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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 Commission File Number: 1-11988
 
 SPECTRUM GROUP INTERNATIONAL, INC.
  Delaware
    
    22-2365834(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 
  (Registrants telephone number, including area code)
    o þ
 o þ
 þ o
 o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



SPECTRUM GROUP INTERNATIONAL, INC.
FORM 10-K ANNUAL REPORT
For the Fiscal Year Ended June 30, 2010
 Table of Contents
 PagePART IItem 1.
    
    Description of Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    11Item 1B.
    
    Unresolved Staff Comments
    
    
    18Item 2.
    
    Properties
    
    
    18Item 3.
    
    Legal Proceedings
    
    
    19PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6.
    
    Selected Financial Data
    
    
    23Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 8.
    
    Consolidated Financial Statements and Supplementary Data
    
    
    39Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    40Item 9A.
    
    Controls and Procedures
    
    
    40Item 9B.
    
    Other Information
    
    
    42PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    43Item 11.
    
    Executive Compensation
    
    
    45Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    45Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    45Item 14.
    
    Principal Accountant Fees and Services
    
    
    45PART IVItem 15.
    
    Exhibits and Financial Statements Schedules
    
    
    45Signatures
    
    
    46EX-3.1.1EX-3.1.2EX-10.3EX-10.4EX-10.5EX-10.7EX-14EX-21EX-31.1EX-31.2EX-32.1EX-32.2
  2




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FORWARD-LOOKING STATEMENTS
  
 PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS
 Company Overview
  www.spectrumgi.com.
     3




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Trading Segment
 Overview
        4




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Supplier and Customer Concentrations
  5




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Trading Competition
  Seasonality
  www.amark.com www.cfccoinloans.com
 Collectibles Segment
 Overview
  DateCompany
    
    Primary Activity
    
    Location
    
    Acquired/FormedTeletrade
    
    Coins and currencies auctions via the Internet and telephone all price points but primarily mid-level
    
    USA
    
    October 1998Spectrum Numismatics International
    
    Wholesaler of coins, currencies and other collectibles
    
    USA
    
    December 1999Corinphila Auktionen
    
    Auctions of stamps  primarily high-level and rare (collections and single items)
    
    Switzerland
    
    September 2003Heinrich Köhler Briefmarkenhandel
    
    Wholesaler of stamps  primarily high-level
    
    Germany
    
    September 2003Heinrich Köhler Auktionshaus
    
    Auctions of stamps  primarily high-level (collections and single items)
    
    Germany
    
    September 2003Bowers and Merena Auctions
    
    Auctions of coins  primarily high-value and rare; and coin retailer  primarily catalogue and Internet
    
    USA
    
    February 2004H.R. Harmer Nutmeg Stamps
    
    Auctions of stamps  entry, mid-level and high-level
    
    USA
    
    July 2004John Bull Stamp Auctions
    
    Auctions of stamps  entry, mid-level and high-level
    
    Hong Kong
    
    January 2005Greg Martin Auctions
    
    Auctions of arms and armor and historical memorabilia
    
    USA
    
    October 2005Spectrum Wine Auctions
    
    Auctions of rare and fine vintage wines
    
    USA
    
    February 2009Corinphila Veilingen
    
    Auctions of stamps  primarily
high-level and rare (collections and single items)
    
    Netherlands
    
    January 2010
  6




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7




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www.bowersandmerena.com
www.corinphila.ch
www.corinphila.nl
www.gregmartinauctions.com
www.heinrich-koehler.de
www.hrharmer.com
www.jbull.com
www.spectrumcoins.com
www.spectrumwineauctions.com
www.teletrade.com
 www.coins.com www.sportscard.com www.iauctions.com
  8




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Consignor Advances
   Complementary Merchant Dealer Operations; Private Treaty Sales
     9




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Collectibles Competition
         Seasonality
  Financial and Geographical Information about Segments
  10




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Government Regulation
  Employees
  June 30, 2010
    
    June 30, 2009Trading
    
    
    20
    
    
    
    20Collectibles
    
    
    116
    
    
    
    119Corporate
    
    
    7
    
    
    
    3Total
    
    
    143
    
    
    
    142
 Website Address
 www.spectrumgi.com
 
 ITEM 1A. RISK FACTORS
 We face risks and uncertainties in connection with the bankruptcy proceedings of Afinsa, our
majority shareholder.
    11




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We face potential liabilities as a result of ongoing proceedings against certain of the Companys
former officers and directors.
     We are subject to ongoing obligations in connection with the SEC Settlement, and our failure to
comply with those obligations, including the obligation to file our Exchange Act reports for prior
periods, could adversely affect our business and the liquidity of our common stock.
   12




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We are the subject of examinations by U.S., New York State and Spanish tax authorities.
    We have incurred and expect to continue to incur substantial legal, accounting and other costs and
expenses arising from our relationship with Afinsa.
  Our trading business is exposed to commodity price risks and to risks of default of our
counterparties.
  13




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A-Marks business is heavily dependent on its heavily concentrated customer base.
  A-Marks business is heavily dependent on its credit facility and its banking relationships.
     The loss of a government purchaser/distributorship arrangement could materially adversely affect
A-Marks business and results of operations.
  A-Marks business is heavily influenced by volatility in commodities prices.
  The materials held by A-Mark and our collectibles companies are subject to loss, damage, theft or
restriction on access.
  14




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Our stock is not currently traded on a recognized exchange.
  Our business is influenced by political conditions and world events.
  Our business is subject to the risk of fraud, forgeries, fakes, lack of provenance and
counterfeiting.
  We have significant operations outside the United States.
   We could suffer losses with our financing operations, which could affect our liquidity and results
of operations.
   15




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Changes in our liquidity and capital requirements could limit our ability to achieve our plans.
   We are dependent on our key management personnel and our Trading and Collectibles experts.
  We have made numerous acquisitions, which entail certain risks, as do our other growth initiatives.
  16




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We may not have successfully remediated previously identified material weaknesses in our internal
controls and we may identify additional material weaknesses in the future.
  The imposition of government regulations could increase our costs of doing business.
   The weak economy has had a negative impact on our Collectibles operations.
  We operate in highly competitive industries.
  17




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Our stock price may fluctuate .
   We have not paid dividends on our common stock in the past and do not anticipate paying dividends
on our common stock in the foreseeable future.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   18




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ITEM 3. LEGAL PROCEEDINGS
 Ongoing Legal Proceedings Against Certain of the Companys Former Officers and Directors Relating
to the Companys Transactions with Afinsa
 Spanish Criminal Investigation
       SEC Action
   19




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Tax Investigation in Spain
  Greg Manning v. SGI
   IRS and New York State Tax Audits
   Securities Class Action and Shareholder Derivative Lawsuit
 In re Escala Group, Inc. Derivative
Litigation, In re Escala Group, Inc. Securities Litigation
   20




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##### Table of Contents



Seymour Ehrenpreis v. Nutmeg Stamps, et al
  
 PART II.
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    21




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2010Quarter
    
    High
    
    LowFirst
    
    $
    2.99
    
    
    $
    2.00Second
    
    $
    3.30
    
    
    $
    1.81Third
    
    $
    1.95
    
    
    $
    1.67Fourth
    
    $
    2.25
    
    
    $
    1.70
 2009Quarter
    
    High
    
    LowFirst
    
    $
    2.80
    
    
    $
    1.65Second
    
    $
    2.65
    
    
    $
    1.70Third
    
    $
    2.95
    
    
    $
    0.86Fourth
    
    $
    2.99
    
    
    $
    1.85
 Dividend Policy
   Equity Compensation Plan Information
  (c)Number of securities(a)
    
    
    
    
    
    
    remaining available forNumber of securities
    
    
    (b)
    
    
    future issuance underto be issued upon
    
    
    Weighted average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans (excludingoutstanding options,
    
    
    outstanding options,
    
    
    securities reflected inPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    column (a))Equity compensation plans approved by security holders (1)
    
    
    1,481,386
    
    
    $
    2.48
    
    
    
    711,999Equity compensation plans not approved by security holders (2)
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,481,386
    
    
    $
    2.48
    
    
    
    711,999
 
 (1)
    
    Consists of stock options and restricted stock granted under the 1993 Stock Option Plan, as
amended (the 1993 Plan), and the 1997 Stock Incentive Plan, as amended (the 1997 Plan).
Spectrums stockholders previously approved the 1993 and 1997 Plans. Under the 1997 Plan, SGI
has granted options and other equity awards as a means of attracting and retaining officers,
employees, non-employee directors and consultants, to provide incentives to such persons, and
to align the interests of such persons with the interests of stockholders by providing
compensation based on the value of SGIs stock. Awards under the 1997 Plan may be granted in
the form of non-qualified stock options, stock appreciation rights (SARs), restricted
stock, restricted stock units, dividend equivalent rights and other stock-based awards (which
may include outright grants of shares). The 1997 Plan currently is administered by the
Compensation Committee of the Board of Directors, which may in its discretion select officers
and other employees, directors (including non-employee directors) and consultants to SGI and its
subsidiaries to receive grants or awards. At June 30, 2010, there were 711,999 shares remaining
available for future awards under the 1997 Plan. Under the 1997 Plan, the exercise price of
options and base price of SARs may be set in the discretion of the Board, and stock options and
SARs may have any term. The 1997 Plan limits the number of stock options and SARs that may be
granted to any one employee to 550,000 in any year. The 1997 Plan will terminate when no shares
remain available for issuance and no awards remain outstanding.(2)
    
    Does not include an aggregate of 37,500 Stock Appreciation Awards and Long-Term Incentive
Awards. The shares of common stock issuable upon the exercise of these rights cannot be
determined until the applicable measurement date. These awards generally provide for the
recipient to receive an amount, payable in stock (in certain cases upon the payment of an
exercise price), equal to the appreciation in value of a specified number of shares of common
stock. 22




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ITEM 6. SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
   INTRODUCTION
  
    
    Overview.This section provides a general description of our business, as well as recent
significant transactions and events that we believe are important in understanding the results
of operations, as well as to anticipate future trends in those operations.
 
    
    Results of operations.This section provides an analysis of our results of operations
presented in the accompanying consolidated statements of operations by comparing the results
for fiscal 2010, to fiscal 2009.
 
