##### 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 March 31, 2006
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For
the transition period
from  
to
 Commission File No. 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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##### 



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PageNumberPART I:
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at March 31, 2006
and June 30, 2005
    
    
    1Condensed Consolidated Statements of Income for the
three and nine months ended March 31, 2006 and 2005
    
    
    2Condensed Consolidated Statements of Cash Flows for
the nine months ended March 31, 2006 and 2005
    
    
    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
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    28PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 6.
    
    Exhibits
    
    
    30SIGNATURES
    
    
    
    
    31Lease Amendment and ExtensionCertification Pursuant to Section 302Certification 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
 March 31,
    
    
    June 30,2006
    
    
    2005(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,410,957
    
    
    $
    40,325,716Accounts receivable, net of allowance for doubtful accounts of
$1,551,497 and $1,042,496, respectively
    
    
    37,003,133
    
    
    
    18,131,753Inventories
    
    
    37,841,033
    
    
    
    17,478,805Current portion of deferred taxes
    
    
    803,278
    
    
    
    775,231Prepaid income taxes
    
    
    262,920
    
    
    
    644,596Prepaid expenses and other current assets
    
    
    3,888,002
    
    
    
    601,439Total current assets
    
    
    84,209,323
    
    
    
    77,957,540PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$2,321,171 and $1,294,135, respectively
    
    
    10,204,815
    
    
    
    1,501,096DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$905,325 and $392,932, respectively
    
    
    2,505,034
    
    
    
    3,017,427INTANGIBLE ASSETS, net of accumulated amortization of
$1,977,190 and $853,333, respectively
    
    
    9,234,100
    
    
    
    1,862,606GOODWILL
    
    
    43,090,458
    
    
    
    23,848,345OTHER ASSETS, net
    
    
    592,622
    
    
    
    409,068Total assets
    
    $
    149,836,352
    
    
    $
    108,596,082LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    17,797,867
    
    
    $
    9,782,479Accrued liabilities
    
    
    6,865,093
    
    
    
    1,724,783Dividends payable
    
    
    254,853
    
    
    
    255,144Accrued interest
    
    
    1,032,986
    
    
    
    250,000Current portion of long-term debt
    
    
    12,161,922
    
    
    
    329,867Total current liabilities
    
    
    38,112,721
    
    
    
    12,342,273DEFERRED TAX LIABILITY
    
    
    497,405
    
    
    
    700,146NOTES PAYABLE AND OTHER LONG-TERM DEBT
    
    
    55,138,337
    
    
    
    50,448,153MINORITY INTEREST IN SUBSIDIARY
    
    
    8,111,294
    
    
    
    COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY:Preferred stock, $0.01 par value, 1,000,000 shares authorized; no shares
issued or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000,000 shares authorized;
10,271,778 and 10,205,780 shares issued and
10,185,752 and 10,119,754 shares outstanding, respectively
    
    
    102,718
    
    
    
    102,058Additional paid-in capital
    
    
    42,709,494
    
    
    
    41,911,008Retained earnings
    
    
    5,821,834
    
    
    
    3,749,895Treasury stock at cost, 86,026 shares
    
    
    (657,451
    )
    
    
    (657,451
    )Total stockholders equity
    
    
    47,976,595
    
    
    
    45,105,510Total liabilities and stockholders equity
    
    $
    149,836,352
    
    
    $
    108,596,082
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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(As restated)Net sales
    
    $
    59,417,658
    
    
    $
    27,018,429
    
    
    $
    171,093,834
    
    
    $
    78,523,315Cost of sales
    
    
    38,420,621
    
    
    
    17,544,088
    
    
    
    113,639,708
    
    
    
    52,012,219Gross profit
    
    
    20,997,037
    
    
    
    9,474,341
    
    
    
    57,454,126
    
    
    
    26,511,096Selling, general and administrative expenses
    
    
    17,252,696
    
    
    
    7,484,598
    
    
    
    49,180,817
    
    
    
    20,149,485Operating profit
    
    
    3,744,341
    
    
    
    1,989,743
    
    
    
    8,273,309
    
    
    
    6,361,611Other income (expense):Interest income
    
    
    25,005
    
    
    
    179,288
    
    
    
    99,343
    
    
    
    237,732Interest expense
    
    
    (1,261,064
    )
    
    
    (899,372
    )
    
    
    (3,378,970
    )
    
