##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 OR 15(d) of the Securities Exchange Act
of 1934
 For the quarterly period ended December 31, 2005
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period fromto
 Commission File No. 0-172923
 COLLEGIATE PACIFIC INC.
  Delaware
    
    22-2795073(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)13950 Senlac Drive, Suite 100, Dallas, Texas
    
    75234(Address of Principal Executive Offices)
    
    (Zip code)
 (972) 243-8100
 
  þ o
  o o þ
 o þ




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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PageNumberPART I:
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at December 31, 2005
and June 30, 2005
    
    
    1Condensed Consolidated Statements of Income for the
three and six months ended December 31, 2005 and 2004
    
    
    2Condensed Consolidated Statements of Cash Flows for
the six months ended December 31, 2005 and 2004
    
    
    3Notes to the Condensed Consolidated Financial Statements
    
    
    5Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations.
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4.
    
    Controls and Procedures
    
    
    30PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    31Item 6.
    
    Exhibits
    
    
    31SIGNATURES
    
    
    33Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to Section 906




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##### Table of Contents



PART
    
    I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements.
 COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    June 30,2005
    
    
    2005(Unaudited)
    
    
    (As restated)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    9,038,788
    
    
    $
    40,325,716Accounts receivable, net of allowance for doubtful accounts of
$1,351,081 and $1,042,496, respectively
    
    
    32,232,306
    
    
    
    18,131,753Inventories
    
    
    38,379,939
    
    
    
    17,478,805Current portion of deferred taxes
    
    
    803,278
    
    
    
    775,231Prepaid income taxes
    
    
    366,265
    
    
    
    644,596Prepaid expenses and other current assets
    
    
    3,310,791
    
    
    
    601,439Total current assets
    
    
    84,131,367
    
    
    
    77,957,540PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$1,845,597 and $1,294,135, respectively
    
    
    10,154,315
    
    
    
    1,501,096DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$734,527 and $392,932, respectively
    
    
    2,675,831
    
    
    
    3,017,427INTANGIBLE ASSETS, net of accumulated amortization of
$1,689,213 and $853,333, respectively
    
    
    9,512,310
    
    
    
    1,862,606GOODWILL
    
    
    41,509,108
    
    
    
    23,848,345DEFERRED INCOME TAXES
    
    
    124,143
    
    
    
    OTHER ASSETS, net
    
    
    604,129
    
    
    
    409,068Total assets
    
    $
    148,711,203
    
    
    $
    108,596,082LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    19,442,010
    
    
    $
    9,782,479Accrued liabilities
    
    
    5,035,848
    
    
    
    1,724,783Dividends payable
    
    
    255,777
    
    
    
    255,144Accrued interest
    
    
    267,708
    
    
    
    250,000Current portion of long-term debt
    
    
    12,463,043
    
    
    
    329,867Total current liabilities
    
    
    37,463,386
    
    
    
    12,342,273DEFERRED TAX LIABILITY
    
    
    621,548
    
    
    
    700,146LONG-TERM DEBT
    
    
    56,007,842
    
    
    
    50,448,153MINORITY INTEREST IN SUBSIDIARY
    
    
    7,647,719STOCKHOLDERS EQUITY:Preferred stock, $0.01 par value, 1,000,000 shares authorized; no shares
issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000,000 shares authorized;
10,268,728 and 10,205,780 shares issued and
10,182,702 and 10,119,754 shares outstanding, respectively
    
    
    102,687
    
    
    
    102,058Additional paid-in capital
    
    
    42,681,086
    
    
    
    41,911,008Retained earnings
    
    
    4,843,386
    
    
    
    3,749,895Treasury stock at cost, 86,026 shares
    
    
    (657,451
    )
    
    
    (657,451
    )Total stockholders equity
    
    
    46,969,708
    
    
    
    45,105,510Total liabilities and stockholders equity
    
    $
    148,711,203
    
    
    $
    108,596,082
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(As
restated)Net sales
    