    
    Financial condition, liquidity and capital resources.This section provides an analysis of
our cash flows, working capital and financial commitments, as well as a discussion of our
outstanding debt that existed as of June 30, 2010, and 2009. Included in the discussion of
outstanding debt is a discussion of the amount of financial capacity available to fund our
future commitments, as well as a discussion of other financing arrangements.
 
    
    Critical accounting estimates.This section discusses those accounting policies that both are
considered important to our financial condition and results, and require significant judgment
and estimates on the part of management in their
 23




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application. In addition, all of our
significant accounting policies, including critical accounting policies, are summarized in
Note 2 to the accompanying consolidated financial statements.
 
    
    Recent accounting pronouncements.This section discusses new accounting pronouncements, dates
of implementation and impact on our accompanying consolidated financial statements, if any.
 OVERVIEW
 Business
    Trading Segment
   Collectibles Segment
  24




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RESULTS OF OPERATIONS
 Year ended June 30, 2010, Compared with Year Ended June 30, 2009
 Consolidated Results of Operations
  % of
    
    
    2009(1)
    
    
    % of
    
    
    $ Increase/
    
    
    % of Increase/(thousands of dollars)
    
    2010
    
    
    revenue
    
    
    (as restated)
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Revenues
    
    $
    6,012,438
    
    
    
    100.0
    %
    
    $
    4,286,029
    
    
    
    100.0
    %
    
    $
    1,726,409
    
    
    
    40.3
    %Gross profit
    
    
    53,839
    
    
    
    0.9
    
    
    
    70,800
    
    
    
    1.6
    
    
    
    (16,961
    )
    
    
    (24.0
    )%General and administrative expenses
    
    
    28,982
    
    
    
    0.5
    
    
    
    29,963
    
    
    
    0.7
    
    
    
    (981
    )
    
    
    (3.3
    )%Salaries and wages
    
    
    26,467
    
    
    
    0.5
    
    
    
    29,814
    
    
    
    0.7
    
    
    
    (3,347
    )
    
    
    (11.2
    )%Depreciation and amortization
    
    
    1,699
    
    
    
    0.0
    
    
    
    1,807
    
    
    
    0.0
    
    
    
    (108
    )
    
    
    (6.0
    )%Impairment of goodwill and intangible assets
    
    
    2,271
    
    
    
    0.0
    
    
    
    860
    
    
    
    0.0
    
    
    
    1,411
    
    
    
    164.1
    %Legal settlement
    
    
    2,697
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    2,697
    
    
    
    100.0
    %Operating (loss) income
    
    
    (8,277
    )
    
    
    (0.1
    )
    
    
    8,356
    
    
    
    0.2
    
    
    
    (16,633
    )
    
    
    (199.1
    )%Interest income
    
    
    6,390
    
    
    
    0.1
    
    
    
    5,614
    
    
    
    0.2
    
    
    
    776
    
    
    
    13.8
    %Interest expense
    
    
    (2,267
    )
    
    
    (0.0
    )
    
    
    (2,373
    )
    
    
    (0.1
    )
    
    
    (106
    )
    
    
    (4.5
    )%Other income (expense), net
    
    
    648
    
    
    
    0.0
    
    
    
    (393
    )
    
    
    0.0
    
    
    
    1,041
    
    
    
    264.9
    %Unrealized gains on foreign exchange
    
    
    3,304
    
    
    
    0.0
    
    
    
    3,068
    
    
    
    0.1
    
    
    
    236
    
    
    
    7.7
    %Income/(Loss) before taxes
    
    
    (202
    )
    
    
    (0.0
    )
    
    
    14,272
    
    
    
    0.4
    
    
    
    (14,474
    )
    
    
    (101.4
    )%Income tax (provision) benefit
    
    
    640
    
    
    
    0.0
    
    
    
    (3,137
    )
    
    
    0.1
    
    
    
    3,777
    
    
    
    120.4
    %Net income
    
    
    438
    
    
    
    (0.0
    )
    
    
    11,135
    
    
    
    0.3
    
    
    
    (10,697
    )
    
    
    (96.1
    )%Less: Net income attributable to the
non-controlling interests
    
    
    (1,490
    )
    
    
    (0.0
    )
    
    
    (3,999
    )
    
    
    (0.1
    )
    
    
    2,509
    
    
    
    62.7
    %Net (loss) income attributable to Spectrum
Group International, Inc.
    
    $
    (1,052
    )
    
    
    (0.0
    )%
    
    $
    7,136
    
    
    
    0.2
    %
    
    $
    (8,188
    )
    
    
    (114.7
    )%Earnings (Loss) per shareBasic
    
    $
    (0.03
    )
    
    
    
    
    
    $
    0.23
    
    
    
    
    
    
    $
    (0.26
    )
    
    
    (113.0
    )%Diluted
    
    $
    (0.03
    )
    
    
    
    
    
    $
    0.23
    
    
    
    
    
    
    $
    (0.26
    )
    
    
    (113.0
    )%Weighted average shares outstandingBasic
    
    
    31,939
    
    
    
    
    
    
    
    30,934Diluted
    
    
    31,939
    
    
    
    
    
    
    
    31,649
 
 (1)
    
    The 2009 consolidated statement of operations has been restated for certain errors in
classification. Such reclassifications did not result in an adjustment to the Companys
reported net income. See further discussion at Note 3 to the consolidated financial
statements. In addition, the 2009 consolidated statement of operations has been
retrospectively adjusted in accordance with ASC 810. Revenues and Gross Profit
   25




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Operating Expenses
      Interest Income
  Interest Expense
  26




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Other Income
  Legal Settlement
  Provision for Income Taxes
  2010
    
    
    2009(in thousands)
    
    
    (in thousands)Statutory income tax
    
    $
    69
    
    
    $
    (4,852
    )State and local income taxes, net of federal
tax benefit
    
    
    (119
    )
    
    
    (1,132
    )Foreign taxes at rates different for U.S. rates
    
    
    156
    
    
    
    (68
    )Tax on unrepatriated foreign earnings
    
    
    (298
    )
    
    
    10Deferred tax asset write-offs/adjustments
    
    
    (563
    )
    
    
    Valuation allowance
    
    
    3,104
    
    
    
    3,298Uncertain tax positions
    
    
    (1,993
    )
    
    
    (81
    )Other
    
    
    284
    
    
    
    (312
    )Income tax benefit (expense)
    
    $
    640
    
    
    $
    (3,137
    )
   Non-Controlling Interests
  27




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Net Income
  Earnings (Loss) per Share
  Trading Segment
  % of
    
    
    2009(1)
    
    
    % of
    
    
    $
    
    
    %(thousands of dollars)
    
    2010
    
    
    revenue
    
    
    (as restated)
    
    
    revenue
    
    
    Increase/(decrease)
    
    
    Increase/(decrease)Trading revenues
    
    $
    5,834,712
    
    
    
    100.0
    %
    
    $
    4,121,159
    
    
    
    100.0
    %
    
    $
    1,713,553
    
    
    
    41.6
    %Gross profit
    
    
    20,256
    
    
    
    0.3
    
    
    
    43,162
    
    
    
    1.0
    
    
    
    (22,906
    )
    
    
    (53.1
    )%General and administrative expenses
    
    
    3,562
    
    
    
    0.0
    
    
    
    2,838
    
    
    
    0.1
    
    
    
    724
    
    
    
    25.5
    %Salaries and wages
    
    
    8,904
    
    
    
    0.2
    
    
    
    13,082
    
    
    
    0.3
    
    
    
    (4,178
    )
    
    
    (31.9
    )%Depreciation and amortization
    
    
    671
    
    
    
    0.0
    
    
    
    997
    
    
    
    0.0
    
    
    
    (326
    )
    
    
    (32.7
    )%Operating income
    
    $
    7,119
    
    
    
    0.1
    %
    
    $
    26,245
    
    
    
    0.6
    %
    
    $
    (19,126
    )
    
    
    (72.9
    )%
 
 (1)
    
    The 2009 consolidated statement of operations and related segment disclosures have been
restated for certain errors in classification. Such reclassifications did not result in an
adjustment to the Companys reported net income. See further discussion at Note 3 to the
consolidated financial statements. Trading Revenues
  Gross Profit
  General and Administrative Expenses
  28




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Salaries and Wages
  Depreciation and Amortization
  Collectibles Segment
  For the Years Ended June 30,2010
    
    
    2009(1)(as restated)$
    
    
    % ofIncrease/
    
    
    Increase/(thousands of dollars)
    
    $
    
    
    % to total
    
    
    $
    
    
    % to total
    
    
    (decrease)
    
    
    (decrease)Collectibles revenues
    
    $
    177,726
    
    
    
    100.0
    %
    
    $
    164,870
    
    
    
    100.0
    %
    
    $
    12,856
    
    
    
    7.8
    %Revenues by Collectibles Type:Numismatic
    
    $
    156,174
    
    
    
    87.9
    %
    
    $
    132,070
    
    
    
    80.1
    %
    
    $
    24,104
    
    
    
    18.3
    %Philatelic
    
    
    17,804
    
    
    
    10.0
    
    
    
    31,024
    
    
    
    18.8
    
    
    
    (13,220
    )
    
    
    (42.6
    )%Militaria, Wine and other
    
    
    3,748
    
    
    
    2.1
    
    
    
    1,776
    
    
    
    1.1
    
    
    
    1,972
    
    
    
    111.0
    %$
    177,726
    
    
    
    100.0
    %
    
    $
    164,870
    
    
    
    100.0
    %
    
    $
    12,856
    
    
    
    7.8
    %
 
 (1)
    
    The 2009 consolidated statement of operations and related segment disclosures have been
restated for certain errors in classification. Such reclassifications did not result in an
adjustment to the Companys reported net income. See further discussion at Note 3 to the
consolidated financial statements. Collectibles Revenues
   $
    
    
    %% of
    
    
    2009(1)
    
    
    % of
    
    
    Increase/
    
    
    Increase/(thousands of dollars)
    
    2010
    
    
    revenue
    
    
    (as restated)
    
    
    revenue
    
    
    (decrease)
    
    
    (decrease)Collectibles revenue
    
    $
    177,726
    
    
    
    100.0
    %
    
    $
    164,870
    
    
    