    
    (1,240,891
    )Other income
    
    
    155,198
    
    
    
    32,774
    
    
    
    243,671
    
    
    
    153,337Total other (expense)
    
    
    (1,080,861
    )
    
    
    (687,310
    )
    
    
    (3,035,956
    )
    
    
    (849,822
    )Income before minority interest
in income of consolidated
subsidiary and income taxes
    
    
    2,663,480
    
    
    
    1,302,433
    
    
    
    5,237,353
    
    
    
    5,511,789Income tax provision
    
    
    787,326
    
    
    
    514,772
    
    
    
    1,813,376
    
    
    
    2,266,426Minority interest in income of consolidated
subsidiary, net of tax
    
    
    643,856
    
    
    
    
    
    
    
    587,665
    
    
    
    Net income
    
    $
    1,232,298
    
    
    $
    787,661
    
    
    $
    2,836,312
    
    
    $
    3,245,363Weighted average number of shares outstanding:Basic
    
    
    10,183,973
    
    
    
    10,094,747
    
    
    
    10,174,843
    
    
    
    10,002,640Diluted
    
    
    10,359,528
    
    
    
    10,410,933
    
    
    
    10,389,740
    
    
    
    10,277,970Net income per share common stock  basic
    
    $
    0.12
    
    
    $
    0.08
    
    
    $
    0.28
    
    
    $
    0.32Net income per share common stock  diluted
    
    $
    0.12
    
    
    $
    0.08
    
    
    $
    0.27
    
    
    $
    0.32Dividends declared per share common stock
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.075
    
    
    $
    0.075
  - 2 -




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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months EndedMarch 31,2006
    
    
    2005(As restated)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,836,312
    
    
    $
    3,245,363Adjustments to reconcile net income to cash used in operating
activities:Provision for uncollectible accounts receivable
    
    
    763,137
    
    
    
    460,339Depreciation expense
    
    
    1,027,036
    
    
    
    300,596Amortization expense
    
    
    1,114,090
    
    
    
    235,766Amortization of deferred debt issuance costs
    
    
    512,393
    
    
    
    222,784Loss on sale of property and equipment
    
    
    
    
    
    
    2,912Deferred taxes
    
    
    (230,788
    )
    
    
    Stock-based compensation expense
    
    
    59,761
    
    
    
    Minority interest in consolidated subsidiary
    
    
    587,665
    
    
    
    Changes in operating assets and liabilities (net of acquisitions):Accounts receivable
    
    
    (8,572,695
    )
    
    
    (5,346,516
    )Inventories
    
    
    (2,739,514
    )
    
    
    (2,550,735
    )Prepaid expenses and other current assets
    
    
    (2,936,995
    )
    
    
    (1,168,608
    )Other assets, net
    
    
    127,506
    
    
    
    263,856Accounts payable
    
    
    1,658,013
    
    
    
    (966,718
    )Accrued liabilities
    
    
    864,045
    
    
    
    1,127,355Taxes payable
    
    
    381,675
    
    
    
    (1,279,064
    )Net cash used in operating activities:
    
    
    (4,548,359
    )
    
    
    (5,452,670
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (698,555
    )
    
    
    (416,657
    )Cash used in business acquisitions, net of cash acquired of $863,887
and $317,551 respectively
    
    
    (43,657,331
    )
    
    
    (6,726,870
    )Net cash used in investing activities:
    
    
    (44,355,886
    )
    
    
    (7,143,527
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from bank line of credit
    
    
    110,991,829
    
    
    
    9,185,948Payments on notes payable and line of credit
    
    
    (97,336,490
    )
    
    
    (9,379,549
    )Proceeds from issuance of senior subordinated notes, net of deferred
issuance costs
    
    
    
    
    
    
    46,621,694Payment of dividends
    
    
    (764,666
    )
    
    
    (750,562
    )Proceeds from issuance of common stock
    
    
    98,813
    
    
    
    454,012Net cash provided by financing activities:
    
    
    12,989,486
    
    
    
    46,131,543Net change in cash and cash equivalents
    
    
    (35,914,759
    )
    
    
    33,535,346Cash and cash equivalents at beginning of period
    
    
    40,325,716
    
    
    
    7,473,145Cash and cash equivalents at end of period
    
    $
    4,410,957
    
    
    $
    41,008,491SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    2,014,872
    