    $
    46,401,280
    
    
    $
    23,794,598
    
    
    $
    111,676,176
    
    
    $
    51,504,886Cost of sales
    
    
    31,258,686
    
    
    
    15,884,544
    
    
    
    75,219,087
    
    
    
    34,468,131Gross profit
    
    
    15,142,594
    
    
    
    7,910,054
    
    
    
    36,457,089
    
    
    
    17,036,755Selling, general and administrative expenses
    
    
    16,192,395
    
    
    
    6,710,482
    
    
    
    31,928,121
    
    
    
    12,664,887Operating profit (loss)
    
    
    (1,049,801
    )
    
    
    1,199,572
    
    
    
    4,528,968
    
    
    
    4,371,868Other income (expense):Interest income
    
    
    28,116
    
    
    
    42,999
    
    
    
    74,338
    
    
    
    58,444Interest expense
    
    
    (1,119,045
    )
    
    
    (334,663
    )
    
    
    (2,117,906
    )
    
    
    (341,519
    )Other income
    
    
    63,824
    
    
    
    71,184
    
    
    
    88,473
    
    
    
    120,563Total other (expense)
    
    
    (1,027,105
    )
    
    
    (220,480
    )
    
    
    (1,955,095
    )
    
    
    (162,512
    )Income (loss) before minority interest
in net income (loss) of consolidated
subsidiary and income taxes
    
    
    (2,076,906
    )
    
    
    979,092
    
    
    
    2,573,873
    
    
    
    4,209,356Minority interest in net loss of consolidated
subsidiary
    
    
    (481,833
    )
    
    
    
    
    
    
    (56,191
    )
    
    
    Income (loss) before income taxes
    
    
    (1,595,073
    )
    
    
    979,092
    
    
    
    2,630,064
    
    
    
    4,209,356Income tax
provision (benefit)
    
    
    (624,198
    )
    
    
    397,945
    
    
    
    1,026,052
    
    
    
    1,751,654Net income (loss)
    
    $
    (970,875
    )
    
    $
    581,147
    
    
    $
    1,604,012
    
    
    $
    2,457,702Weighted average number of shares outstanding:Basic
    
    
    10,182,599
    
    
    
    10,004,947
    
    
    
    10,170,278
    
    
    
    9,956,587Diluted
    
    
    10,182,599
    
    
    
    10,320,184
    
    
    
    10,643,327
    
    
    
    10,211,489Net income
(loss) per share common stock  basic
    
    $
    (0.10
    )
    
    $
    0.06
    
    
    $
    0.16
    
    
    $
    0.25Net income
(loss) per share common stock  diluted
    
    $
    (0.10
    )
    
    $
    0.06
    
    
    $
    0.15
    
    
    $
    0.24Dividends
declared per share common stock
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.05
    
    
    $
    0.05
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedDecember 31,2005
    
    
    2004(As
restated)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    1,604,012
    
    
    $
    2,457,702Adjustments to reconcile net income to cash provided by (used in)
operating
activities:Provision for uncollectible accounts receivable
    
    
    469,668
    
    
    
    280,803Depreciation expense
    
    
    551,461
    
    
    
    189,424Amortization expense
    
    
    835,880
    
    
    
    235,962Amortization of deferred debt issuance costs
    
    
    341,595
    
    
    
    55,245Loss on sale of property and equipment
    
    
    
    
    
    
    2,723Deferred taxes
    
    
    (230,788
    )
    
    
    Stock based compensation expense
    
    
    59,761
    
    
    
    Minority interest in consolidated subsidiary
    
    
    (56,191
    )
    
    
    Changes in operating assets and liabilities (net of acquisitions):(Increase) in accounts receivable
    
    
    (3,508,399
    )
    
    
    (3,348,948
    )(Increase) in inventories
    
    
    (2,935,541
    )
    