    100.0
    %
    
    $
    12,856
    
    
    
    7.8
    %Gross profit
    
    
    33,583
    
    
    
    18.9
    
    
    
    27,638
    
    
    
    16.8
    
    
    
    5,945
    
    
    
    21.5
    %General and administrative expenses
    
    
    18,083
    
    
    
    10.2
    
    
    
    19,309
    
    
    
    11.7
    
    
    
    (1,226
    )
    
    
    (6.3
    )%Salaries and wages
    
    
    14,445
    
    
    
    8.0
    
    
    
    14,262
    
    
    
    8.7
    
    
    
    183
    
    
    
    1.3
    %Depreciation and amortization
    
    
    1,009
    
    
    
    0.6
    
    
    
    802
    
    
    
    0.5
    
    
    
    207
    
    
    
    25.8
    %Impairment of goodwill and intangible assets
    
    
    2,271
    
    
    
    1.3
    
    
    
    860
    
    
    
    0.5
    
    
    
    1,411
    
    
    
    164.1
    %Operating loss
    
    $
    (2,225
    )
    
    
    (1.3
    )%
    
    $
    (7,595
    )
    
    
    (4.6
    )%
    
    $
    5,370
    
    
    
    (70.7
    )%
 29




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##### Table of Contents



(1)
    
    The 2009 consolidated statement of operations and related segment disclosures have been
restated for certain errors in classification. Such reclassifications did not result in an
adjustment to the Companys reported net income. See further discussion at Note 3 to the
consolidated financial statements. Gross Profit
  General and Administrative Expenses
  Salaries and Wages
  Impairment of Goodwill and Other Purchased Intangible Assets
  Depreciation and Amortization
  FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
  (thousands of dollars)
    
    2010
    
    2009(1)Cash provided by operating activities
    
    $
    12,981
    
    
    $
    6,334Cash provided by (used in) investing activities
    
    $
    1,171
    
    
    $
    (8,321
    )Cash used in financing activities
    
    $
    (7,964
    )
    
    $
    (14,293
    )
 
 (1)
    
    The 2009 consolidated statement of cash flow has been restated for certain errors in
classification. Such reclassifications did not result in an adjustment to the Companys
overall cash. See further discussion at Note 3 to the consolidated financial statements.   30




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31




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Item 3: Legal Proceedings
    CONTRACTURAL OBLIGATIONS, CONTINGENT LIABILITIES, AND COMMITMENTS
  Payments due by period5 years and(thousands of dollars)
    
    Total
    
    
    1 year
    
    
    2 years
    
    
    3 years
    
    
    4 years
    
    
    thereafterBorrowings under
lines-of-credit 
Collectibles
    
    $
    2,000
    
    
    $
    2,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Borrowings under
lines-of-credit  Trading
    
    $
    45,200
    
    
    $
    45,200
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    1,755
    
    
    
    1,168
    
    
    
    362
    
    
    
    224
    
    
    
    
    
    
    
    Total
    
    $
    48,955
    
    
    $
    48,368
    
    
    $
    362
    
    
    $
    224
    
    
    $
    
    
    
    $
    
  32




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Derivatives and Hedging
    33




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##### Table of Contents



CRITICAL ACCOUNTING ESTIMATES
  Basis of Presentation Summary of Significant Accounting Policies Consolidated Financial Statements and Supplementary Data
 Revenue Recognition
 Trading Segment .
 Derivatives and Hedging
 Collectibles Segment .
 Auction Sales .
 34




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##### Table of Contents



Private Treaty Sales.
 Stock Based Compensation
  Compensation-Stock Compensation Equity-Based Payments to Non-Employees
 35




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##### Table of Contents



Income Taxes
 Income Taxes
  Accounting for Uncertainty in Income Taxes Income Taxes
 Fair Value Measurements
  Fair Value Measurements and Disclosures
  36




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##### Table of Contents



Financial Derivatives
  Goodwill and Other Purchased Intangible Assets
 Business Combinations Intangibles  Goodwill and Others
 Long-Lived Assets
  RECENT ACCOUNTING PRONOUNCEMENTS
 Business Combinations
 37




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##### Table of Contents



Consolidation Consolidated Financial
Statements
 Derivatives and Hedging
 Subsequent Events
 Transfers and Servicing
 Consolidation
 Revenue Recognition
 38




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 39




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
FINANCIAL STATEMENTS
INDEX
 PageReports of Independent Registered Public Accounting Firms
    
    
    F-2Consolidated Balance Sheets as of June 30, 2010, and 2009
    
    
    F-4Consolidated Statements of Operations for the Years Ended June 30, 2010, and 2009
    
    
    F-5Consolidated Statements of Stockholders Equity for the Years Ended June 30, 2010, and 2009
    
    
    F-6Consolidated Statements of Cash Flows for the Years Ended June 30, 2010, and 2009
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F-1




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Report of Independent Registered Public Accounting Firm
 
         F-2




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Report of Independent Registered Public Accounting Firm
 
       F-3




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except par value)
 June 30,
    
    
    June 30,2010
    
    
    2009(as restated)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    22,320
    
    
    $
    17,545Restricted cash
    
    
    
    
    
    
    650Short-term investments and marketable securities
    
    
    6,433
    
    
    
    8,175Receivables and secured loans, net  trading operations
    
    
    42,901
    
    
    
    46,214Accounts receivable and consignor advances, net  collectibles operations
    
    
    6,127
    
    
    
    7,006Inventories,
    
    
    138,077
    
    
    
    115,654Prepaid expenses and other assets
    
    
    1,333
    
    
    
    2,028Total current assets
    
    
    217,191
    
    
    
    197,272Property and equipment, net
    
    
    2,277
    
    
    
    2,668Goodwill
    
    
    5,942
    
    
    
    5,960Other purchased intangibles, net
    
    
    5,948
    
    
    
    8,301Other assets
    
    
    259
    
    
    
    126Income taxes receivable
    
    
    4,974
    
    
    
    3,424Deferred tax assets
    
    
    144
    
    
    
    398Total assets
    
    $
    236,735
    
    
    $
    218,149LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and consignor payables
    
    $
    30,397
    
    
    $
    20,788Liabilities on borrowed metals
    
    
    40,841
    
    
    
    15,100Accrued expenses, accrued compensation and other current liabilities
    
    
    13,411
    
    
    
    23,161Accrued legal settlement
    
    
    2,697
    
    
    
    6,556Income taxes payable
    
    
    825
    
    
    
    6,582Lines-of-credit
    
    
    47,200
    
    
    
    52,750Deferred tax liability
    
    
    934
    
    
    
    1,920Dividend
payable to Auctentia
    
    
    2,500
    
    
    
    Total current liabilities
    
    
    138,805
    
    
    
    126,857Deferred and other long term tax liabilities
    
    
    7,794
    
    
    
    189Total liabilities
    
    
    146,599
    
    
    
    127,046Commitments, contingencies and subsequent eventsStockholders equity:Spectrum Group International, Inc. stockholders equity:Preferred stock, $.01 par value, authorized 10,000 shares; issued and outstanding: none
    
    
    
    
    
    
    Common stock, $.01 par value, authorized 40,000 shares; issued and outstanding: 31,893
and 28,309
at June 30, 2010, and 2009, respectively
    
    
    319
    
    
    
    283Additional paid-in capital
    
    
    241,615
    
    
    
    233,385Accumulated other comprehensive income
    
    
    3,529
    
    
    
    8,419Accumulated deficit
    
    
    (162,350
    )
    
    
    (161,298
    )Total Spectrum Group International, Inc. stockholders equity
    
    
    83,113
    
    
    
    80,789Non-controlling interests
    
    
    7,023
    
    
    
    10,314Total stockholders equity
    
    
    90,136
    
    
    
    91,103Total liabilities and stockholders equity
    
    $
    236,735
    
    
    $
    218,149
  F-4




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 Year Ended June 30,
    
    
    Year Ended June 30,2010
    
    
    2009(as restated)Revenues:Sales of precious metals
    
    $
    5,834,712
    
    
    $
    4,121,159Collectibles revenues:Sales of inventories
    
    
    154,943
    
    
    
    144,320Commissions earned
    
    
    22,783
    
    
    
    20,550Total revenue
    
    
    6,012,438
    
    
    
    4,286,029Cost of sales:Cost of precious metals sold
    
    
    5,814,456
    
    
    
    4,077,997Cost of collectibles sold
    
    
    144,143
    
    
    
    137,232Total cost of sales
    
    
    5,958,599
    
    
    
    4,215,229Gross profit
    
    
    53,839
    
    
    
    70,800Operating expenses:General and administrative
    
    
    28,982
    
    
    
    29,963Salaries and wages
    
    
    26,467
    
    
    
    29,814Depreciation and amortization
    
    
    1,699
    
    
    
    1,807Goodwill and intangible asset impairments
    
    
    2,271
    
    
    
    860Legal settlement
    
    
    2,697
    
    
    
    Total operating expenses
    
    
    62,116
    
    
    
    62,444Operating (loss) income
    
    
    (8,277
    )
    
    
    8,356Interest and other income (expense):Interest income
    
    
    6,390
    
    
    
    5,614Interest expense
    
    
    (2,267
    )
    
    
    (2,373
    )Other income (expense), net
    
    
    648
    
    
    
    (393
    )Unrealized gains on foreign exchange
    
    
    3,304
    
    
    
    3,068Total interest and other income (expense), net
    
    
    8,075
    
    
    
    5,916(Loss) Income before income taxes
    
    
    (202
    )
    
    
    14,272Income tax (provision)benefit
    
    
    640
    
    
    
    (3,137
    )Net income
    
    
    438
    
    
    
    11,135Less: Net income attributable to the
non-controlling interests
    
    
    (1,490
    )
    
    
    (3,999
    )Net (loss) income attributable to Spectrum
Group International, Inc.
    
