 30, 2006
    
    
    10,315,186
    
    
    
    103
    
    
    
    43,162
    
    
    
    4,626
    
    
    
    86,026
    
    
    
    (657
    )
    
    
    47,234SAB No 108 cummulative

effect adjustment
(Note 2 )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (646
    )
    
    
    
    
    
    
    
    
    
    
    (646
    )Adjusted balances at July 1,
2006
    
    
    10,315,186
    
    
    
    103
    
    
    
    43,162
    
    
    
    3,980
    
    
    
    86,026
    
    
    
    (657
    )
    
    
    46,588Issuance of stock for cash
    
    
    125,400
    
    
    
    1
    
    
    
    607
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,027
    )
    
    
    
    
    
    
    
    
    
    
    (1,027
    )Tax benefit related to
the exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    507
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    507Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,860
    
    
    
    
    
    
    
    
    
    
    
    3,860Balances at June 30, 2007
    
    
    10,440,586
    
    
    $
    104
    
    
    $
    44,276
    
    
    $
    6,813
    
    
    
    86,026
    
    
    $
    (657
    )
    
    $
    50,536Issuance of stock for
cash, net of offering
costs of $200
    
    
    2,025,400
    
    
    
    21
    
    
    
    19,499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,520Treasury stock purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,900
    
    
    
    (146
    )
    
    
    (146
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    494Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,230
    )
    
    
    
    
    
    
    
    
    
    
    (1,230
    )Tax benefit related to
the exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    379Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,733
    
    
    
    
    
    
    
    
    
    
    
    9,733Balances at June 30, 2008
    
    
    12,465,986
    
    
    $
    125
    
    
    $
    64,648
    
    
    $
    15,316
    
    
    
    103,926
    
    
    $
    (803
    )
    
    $
    79,286
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##### Table of Contents



SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the years ended June 30,2008
    
    
    2007
    
    
    2006(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    9,733
    
    
    $
    3,860
    
    
    $
    1,896Adjustments to reconcile net income to cash provided by (used in)
operating activities:Provision for uncollectible accounts receivable
    
    
    1,028
    
    
    
    1,099
    
    
    
    982Depreciation and amortization expense
    
    
    3,738
    
    
    
    3,479
    
    
    
    3,436Amortization of deferred debt issuance costs
    
    
    943
    
    
    
    959
    
    
    
    683Loss on disposition of property and equipment
    
    
    
    
    
    
    
    
    
    
    60Deferred tax expense
    
    
    4,362
    
    
    
    2,542
    
    
    
    1,060Stock-based compensation expense
    
    
    494
    
    
    
    
    
    
    
    60Minority interest in consolidated subsidiary
    
    
    
    
    
    
    531
    
    
    
    608Changes in operating assets and liabilities (net of effects of
acquisitions):Accounts receivable
    
    
    (3,934
    )
    
    
    (1,249
    )
    
    
    (2,793
    )Inventories
    
    
    (4,077
    )
    
    
    4,944
    
    
    
    (2,083
    )Prepaid income taxes and income taxes payable
    
    
    3,885
    
    
    
    (1,601
    )
    
    
    (962
    )Prepaid expenses and other current assets
    
    
    177
    
    
    
    819
    
    
    
    (1,248
    )Other assets, net
    
    
    46
    
    
    
    (313
    )
    
    
    (145
    )Accounts payable
    
    
    5,016
    
    
    
    1,365
    
    
    
    (1,338
    )Accrued liabilities and accrued interest
    
    
    1,473
    
    
    
    2,452
    
    
    
    (388
    )Net cash provided by (used in) operating activities
    
    
    22,884
    
    
    
    18,887
    
    
    
    (172
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (1,723
    )
    
    
    (2,980
    )
    
    
    (1,694
    )Cash used in business acquisitions, net of cash acquired of
$0, $0 and $864, respectively
    
    
    
    
    
    
    (24,907
    )
    
    
    (44,395
    )Net cash used in investing activities
    
    
    (1,723
    )
    
    
    (27,887
    )
    
    
    (46,089
    )CASH FLOWS FROM FINANCING ACTIVITIES:Deferred debt issuance cost
    
    
    (23
    )
    
    
    
    
    
    
    Proceeds from bank line of credit
    
    
    1,015
    
    
    
    34,935
    
    
    
    174,895Payments on notes payable and line of credit
    
    
    (25,865
    )
    
    
    (24,435
    )
    
    
    (164,046
    )Cash paid for treasury shares
    
    
    (146
    )
    
    
    
    
    
    
    Payment of dividends
    
    
    (1,180
    )
    
    
    (1,024
    )
    
    
    (1,020
    )Tax benefit related to the exercise of stock options
    
    
    379
    
    
    
    507
    
    
    
    Proceeds from issuance of common stock
    
    
    19,520
    
    
    
    608
    
    
    
    185Net cash provided by (used in) financing activities
    
    
    (6,300
    )
    
    
    10,591
    
    
    
    10,014Net change in cash and cash equivalents
    
    
    14,861
    
    
    
    1,591
    
    
    
    (36,247
    )Cash and cash equivalents, beginning of year
    
    
    5,670
    
    
    
    4,079
    
    
    
    40,326Cash and cash equivalents, end of year
    
    $
    20,531
    
    
    $
    5,670
    
    
    $
    4,079SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    3,181
    
    
    $
    5,041
    
    
    $
    3,795Cash paid (refunded) for income taxes
    
    $
    (1,752
    )
    
    $
    1,378
    
    
    $
    1,612SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES (See Note 3 for non-cash acquisition disclosures)
   - 43 -




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##### Table of Contents



1. General:
 Sport Supply Group soft goods
 2. Summary of Significant Accounting Policies:
 Consolidation. Kesslers Dixie Company
 Cash and Cash Equivalents.
 Financial Instruments and Credit Risk Concentrations. Notes
 Accounts Receivable.
  - 44 -