    
    (1,032,064
    )(Increase) in prepaid expenses and other current assets
    
    
    (1,480,529
    )
    
    
    (800,636
    )Decrease in other assets, net
    
    
    115,999
    
    
    
    237,121Increase (decrease) in accounts payable
    
    
    3,302,155
    
    
    
    (689,103
    )Increase (decrease) in accrued expenses
    
    
    (1,630,477
    )
    
    
    512,965Increase (decrease) in taxes payable
    
    
    278,330
    
    
    
    (1,728,735
    )Net cash (used in) operating activities:
    
    
    (2,283,064
    )
    
    
    (3,627,541
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (172,480
    )
    
    
    (251,225
    )Cash used in business acquisitions, net of cash acquired of $970,161
and $317,551 respectively
    
    
    (43,165,382
    )
    
    
    (6,594,273
    )Net cash (used in) investing activities:
    
    
    (43,337,862
    )
    
    
    (6,845,498
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from bank line of credit
    
    
    72,063,832
    
    
    
    7,718,951Payments on notes payable and line of credit
    
    
    (57,290,320
    )
    
    
    (7,823,018
    )Proceeds from issuance of senior subordinated notes
    
    
    
    
    
    
    50,000,000Deferred debt issuance costs
    
    
    
    
    
    
    (3,314,693
    )Payment of dividends
    
    
    (509,887
    )
    
    
    (498,264
    )Proceeds from issuance of common stock
    
    
    70,373
    
    
    
    319,032Net cash provided by financing activities:
    
    
    14,333,998
    
    
    
    46,402,008Net change
in cash and cash equivalents
    
    
    (31,286,928
    )
    
    
    35,928,969Cash and
cash equivalents at beginning of period
    
    
    40,325,716
    
    
    
    7,473,145Cash and
cash equivalents at end of period
    
    $
    9,038,788
    
    
    $
    43,402,114SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    1,701,991
    
    
    $
    16,344Cash paid for income taxes
    
    $
    723,029
    
    
    $
    3,480,389
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Six Months EndedDecember 31,2005
    
    
    2004SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Fair value of assets acquired in business acquisitions
    
    $
    40,830,353
    
    
    $
    7,914,857Liabilities assumed in business acquisitions
    
    
    26,825,986
    
    
    $
    4,495,229Promissory notes issued for business acquisitions
    
    $
    
    
    
    $
    600,000Common stock
issued for business acquisitions; 53,248 shares and
231,788 shares, respectively
    
    $
    640,573
    
    
    $
    2,687,514
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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation:
 Company US GAAP
  2. Business Combinations:
 Dixie
   OTS
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Partnership
   Salkeld
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   SSG
  Merger Agreement
  - 7 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    46,401,280
    
    
    $
    44,411,548
    
    
    $
    111,805,320
    
    
    $
    101,420,030Net income (loss)
    
    
    (1,452,708
    )
    
    
    (718,348
    )
    
    
    1,559,403
    
    
    
    1,643,420Net income per
share common stock:Basic
    
    $
    (0.14
    )
    
    $
    (0.07
    )
    
    $
    0.15
    
    
    $
    0.16Diluted
    
    $
    (0.14
    )
    
    $
    (0.07
    )
    
    $
    0.15
    
    
    $
    0.16
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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 3. Net Sales:
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Sporting goods equipment
    
    $
    26,221,305
    
    
    $
    13,446,297
    
    
    $
    68,525,945
    
    
    $
    31,266,031Soft good athletic apparel
and footwear
    
    $
    20,179,975
    
    
    $
    10,348,301
    
    
    $
    43,150,231
    
    
    $
    20,238,855Net sales
    
    $
    46,401,280
    
    
    $
    23,794,598
    
    
    $
    111,676,176
    
    
    $
    51,504,886
 4. Inventories:
   December 31,
    
    
    June 30,2005
    
    
    2005Raw materials
    
    $
    2,227,642
    
    
    $
    515,508Work in progress
    
    
    192,089
    
    
    