    
    $
    29,427Cash paid for income taxes
    
    $
    1,412,289
    
    
    $
    3,545,491
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Nine Months EndedMarch 31,2006
    
    
    2005(As restated)SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:Fair value of assets acquired in business acquisitions
    
    $
    40,830,353
    
    
    $
    7,690,531Liabilities assumed in business acquisitions
    
    $
    26,798,734
    
    
    $
    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
  - 4 -




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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
  Restatement
 2. Business Combinations:
 Dixie
  - 5 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  OTS Partnership
  Salkeld
  - 6 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  SSG
       - 7 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  For the Three Months Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    59,417,658
    
    
    $
    55,986,037
    
    
    $
    171,343,761
    
    
    $
    154,633,420Net income
    
    
    1,232,298
    
    
    
    1,347,253
    
    
    
    3,464,553
    
    
    
    2,397,730Net income per
share common stock:Basic
    
    $
    0.12
    
    
    $
    0.13
    
    
    $
    0.34
    
    
    $
    0.24Diluted
    
    $
    0.12
    
    
    $
    0.13
    
    
    $
    0.33
    
    
    $
    0.23
 3. Net Sales:
  For the Three Months Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Sporting goods equipment
    
    $
    42,246,157
    
    
    $
    18,033,432
    
    
    $
    110,772,102
    
    
    $
    44,484,533Soft good athletic apparel
and footwear
    
    $
    17,171,501
    
    
    $
    8,984,997
    
    
    $
    60,321,732
    
    
    $
    34,038,782Net sales
    
    $
    59,417,658
    
    
    $
    27,018,429
    
    
    $
    171,093,834
    
    
    $
    78,523,315
 4. Inventories:
   March 31,
    
    
    June 30,2006
    
    
    2005Raw materials
    
    $
    2,019,077
    
    
    $
    515,508Work in progress
    
    
    183,290
    
    
    
    75,450Finished goods
    
    
    35,638,666
    
    
    
    16,887,847Inventories
    
    $
    37,841,033
    
    
    $
    17,478,805
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 5. Allowance for Doubtful Accounts:
  March 31,
    
    
    June 30,2006
    
    
    2005Balance at beginning of period
    
    $
    1,042,496
    
    
    $
    635,531Provision for uncollectible accounts
receivable
    
    
    763,135
    
    
    
    574,464Effect of business acquisitions
    
    
    
    
    
    
    264,515Accounts written off, net of recoveries
    
    
    (254,134
    )
    
    
    (432,014
    )Balance at end of period
    
    $
    1,551,497
    
    
    $
    1,042,496
 6. Income Per Share:
  For the Three Months Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(As restated)Net income available to commonStockholders  basic
    
    $
    1,232,298
    
    
    $
    787,661
    
    
    $
    2,836,312
    
    
    $
    3,245,363Add: Income impact of
convertible bonds if
converted(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income available to
common stockholders- diluted
    
    $
    1,232,298
    
    
    $
    787,661
    
    
    $
    2,836,312
    
    
    $
    3,245,363Weighted average
common shares  basic
    
    
    10,183,973
    
    
    
    10,094,747
    
    
    
    10,174,843
    
    
    
    10,002,640Effect of dilutive options
    
    
    175,555
    
    
    
    316,186
    
    
    
    214,897
    
    
    
    275,330Effect of convertible bonds
if converted(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average common
shares  diluted
    
    
    10,359,528
    
    
    
    10,410,933
    
    
    
    10,389,740
    
    
    
    10,277,970Net income per share  basic
    
    $
    0.12
    
    
    $
    0.08
    
    
    $
    0.28
    
    
    $
    0.32Net income per share  diluted
    
    $
    0.12
    
    
    $
    0.08
    
    
    $
    0.27
    
    
    $
    0.32Options and shares reserved
for issuance excluded from
computation because their
effect was antidilutive
    
    
    3,619,969
    (1)
    
    
    3,607,969
    
    
    
    3,606,969
    (1)
    
    
    3,541,136
 
 (1)
    
    For the three and nine months ended March 31, 2006, 3,619,969 shares and 3,606,969 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. - 9 -




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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (2)
    
    Convertible bonds of $50,000,000 were issued in November 2004. For the periods ended March
31, 2006 and 2005, these bonds were convertible into 3,412,969 shares and were antidilutive
in the computation of earnings per share; however, in future periods they may be dilutive.
 7. Stock Based Compensation:
 1998
Collegiate Pacific Inc. Stock Option Plan
   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
    