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2008
    
    
    2007
    
    
    2006(In thousands)Balance at beginning of period
    
    $
    1,296
    
    
    $
    1,496
    
    
    $
    1,042Provision for uncollectible accounts receivable
    
    
    1,028
    
    
    
    1,099
    
    
    
    982Accounts written off, net of recoveries
    
    
    (1,004
    )
    
    
    (1,299
    )
    
    
    (528
    )Balance at end of period
    
    $
    1,320
    
    
    $
    1,296
    
    
    $
    1,496
  Inventories.
 Property and Equipment.
 Intangible Assets.
 Old SSG
 SFAS Accounting for the
Impairment or Disposal of Long-Lived Assets
  - 45 -




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##### Table of Contents



Goodwill. Goodwill and Other Intangible Assets,
 Impairment of Long-Lived Assets.
 Revenue Recognition.
 Shipping and Handling Costs and Fees.
 Advertising.
 Stock Based Compensation. Share-Based Payment SFAS 123(R)
 Income Taxes.
 Income Per Share.
  - 46 -




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##### Table of Contents



Segment Reporting. Disclosures About Segments of an Enterprise and Related
Information
 Use of Estimates in Financial Statements. US GAAP
 Staff Accounting Bulletin 108 ( SAB 108 ). SEC Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements
  Recent Accounting Pronouncements :
 FASB Accounting for Uncertainty in Income Taxes FIN 48 . Accounting for Income Taxes
  - 47 -




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##### Table of Contents



Fair
Value Measurements Effective Date of FASB Statement No. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities including an Amendment of FASB Statement No. 115 SFAS 159
 Business Combinations SFAS
141R Business Combinations SFAS 141
 Noncontrolling Interests in Consolidated
Financial Statements SFAS 160
 Disclosures about Derivative Instruments and
Hedging Activities SFAS 161 Accounting for Derivative Instruments and Hedging Activities
  - 48 -




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##### Table of Contents



Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (including Partial Cash Settlement) APB 14-1
   Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities FSP EITF
03-6-1 Earnings Per
Share.
 3. Business Combinations:
 B2B
  - 49 -




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##### Table of Contents



Merger Agreement Termination Agreement
  Merger Transaction
 Salkeld
   OTS
  - 50 -




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##### Table of Contents



2006(In thousands)Current assets
    
    $
    29,851Property and equipment
    
    
    9,032Other assets
    
    
    311Intangible assets
    
    
    8,391Goodwill
    
    
    17,408Total assets acquired
    
    $
    64,993Current liabilities
    
    $
    10,342Non-current liabilities
    
    
    2,867Total liabilities assumed
    
    $
    13,209
 4. Net Sales:
  2008
    
    
    2007
    
    
    2006(In thousands)Catalog Group
    
    $
    149,913
    
    
    $
    140,760
    
    
    $
    134,456Team Dealer Group
    
    
    101,481
    
    
    
    96,095
    
    
    
    89,782Net Sales
    
    $
    251,394
    
    
    $
    236,855
    
    
    $
    224,238
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##### Table of Contents



5. Inventories:
  2008
    
    
    2007(In thousands)Raw materials
    
    $
    2,297
    
    
    $
    1,784Work in progress
    
    
    159
    
    
    
    114Finished goods
    
    
    33,862
    
    
    
    30,343Inventories
    
    $
    36,318
    
    
    $
    32,241
  2008
    
    
    2007(In thousands)Balance at beginning of period
    
    $
    2,727
    
    
    $
    2,230Provision for inventory reserve
    
    
    1,109
    
    
    
    2,626Inventory written off
    
    
    (863
    )
    
    
    (2,129
    )Balance at end of period
    
    $
    2,973
    
    
    $
    2,727
 6. Property and Equipment:
  EstimatedUseful Lives(Years)
    
    
    2008
    
    
    2007(In thousands)Office equipment
    
    
    2 -10
    
    
    $
    11,574
    
    
    $
    9,337Furniture and fixtures
    
    
    2 -10
    
    
    
    2,341
    
    
    
    2,474Warehouse and manufacturing equipment
    
    
    3 - 20
    
    
    
    1,677
    
    
    
    1,362Leasehold improvements
    
    
    *
    
    
    
    1,517
    
    
    
    2,130Vehicles
    
    
    3-7
    
    
    
    182
    
    
    
    361Total property and equipment
    
    
    
    
    
    
    17,291
    
    
    
    15,664Less: accumulated depreciation
    
    
    
    
    
    
    (7,576
    )
    
    
    (4,986
    )Property and equipment, net
    
    
    
    
    
    $
    9,715
    
    
    $
    10,678
 
    
    Shorter of useful life of related asset or lease term
   - 52 -




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##### Table of Contents



7. Intangible Assets:
  June 30, 2008
    
    
    June 30, 2007Asset
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(Years)
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Value(In thousands)Amortizable intangible assets:Trademarks
    
    
    10-15
    
    
    $
    343
    
    
    $
    222
    
    
    $
    121
    
    
    $
    343
    
    
    $
    199
    
    
    $
    144Non-compete agreements
    
    
    10
    
    
    
    3,200
    
    
    
    960
    
    
    
    2,240
    
    
    
    3,200
    
    
    
    640
    
    
    
    2,560Customer relationships
    
    
    10
    
    
    
    3,343
    
    
    
    1,558
    
    
    
    1,785
    
    
    
    3,343
    
    
    
    1,200
    
    
    
    2,143Contractual backlog
    
    
    .25-.50
    
    
    
    427
    
    
    
    427
    
    
    
    
    
    
    
    427
    
    
    
    427
    
    
    
    Customer database
    
    
    3
    
    
    
    660
    
    
    
    660
    
    
    
    
    
    
    
    660
    
    
    
    440
    
    
    
    220Significant contracts
    
    
    5
    
    
    
    327
    
    
    
    196
    
    
    
    131
    
    
    