    75,450Finished goods
    
    
    35,960,208
    
    
    
    16,887,847Inventories
    
    $
    38,379,939
    
    
    $
    17,478,805
 5. Allowance for Doubtful Accounts:
  December 31,
    
    
    June 30,2005
    
    
    2005Balance at beginning of period
    
    $
    1,042,496
    
    
    $
    635,531Provision for uncollectible accounts
receivable
    
    
    469,668
    
    
    
    574,464Effect of business acquisitions
    
    
    
    
    
    
    264,515Accounts written off, net of recoveries
    
    
    (161,083
    )
    
    
    (432,014
    )Balance at end of period
    
    $
    1,351,081
    
    
    $
    1,042,496
 6. Income Per Share:
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(As
restated)Net income available to common
Stockholders  basic
    
    $
    (970,875
    )
    
    $
    581,147
    
    
    $
    1,604,012
    
    
    $
    2,457,702Add: Income impact of
convertible bonds if
converted(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) available
to common stockholders  diluted
    
    $
    (970,875
    )
    
    $
    581,147
    
    
    $
    1,604,012
    
    
    $
    2,457,702Weighted average
common shares  basic
    
    
    10,182,599
    
    
    
    10,004,947
    
    
    
    10,170,278
    
    
    
    9,956,587Effect of dilutive options
    
    
    
    
    
    
    315,237
    
    
    
    473,049
    
    
    
    254,902Effect of convertible bonds
if
converted(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average common
shares  diluted
    
    
    10,182,599
    
    
    
    10,320,184
    
    
    
    10,643,327
    
    
    
    10,211,489Net income (loss) per share
 basic
    
    $
    (.10
    )
    
    $
    0.06
    
    
    $
    0.16
    
    
    $
    0.25Net income (loss) per share
 diluted
    
    $
    (.10
    )
    
    $
    0.06
    
    
    $
    0.15
    
    
    $
    0.24Options excluded from
computation because their
effect was antidilutive
    
    
    1,157,850
    (1)
    
    
    
    
    
    
    192,000
    (1)
    
    
    
 
 (1)
    
    For the three and six months ended December 31, 2005, 4,912,311 shares and 4,258,640
shares, respectively, related to outstanding stock options and shares
reserved for issuance under the outstanding convertible bonds were not included in the
calculation of fully diluted earnings per share since the effect of those options would be
antidilutive.(2)
    
    Convertible bonds of $50,000,000 were issued in November
2004. For the periods ended December 31, 2005 and 2004, these
bonds were not dilutive in the computations of earnings per share;
however, in future periods they may be dilutive. 7. Stock Based Compensation:
 1998
Collegiate Pacific Inc. Stock Option Plan
 Share- Based Payments
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Income from continuing operations
    
    $
    59,761Income before income taxes
    
    $
    59,761Net income
    
    $
    36,473Net income per common share  basic
    
    $
    0.00Net income per common share  diluted
    
    $
    0.00Cash flows from operating activities
    
    $
    59,761Cash flows from financing activities
    
    $
    
   For the Three Months Ended
    
    
    For the Six Months EndedDecember 31
    
    
    December 312004
    
    
    2004(As
restated)Net income (loss), as reported
    
    $
    581,147
    
    
    $
    2,457,702Add: stock based employee
compensation expense included
in net income
    
    
    
    
    
    
    Deduct: stock-based employee
compensation expense
determined using the fair
value based method for all
awards, net of related tax
effects
    
    
    498,261
    
    
    
    694,916Pro forma income (loss)
    
    $
    82,886
    
    
    $
    1,762,786Net income (loss) per share
common stock:As reported:Basic
    
    $
    0.06
    
    
    $
    0.25Diluted
    
    $
    0.06
    
    
    $
    0.24Pro forma:Basic
    
    $
    0.01
    
    
    $
    0.18Diluted
    
    $
    0.01
    
    
    $
    0.17
   WeightedAverageOptions
    
    
    Exercise PriceOutstanding at July 1, 2005
    
    
    1,170,550
    
    
    $
    8.56Granted
    
    
    Exercised
    
    
    (9,700
    )
    