    $
    
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the Three Months
    
    
    For the Nine MonthsEnded March 31,
    
    
    Ended March 31,2005
    
    
    2005(As restated)Net income (loss), as reported
    
    $
    787,661
    
    
    $
    3,245,363Add: 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
    
    
    910,573
    
    
    
    1,605,489Pro forma income (loss)
    
    $
    (122,912
    )
    
    $
    1,639,874Net income (loss) per share
common stock:As reported:Basic
    
    $
    0.08
    
    
    $
    0.32Diluted
    
    $
    0.08
    
    
    $
    0.32Pro forma:Basic
    
    $
    (0.01
    )
    
    $
    0.16Diluted
    
    $
    (0.01
    )
    
    $
    0.16
   WeightedAverageOptions
    
    
    Exercise PriceOutstanding at July 1, 2005
    
    
    1,170,550
    
    
    $
    8.56Granted
    
    
    Exercised
    
    
    (12,750
    )
    
    
    7.75Forfeited or cancelled
    
    
    (3,000
    )
    
    
    12.50Outstanding at March 31, 2006
    
    
    1,154,800
    
    
    
    8.56Exercisable at March 31, 2006
    
    
    1,154,800
    
    
    $
    8.56
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COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  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
    
    
    
    5.1
    
    
    $
    5.85
    
    
    
    321,250
    
    
    $
    5.85$9.38
    
    
    31,500
    
    
    
    3.0
    
    
    $
    9.38
    
    
    
    31,500
    
    
    $
    9.38$8.73  $9.73
    
    
    474,550
    
    
    
    8.5
    
    
    $
    9.30
    
    
    
    474,550
    
    
    $
    9.30$10.70  $14.34
    
    
    207,000
    
    
    
    9.0
    
    
    $
    13.68
    
    
    
    207,000
    
    
    $
    13.681,154,800
    
    
    
    7.2
    
    
    $
    8.56
    
    
    
    1,154,800
    
    
    $
    8.56
 8. Intangible Assets:
 March 31, 2006
    
    
    
    
    
    
    
    
    
    
    June 30, 2005Asset
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    NetLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Net Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(years)
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    ValueAmortizable intangible assets:Trademarks
    
    
    10-15
    
    
    $
    343,142
    
    
    $
    169,855
    
    
    $
    173,287
    
    
    $
    343,142
    
    
    $
    152,384
    
    
    $
    190,758Non-compete agreements
    
    
    10
    
    
    
    3,200,000
    
    
    
    240,000
    
    
    
    2,960,000
    
    
    
    
    
    
    
    
    
    
    
    Customer relationships
    
    
    10
    
    
    
    3,343,000
    
    
    
    679,428
    
    
    
    2,663,572
    
    
    
    1,923,000
    
    
    
    324,020
    
    
    
    1,598,980Contractual backlog
    
    
    0.25
    
    
    
    426,600
    
    
    
    426,600
    
    
    
    
    
    
    
    205,600
    
    
    
    195,200
    
    
    
    10,400Customer database
    
    
    3
    
    
    
    660,000
    
    
    
    165,000
    
    
    
    495,000
    
    
    
    
    
    
    
    
    
    
    
    Significant contracts
    
    
    5
    
    
    
    327,000
    
    
    
    49,050
    
    
    
    277,950
    
    
    
    
    
    
    
    
    
    
    
    License agreements and other
    
    
    3-10
    
    
    
    305,048
    
    
    
    247,257
    
    
    
    57,791
    
    
    
    244,197
    
    
    
    181,729
    
    
    
    62,468Total amortizable intangible assets
    
    
    
    
    
    $
    8,604,790
    
    
    $
    1,977,190
    
    
    $
    6,627,600
    
    
    $
    2,715,939
    
    
    $
    853,333
    
    
    $
    1,862,606Non-amortizable intangible assets:Trademarks
    
    
    
    
    
    $
    2,606,500
    
    
    
    
    
    
    $
    2,606,500Total non-amortizable intangible assets
    
    
    
    
    
    $
    2,606,500
    
    
    
    
    
    
    $
    2,606,500Total intangible assets
    
    
    
    
    
    $
    11,211,290
    
    
    $
    1,977,190
    
    
    $
    9,234,100Goodwill  6/30/05
    
    
    
    
    
    $
    23,848,345Additions
    
    
    