    327
    
    
    
    130
    
    
    
    197License agreements and other
    
    
    3-10
    
    
    
    493
    
    
    
    408
    
    
    
    85
    
    
    
    493
    
    
    
    343
    
    
    
    150Total amortizable intangible
assets
    
    
    
    
    
    $
    8,793
    
    
    $
    4,431
    
    
    $
    4,362
    
    
    $
    8,793
    
    
    $
    3,379
    
    
    $
    5,414Non-amortizable intangible
assets:Trademarks
    
    
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total non-amortizable
intangible assets
    
    
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total intangible assets
    
    
    
    
    
    $
    11,403
    
    
    $
    4,431
    
    
    $
    6,972
    
    
    $
    11,403
    
    
    $
    3,379
    
    
    $
    8,024
 2008
    
    
    2007Goodwill:Balance at beginning of year
    
    $
    54,949
    
    
    $
    40,280SAB 108 adjustment (see Note
2)
    
    
    
    
    
    
    552Adjusted goodwill
    
    
    54,949
    
    
    
    40,832Old SSG tax benefit
related to the exercise of
stock options
    
    
    (1,173
    )
    
    
    Acquisitions (see Note 3)
    
    
    
    
    
    
    16,226Changes in deferred tax
valuation allowance
    
    
    (233
    )
    
    
    (2,109
    )Balance at end of year
    
    $
    53,543
    
    
    $
    54,949
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##### Table of Contents



Year Ending June 30,
    
    (In thousands)2009
    
    
    7632010
    
    
    6972011
    
    
    6182012
    
    
    6152013
    
    
    601Thereafter
    
    
    1,068Total
    
    $
    4,362
 8. Accrued Liabilities:
  2008
    
    
    2007(In thousands)Accrued compensation and benefits
    
    $
    4,303
    
    
    $
    2,700Customer deposits
    
    
    1,403
    
    
    
    1,983Taxes other than income taxes
    
    
    3,719
    
    
    
    3,025Gift certificates
    
    
    603
    
    
    
    100Other
    
    
    1,814
    
    
    
    2,510Total accrued liabilities
    
    $
    11,842
    
    
    $
    10,318
 9. Long-Term Debt and Line of Credit:
 Securities Act Thomas Weisel
 Indenture
  - 54 -




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##### Table of Contents



Registration Rights
Agreement Registration Statement
 Amended Credit Agreement MLCFC
 Senior Credit Facility Revolving Facility
 Amendment No. 1
 Amendment No. 2
  EBITDA Senior
Leverage Ratio
 Fixed Charge Coverage Ratio
  - 55 -




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##### Table of Contents



CBT Holdings
      Year Ending June 30,
    
    (In thousands)2009
    
    $
    1082010
    
    
    50,0362011
    
    
    Thereafter
    
    
    Total future payments
    
    $
    50,144
  - 56 -




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##### Table of Contents



10. Income Taxes:
  2008
    
    
    2007(In thousands)Deferred tax assets attributed to:Accounts receivable
    
    $
    502
    
    
    $
    438Inventories
    
    
    2,026
    
    
    
    1,693Net operating loss carry-forwards
    
    
    77
    
    
    
    2,433Tax credits
    
    
    
    
    
    
    772Accrued liabilities
    
    
    351
    
    
    
    492Accrued state and local taxes
    
    
    910
    
    
    
    1,240Total deferred tax assets
    
    
    3,866
    
    
    
    7,068Less valuation allowance
    
    
    
    
    
    
    (233
    )Total deferred tax assets, net
    
    
    3,866
    
    
    
    6,835Deferred tax liabilities attributed to:Property and equipment
    
    
    (2,112
    )
    
    
    (1,643
    )Intangible assets
    
    
    (2,082
    )
    
    
    (1,890
    )Other
    
    
    180
    
    
    
    (494
    )Total deferred tax liabilities
    
    
    (4,014
    )
    
    
    (4,027
    )Net deferred taxes
    
    $
    (148
    )
    
    $
    2,808
  2008
    
    
    2007(In thousands)Current deferred tax asset
    
    $
    3,870
    
    
    $
    3,790Non-current deferred tax asset
    
    
    208
    
    
    
    3,278Current deferred tax liability
    
    
    (4
    )
    
    
    (129
    )Non-current deferred tax liability
    
    
    (4,222
    )
    
    
    (3,898
    )Less valuation allowance
    
    
    
    
    
    
    (233
    )Balance at end of period
    
    $
    (148
    )
    
    $
    2,808
  (In thousands)Deferred tax valuation allowance at June 30, 2007
    
    $
    (233
    )Tax benefits utilized
    
    
    233Deferred tax valuation allowance at June 30, 2008
    
    $
    
  - 57 -




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2008
    
    
    2007
    
    
    2006(In thousands)FederalCurrent
    
    $
    1,742
    
    
    $
    80
    
    
    $
    510Deferred
    
    
    3,443
    
    
    
    2,276
    
    
    
    925StateCurrent
    
    
    1,011
    
    
    
    12
    
    
    
    33Deferred
    
    
    80
    
    
    
    266
    
    
    
    135Total provision for income taxes
    
    $
    6,276
    
    
    $
    2,634
    
    
    $
    1,603
  2008
    
    
    2007
    
    
    2006(In thousands)Tax expense at the federal statutory rate
    
    $
    5,443
    
    
    $
    2,377
    
    
    $
    1,396State income taxes, net of federal benefit
    
    
    1,092
    
    
    
    280
    
    
    
    77Alternative minimum tax
    
    
    
    
    
    
    
    
    
    
    144Other
    
    
    (259
    )
    
    
    (23
    )
    