    $
    (1,052
    )
    
    $
    7,136(Loss)Earnings per share attributable to
Spectrum Group International, Inc.Basic
    
    $
    (0.03
    )
    
    $
    0.23Diluted
    
    $
    (0.03
    )
    
    $
    0.23Weighted average shares outstandingBasic
    
    
    31,939
    
    
    
    30,934Diluted
    
    
    31,939
    
    
    
    31,649
  F-5




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (in thousands)
 TotalSpectrumGroupAccumulated
    
    
    
    
    
    
    
    
    
    
    International,Common
    
    
    Common
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    Non-
    
    
    Inc.Stock
    
    
    Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    controlling
    
    
    Stockholders
    
    
    Comprehensivein Shares
    
    
    in $
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    Interests
    
    
    Equity
    
    
    Income/(Loss)Balance, June 30, 2008 (restated)
    
    
    28,209
    
    
    $
    282
    
    
    $
    232,123
    
    
    $
    13,141
    
    
    $
    (168,434
    )
    
    $
    6,315
    
    
    $
    83,427
    
    
    $
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,136
    
    
    
    3,999
    
    
    
    11,135
    
    
    
    11,135Less: Total comprehensive income attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,999
    )Unrealized gain on marketable securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    313Change in cumulative foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,035
    )
    
    
    
    
    
    
    
    
    
    
    (5,035
    )
    
    
    (5,035
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,414Issuance of stock for class action settlement
    
    
    772
    
    
    
    8
    
    
    
    1,437
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,445Repurchase of stock issued for class action settlement
    
    
    (772
    )
    
    
    (8
    )
    
    
    (1,190
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,198
    )Taxes paid in exchange for cancellation of restricted stock
    
    
    
    
    
    
    
    
    
    
    (98
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    1,114
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,114Issuance of common stock for restricted stock grants
    
    
    100
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2009 (restated)
    
    
    28,309
    
    
    
    283
    
    
    
    233,385
    
    
    
    8,419
    
    
    
    (161,298
    )
    
    
    10,314
    
    
    
    91,103Net (loss) income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,052
    )
    
    
    1,490
    
    
    
    438
    
    
    
    438Less: Total comprehensive income attributable to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,490
    )Unrealized loss on marketable securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (173
    )
    
    
    
    
    
    
    
    
    
    
    (173
    )
    
    
    (173
    )Change in cumulative foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,717
    )
    
    
    
    
    
    
    
    
    
    
    (4,717
    )
    
    
    (4,717
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,942
    )Dividend paid to Auctentia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )
    
    
    (1,000
    )Dividend declared to Auctentia
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,500
    )
    
    
    (2,500
    )Distribution paid to a non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,281
    )
    
    
    (1,281
    )Issuances of common stock for legal settlement
    
    
    3,278
    
    
    
    33
    
    
    
    6,523
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,556Taxes paid in exchange for cancellation of restricted stock
    
    
    
    
    
    
    
    
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (133
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    1,843
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,843Issuance of common stock for restricted stock grants
    
    
    306
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2010
    
    
    31,893
    
    
    $
    319
    
    
    $
    241,615
    
    
    $
    3,529
    
    
    $
    (162,350
    )
    
    $
    7,023
    
    
    $
    90,136
  F-6




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year Ended
    
    
    Year EndedJune 30,
    
    
    June 30,2010
    
    
    2009(as restated)Cash flows from operating activities:Net (loss) income
    
    $
    438
    
    
    $
    11,135Adjustments to reconcile net income to net cash provided by operating activities:Unrealized loss on derivative instruments
    
    
    5,110
    
    
    
    4,696Unrealized (gain) on foreign currency
    
    
    (3,304
    )
    
    
    (3,000
    )Depreciation and amortization
    
    
    1,699
    
    
    
    1,807Loss on abandonment of property and equipment
    
    
    144
    
    
    
    Goodwill and other purchased intangibles impairment charge
    
    
    2,271
    
    
    
    860Provision for bad debts
    
    
    (22
    )
    
    
    440Provision for inventory reserves
    
    
    1,221
    
    
    
    1,356Stock based compensation
    
    
    1,843
    
    
    
    1,115Legal settlement
    
    
    2,697
    
    
    
    Gain on sale of land and building
    
    
    
    
    
    
    (432
    )Gains on sales of marketable securities
    
    
    (135
    )
    
    
    (254
    )Changes in assets and liabilities:Receivables and secured loans  trading operations
    
    
    1,598
    
    
    
    (20,629
    )Accounts receivable and consignor advances  collectibles operations
    
    
    918
    
    
    
    (432
    )Litigation settlement receivable
    
    
    
    
    
    
    5,975Inventories
    
    
    (23,644
    )
    
    
    13,911Liabilities on borrowed metals
    
    
    25,741
    
    
    
    (3,688
    )Prepaid expenses and other assets
    
    
    562
    
    
    
    2,309Accounts payable, accrued expenses and other liabilities
    
    
    (3,722
    )
    
    
    (6,233
    )Income taxes
    
    
    (468
    )
    
    
    4,651Deferred taxes
    
    
    34
    
    
    
    (12
    )Accrued litigation settlement
    
    
    
    
    
    
    (7,241
    )Net cash (used in) provided by operating activities
    
    
    12,981
    
    
    
    6,334Cash flows from investing activities:Capital expenditures for property and equipment
    
    
    (699
    )
    
    
    (1,595
    )Proceeds from disposition of assets
    
    
    
    
    
    
    2,072Cash paid for acquisitions, net of cash acquired
    
    
    (657
    )
    
    
    (592
    )Net sales (purchases) of short-term investments and marketable securities
    
    
    827
    
    
    
    (8,734
    )Proceeds from sales of marketable securities
    
    
    1,050
    
    
    
    1,178Decrease (increase) in restricted cash
    
    
    650
    
    
    
    (650
    )Net cash provided by (used in) investing activities
    
    
    1,171
    
    
    
    (8,321
    )Cash flows from financing activities:Net borrowings under lines-of-credit
    
    
    (5,550
    )
    
    
    (12,997
    )Repurchase of stock issued for class action settlement
    
    
    
    
    
    
    (1,198
    )Dividend paid to a non-controlling interest
    
    
    (1,000
    )
    
    
    Distribution paid to a non-controlling interest
    
    
    (1,281
    )
    
    
    Taxes paid on behalf of employees with respect to vesting of restricted stock
    
    
    (133
    )
    
    
    (98
    )Net cash provided by (used in) financing activities
    
    
    (7,964
    )
    
    
    (14,293
    )Effects of exchange rates on cash
    
    
    (1,413
    )
    
    
    (2,035
    )Net increase (decrease) in cash and cash equivalents
    
    
    4,775
    
    
    
    (18,315
    )Cash and cash equivalents, beginning of year
    
    
    17,545
    
    
    
    35,860Cash and cash equivalents, end of year
    
    $
    22,320
    
    
    $
    17,545Supplemental disclosures of cash flow information:Cash paid during the year for:Interest expense
    
    $
    1,473
    
    
    $
    2,159Income taxes
    
    $
    1,001
    
    
    $
    4,582
  F-7




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##### Table of Contents



SPECTRUM GROUP INTERNATIONAL, INC.
Notes to Consolidated Financial Statements
 1. BASIS OF PRESENTATION
 Basis of Presentation
 Segment Reporting
 Business Segments
 Trading Segment
  Collectibles Segment
  European Operations
  Reclassifications
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  F-8




---



##### Table of Contents



Use of Estimates
  Concentrations of credit risk
   Trading Segment .
 Collectibles Segment.
  Cash Equivalents
  F-9




---



##### Table of Contents



Restricted Cash
  Short-Term Investments and Marketable Securities
  Investments  Debt and Equity Securities
 Inventories
 Trading Inventories
    Collectibles Inventories
  F-10




---



##### Table of Contents



Derivative Financial Instruments
 Derivatives and Hedging
 Property and Equipment
 Property, Plant and Equipment
 Goodwill and Other Purchased Intangible Assets
 Business Combinations Intangibles  Goodwill and Other
 F-11




---



##### Table of Contents



Long-Lived Assets
  Consolidated Joint Venture
  Consolidation
 Consignor Advances and Payables
  Accrued Compensation
  Fair Value Measurements
 Fair Value Measurements and Disclosures
 F-12




---



##### Table of Contents



Fair Value of Financial Instruments
  Revenue Recognition
 Trading Segment.
 settlement date accounting. Derivatives
and Hedging
 Collectibles Segment.
 Auction Sales.
    F-13




---



##### Table of Contents



Private Treaty Sales.
 Commodity Contracts
   Foreign Currencies Translation
   Comprehensive Income (Loss)
  F-14




---



##### Table of Contents



Stock Based Compensation
  Compensation-Stock Compensation Equity-Based Payments to Non-Employees
 Marketing
  Shipping and Handling
  Income Taxes
 Income Taxes
 F-15




---



##### Table of Contents



Earnings per Share
   (thousands of shares)
    
    (thousands of shares)Year Ended June 30, 2010
    
    Year Ended June 30, 2009Basic weighted average shares outstanding (1) (2)
    
    
    31,939
    
    
    
    30,934Effect of common stock equivalents  stock options and
stock issuable under employee compensation plans
    
    
    
    
    
    
    715Diluted weighted average shares outstanding
    
    
    31,939
    
    
    
    31,649
 
 (1)
    
    Basic weighted average shares outstanding include the full effect of shares issuable
pursuant to the litigation settlement (Note 15) as of the date the settlement agreement was
executed.(2)
    
    Basic weighted average shares, as of years ending June 30, 2010 and 2009 include the effect
of vested but unissued restricted stock grants. Supplemental Disclosure of Noncash Investing and Financing Activities
  F-16




---



##### Table of Contents



Recent Accounting Pronouncements
 Business Combinations
 Consolidation Consolidated Financial
Statements
 Derivatives and Hedging
 Subsequent Events
 Transfers and Servicing
 Consolidation
 F-17




---



##### Table of Contents



Revenue Recognition
 Adoption of Accounting Standards Codification 810
 Consolidation
 3. RESTATEMENTS OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
 Correction of Errors to the 2009 Consolidated Financial Statement
   F-18




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##### Table of Contents



Correction of an error for the year ended June 30, 2009:
 (in thousands)
    
    Year Ended June 30, 2009As Originally
    
    
    
    
    
    
    AsReported
    
    
    Adjustment
    
    
    CorrectedRevenue:Sales of precious metals
    
    $
    4,126,909
    
    
    $
    (5,750
    )
    
    $
    4,121,159
    aSales of inventory
    
    
    144,320
    
    
    