    
    7.26Forfeited or cancelled
    
    
    (3,000
    )
    
    
    12.50Outstanding at December 31, 2005
    
    
    1,157,850
    
    
    
    8.56Exercisable at December 31, 2005
    
    
    1,157,850
    
    
    $
    8.56
    Outstanding
    
    
    ExercisableWeighted AverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    AverageLife
    
    
    Exercise
    
    
    
    
    
    
    ExerciseExercise price
    
    Shares
    
    
    (In Years)
    
    
    Price
    
    
    Shares
    
    
    Price$3.89  $4.81
    
    
    120,500
    
    
    
    5.4
    
    
    $
    3.91
    
    
    
    120,500
    
    
    $
    3.91$4.90  $6.13
    
    
    321,250
    
    
    
    5.12
    
    
    $
    5.85
    
    
    
    321,250
    
    
    $
    5.85$9.38
    
    
    31,500
    
    
    
    3.0
    
    
    $
    9.38
    
    
    
    31,500
    
    
    $
    9.38$8.73   $9.73
    
    
    477,600
    
    
    
    8.54
    
    
    $
    9.30
    
    
    
    477,600
    
    
    $
    9.30$10.70  $14.34
    
    
    207,000
    
    
    
    9.0
    
    
    $
    13.68
    
    
    
    207,000
    
    
    $
    13.681,157,850
    
    
    
    7.2
    
    
    $
    8.56
    
    
    
    1,157,850
    
    
    $
    8.56
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 8. Intangible Assets:
 December 31, 2005
    
    
    June 30, 2005Asset
    
    
    Gross
    
    
    GrossLife
    
    
    Carrying
    
    
    Carrying(years)
    
    
    Value
    
    
    ValueAmortizable intangible assets:License agreements
    
    
    3-10
    
    
    $
    235,429$
    
    
    
    235,429Trademarks
    
    10-indefinite
     
    
    
    2,949,642
    
    
    
    343,142Non-compete agreements
    
    
    10
    
    
    
    3,200,000
    
    
    
    Customer relationships
    
    
    10
    
    
    
    3,343,000
    
    
    
    1,923,000Contractual backlog
    
    
    0.25
    
    
    
    426,600
    
    
    
    205,600Customer database
    
    
    3
    
    
    
    660,000
    
    
    
    Significant contracts
    
    
    5
    
    
    
    327,000
    
    
    
    Other
    
    
    3
    
    
    
    59,852
    
    
    
    8,768Total amortizable intangible assets
    
    
    
    
    
    
    11,201,523
    
    
    
    2,715,939Accumulated amortization
    
    
    
    
    
    
    (1,689,213
    )
    
    
    (853,333
    )Intangible assets, net
    
    
    
    
    
    $
    9,512,310
    
    
    $
    1,862,606Intangible assets not subject to amortization:Goodwill
 6/30/05 balance
    
    
    
    
    
    $
    23,848,345Additions
    
    
    
    
    
    
    17,660,763Goodwill  12/31/05
    
    
    
    
    
    $
    41,509,108
 9. Minority Interest in Subsidiary:
   Minority interest in SSG at July 1, 2005 (53.2%)
    
    $
    13,590,006Minority interest in net (loss) of SSG for the six months ended December 31, 2005
    
    
    (56,191
    )Common stock issued in subsidiary
    
    
    56,418Stock based compensation
    
    
    3,850Additional
purchase of 20% of SSG common stock
    
    
    (5,946,364
    )Minority
interest in SSG at December 31, 2005 (72%)
    
    $
    7,647,719
 - 12 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 10. Recent Accounting Pronouncements:
  - 13 -