    
    (14
    )Income tax provision
    
    $
    6,276
    
    
    $
    2,634
    
    
    $
    1,603
   11. Related Party Transactions:
    - 58 -




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##### Table of Contents



12. Stock Options and Warrants:
 1998
Plan
 2007 Plan Board Amended and Restated Plan
  - 59 -




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##### Table of Contents



2008
    
    
    2006(In thousands)Income before income taxes
    
    $
    494
    
    
    $
    60Net income
    
    $
    306
    
    
    $
    36Net income per common share  basic
    
    $
    0.03
    
    
    $
    0.00Net income per common share  diluted
    
    $
    0.02
    
    
    $
    0.00
   WeightedAverageOptions
    
    
    Exercise PriceOutstanding at June 30, 2007
    
    
    977,950
    
    
    $
    9.00Granted
    
    
    517,500
    
    
    
    9.65Exercised
    
    
    (195,400
    )
    
    
    7.30Forfeited or cancelled
    
    
    (56,900
    )
    
    
    10.62Outstanding at June 30, 2008
    
    
    1,243,150
    
    
    $
    9.46Exercisable at June 30, 2008
    
    
    735,650
    
    
    $
    9.33
  2008Expected volatility
    
    
    30 - 31
    %Risk-free interest rate
    
    
    4.12 - 4.91
    %Dividend yield
    
    
    1.03 - 1.05
    %Expected lives
    
    6 years
    - 60 -




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##### Table of Contents



Outstanding



    ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    Remaining
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    Contractual
    
    
    AverageLife
    
    
    Exercise
    
    
    
    
    
    
    Life
    
    
    ExerciseExercise price
    
    Shares
    
    
    (In Years)
    
    
    Price
    
    
    Shares
    
    
    (In Years)
    
    
    Price$3.89 - $4.81
    
    
    32,000
    
    
    
    2.8
    
    
    $

    
    
    

    
3.95
    
    
    
    32,000
    
    
    
    2.8
    
    
    $
    3.95$4.90 - $6.13
    
    
    174,500
    
    
    
    3.6
    
    
    $

    
    
    
    
5.73
    
    
    
    174,500
    
    
    
    3.6
    
    
    $
    5.73$8.73 - $9.73
    
    
    628,350
    
    
    
    7.4
    
    
    $

    
    
    
    
9.42
    
    
    
    348,350
    
    
    
    5.9
    
    
    $
    9.30$9.75 - $14.34
    
    
    408,300
    
    
    
    7.9
    
    
    $

    
    
    
    
11.56
    
    
    
    180,800
    
    
    
    6.4
    
    
    $
    13.821,243,150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    735,650
 13. Leases:
   Year Ending June 30,
    
    (In thousands)2009
    
    $
    3,0862010
    
    
    2,3412011
    
    
    9642012
    
    
    1102013
    
    
    69Thereafter
    
    
    Total minimum future lease payments
    
    $
    6,570
  - 61 -




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14. Income Per Share:
  2008
    
    
    2007
    
    
    2006(In thousands except shareand per share data)Determination of diluted number of shares:Average common shares outstanding
    
    
    12,122,765
    
    
    
    10,235,308
    
    
    
    10,182,428Assumed exercise of dilutive stock options
    
    
    120,938
    
    
    
    138,599
    
    
    
    216,702Assumed conversion of subordinated debentures
    
    
    3,412,969
    
    
    
    
    
    
    
    Diluted average common shares outstanding
    
    
    15,656,672
    
    
    
    10,373,907
    
    
    
    10,399,130Calculation of diluted earnings per share:Net income
    
    $
    9,733
    
    
    $
    3,860
    
    
    $
    1,896Add: interest component on assumed
conversion of subordinated debentures, net
of taxes
    
    
    2,206
    
    
    
    
    
    
    
    Net income, adjusted
    
    $
    11,939
    
    
    $
    3,860
    
    
    $
    1,896Diluted earnings per share
    
    $
    .76
    
    
    $
    .37
    
    
    $
    0.18
  15.
Employee Benefit Plan:
 plan
 SSG 401(k) Plan SSG Employees Savings Plan SSG 401(k) Plan.
  - 62 -




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16. Legal Proceedings:
  17. Subsequent Events:
  Amended and Restated Plan
 18. Quarterly Operating Data (unaudited):
 QuarterFirst
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Year(In thousands except per share data)(Unaudited)Fiscal 2008:Net sales
    
    $
    70,374
    
    
    $
    54,089
    
    
    $
    65,821
    
    
    $
    61,110
    
    
    $
    251,394Gross profit
    
    
    25,628
    
    
    
    19,273
    
    
    
    24,082
    
    
    
    22,096
    
    
    
    91,079Net income
    
    $
    4,096
    
    
    $
    452
    
    
    $
    3,376
    
    
    $
    1,809
    
    
    $
    9,733Earnings per share:Basic
    
    $
    0.35
    
    
    $
    0.04
    
    
    $
    0.27
    
    
    $
    0.15
    
    
    $
    0.80Diluted
    
    $
    0.31
    
    
    $
    0.04
    
    
    $
    0.25
    
    
    $
    0.15
    
    
    $
    0.76Cash dividends per share
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.10
 QuarterFirst
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Year(In thousands except per share data)(Unaudited)Fiscal 2007:Net sales
    
    $
    68,163
    
    
    $
    49,384
    
    
    $
    63,235
    
    
    $
    56,073
    
    
    $
    236,855Gross profit
    
    
    24,063
    
    
    
    17,375
    
    
    
    22,831
    
    
    
    19,291
    
    
    
    83,560Net income (loss)
    
    $
    3,295
    
    
    $
    (871
    )
    
    $
    1,738
    
    
    $
    (302
    )
    
    $
    3,860Earnings (loss) per share:Basic
    
    $
    0.32
    
    
    $
    (0.09
    )
    
    $
    0.17
    
    
    $
    (.03
    )
    
    $
    0.38Diluted
    
    $
    0.28
    
    
    $
    (0.09
    )
    
    $
    0.17
    
    
    $
    (.03
    )
    
    $
    0.37Cash dividends per share
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.10
  - 63 -