    
    
    
    
    144,320Auction commissions earned
    
    
    22,113
    
    
    
    (1,563
    )
    
    
    20,550
    aTotal revenue
    
    
    4,293,342
    
    
    
    (7,313
    )
    
    
    4,286,029Cost of sales:Cost of precious metals sold
    
    
    4,084,419
    
    
    
    (6,422
    )
    
    
    4,077,997
    aCost of collectibles sold
    
    
    138,589
    
    
    
    (1,357
    )
    
    
    137,232
    bTotal cost of sales
    
    
    4,223,008
    
    
    
    (7,779
    )
    
    
    4,215,229Gross profit
    
    
    70,334
    
    
    
    466
    
    
    
    70,800Operating expenses:General and administrative
    
    
    30,169
    
    
    
    (206
    )
    
    
    29,963
    a,bSalaries and wages
    
    
    29,814
    
    
    
    
    
    
    
    29,814Depreciation and amortization
    
    
    1,807
    
    
    
    
    
    
    
    1,807Litigation settlement
    
    
    860
    
    
    
    
    
    
    
    860Total operating expenses
    
    
    62,650
    
    
    
    (206
    )
    
    
    62,444Operating (loss) income
    
    
    7,684
    
    
    
    672
    
    
    
    8,356Interest and other income (loss):Interest income
    
    
    5,614
    
    
    
    
    
    
    
    5,614Interest expense
    
    
    (2,373
    )
    
    
    
    
    
    
    (2,373
    )Other income (expense), net
    
    
    279
    
    
    
    (672
    )
    
    
    (393
    )aUnrealized gains (loss) on
foreign exchange
    
    
    3,068
    
    
    
    
    
    
    
    3,068Interest and other income
(expense)
    
    
    6,588
    
    
    
    (672
    )
    
    
    5,916Income (loss) before income
taxes and non-controlling
interest
    
    $
    14,272
    
    
    $
    
    
    
    $
    14,272
 
 (a)
    
    Represents the elimination of intercompany transactions(b)
    
    Represents the reclassification of auction related expenses from cost of sales to selling,
general and administrative th th
 F-19




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##### Table of Contents



June 30, 2009
    
    
    June 30, 2009As Corrected
    
    
    As Originally Reported
    
    
    Inc/(dec)(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)Net cash provided by operating activities
    
    $
    6,334
    
    
    $
    13,022
    
    
    $
    (6,688
    )Net cash used in investing activities
    
    
    (8,321
    )
    
    
    (8,321
    )
    
    
    Net cash used in financing activities
    
    
    (14,293
    )
    
    
    (17,981
    )
    
    
    3,688Effects of exchange rates in cash
    
    
    (2,035
    )
    
    
    (5,035
    )
    
    
    3,000Net cash increase (decrease) in cash and cash
equivalents
    
    
    (18,315
    )
    
    
    (18,315
    )
    
    
    Cash and cash equivalents, beginning of year
    
    
    35,860
    
    
    
    35,860
    
    
    
    Cash and cash equivalents, end of year
    
    $
    17,545
    
    
    $
    17,545
    
    
    $
    
    4. CUSTOMER CONCENTRATIONS
  2010
    
    
    2009(in thousands)
    
    
    (in thousands)In $s
    
    
    As a %
    
    
    In $s
    
    
    As a %Total Trading segment revenue
    
    $
    5,834,712
    
    
    
    100.0
    %
    
    $
    4,121,159
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    1,650,760
    
    
    
    28.3
    %
    
    $
    953,278
    
    
    
    23.1
    %Customer B
    
    
    701,981
    
    
    
    12.0
    
    
    
    256,801
    
    
    
    6.2Total
    
    $
    2,352,741
    
    
    
    40.3
    %
    
    $
    1,210,079
    
    
    
    29.3
    %
  2010
    
    
    2009(in thousands)
    
    
    (in thousands)In $s
    
    
    As a %
    
    
    In $s
    
    
    As a %Trading segment accounts receivable
    
    $
    18,615
    
    
    
    100.0
    %
    
    $
    16,205
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    3,101
    
    
    
    16.7
    %
    
    $
    3,894
    
    
    
    24.0
    %Customer B
    
    
    2,657
    
    
    
    14.3
    
    
    
    2,535
    
    
    
    15.6Total
    
    $
    5,758
    
    
    
    31.0
    %
    
    $
    6,429
    
    
    
    39.6
    %
  F-20




---



##### Table of Contents



2010
    
    
    2009(in thousands)
    
    
    (in thousands)In $s
    
    
    As a %
    
    
    In $s
    
    
    As a %Trading segment secured loans
    
    $
    22,690
    
    
    
    100.0
    %
    
    $
    17,727
    
    
    
    100.0
    %Trading segment customer concentrationsCustomer A
    
    $
    7,396
    
    
    
    32.6
    %
    
    $
    3,043
    
    
    
    17.2
    %Customer B
    
    
    2,770
    
    
    
    12.2
    
    
    
    2,600
    
    
    
    14.7Customer C
    
    
    2,511
    
    
    
    11.0
    
    
    
    2,502
    
    
    
    14.1Total
    
    $
    12,677
    
    
    
    55.8
    %
    
    $
    8,145
    
    
    
    46.0
    %
   5. RECEIVABLES
  June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Customer trade receivables
    
    $
    6,077
    
    
    $
    9,138Wholesale trade advances
    
    
    5,407
    
    
    
    3,493Secured loans
    
    
    22,690
    
    
    
    17,727Due from brokers
    
    
    7,131
    
    
    
    3,574Subtotal
    
    
    41,305
    
    
    
    33,932Less: allowances for doubtful accounts
    
    
    (102
    )
    
    
    (319
    )Subtotal
    
    
    41,203
    
    
    
    33,613Derivative assets  open purchase and sales commitments
    
    
    1,698
    
    
    
    Derivative assets  futures contracts
    
    
    
    
    
    
    10,875Derivative assets  forwards contracts
    
    
    
    
    
    
    1,726Receivables and secured loans, net
    
    $
    42,901
    
    
    $
    46,214
      F-21




---



##### Table of Contents



June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auction and trade
    
    $
    6,510
    
    
    $
    7,555Less: allowance for doubtful accounts
    
    
    (383
    )
    
    
    (549
    )Accounts receivable and consignor advances, net
    
    $
    6,127
    
    
    $
    7,006
   Year Ended
    
    
    Year EndedJune 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Beginning balance
    
    $
    (868
    )
    
    $
    (521
    )Provision for losses
    
    
    22
    
    
    
    (440
    )Charge-offs to reserve
    
    
    309
    
    
    
    39Foreign currencies exchange rate charges
    
    
    52
    
    
    
    54Ending balance
    
    $
    (485
    )
    
    $
    (868
    )
 6. INVENTORIES
  June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trading segment inventories
    
    $
    114,102
    
    
    $
    92,043Less: provision for losses
    
    
    (350
    )
    
    
    (104
    )Trading, net
    
    $
    113,752
    
    
    $
    91,939Collectibles segment inventories
    
    $
    25,290
    
    
    $
    26,719Less: provision for losses
    
    
    (965
    )
    
    
    (3,004
    )Collectibles, net
    
    $
    24,325
    
    
    $
    23,715Total inventories, gross
    
    $
    139,392
    
    
    $
    118,762Less: provisions for losses
    
    
    (1,315
    )
    
    
    (3,108
    )Net inventories
    
    $
    138,077
    
    
    $
    115,654
 F-22




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##### Table of Contents



Year Ended
    
    
    Year EndedJune 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Beginning balance
    
    $
    (3,108
    )
    
    $
    (10,868
    )Provision for losses
    
    
    (1,221
    )
    
    
    (1,356
    )Charge-offs to reserve
    
    
    2,947
    
    
    
    7,867Foreign currencies exchange rate changes
    
    
    67
    
    
    
    1,249Ending balance
    
    $
    (1,315
    )
    
    $
    (3,108
    )
 7. PROPERTY AND EQUIPMENT
  June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Equipment
    
    $
    2,102
    
    
    $
    2,753Furniture and fixtures
    
    
    1,376
    
    
    
    1,458Vehicles
    
    
    248
    
    
    
    207Software
    
    
    1,741
    
    
    
    1,448Leasehold improvements
    
    
    1,365
    
    
    
    1,5596,832
    
    
    
    7,425Less: accumulated depreciation and amortization
    
    
    (4,555
    )
    
    
    (4,757
    )Net property and equipment
    
    $
    2,277
    
    
    $
    2,668
   8. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS
 Acquisitions
   Goodwill
  F-23




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##### Table of Contents



June 30, 2009
    
    
    Additions and
    
    
    
    
    
    
    June 30, 2010(in thousands)
    
    
    Adjustments
    
    
    Impairments
    
    
    (in thousands)Trading
    
    $
    4,884
    
    
    $
    
    
    
    $
    
    
    
    $
    4,884Collectibles
    
    
    1,076
    
    
    
    415
    
    
    
    (433
    )
    
    
    1,058$
    5,960
    
    
    $
    415
    
    
    $
    (433
    )
    
    $
    5,942
 June 30, 2008
    
    
    Additions and
    
    
    
    
    
    
    June 30, 2009(in thousands)
    
    
    Adjustments
    
    
    Impairments
    
    
    (in thousands)Trading
    
    $
    4,884
    
    
    $
    
    
    
    $
    
    
    
    $
    4,884Collectibles
    
    
    1,641
    
    
    
    215
    
    
    
    (780
    )
    
    
    1,076$
    6,525
    
    
    $
    215
    
    
    $
    (780
    )
    
    $
    5,960
  Other Purchased Intangible Assets
  June 30, 2010
    
    
    June 30, 2009Estimated
    
    
    (in thousands)
    
    
    (in thousands)Useful
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GrossLives
    
    
    Carrying
    
    
    Accumulated
    
    
    Accumulated
    
    
    Net Book
    
    
    Carrying
    
    
    Accumulated
    
    
    Accumlated
    
    
    Net Book(Years)
    
    
    Amount
    
    
    Amortization
    
    
    Impairment
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    Impairment
    
    
    ValueTrademarks
    
    Indefinite
    
    $
    2,685
    
    
    $
    
    
    
    $
    (1,142
    )
    