    
    
    
    19,242,113Goodwill  3/31/06
    
    
    
    
    
    $
    43,090,458
 9. Minority Interest in Subsidiary:
  - 12 -




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##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Minority interest in SSG at July 1, 2005 (53.2%)
    
    $
    13,590,006Minority interest in net income of SSG for the nine months ended March 31, 2006
    
    
    587,665Common stock issued in subsidiary
    
    
    56,418Stock based compensation
    
    
    16,850Additional purchase of 20% of SSG common stock
    
    
    (6,139,645
    )Minority interest in SSG at March 31, 2006 (73.2%)
    
    $
    8,111,294
 10. Stockholders Equity:
  Stockholders equity at June 30, 2005
    
    $
    45,105,510Net income
    
    
    2,836,312Issuance of common stock in conjunction with stock option exercises
    
    
    98,813Issuance of common stock for business acquisitions
    
    
    640,573Stock based compensation
    
    
    59,761Dividends declared
    
    
    (764,374
    )Stockholders equity at March 31, 2006
    
    $
    47,976,595
 - 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 Nine Months EndedMarch 31,
    
    
    March 31,Increase (decrease)
    
    
    
    
    
    
    
    
    
    
    Increase2006
    
    
    2005
    
    
    Dollars
    
    
    Percentage
    
    
    2006
    
    
    2005
    
    
    Dollars
    
    
    Percentage(dollars in thousands, except per share amounts)Net sales
    
    $
    59,418
    
    
    $
    27,018
    
    
    $
    32,400
    
    
    
    119.9.
    %
    
    $
    171,094
    
    
    $
    78,523
    
    
    $
    92,571
    
    
    
    117.9
    %Gross profit
    
    
    20,997
    
    
    
    9,474
    
    
    
    11,523
    
    
    
    121.6.
    %
    
    
    57,454
    
    
    
    26,511
    
    
    
    30,943
    
    
    
    116.7
    %Operating profit
    
    
    3,744
    
    
    
    1,990
    
    
    
    1,754
    
    
    
    88.1
    %
    
    
    8,273
    
    
    
    6,362
    
    
    
    1,911
    
    
    
    30.0
    %Net income
    
    
    1,232
    
    
    
    788
    
    
    
    444
    
    
    
    56.4
    %
    
    
    2,836
    
    
    
    3,245
    
    
    
    (409
    )
    
    
    (12.6
    )%Earnings
per share  basic
    
    $
    0.12
    
    
    $
    0.08
    
    
    $
    0.04
    
    
    
    50.0
    %
    
    $
    0.28
    
    
    $
    0.32
    
    
    $
    (0.04
    )
    
    
    (12.5
    )%Earnings
per share  diluted
    
    
    0.12
    
    
    $
    0.08
    
    
    $
    0.04
    
    
    
    50.0
    %
    
    $
    0.27
    
    
    $
    0.32
    
    
    $
    (0.05
    )
    
    
    (15.6
    )%Expressed as a
percentage of net
sales:Gross profit margin
    
    
    35.3
    %
    
    
    35.1
    %
    
    
    
    
    
    
    
    
    
    
    33.6
    %
    
    
    33.8
    %Selling, general
and administrative
expenses
    
    
    29.0
    %
    
    
    27.7
    %
    
    
    
    
    
    
    
    
    
    
    28.7
    %
    
    
    25.7
    %Operating profit
    
    
    6.3
    %
    
    
    7.4
    %
    
    
    
    
    
    
    
    
    
    
    4.8
    %
    
    
    8.1
    %
 Acquisitions Since July 1, 2004 and Related Developments
   Partnership
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SSG B2B
 - 16 -




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##### Table of Contents



Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
 Net Sales.
  - 17 -




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Gross Profit
   ,
  - 18 -




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##### Table of Contents



Selling, General and Administrative Expenses. SG&A
  Operating Profit.
 Interest Expense and Other Income.
 Minority Interest
 Income Taxes.
 Net Income.
 Nine Months Ended March 31, 2006 Compared to Nine Months Ended March 31, 2005
 Net Sales.
 - 19 -




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Gross Profit
    - 20 -




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Selling, General and Administrative Expenses.
  Operating Profit.
 Interest Expense and Other Income.
 Minority Interest
 Income Taxes.
 Net Income.
 - 21 -




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##### Table of Contents



Liquidity and Capital Resources
 Cash Flow Activity
  
    
    An increase in accounts receivable of $8.6 million due to the increases in net
sales for the businesses acquired and our preexisting businesses;
    
    An increase in inventories of $2.7 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 $2.9 million due to
advertising costs incurred with the production of catalogs to be mailed in future
periods; and
    
    Partially offset by an increase in accrued liabilities of $1.0 million for accrued
interest on the Companys 5.75% convertible senior subordinated notes and earnout
payment related to the acquisition of Salkeld; and
    
    An increase in accounts payable of $1.7 million to purchase inventories for the
fulfillment of increased sales activities.
   