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9AT. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures. CEO CFO 1934
Act
 Changes in Internal Control Over Financial Reporting.
 Managements Report on Internal Control Over Financial Reporting
  Internal Control
 Integrated Framework
   - 64 -




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##### Table of Contents



ITEM 9B. OTHER INFORMATION.
   - 65 -




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  
 ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
   - 66 -




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
  Financial Statements
 Page ReferenceForm 10-KReport of Independent Registered Public Accounting Firm
    
    
    39Consolidated Balance Sheets as of June 30, 2008 and 2007
    
    
    40Consolidated
Statements of Income for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    41Consolidated Statement of Stockholders Equity for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    42Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2008, 2007 and 2006
    
    
    43Notes to Consolidated Financial Statements
    
    
    44
 Consolidated financial statement schedule
 II  Valuation and qualifying accounts
    
    
    73
  Exhibits
 ExhibitNumber
    
    Description
    
    Location2.1
    
    Agreement and Plan of Merger, dated
as of September 20, 2006, by and
among Collegiate Pacific Inc., CP
Merger Sub, Inc. and Sport Supply
Group, Inc.
    
    Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed on September
21, 2006.2.1.1
    
    First Amendment to Agreement and Plan
of Merger, dated as of November 13,
2006, by and among Collegiate Pacific
Inc., CP Merger Sub, Inc. and Sport
Supply Group, Inc.
    
    Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed on November 13,
2006.3.1
    
    Certificate of Incorporation of the
Registrant.
    
    Exhibit 1 to the
Registrants
Registration
Statement on Form 8-A
filed on September 9,
1999.
  - 67 -




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location3.1.1
    
    Certificate of Amendment to
Certificate of Incorporation of
Collegiate Pacific Inc.
    
    Exhibit 3.10 to the
Registrants
Registration
Statement on Form
SB-2 (No. 333-34294)
originally filed on
April 7, 2000.3.1.2
    
    Amendment to Certificate of
Incorporation of Collegiate Pacific
Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on July 2,
2007.3.2
    
    By-Laws of the Registrant.
    
    Exhibit 2 to the
Registrants
Registration
Statement on Form 8-A
filed on September 9,
1999.3.2.1
    
    Amendment to the Bylaws of Collegiate
Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on June 14,
2007.3.2.2
    
    Amendment to the Bylaws of Collegiate
Pacific Inc.
    
    Exhibit 3.2 to the
Registrants Current
Report on Form 8-K
filed on July 2,
2007.4.1
    
    Specimen Certificate of Common Stock,
$0.01 par value, of Sport Supply
Group, Inc.
    
    Exhibit 4.1 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2007.4.2
    
    Indenture, dated as of November 26,
2004, by and between Collegiate
Pacific Inc. and The Bank of New York
Trust Company N.A., as Trustee.
    
    Exhibit 99.1 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.4.2.1
    
    Form of 5.75% Convertible Senior
Subordinated Note Due 2009 (included
in Section 2.2 of Exhibit 4.2 to this
report).
    
    Exhibit 99.2 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.10.1
    
    Amended and Restated Credit
Agreement, dated as of October 30,
2007, by and among Sport Supply
Group, Inc., Merrill Lynch Business
Financial Services Inc. and the
additional lenders from time to time
parties thereto.
    
    Exhibit 10.5 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2007.10.1.1
    
    Amendment No. 1 To Amended and
Restated Credit Agreement, dated as
of January 7, 2008, by and among
Sport Supply Group, Inc., Merrill
Lynch Commercial Finance Corp. and
the additional lenders from time to
time parties thereto.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on January 9,
2008.10.1.2
    
    Amendment No. 2 To Amended and
Restated Credit Agreement, dated as
of July 30, 2008, by and among Sport
Supply Group, Inc., Merrill Lynch
Commercial Finance Corp. and the
additional lenders from time to time
parties thereto.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on August 1,
2008.
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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.2
    
    Amended and Restated 1998 Collegiate
Pacific Inc. Stock Option Plan and
form of Stock Option Agreements.
    
    Exhibit 10.3 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2004.10.3
    
    Sport Supply Group, Inc. Amended and
Restated 2007 Long-Term Incentive
Plan.
    
    Exhibit A to the
Registrants
Definitive Proxy
Statement on
Schedule 14A filed on
May 27, 2008.10.3.1
    
    Form of Nonstatutory Stock Option
Agreement for Employees for grants
under the Sport Supply Group, Inc.
Amended and Restated 2007 Long-Term
Incentive Plan.
    
    Exhibit 4.8 to the
Registrants Form S-8
filed on July 10,
2008.10.3.2
    
    Form of Nonstatutory Stock Option
Agreement for Non Employee Directors
for grants under the Sport Supply
Group, Inc. Amended and Restated 2007
Long-Term Incentive Plan.
    
    Exhibit 4.9 to the
Registrants Form S-8
filed on July 10,
2008.10.3.3
    
    Form of Incentive Stock Option
Agreement for Employees for grants
under the Sport Supply Group, Inc.
Amended and Restated 2007 Long-Term
Incentive Plan.
    
    Exhibit 4.10 to the
Registrants Form S-8
filed on July 10,
2008.10.3.4
    
    Form of Restricted Stock Award
Agreement for grants under the Sport
Supply Group, Inc. Amended and
Restated 2007 Long-Term Incentive
Plan.
    
    Exhibit 4.11 to the
Registrants Form S-8
filed on July 10,
2008.10.4
    
    Form of Indemnification Agreement for
Sport Supply Group, Inc. directors
and executive officers.*10.5
    
    Form of Amended and Restated
Executive Officer Change in Control
Agreement.
    
    Exhibit 10.5 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
December 31, 2006.10.6
    
    Lease Agreement, dated July 1, 1997,
by and between Collegiate Pacific
Inc. and The Realty Associates Fund
VI, L.P.
    