    $
    1,543
    
    
    $
    2,616
    
    
    $
    
    
    
    $
    (80
    )
    
    $
    2,536Customer lists
    
    5-15
    
    
    9,326
    
    
    
    (4,175
    )
    
    
    (776
    )
    
    
    4,375
    
    
    
    9,161
    
    
    
    (3,500
    )
    
    
    
    
    
    
    5,661Non- competes and
others
    

    4-15
    
    
    2,309
    
    
    
    (2,279
    )
    
    
    
    
    
    
    30
    
    
    
    2,302
    
    
    
    (2,198
    )
    
    
    
    
    
    
    104$
    14,320
    
    
    $
    (6,454
    )
    
    $
    (1,918
    )
    
    $
    5,948
    
    
    $
    14,079
    
    
    $
    (5,698
    )
    
    $
    (80
    )
    
    $
    8,301
  F-24




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##### Table of Contents



Estimated amortization expenses on an annual basis for the succeeding five years are as follows:
 Years ending June 30:
    
    (in thousands)2011
    
    $
    4422012
    
    
    4422013
    
    
    4372014
    
    
    4322015
    
    
    432Thereafter
    
    
    2,220Total
    
    $
    4,405
 9. ACCOUNTS PAYABLE AND CONSIGNOR PAYABLES
  June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Trade payables to customers
    
    $
    6,859
    
    
    $
    5,696Advances from customers
    
    
    12,153
    
    
    
    5,834Net liabilities on margin accounts
    
    
    10,530
    
    
    
    3,041Due to brokers
    
    
    
    
    
    
    648Derivative liabilities  open purchase and sales commitments
    
    
    
    
    
    
    5,356Derivative liabilities  future contracts
    
    
    507
    
    
    
    Derivative liabilities  forward contracts
    
    
    45
    
    
    
    Other accounts payable
    
    
    303
    
    
    
    213Accounts payable and consignor payable
    
    $
    30,397
    
    
    $
    20,788
 10. INCOME TAXES
  Year Ended
    
    
    Year EndedJune 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)U.S.
    
    $
    (2,045
    )
    
    $
    13,173Foreign
    
    
    1,843
    
    
    
    1,099Income / (loss) before income taxes
and non-controlling interests
    
    $
    (202
    )
    
    $
    14,272
  Year Ended
    
    
    Year EndedJune 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Current:Federal
    
    $
    3,164
    
    
    $
    (1,845
    )State
    
    
    (2,002
    )
    
    
    (869
    )Foreign
    
    
    (570
    )
    
    
    (435
    )Total current tax (provision)/ benefit
    
    
    592
    
    
    
    (3,149
    )Deferred:Federal
    
    
    162
    
    
    
    61State
    
    
    68
    
    
    
    (42
    )Foreign
    
    
    (182
    )
    
    
    (7
    )Total deferred tax (provision)/ benefit
    
    
    48
    
    
    
    12Income tax (provision)/benefit
    
    $
    640
    
    
    $
    (3,137
    )
 F-25




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##### Table of Contents



June 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Deferred tax assets:Inventories
    
    $
    656
    
    
    $
    1,149Unrealized gains on futures contracts
    
    
    201
    
    
    
    Unrealized losses on open purchase and sales commitments
    
    
    
    
    
    
    1,444Investments
    
    
    
    
    
    
    263Stock-based compensation
    
    
    855
    
    
    
    235Intangible assets
    
    
    3,438
    
    
    
    1,797Property, plant & equipment
    
    
    109
    
    
    
    84Accrued compensation
    
    
    895
    
    
    
    1,399Legal settlement
    
    
    1,074
    
    
    
    2,611Net operating loss carry-forwards
    
    
    5,184
    
    
    
    1.945Charitable contribution carry-forward
    
    
    12
    
    
    
    2,894Foreign tax credit carry-forwards
    
    
    6,087
    
    
    
    6,499Accrual to cash adjustments
    
    
    1,200
    
    
    
    1,295Other
    
    
    541
    
    
    
    844Total deferred tax assets
    
    
    20,252
    
    
    
    22,459Less: valuation allowances
    
    
    (12,726
    )
    
    
    (13,984
    )Net deferred tax assets after valuation allowances
    
    
    7,526
    
    
    
    8,475Deferred tax liabilities:Inventories
    
    
    2,580
    
    
    
    742Unrealized gains on open purchase and sales contracts
    
    
    654
    
    
    
    Unrealized gains on futures contracts
    
    
    
    
    
    
    4,152Intangible assets
    
    
    698
    
    
    
    136Un-repatriated foreign earnings
    
    
    1,328
    
    
    
    738Withholding tax on foreign earnings
    
    
    1,179
    
    
    
    1,177Unrealized loss on foreign exchange
    
    
    1,354
    
    
    
    Unrealized foreign exchange translation adjustment
    
    
    1,395
    
    
    
    3,241Other
    
    
    83
    
    
    
    Total deferred tax liabilities
    
    
    9,271
    
    
    
    10,186Net deferred tax liabilities
    
    $
    1,745
    
    
    $
    1,711
   F-26




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##### Table of Contents



2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Statutory income tax (expense)benefit
    
    $
    69
    
    
    $
    (4,852
    )State and local taxes, net of federal tax
benefit
    
    
    (119
    )
    
    
    (1,132
    )Foreign taxes at rates different for U.S. rates
    
    
    156
    
    
    
    (68
    )Tax on unrepatriated foreign earnings
    
    
    (298
    )
    
    
    10Deferred tax asset write-offs/adjustments
    
    
    (563
    )
    
    
    Valuation allowance
    
    
    3,104
    
    
    
    3,298Uncertain tax position
    
    
    (1,993
    )
    
    
    (81
    )Other
    
    
    284
    
    
    
    (312
    )Income tax (provision)/benefit
    
    $
    640
    
    
    $
    (3,137
    )
    F-27




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##### Table of Contents



2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Current LiabilitiesAccrued Income Taxes
    
    $
    
    
    
    $
    Non-Current LiabilitiesDeferred income taxes  (contra assets,
netted against corresponding tax refund
receivables)
    
    
    20,426
    
    
    
    20,426Tax liability
    
    
    5,974
    
    
    
    1,991Total Liability for unrecognized tax benefits
    
    $
    26,400
    
    
    $
    22,417
  2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Balance at July 1,
    
    $
    22,417
    
    
    $
    22,247Increase as a result of tax position taken
during the current period
    
    
    3,983
    
    
    
    170Total Liability for unrecognized tax benefits
    
    $
    26,400
    
    
    $
    22,417
    F-28




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##### Table of Contents



11. FINANCING AGREEMENTS
       12. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
   F-29




---



##### Table of Contents



Derivatives and Hedging
   June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)As restatedTrading inventories, net
    
    $
    113,753
    
    
    $
    91,939Less un-hedged inventories:Inventory reserve
    
    
    350
    
    
    
    104Commemorative coins
    
    
    
    
    
    
    (3,517
    )Premiums on metal positions
    
    
    (1,034
    )
    
    
    (1,477
    )Subtotal
    
    
    113,069
    
    
    
    87,049Commitments at market:Open inventory purchase commitments
    
    
    153,215
    
    
    
    131,844Open inventory sale commitments
    
    
    (56,903
    )
    
    
    (38,370
    )Margin sale commitments
    
    
    (19,356
    )
    
    
    (7,358
    )Premiums on open commitment positions
    
    
    (26
    )
    
    
    32Inventory borrowed from suppliers
    
    
    (40,841
    )
    
    
    (15,100
    )Advances on industrial metals
    
    
    1,508
    
    
    
    700Inventories subject to price risk
    
    
    150,666
    
    
    
    158,797Inventories subject to derivative financial instruments:Precious metals forwards contracts at market values
    
    
    49,985
    
    
    
    27,731Precious metals futures contracts at market values
    
    
    105,769
    
    
    
    132,651Total market value of derivative financial instruments
    
    
    155,754
    
    
    
    160,382Net inventories subject to price risk, Company
consolidated basis
    
    $
    (5,088
    )
    
    $
    (1,585
    )
 F-30




---



##### Table of Contents



June 30, 2009June 30, 2010
    
    
    (in thousands)(in thousands)
    
    
    As restatedEffects of open related party transaction
between A-Mark and affiliates:Net inventory subject to price risk,
Company consolidated basis
    
    $
    (5,088
    )
    
    $
    (1,585
    )Open inventory purchase commitments
with affiliates
    
    
    4,981
    
    
    
    1,088Net inventory subject to price risk,
A-Mark stand-alone basis
    
    $
    (107
    )
    
    $
    (497
    )
    13. RELATED PARTY TRANSACTIONS
  14. NON-CONTROLLING INTEREST
   June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    7,018
    
    
    $
    9,167Winter Games Bullion Ventures, LLC 50% outside interest
    
    
    5
    
    
    
    1,147Total
    
    $
    7,023
    
    
    $
    10,314
  F-31




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##### Table of Contents



Year Ended
    
    
    Year EndedJune 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Auctentia 20% interest in Spectrum PMI
    
    $
    1,352
    
    
    $
    3,346Winter Games Bullion Ventures, LLC 50% interest
    
    
    138
    
    
    
    653Total
    
    $
    1,490
    
    
    $
    3,999
  June 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Cash
    
    $
    10
    
    
    $
    154Receivables
    
    
    
    
    
    
    21Inventories
    
    
    
    
    
    
    3,516Total assets
    
    $
    10
    
    
    $
    3,691Accounts payable
    
    $
    
    
    
    $
    1,397Members equity
    
    
    10
    
    
    
    2,294Total liabilities and members equity
    
    $
    10
    
    
    $
    3,691
  For the
    
    
    For theyear ended
    
    
    year endedJune 30, 2010
    
    
    June 30, 2009(in thousands)
    
    
    (in thousands)Sales
    
    $
    26,818
    
    
    $
    46,234Cost of products sold
    
    
    25,782
    
    
    
    44,012Gross profit
    
    
    1,036
    
    
    
    2,222Operating expenses
    
    
    759
    
    
    
    916Net income
    
    $
    277
    
    
    $
    1,306
 15. COMMITMENTS AND CONTINGENCIES
 Litigation, Claims and Contingencies
  Operating Leases
  F-32