    
    Net borrowings under the Companys line of credit of $13.7 million to finance the
purchase of additional common shares of SSG and to provide working capital;
    
    Proceeds of $99 thousand received upon the exercise of common stock options; and
    
    Payments of dividends of approximately $765 thousand.
  
    
    Net proceeds from the sale of convertible notes in the amount of $46.6 million,
after debt issuance costs;
 - 22 -




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##### Table of Contents




    
    Proceeds from the issuance of common stock upon the exercise of options of
approximately $454 thousand;
    
    Net payments on the Companys revolving line of credit and other notes payable of
$193 thousand; and
    
    Payments of dividends of approximately $751 thousand.
  Capital Structure and Resources
 Notes Securities Act Thomas Weisel
 Indenture
 Registration Rights
Agreement SEC Registration Statement
 Credit
Facility MLBFS
 - 23 -




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##### Table of Contents



EBITDA
 Fixed Charge Coverage Ratio September 15
Letter Agreement
 Amendment and Consent
  SSG Credit Facility
  - 24 -




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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)Notes Payable and other long-term
debt
    
    $
    62,453
    
    
    $
    12,264
    
    
    $
    167
    
    
    $
    50,022
    
    
    $
    Long-term debt  Sport Supply
Group line of credit
    
    
    4,847
    
    
    
    
    
    
    
    4,847
    
    
    
    Interest expense on
long-term debt
    
    
    10,542
    
    
    
    2,875
    
    
    
    5,750
    
    
    
    1,917
    
    
    
    Operating leases
    
    
    7,558
    
    
    
    3,169
    
    
    
    3,868
    
    
    
    521
    
    
    
    Total contractual cash obligations
    
    $
    85,400
    
    
    $
    18,308
    
    
    $
    14,632
    
    
    $
    52,460
    
    
    $
    
  Newly Adopted Accounting Standards
 
 - 25 -




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##### Table of Contents



Critical Accounting Policies
   Inventories.
 Allowance for Doubtful Accounts.
  Goodwill, Intangibles and Long-lived Assets.
 - 26 -




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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 Amendment No. 1 to
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.
    - 27 -




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##### Table of Contents



Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures CEO CFO
 Changes in Internal Control Over Financial Reporting.
 - 28 -




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Salkeld
 - 29 -




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
   No. of Votes Cast
    
    
    No. of Votes CastNominee for Election
    
    
    Against or WithheldMichael J. Blumenfeld
    
    
    8,903,869
    
    
    
    292,060Adam Blumenfeld
    
    
    8,736,339
    
    
    
    459,590Jeff Davidowitz
    
    
    8,871,289
    
    
    
    324,640William H. Watkins
    
    
    9,036,189
    
    
    
    159,740Robert W. Hampton
    
    
    9,036,233
    
    
    
    159,696
  Votes For
    
    
    9,167,979Votes Against
    
    
    259Abstention
    
    
    27,691
 
 Item 6. Exhibits.
   ExhibitNumber
    
    Description10.1
    
    Lease Amendment and Extension, dated February 26, 2005, by and
between Dixie Sporting Goods Co., Inc. and The Wilton Companies,
LLC.*31.1
    
    Certification of Michael J. Blumenfeld 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 William R. Estill 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 Michael J. Blumenfeld and William R. Estill
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 - 30 -




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##### Table of Contents



SIGNATURES
  COLLEGIATE PACIFIC INC.Dated: May 15, 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)
 - 31 -




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description10.1
    
    Lease Amendment and Extension, dated February 26, 2005, by and
between Dixie Sporting Goods Co., Inc. and The Wilton Companies,
LLC.*31.1
    
    Certification of Michael J. Blumenfeld 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 William R. Estill 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 Michael J. Blumenfeld and William R. Estill
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