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
  Collegiate Pacific we us our Company soft goods fiscal 2004 fiscal 2005 fiscal
2006
 Matters Affecting Comparability
 Dixie OTS Salkeld SSG
 Consolidated Results of Operations
  - 14 -




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##### Table of Contents



For the Three Months Ended
    
    For the Six Months EndedDecember 31,
    
    December 31,Increase (decrease)
    
    
    
    
    
    
    
    
    
    Increase2005
    
    2004
    
    Dollars
    
    Percentage
    
    2005
    
    2004
    
    Dollars
    
    Percentage(dollars in thousands, except per share amounts)Net sales
    
    $
    46,401
    
    
    $
    23,795
    
    
    $
    22,607
    
    
    
    95.0.
    %
    
    $
    111,676
    
    
    $
    51,505
    
    
    $
    60,171
    
    
    
    116.8
    %Gross profit
    
    
    15,143
    
    
    
    7,910
    
    
    
    7,233
    
    
    
    91.4.
    %
    
    
    36,457
    
    
    
    17,037
    
    
    
    19,420
    
    
    
    114.0
    %Operating profit (loss)
    
    
    (1,050
    )
    
    
    1,200
    
    
    
    (2,249
    )
    
    
    (187.4
    %)
    
    
    4,529
    
    
    
    4,372
    
    
    
    157
    
    
    
    3.6
    %Net income (loss)
    
    
    (971
    )
    
    
    581
    
    
    
    (1,552
    )
    
    
    (267.1
    %)
    
    
    1,604
    
    
    
    2,458
    
    
    
    (854
    )
    
    
    (34.7
    %)Earnings (loss)
per share   basic
    
    $
    (0.10
    )
    
    $
    0.06
    
    
    $
    (0.16
    )
    
    
    (266.7
    %)
    
    $
    0.16
    
    
    $
    0.25
    
    
    $
    (0.09
    )
    
    
    (36.0
    %)Earnings (loss)
per share   diluted
    
    
    (0.10
    )
    
    $
    0.06
    
    
    $
    (0.16
    )
    
    
    (266.7
    %)
    
    $
    0.15
    
    
    $
    0.24
    
    
    $
    (0.09
    )
    
    
    (36.5
    %)Expressed as a percentage of net sales:Gross profit margin
    
    
    32.6
    %
    
    
    33.2
    %
    
    
    
    
    
    
    
    
    
    
    32.6
    %
    
    
    33.1
    %Selling, general
and administrative
expenses
    
    
    34.9
    %
    
    
    28.2
    %
    
    
    
    
    
    
    
    
    
    
    28.6
    %
    
    
    24.6
    %Operating profit (loss)
    
    
    (2.3
    %)
    
    
    5.0
    %
    
    
    
    
    
    
    
    
    
    
    4.1
    %
    
    
    8.5
    %
 Acquisitions Since July 1, 2004 and Related Developments
  SFAS
  - 15 -




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Partnership
     - 16 -




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SSG
  Merger Agreement
  - 17 -




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##### Table of Contents



Three Months Ended December 31, 2005 Compared to Three Months Ended December 31, 2004
 Net Sales.
  - 18 -




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Gross Profit
   ,
  Selling, General and Administrative Expenses. SG&A
 - 19 -




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##### Table of Contents



Operating Profit(Loss).
 Interest Expense and Other Income.
 Minority
Interest
 Income Taxes.
 Net Income(Loss).
 Six Months Ended December 31, 2005 Compared to Six Months Ended December 31, 2004
 Net Sales.
 - 20 -




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Gross Profit
   ,
  - 21 -




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##### Table of Contents



Selling, General and Administrative Expenses.
  Operating Profit.
 Interest Expense and Other Income.
 Minority
Interest
 Income Taxes.
 Net Income.
 - 22 -




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##### Table of Contents



Cash Flow Activity
  
    
    An increase in accounts receivable of $3.5 million due to the increases in net
sales for the businesses acquired and our preexisting businesses;
    
    An increase in inventories of $2.9 million attributed to the anticipated increase
in demand for the Companys products during future periods;
    
    An increase in prepaid expenses and other current assets of $1.5 million due to
advertising costs incurred with the production of catalogs to be mailed in future
periods; and
    
    A decrease in accrued liabilities of $1.6 million from the payment of assumed
liabilities associated with acquisitions and the payment of commissions to salesmen at
the calendar year end;
    
    Partially offset by an increase in accounts payable of $3.3 million to purchase inventories for the
fulfillment of increased sales activities.
   