    Exhibit 10.8 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 1998.10.6.1
    
    Second Amendment to Lease, dated as
of February 10, 2003, by and between
Collegiate Pacific Inc. and The
Realty Associates Fund VI, L.P.
    
    Exhibit 10.18 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2005.10.6.2
    
    Third Amendment to Lease, dated as of
September 6, 2007, by and between
Collegiate Pacific Inc. and The
Realty Associates Fund VI, L.P.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2007.
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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.7
    
    Lease Agreement, dated April 1, 2004,
by and between Collegiate Pacific
Inc. and RPD Services, Inc.
    
    Exhibit 10.2 to the
Registrants
Quarterly Report on
Form 10-QSB for the
fiscal quarter ended
March 31, 2004.10.8
    
    Lease Agreement, dated May 21, 2004,
by and between Tomark Sports, Inc.,
and Edward A. Money and Marilyn J.
Money, Trustees of the Money Family
Trust.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2005.10.9
    
    Lease Agreement, dated July 6, 1994,
by and between Dixie Sporting Goods
Co., Inc. and E. Carlton Wilton.
    
    Exhibit 10.7 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2004.10.9.1
    
    Lease Amendment and Extension, dated
February 26, 2005, by and between
Dixie Sporting Goods Co., Inc. and
The Wilton Companies, LLC.
    
    Exhibit 10.1 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
March 31, 2006.10.10
    
    Lease Agreement, dated December 10,
2004, by and between McWeeney Smith
Partnership and CMS of Central
Florida, Inc d/b/a Orlando Team
Sports.
    
    Exhibit 10.4 to the
Registrants
Quarterly Report on
Form 10-QSB for the
fiscal quarter ended
December 31, 2004.10.11
    
    Lease Agreement, dated as of August
3, 2005, by and among Salkeld & Sons,
Inc. and Albert A. Messier.
    
    Exhibit 10.2 to the
Registrants Current
Report on Form 8-K
filed on August 5,
2005.10.12
    
    Lease Agreement, dated as of October
1, 2004, by and between Salkeld &
Sons, Inc. and First American Bank.
    
    Exhibit 10.24 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2006.10.13
    
    Lease Agreement, dated as of April
25, 1994, by and between Sport Supply
Group, Inc. and Prologis
(successor-in-interest to APT-Cabot
Texas, Inc., as successor-in-interest
to Centre Development Co., Inc.), as
amended on July 8, 1994, and June 10,
2004.
    
    Exhibit 10.8 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.13.1
    
    Third Amendment to Lease Agreement,
dated as of August 31, 2006, by and
between Sport Supply Group, Inc. and
Prologis.
    
    Exhibit 10.25 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2006.10.14
    
    Lease Agreement, dated as of July 28,
1989, by and between Sport Supply
Group, Inc. and Merit Investment
Partners, L.P., as amended on July
13, 1998, July 31, 2000, and April
15, 2004.
    
    Exhibit 10.9 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.14.1
    
    Fourth Amendment to Lease Agreement,
dated as of August 25, 2006, by and
between Sport Supply Group, Inc. and
Acquiport DFWIP, Inc.
(successor-in-interest to Merit
Investment Partners, L.P.).
    
    Exhibit 10.26 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2006.
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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.15
    
    Amended and Restated License
Agreement, dated as of December 21,
2000, as amended on May 1, 2005, by
and among MacMark Corporation,
Equilink Licensing Corporation and
Sport Supply Group, Inc.
    
    Exhibit 10.4 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.16
    
    Agreement, dated as of December 9,
1986, by and between Voit Corporation
and Sport Supply Group, Inc., the
successor-in-interest to BSN Corp.,
as amended on August 1, 2003.
    
    Exhibit 10.6 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.17
    
    Software End-User License Agreement ,
dated as of June 11, 1998, by and
between SAP America, Inc. and Sport
Supply Group, Inc., as amended on
January 1, 2004.
    
    Exhibit 10.7 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.18
    
    Purchase Agreement, dated as of July
26, 2007, by and between Sport Supply
Group, Inc. and CBT Holdings, LLC.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 31,
2007.12
    
    Ratio of Earnings to Fixed Charges.*14
    
    Code of Ethics.
    
    Exhibit 14 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2003.21
    
    Subsidiaries of Sport Supply Group,
Inc.*23
    
    Consent of Grant Thornton LLP.*31.1
    
    Certification of the Chief Executive
Officer pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002.*31.2
    
    Certification of the Chief Financial
Officer pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002.*32.1
    
    Certification of the Chief Executive
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.**
 
 *
    
    Filed herewith**
    
    Furnished herewith  - 71 -




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##### Table of Contents



SIGNATURES
  SPORT SUPPLY GROUP, INC.August 29, 2008
    By:
    /s/ Adam BlumenfeldAdam Blumenfeld,Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)  Signature
    
    Capacity/s/ Adam Blumenfeld
    
    Chairman of the Board and Chief Executive OfficerAdam Blumenfeld
    
    (Principal Executive Officer)/s/ John Pitts
    
    Chief Financial OfficerJohn Pitts
    
    (Principal Accounting and Financial Officer)/s/ Jeff Davidowitz
    
    DirectorJeff Davidowitz/s/ Richard Ellman
    
    DirectorRichard Ellman/s/ William M. Lockhart
    
    DirectorWilliam M. Lockhart/s/ William H. Watkins, Jr.
    