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##### Table of Contents



OperatingLeasesFor the years ending June 30:
    
    (in thousands)2011
    
    $
    1,1682012
    
    
    3632013
    
    
    2242014
    
    
    2015
    
    
    Total future minimum lease payments
    
    $
    1,755
  Contractual Obligations
   Consulting, Employment and Non-Compete Agreements
  Employee Benefit Plans
  Restricted Capital of Foreign Subsidiaries
  Registration Rights
  F-33




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##### Table of Contents



Legal Proceedings
 Ongoing Legal Proceedings Against Certain of the Companys Former Officers and Directors Relating
to the Companys Transactions with Afinsa
 Spanish Criminal Investigation
      IRS and New York State Tax Audits
   F-34




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##### Table of Contents



Tax Investigation in Spain
  SEC Action
      F-35




---



##### Table of Contents



Greg Manning v. Spectrum Group International, Inc.
    Securities Class Action and Shareholder Derivative Lawsuit
 In re Escala Group, Inc.
Derivative Litigation, In re Escala Group, Inc. Securities Litigation
     F-36




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##### Table of Contents



Seymour Ehrenpreis v. Nutmeg Stamps, et al
  16. STOCKHOLDERS EQUITY
 Stock Option Plan
   Employee Stock Options.
 F-37




---



##### Table of Contents



WeightedAverageWeighted
    
    
    
    
    
    
    per shareAverage
    
    
    Intrinsic Value
    
    
    Grant DateOptions
    
    
    Exercise Price
    
    
    (in thousands)
    
    
    Fair ValueOutstanding at June 30, 2008
    
    
    613,325
    
    
    $
    6.14
    
    
    $
    114
    
    
    $
    4.69Granted through stock option plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (9,000
    )
    
    $
    9.57
    
    
    
    (10
    )
    
    $
    8.68Outstanding at June 30, 2009
    
    
    604,325
    
    
    $
    6.09
    
    
    
    104
    
    
    $
    4.63Granted through stock option plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at June 30, 2010
    
    
    604,325
    
    
    $
    6.09
    
    
    $
    104
    
    
    $
    4.63Shares exercisable at June 30, 2009
    
    
    604,325
    
    
    $
    6.09
    
    
    $
    104
    
    
    $
    4.63Shares exercisable at June 30, 2010
    
    
    604,325
    
    
    $
    6.09
    
    
    $
    104
    
    
    $
    4.63
  Options Outstanding
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    WeightedNumber of
    
    Average
    
    Average
    
    Number of
    
    AverageExercise Price Ranges
    
    Shares
    
    Remaining
    
    Exercise
    
    Shares
    
    ExerciseFrom
    
    To
    
    Outstanding
    
    Contractual Life
    
    Price
    
    Exercisable
    
    Price$
    1.00
    
    
    $
    5.00
    
    
    
    391,250
    
    
    
    2.8
    
    
    $
    2.28
    
    
    
    391,250
    
    
    $
    2.28$
    5.01
    
    
    $
    10.00
    
    
    
    26,200
    
    
    
    3.3
    
    
    $
    8.96
    
    
    
    26,200
    
    
    $
    8.96$
    10.01
    
    
    $
    15.00
    
    
    
    186,875
    
    
    
    3.7
    
    
    $
    13.65
    
    
    
    186,875
    
    
    $
    13.65604,325
    
    
    
    3.1
    
    
    $
    6.09
    
    
    
    604,325
    
    
    $
    6.09
 Restricted Stock Grants.
 F-38




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##### Table of Contents



WeightedAverage shareShares
    
    price at grant dateOutstanding as of June 30, 2008
    
    
    279,892
    
    
    $
    2.64Shares issued
    
    
    531,548
    
    
    $
    2.51Shares exercised
    
    
    (99,838
    )
    
    $
    2.66Shares forfeited
    
    
    Shares withheld for employee taxes
    
    
    (34,920
    )
    
    $
    2.18Outstanding as of June 30, 2009
    
    
    676,682
    
    
    $
    2.54Shares issued
    
    
    604,726
    
    
    $
    2.53Shares exercised
    
    
    (306,002
    )
    
    $
    2.67Shares forfeited
    
    
    (34,334
    )
    
    $
    2.05Shares withheld for employee taxes
    
    
    (64,011
    )
    
    $
    2.66Outstanding at June 30, 2010
    
    
    877,061
    
    
    $
    2.51Vested but unissued at June 30, 2010
    
    
    596,228
 Stock Appreciation Rights.
 Certain Anti-Takeover Provisions
  Dividends
   F-39




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##### Table of Contents



17. SEGMENT AND GEOGRAPHIC INFORMATION
   Year Ended June 30,
    
    
    Year Ended June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Revenues:Trading
    
    $
    5,834,712
    
    
    $
    4,121,159Collectibles:Numismatic
    
    
    156,174
    
    
    
    132,070Philatelic
    
    
    17,804
    
    
    
    31,024Other
    
    
    3,748
    
    
    
    1,776Total Collectibles
    
    
    177,726
    
    
    
    164,870$
    6,012,438
    
    
    $
    4,286,029
 Year Ended June 30,
    
    
    Year Ended June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Revenues by geographic region:United States
    
    $
    6,002,118
    
    
    $
    4,271,725Europe
    
    
    9,232
    
    
    
    9,680Asia
    
    
    1,088
    
    
    
    4,624$
    6,012,438
    
    
    $
    4,286,029
 Year Ended June 30,
    
    
    Year Ended June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)(as restated)Operating income (loss):Trading
    
    $
    7,119
    
    
    $
    26,244Collectibles
    
    
    (2,225
    )
    
    
    (7,594
    )Corporate
    
    
    (13,171
    )
    
    
    (10,294
    )$
    (8,277
    )
    
    $
    8,356
 Year Ended June 30,
    
    
    Year Ended June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Depreciation and amortization:Trading
    
    $
    671
    
    
    $
    997Collectibles
    
    
    1,009
    
    
    
    802Corporate
    
    
    19
    
    
    
    8$
    1,699
    
    
    $
    1,807
 F-40




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##### Table of Contents



June 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Inventories:Trading:United States
    
    $
    113,752
    
    
    $
    91,939Total Trading
    
    
    113,752
    
    
    
    91,939Collectibles:United States
    
    
    23,489
    
    
    
    22,256Europe
    
    
    819
    
    
    
    1,277Asia
    
    
    17
    
    
    
    182Total Collectibles
    
    
    24,325
    
    
    
    23,715$
    138,077
    
    
    $
    115,654
 June 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Total assets:Trading:United States
    
    $
    171,507
    
    
    $
    151,986Europe
    
    
    257
    
    
    
    Total Trading
    
    
    171,764
    
    
    $
    151,986Collectibles:United States
    
    
    40,541
    
    
    
    38,485Europe
    
    
    15,673
    
    
    
    19,791Asia
    
    
    906
    
    
    
    1,398Total Collectibles
    
    
    57,120
    
    
    
    59,674Corporate and Other
    
    
    7,851
    
    
    
    6,489$
    236,735
    
    
    $
    218,149
 June 30,
    
    
    June 30,2010
    
    
    2009(in thousands)
    
    
    (in thousands)Total long-term assets:Trading:United States
    
    $
    10,017
    
    
    $
    10,451Europe
    
    
    38
    
    
    
    Total Trading
    
    
    10,055
    
    
    
    10,451Collectibles:United States
    
    
    2,334
    
    
    
    4,733Europe
    
    
    1,170
    
    
    
    1,036Asia
    
    
    142
    
    
    
    152Total Collectibles
    
    
    3,646
    
    
    
    5,921Corporate and Other
    
    
    5,843
    
    
    
    4,505$
    19,544
    
    
    $
    20,877
 18. Fair Value Measurements
 Fair Value Measurements and Disclosures
 F-41




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##### Table of Contents




    
    Defined fair value as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date, and establishes a framework for measuring fair value;
    
    Established a three-level hierarchy for fair value measurements based upon the
transparency of inputs to the valuation of an asset or liability as of the measurement
date;
    
    Nullified the guidance in Emerging Issues Task Force Issue 02-3, Issues Involved in
Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in
Energy Trading and Risk Management Activities, which required the deferral of profit at
inception of a transaction involving a derivative financial instrument in the absence of
observable data supporting the valuation technique;
    
    Eliminated large position discounts for financial instruments quoted in active
markets and requires consideration of the Companys creditworthiness when valuing
liabilities; and
    
    Expanded disclosures about instruments measured at fair value.
 Valuation Hierarchy
  
    
    Level 1  inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2  inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3  inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
 
 F-42




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##### Table of Contents



Assets and Liabilities Measured at Fair Value on a Recurring Basis
 June 30, 2010Quoted Price inActive Markets for
    
    
    
    
    
    
    SignificantIdentical
    
    
    Significant Other
    
    
    UnobservableInstruments
    
    
    Observable Inputs
    
    
    Inputs(in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total BalanceAssets:Commodities
    
    $
    114,102
    
    
    $
    
    
    
    $
    
    
    
    $
    114,102Derivative assets  open sales and
purchase commitments
    
    
    
    
    
    
    1,698
    
    
    
    
    
    
    
    1,698Total assets valued at fair value:
    
    $
    114,102
    
    
    $
    1,698
    
    
    $
    
    
    
    $
    115,800Liabilities:Liabilities on borrowed metals
    
    $
    (40,841
    )
    
    $
    
    
    
    $
    
    
    
    $
    (40,841
    )Liabilities on margin accounts
    
    
    (10,530
    )
    
    
    
    
    
    
    
    
    
    
    (10,530
    )Derivative liabilities  forward contracts
    
    
    
    
    
    
    (45
    )
    
    
    
    
    
    
    (45
    )Derivative liabilities  future
    
    
    
    
    
    
    (507
    )
    
    
    
    
    
    
    (507
    )Total liabilities valued at fair value:
    
    $
    (51,371
    )
    
    $
    (552
    )
    
    $
    
    
    
    $
    (51,923
    )
 June 30, 2009Quoted Price inActive Markets for
    
    
    
    
    
    
    SignificantIdentical
    
    
    Significant Other
    
    
    UnobservableInstruments
    
    
    Observable Inputs
    
    
    Inputs(in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total BalanceAssets:Commodities
    