    
    Net borrowings under the Companys line of credit of
$14.8 million to finance the
purchase of additional common shares of SSG and to provide working capital;
    
    Proceeds of $70 thousand received upon the exercise of common stock options; and
    
    Payments of dividends of approximately $510 thousand.
  
    
    Proceeds from the sale of convertible notes in the amount of $46.7 million, after
debt issuance costs;
 - 23 -




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##### Table of Contents




    
    Proceeds from the issuance of common stock upon the exercise of options in the
approximate amount of $319 thousand;
    
    Net borrowings on the Companys revolving line of credit of approximately $104
thousand and
    
    Payments of dividends of approximately $498 thousand.
  Capital Structure and Resources
 Notes Securities Act Thomas Weisel
 Indenture
 Registration Rights
Agreement SEC Registration
Statement
  - 24 -




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##### Table of Contents




    
    increased the value of customer relationships acquired by approximately $1.9
million, which was originally allocated to goodwill;
    
    increased the value the inventories acquired by approximately $650 thousand,
which was originally allocated to goodwill; and
    
    increased the value of contractual backlog by approximately $200 thousand,
which was originally allocated to goodwill.
   Credit
Facility MLBFS
 EBITDA
 Fixed Charge Coverage Ratio
 - 25 -




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##### Table of Contents



September 15 Letter Agreement
 Amendment and Consent
  SSG Credit Facility
    - 26 -




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##### Table of Contents



Long-Term Financial Obligations and Other Commercial Commitments
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 year
    
    

1 - 3 years

    
    4 - 5 years
    
    5 years(dollars in thousands)Long-term debt
    
    $
    62,832
    
    
    $
    12,463
    
    
    $
    369
    
    
    $
    50,000
    
    
    $
    Long-term debt  Sport SupplyGroup line of credit
    
    
    5,639
    
    
    
    
    
    
    
    5,639Interest expense on long-term debt
    
    
    12,534
    
    
    
    3,119
    
    
    
    6,061
    
    
    
    3,354
    
    
    
    Operating leases
    
    
    7,031
    
    
    
    2,886
    
    
    
    3,962
    
    
    
    135
    
    
    
    48Total contractual cash obligations
    
    $
    88,036
    
    
    $
    18,468
    
    
    $
    16,031
    
    
    $
    53,489
    
    
    $
    48
  Newly Adopted Accounting Standards
 Share-Based Payments
 - 27 -




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Critical Accounting Policies
   Inventories.
 Allowance for Doubtful Accounts.
  Goodwill, Intangibles and Long-lived Assets.
 - 28 -




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##### Table of Contents



Accounting
for Business Combinations.
 Statement Regarding Forward-Looking Disclosure
 This Quarterly Report on Form 10-Q , including Managements Discussion and Analysis of
Financial Condition and Results of Operations in Item 2, contains forward-looking statements that
involve risks and uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of Collegiate Pacific and its consolidated subsidiaries to
differ materially from those expressed or implied by such forward-looking statements. All
statements other than statements of historical fact are statements that could be deemed
forward-looking statements, including any projections of net sales, gross profit margin, expenses,
earnings or losses from operations, synergies or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any statements regarding
future economic conditions or performance; any statements of expectation or belief; and any
statements of assumptions underlying any of the foregoing. The risks, uncertainties and
assumptions referred to above include Collegiate Pacifics ability to successfully execute its
acquisition plans and growth strategy, integration of acquired businesses, global economic
conditions, product demand, financial market performance and other risks that are described herein,
including but not limited to the items described from time to time in Collegiate Pacifics
Securities and Exchange Commission reports, including Collegiate Pacifics Annual Report on Form
10-KSB for the fiscal year ended June 30, 2005. Collegiate Pacific cautions that the foregoing
list of important factors is not exclusive. Any forward-looking statements included in this report
are made as of the date of filing of this report with the Securities and Exchange Commission, and
we assume no obligation and do not intend to update these forward-looking statements.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     - 29 -