    DirectorWilliam H. Watkins, Jr.
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##### Table of Contents



SPORT SUPPLY GROUP, INC.
Schedule II  VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
 Additions
    
    
    
    
    
    
    DeductionsCharged
    
    
    
    
    
    
    AmountsBalance
    
    
    to costs
    
    
    Charged
    
    
    Charged to
    
    
    
    
    
    
    Balanceat beginning
    
    
    and
    
    
    to other
    
    
    reserve net of
    
    
    Other
    
    
    at endof year
    
    
    expenses
    
    
    Accounts
    
    
    reinstatements
    
    
    Changes
    
    
    of yearYear ended June 30, 2008Allowance for doubtful accounts
    
    $
    1,296
    
    
    $
    1,028
    
    
    $
    
    
    
    $
    (1,004
    )
    
    $
    
    
    
    $
    1,320Inventory reserve
    
    
    2,727
    
    
    
    1,109
    
    
    
    
    
    
    
    (863
    )
    
    
    
    
    
    
    2,973Deferred tax valuation reserve
    
    
    233
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    
    
    
    
    Year ended June 30, 2007Allowance for doubtful accounts
    
    
    1,496
    
    
    
    1,099
    
    
    
    
    
    
    
    (1,299
    )
    
    
    
    
    
    
    1,296Inventory reserve
    
    
    2,230
    
    
    
    2,626
    
    
    
    
    
    
    
    (2,129
    )
    
    
    
    
    
    
    2,727Deferred tax valuation reserve
    
    
    3,083
    
    
    
    
    
    
    
    
    
    
    
    (2,850
    )
    
    
    
    
    
    
    233Year ended June 30, 2006Allowance for doubtful accounts
    
    
    1,042
    
    
    
    982
    
    
    
    
    
    
    
    (528
    )
    
    
    
    
    
    
    1,496Inventory reserve
    
    
    439
    
    
    
    2,199
    
    
    
    
    
    
    
    (408
    )
    
    
    
    
    
    
    2,230Deferred tax valuation reserve
    
    
    
    
    
    
    
    
    
    
    3,083
    
    
    
    
    
    
    
    
    
    
    
    3,083
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description
    
    Location2.1
    
    Agreement and Plan of Merger, dated
as of September 20, 2006, by and
among Collegiate Pacific Inc., CP
Merger Sub, Inc. and Sport Supply
Group, Inc.
    
    Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed on September
21, 2006.2.1.1
    
    First Amendment to Agreement and Plan
of Merger, dated as of November 13,
2006, by and among Collegiate Pacific
Inc., CP Merger Sub, Inc. and Sport
Supply Group, Inc.
    
    Exhibit 2.1 to the
Registrants Current
Report on Form 8-K
filed on November 13,
2006.3.1
    
    Certificate of Incorporation of the
Registrant.
    
    Exhibit 1 to the
Registrants
Registration
Statement on Form 8-A
filed on September 9,
1999.3.1.1
    
    Certificate of Amendment to
Certificate of Incorporation of
Collegiate Pacific Inc.
    
    Exhibit 3.10 to the
Registrants
Registration
Statement on Form
SB-2 (No. 333-34294)
originally filed on
April 7, 2000.3.1.2
    
    Amendment to Certificate of
Incorporation of Collegiate Pacific
Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on July 2,
2007.3.2
    
    By-Laws of the Registrant.
    
    Exhibit 2 to the
Registrants
Registration
Statement on Form 8-A
filed on September 9,
1999.3.2.1
    
    Amendment to the Bylaws of Collegiate
Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on June 14,
2007.3.2.2
    
    Amendment to the Bylaws of Collegiate
Pacific Inc.
    
    Exhibit 3.2 to the
Registrants Current
Report on Form 8-K
filed on July 2,
2007.4.1
    
    Specimen Certificate of Common Stock,
$0.01 par value, of Sport Supply
Group, Inc.
    
    Exhibit 4.1 to the
Registrants Annual
Report on Form 10-K
for the fiscal year ended June 30, 2007.4.2
    
    Indenture, dated as of November 26,
2004, by and between Collegiate
Pacific Inc. and The Bank of New York
Trust Company N.A., as Trustee.
    
    Exhibit 99.1 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.4.2.1
    
    Form of 5.75% Convertible Senior
Subordinated Note Due 2009 (included
in Section 2.2 of Exhibit 4.2 to this
report).
    
    Exhibit 99.2 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.10.1
    
    Amended and Restated Credit
Agreement, dated as of October 30,
2007, by and among Sport Supply
Group, Inc., Merrill Lynch Business
Financial Services Inc. and the
additional lenders from time to time
parties thereto.
    
    Exhibit 10.5 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2007.




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.1.1
    
    Amendment No. 1 To Amended and
Restated Credit Agreement, dated as
of January 7, 2008, by and among
Sport Supply Group, Inc., Merrill
Lynch Commercial Finance Corp. and
the additional lenders from time to
time parties thereto.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on January 9,
2008.10.1.2
    
    Amendment No. 2 To Amended and
Restated Credit Agreement, dated as
of July 30, 2008, by and among Sport
Supply Group, Inc., Merrill Lynch
Commercial Finance Corp. and the
additional lenders from time to time
parties thereto.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on August 1,
2008.10.2
    
    Amended and Restated 1998 Collegiate
Pacific Inc. Stock Option Plan and
form of Stock Option Agreements.
    
    Exhibit 10.3 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2004.10.3
    
    Sport Supply Group, Inc. Amended and
Restated 2007 Long-Term Incentive
Plan.
    
    Exhibit A to the
Registrants
Definitive Proxy
Statement on
Schedule 14A filed on
May 27, 2008.10.3.1
    
    Form of Nonstatutory Stock Option
Agreement for Employees for grants
under the Sport Supply Group, Inc.
Amended and Restated 2007 Long-Term
Incentive Plan.
    
    Exhibit 4.8 to the
Registrants Form S-8
filed on July 10,
2008.10.3.2
    
    Form of Nonstatutory Stock Option
Agreement for Non Employee Directors
for grants under the Sport Supply
Group, Inc. Amended and Restated 2007
Long-Term Incentive Plan.
    
    Exhibit 4.9 to the
Registrants Form S-8
filed on July 10,
2008.10.3.3
    
    Form of Incentive Stock Option
Agreement for Employees for grants
under the Sport Supply Group, Inc.
Amended and Restated 2007 Long-Term
Incentive Plan.
    