    $
    88,527
    
    
    $
    
    
    
    $
    
    
    
    $
    88,527Marketable Securities
    
    
    914
    
    
    
    
    
    
    
    
    
    
    
    914Derivative assets  futures contracts
    
    
    
    
    
    
    10,875
    
    
    
    
    
    
    
    10,875Derivative assets  forward contracts
    
    
    
    
    
    
    1,726
    
    
    
    
    
    
    
    1,726Total assets valued at fair value:
    
    $
    89,441
    
    
    $
    12,601
    
    
    $
    
    
    
    $
    102,042Liabilities:Liabilities on borrowed metals
    
    $
    (15,100
    )
    
    $
    
    
    
    $
    
    
    
    $
    (15,100
    )Liabilities on margin accounts
    
    
    (3,041
    )
    
    
    
    
    
    
    
    
    
    
    (3,041
    )Derivative liabilities  open sales
and purchased commitments
    
    
    
    
    
    
    (5,356
    )
    
    
    
    
    
    
    (5,356
    )Total liabilities valued at fair value:
    
    $
    (18,141
    )
    
    $
    (5,356
    )
    
    $
    
    
    
    $
    (23,497
    )
  Marketable Securities
  F-43




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##### Table of Contents



Commodities
  Derivatives
  Margin Liabilities
  Goodwill and Other Intangibles
  Assets Measured at Fair Value on a Non Recurring Basis
 June 30, 2010Quoted Price inActive Markets for
    
    
    
    
    
    
    SignificantIdentical
    
    
    Significant Other
    
    
    UnobservableInstruments
    
    
    Observable Inputs
    
    
    Inputs(in thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Total BalanceGoodwill and other intangible assets:Goodwill
    
    $
    
    
    
    $
    
    
    
    $
    30
    
    
    $
    30Trade names
    
    
    
    
    
    
    
    
    
    
    668
    
    
    
    668Customer relationships
    
    
    
    
    
    
    
    
    
    
    369
    
    
    
    369Total assets at fair value (after impairment):
    
    $
    
    
    
    $
    
    
    
    $
    1,067
    
    
    $
    1,067
   Goodwill
  F-44




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##### Table of Contents



Trade names
  Customer Relationships
 Valuing Intangible Assets
 19. SUBSEQUENT EVENTS
    F-45




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 Not applicable.
 
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
     Proper segregation of duties was not maintained over the accounting functions within our
Collectibles operations.
 Controls over period-end financial reporting were not operating effectively.
 Remediation of Previously Identified Material Weaknesses & Other Remediation Activities
  The Company operated with inadequate and insufficient accounting and finance resources to ensure
timely and reliable financial reporting within the North American stamp division of the
Collectibles segment.
 40




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##### Table of Contents



The Company did not have adequate accounting policies that were formally and effectively
communicated to the Companys accounting and finance resources.
 The Company did not design formal controls to ensure that the financial positions and results of
operations of divisions were effectively consolidated on a timely basis.
 The Company did not consistently maintain documentation as evidence to verify that controls were
operating effectively.
 Transactions were not consistently approved by the appropriate level of management within the North
American stamp division of the Collectibles segment.
 Management of the North American stamp division has not designed controls to ensure the proper
accounting for inventory.
 Management has not designed controls to ensure that the provision for income taxes is properly
prepared on a timely basis.
 Proper segregation of duties was not maintained over the accounting functions within our
Collectibles operations.
 
    
    Added additional staff (Chief Financial Officer, Chief Accounting Officer, Corporate
Controller, and Assistant Corporate Controller) which implemented manual review controls
around journal entries, reconciliations, adjusting entries, and top-level entries,
    
    Reviewed user access roles and removed users that did not require access to certain
systems,
    
    Implemented independent review at the subsidiary-level of journal entries and
reconciliations,
 41




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##### Table of Contents




    
    Cross training of subsidiary accounting staff and cross review of journal entries and
account reconciliations,
    
    Implementation of accounting shared services,
    
    Further review of user access rights in systems and implementation of formal user
groups.
 Controls over period-end financial reporting were not operating effectively.
     Changes in Internal Control over Financial Reporting
   
 ITEM 9B. OTHER INFORMATION
  42




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Name
    
    Age
    
    Position(s)Antonio Arenas
    
    
    54
    
    
    Executive Chairman and DirectorGregory N. Roberts
    
    
    48
    
    
    Chief Executive Officer, President and DirectorPaul Soth
    
    
    52
    
    
    Chief Financial Officer and Executive Vice PresidentCarol Meltzer
    
    
    51
    
    
    Executive Vice President, General Counsel and Corporate SecretaryJeffrey D. Benjamin
    
    
    49
    
    
    DirectorJess M. Ravich
    
    
    53
    
    
    DirectorGeorge Lumby
    
    
    65
    
    
    DirectorJohn U. Moorhead
    
    
    58
    
    
    DirectorChristopher W. Nolan, Sr.
    
    
    45
    
    
    Director
 Antonio Arenas
 Gregory N. Roberts
 Paul Soth
 Carol Meltzer
 Jeffrey D. Benjamin
 Jess M. Ravich
 43




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##### Table of Contents



George Lumby
 John (Jay) U. Moorhead
 Christopher W. Nolan, Sr .
    Compliance
   Code of Ethics
 www.spectrumgi.com
  44




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##### Table of Contents



Audit Committee
  
 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 ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
 (a)
    
    The following documents are filed as part of this report:
 1.
    
    Financial StatementsThe information called for by this item is incorporated herein by reference to pages F-1
through F-45 of this report.2.
    
    Financial Statements SchedulesNone3.
    
    Exhibits required to be filed by Item 601 of Regulation S-KThe information called for by this item is incorporated herein by reference to the Exhibit
Index in this report.
 45




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##### Table of Contents



SIGNATURES
  Date: September 16, 2010
    
    SPECTRUM GROUP INTERNATIONAL, INC.By:
    
    /s/ Gregory N. RobertsName:
    
    Gregory N. RobertsTitle:
    
    President and Chief Executive Officer
  Signatures
    
    Title(s)
    
    Date/s/ Antonio Arenas

Antonio Arenas
    
    Chairman of the Board and Executive Chairman
    
    September 16, 2010/s/ Gregory N. Roberts

Gregory N. Roberts
    
    President, Chief Executive Officer and Director 
(Principal
Executive Officer)
    
    September 16, 2010/s/ Paul Soth

Paul Soth
    
    Chief Financial Officer and Executive Vice
President 
(Principal
Financial Officer)
    
    September 16, 2010/s/ Jeffrey D. Benjamin

Jeffrey D. Benjamin
    
    Director
    
    September 16, 2010/s/ Jess M. Ravich

Jess M. Ravich
    
    Director
    
    September 16, 2010/s/ John U. Moorhead

John U. Moorhead
    
    Director
    
    September 16, 2010/s/ George Lumby

George Lumby
    
    Director
    
    September 16, 2010/s/ Christopher W. Nolan, Sr.

Christopher W. Nolan, Sr.
    
    Director
    
    September 16, 2010
 46




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##### Table of Contents



EXHIBIT INDEX
 Regulation S-KExhibit TableItem No.
    
    Description of Exhibit3.1.1
    
    Articles of Incorporation of the Greg Manning Delaware, Inc. Filed herewith.3.1.2
    
    Certificate of Ownership and Merger of Greg Manning Auctions, Inc. into and
with Greg Manning Delaware, Inc. Filed herewith.3.1.3
    
    Certificate of Ownership and Merger of Escala Group, Inc. into and with
Greg Manning Auctions, Inc. Incorporated by reference to Exhibit 3.1 of the
Companys Current Report on Form 8-K filed October 3, 2005, Commission File
No. 1-11988.3.1.4
    
    Certificate of Ownership and Merger of Spectrum Group International, Inc.
with and into Escala Group, Inc. Incorporated by reference to Exhibit 3.1
of the Companys Current Report on Form 8-K filed on May 29, 2009,
Commission File No. 1-11988.3.2
    
    Bylaws of Registrant. Incorporated by reference to Exhibit 3.2 of the
Companys Annual Report on Form 10-K filed on October 8, 2009, Commission
File No. 1-11988.10.1
    
    1997 Stock Incentive Plan. Incorporated by reference to Exhibit 10.1 of the
Companys Annual Report on Form 10-K filed on October 8, 2009, Commission
File No. 1-11988.10.2
    
    Amended and Restated Employment Agreement between Registrant and Greg
Roberts, dated as of May 13, 2010. Incorporated by reference to Exhibit
10.1 of the Companys Current Report on Form 8-K filed on May 14, 2010,
Commission File No. 1-11988. *10.3
    
    Employment Agreement between A-Mark Precious Metals, Inc. and Rand LeShay,
dated June 1, 2010. Filed herewith.*10.4
    
    Non-Employee Directors Compensation Policy. Filed herewith.*10.5
    
    Non-Employee Directors Equity Compensation Program. Filed herewith.*10.6
    
    Form of Restricted Stock Purchase Agreement for Employees under the 1997
Stock Incentive Plan. Incorporated by reference to Exhibit 10.7 of the
Companys Annual Report on Form 10-K filed on October 8, 2009, Commission
File No. 1-11988.*10.7
    
    Form of Restricted Stock Unit Agreement for Employees under the 1997 Stock
Incentive Plan. Filed herewith.*10.8
    
    Registration Rights Agreement, dated as of September 8, 2003, between
Registrant and Auctentia, S.L. Incorporated by reference to Appendix E to
the Companys Definitive Proxy Statement filed August 13, 2003, Commission
File No. 1-11988.10.9
    
    Consent of Escala Group, Inc. Incorporated by reference to Exhibit 10.1 of
the Companys Current Report on Form 8-K filed March 25, 2009, Commission
File No. 1-11988.14
    
    Code of Ethics for Senior Financial and Other Officers. Filed herewith.21
    
    Subsidiaries of the Registrant. Filed herewith.31.1
    
    Certification by the Chief Executive Officer. Filed herewith31.2
    
    Certification by the Chief Financial Officer. Filed herewith.32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.32.2
    
    Certification by 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.
 
 *
    
    Identifies Exhibit that consists of or includes a management contract or compensatory plan or
arrangement. 47