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##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting.
  - 30 -




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    
 Item 6. Exhibits.
   ExhibitNumber
    
    Description
    
    Location10.1
    
    Consent Agreement, dated
November 22, 2005, by and
among Merrill Lynch Business
Financial Services Inc.,
Collegiate Pacific Inc.,
Kesslers Team
    
    Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed on November
22, 2005.
 - 31 -




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##### Table of Contents



ExhibitNumber
    
    Description
    
    LocationSports, Inc.,
Tomark Sports Inc., Dixie
Sporting Goods Co., inc., CMS
of Central Florida, Inc. and
Salkeld & Sons, Inc.10.2
    
    Termination Agreement, dated
November 22, 2005, by and
among Collegiate Pacific
inc., CP Merger Sub, Inc. and
Sport Supply Group, Inc.
    
    Exhibit 10.2 to the
Registrants Current Report
on Form 8-K filed on November
22, 2005.31.1
    
    Certification of the Chief
Executive Officer pursuant to
Rule 13a-14(a) or 15(d)-14(a)
of the Securities Exchange
Act of 1934, as adopted
pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002.*31.2
    
    Certification of the Chief
Financial Officer pursuant to
Rule 13a-14(a) or 15(d)-14(a)
of the Securities Exchange
Act of 1934, as adopted
pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002.*32
    
    Certification of the Chief
Executive Officer and Chief
Financial Officer pursuant to
18 U.S.C. Section 1350 as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.**
 
 *
    
    Filed herewith**
    
    Furnished herewith - 32 -




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##### Table of Contents



SIGNATURES
  COLLEGIATE PACIFIC INC.Dated: February 21, 2006
    /s/ Michael J. BlumenfeldMichael J. Blumenfeld, Chairman andChief Executive Officer/s/ William R. EstillWilliam R. Estill, Chief Financial Officer(Principal Financial and Accounting Officer) - 33 -




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description
    
    Location10.1
    
    Consent Agreement, dated
November 22, 2005, by and
among Merrill Lynch Business
Financial Services Inc.,
Collegiate Pacific Inc.,
Kesslers Team Sports, Inc.,
Tomark Sports Inc., Dixie
Sporting Goods Co., inc., CMS
of Central Florida, Inc. and
Salkeld & Sons, Inc.
    
    Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed on November
22, 2005.10.2
    
    Termination Agreement, dated
November 22, 2005, by and
among Collegiate Pacific
inc., CP Merger Sub, Inc. and
Sport Supply Group, Inc.
    
    Exhibit 10.2 to the
Registrants Current Report
on Form 8-K filed on November
22, 2005.31.1
    
    Certification of the Chief
Executive Officer pursuant to
Rule 13a-14(a) or 15(d)-14(a)
of the Securities Exchange
Act of 1934, as adopted
pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002.*31.2
    
    Certification of the Chief
Financial Officer pursuant to
Rule 13a-14(a) or 15(d)-14(a)
of the Securities Exchange
Act of 1934, as adopted
pursuant to Section 302 of
the Sarbanes-Oxley Act of
2002.*32
    
    Certification of the Chief
Executive Officer and Chief
Financial Officer pursuant to
18 U.S.C. Section 1350 as
adopted pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002.**
 
 *
    
    Filed herewith**
    
    Furnished herewith