    Exhibit 4.10 to the
Registrants Form S-8
filed on July 10,
2008.10.3.4
    
    Form of Restricted Stock Award
Agreement for grants under the Sport
Supply Group, Inc. Amended and
Restated 2007 Long-Term Incentive
Plan.
    
    Exhibit 4.11 to the
Registrants Form S-8
filed on July 10,
2008.




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.4
    
    Form of Indemnification Agreement for
Sport Supply Group, Inc. directors
and executive officers.*10.5
    
    Form of Amended and Restated
Executive Officer Change in Control
Agreement.
    
    Exhibit 10.5 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
December 31, 2006.10.6
    
    Lease Agreement, dated July 1, 1997,
by and between Collegiate Pacific
Inc. and The Realty Associates Fund
VI, L.P.
    
    Exhibit 10.8 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 1998.10.6.1
    
    Second Amendment to Lease, dated as
of February 10, 2003, by and between
Collegiate Pacific Inc. and The
Realty Associates Fund VI, L.P.
    
    Exhibit 10.18 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2005.10.6.2
    
    Third Amendment to Lease, dated as of
September 6, 2007, by and between
Collegiate Pacific Inc. and The
Realty Associates Fund VI, L.P.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2007.10.7
    
    Lease Agreement, dated April 1, 2004,
by and between Collegiate Pacific
Inc. and RPD Services, Inc.
    
    Exhibit 10.2 to the
Registrants
Quarterly Report on
Form 10-QSB for the
fiscal quarter ended
March 31, 2004.10.8
    
    Lease Agreement, dated May 21, 2004,
by and between Tomark Sports, Inc.,
and Edward A. Money and Marilyn J.
Money, Trustees of the Money Family
Trust.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2005.10.9
    
    Lease Agreement, dated July 6, 1994,
by and between Dixie Sporting Goods
Co., Inc. and E. Carlton Wilton.
    
    Exhibit 10.7 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2004.10.9.1
    
    Lease Amendment and Extension, dated
February 26, 2005, by and between
Dixie Sporting Goods Co., Inc. and
The Wilton Companies, LLC.
    
    Exhibit 10.1 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
March 31, 2006.10.10
    
    Lease Agreement, dated December 10,
2004, by and between McWeeney Smith
Partnership and CMS of Central
Florida, Inc d/b/a Orlando Team
Sports.
    
    Exhibit 10.4 to the
Registrants
Quarterly Report on
Form 10-QSB for the
fiscal quarter ended
December 31, 2004.10.11
    
    Lease Agreement, dated as of August
3, 2005, by and among Salkeld & Sons,
Inc. and Albert A. Messier.
    
    Exhibit 10.2 to the
Registrants Current
Report on Form 8-K
filed on August 5,
2005.10.12
    
    Lease Agreement, dated as of October
1, 2004, by and between Salkeld &
Sons, Inc. and First American Bank.
    
    Exhibit 10.24 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2006.




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location10.13
    
    Lease Agreement, dated as of April
25, 1994, by and between Sport Supply
Group, Inc. and Prologis
(successor-in-interest to APT-Cabot
Texas, Inc., as successor-in-interest
to Centre Development Co., Inc.), as
amended on July 8, 1994, and June 10,
2004.
    
    Exhibit 10.8 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.13.1
    
    Third Amendment to Lease Agreement,
dated as of August 31, 2006, by and
between Sport Supply Group, Inc. and
Prologis.
    
    Exhibit 10.25 to the
Registrants Annual
Report on Form 10-K
for the fiscal year ended June 30, 2006.10.14
    
    Lease Agreement, dated as of July 28,
1989, by and between Sport Supply
Group, Inc. and Merit Investment
Partners, L.P., as amended on July
13, 1998, July 31, 2000, and April
15, 2004.
    
    Exhibit 10.9 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.14.1
    
    Fourth Amendment to Lease Agreement,
dated as of August 25, 2006, by and
between Sport Supply Group, Inc. and
Acquiport DFWIP, Inc.
(successor-in-interest to Merit
Investment Partners, L.P.).
    
    Exhibit 10.26 to the
Registrants Annual
Report on Form 10-K
for the fiscal year
ended June 30, 2006.10.15
    
    Amended and Restated License
Agreement, dated as of December 21,
2000, as amended on May 1, 2005, by
and among MacMark Corporation,
Equilink Licensing Corporation and
Sport Supply Group, Inc.
    
    Exhibit 10.4 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.16
    
    Agreement, dated as of December 9,
1986, by and between Voit Corporation
and Sport Supply Group, Inc., the
successor-in-interest to BSN Corp.,
as amended on August 1, 2003.
    
    Exhibit 10.6 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.17
    
    Software End-User License Agreement ,
dated as of June 11, 1998, by and
between SAP America, Inc. and Sport
Supply Group, Inc., as amended on
January 1, 2004.
    
    Exhibit 10.7 to the
Registrants
Quarterly Report on
Form 10-Q for the
fiscal quarter ended
September 30, 2005.10.18
    
    Purchase Agreement, dated as of July
26, 2007, by and between Sport Supply
Group, Inc. and CBT Holdings, LLC.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 31,
2007.12
    
    Ratio of Earnings to Fixed Charges.*14
    
    Code of Ethics.
    
    Exhibit 14 to the
Registrants Annual
Report on Form 10-KSB
for the fiscal year
ended June 30, 2003.




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##### Table of Contents



ExhibitNumber
    
    Description
    
    Location21
    
    Subsidiaries of Sport Supply Group,
Inc.*23
    
    Consent of Grant Thornton LLP.*31.1
    
    Certification of the Chief Executive
Officer pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002.*31.2
    
    Certification of the Chief Financial
Officer pursuant to Rule 13a-14(a) or
15d-14(a) of the Securities Exchange
Act of 1934, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002.*32.1
    
    Certification of the Chief Executive
Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.**
 
 *
    
    Filed herewith**
    
    Furnished herewith