##### 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, 2007
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from  to
 Commission File No. 1-15289
 Sport Supply Group, Inc.
  Delaware
    
    22-2795073(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)
 1901 Diplomat Drive, Farmers Branch, Texas
    
    75234(Address of Principal Executive Offices)
    
    (Zip code)
 (972) 484-9484  (Registrants Telephone Number, Including Area Code)
  þ o
  o þ o
  o þ




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##### 



SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PageNumberPART I:
    
    FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at December 31, 2007 and June 30, 2007
    
    1Condensed Consolidated Statements of Income for the three and six months ended
December 31, 2007 and 2006
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended December 31,
2007 and 2006
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    23Item 4.
    
    Controls and Procedures
    
    23PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    25Item 6.
    
    Exhibits
    
    26SIGNATURES
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements.
 SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share amounts)
 December 31,
    
    
    June 30,2007
    
    
    2007(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    10,035
    
    
    $
    5,670Accounts receivable, net of allowance for doubtful accounts of
$1,497 and $1,296, respectively
    
    
    35,816
    
    
    
    31,154Inventories
    
    
    31,776
    
    
    
    32,241Current portion of deferred income taxes
    
    
    4,159
    
    
    
    3,790Prepaid income taxes
    
    
    365
    
    
    
    3,208Prepaid expenses and other current assets
    
    
    1,231
    
    
    
    1,380Total current assets
    
    
    83,382
    
    
    
    77,443PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$6,266 and $4,986, respectively
    
    
    10,718
    
    
    
    10,678DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$2,531 and $2,035, respectively
    
    
    1,831
    
    
    
    2,309INTANGIBLE ASSETS, net of accumulated amortization of
$3,912 and $3,379, respectively
    
    
    7,491
    
    
    
    8,024GOODWILL
    
    
    54,949
    
    
    
    54,949DEFERRED INCOME TAXES
    
    
    
    
    
    
    3,045OTHER ASSETS, net
    
    
    127
    
    
    
    144Total assets
    
    $
    158,498
    
    
    $
    156,592LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    18,961
    
    
    $
    16,167Accrued liabilities
    
    
    11,917
    
    
    
    10,318Dividends payable
    
    
    307
    
    
    
    259Accrued interest
    
    
    240
    
    
    
    291Current portion of long-term debt
    
    
    108
    
    
    
    3,608Deferred income tax liability
    
    
    
    
    
    
    129Total current liabilities
    
    
    31,533
    
    
    
    30,772DEFERRED INCOME TAX LIABILITY
    
    
    3,391
    
    
    
    3,898NOTES PAYABLE AND OTHER LONG-TERM DEBT
    
    
    50,121
    
    
    
    71,386COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred stock, $0.01 par value, 1,000,000 shares
authorized; no shares issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000,000 shares authorized;
12,371,686 and 10,440,586 shares issued and
12,285,660 and 10,354,560 shares outstanding, respectively
    
    
    124
    
    
    
    104Additional paid-in capital
    
    
    63,238
    
    
    
    44,276Retained earnings
    
    
    10,748
    
    
    
    6,813Treasury stock at cost, 86,026 shares
    
    
    (657
    )
    
    
    (657
    )Total stockholders equity
    
    
    73,453
    
    
    
    50,536Total liabilities and stockholders equity
    
    $
    158,498
    
    
    $
    156,592
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited)
 (In thousands, except share and per share amounts)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    54,089
    
    
    $
    49,384
    
    
    $
    124,463
    
    
    $
    117,547Cost of sales
    
    
    34,816
    
    
    
    32,009
    
    
    
    79,562
    
    
    
    76,109Gross profit
    
    
    19,273
    
    
    
    17,375
    
    
    
    44,901
    
    
    
    41,438Selling, general and administrative expenses
    
    
    17,635
    
    
    
    17,250
    
    
    
    35,578
    
    
    
    34,053Operating profit
    
    
    1,638
    
    
    
    125
    
    
    
    9,323
    
    
    
    7,385Other income (expense):Interest income
    
    
    70
    
    
    
    67
    
    
    
    157
    
    
    
    114Interest expense
    
    
    (964
    )
    
    
    (1,483
    )
    
    
    (2,180
    )
    
    
    (2,717
    )Other income (expense)
    
    
    (15
    )
    
    
    55
    
    
    
    35
    
    
    
    92Total other expense
    
    
    (909
    )
    
    
    (1,361
    )
    
    
    (1,988
    )
    
    
    (2,511
    )Income (loss) before minority interest
in income of consolidated
subsidiary and income taxes
    
    
    729
    
    
    
    (1,236
    )
    
    
    7,335
    
    
    
    4,874Income tax provision (benefit)
    
    
    277
    
    
    
    (393
    )
    
    
    2,787
    
    
    
    1,919Minority interest in income of consolidated
subsidiary, net of tax
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    531Net income (loss)
    
    $
    452
    
    
    $
    (871
    )
    
    $
    4,548
    
    
    $
    2,424Weighted average number of shares outstanding:Basic
    
    
    12,242,845
    
    
    
    10,230,428
    
    
    
    11,916,216
    
    
    
    10,229,796Diluted
    
    
    12,347,175
    
    
    
    10,230,428
    
    
    
    15,446,363
    
    
    
    10,382,510Net income (loss) per common share  basic
    
    $
    0.04
    
    
    $
    (0.09
    )
    
    $
    0.38
    
    
    $
    0.24Net income (loss) per common share  diluted
    
    $
    0.04
    
    
    $
    (0.09
    )
    
    $
    0.37
    
    
    $
    0.23Dividends declared per common share
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.05
    
    
    $
    0.05
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Six Months EndedDecember 31,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    4,548
    
    
    $
    2,424Adjustments to reconcile net income to cash provided by
operating activities:Provision for uncollectible accounts receivable
    
    
    486
    
    
    
    999Depreciation and amortization
    
    
    1,850
    
    
    
    1,659Amortization of deferred debt issuance costs
    
    
    496
    
    
    
    451Deferred taxes
    
    
    2,040
    
    
    
    501Stock-based compensation expense
    
    
    218
    
    
    
    Minority interest in consolidated subsidiary
    
    
    
    
    
    
    531Changes in operating assets and liabilities:Accounts receivable
    
    
    (5,148
    )
    
    
    (1,832
    )Inventories
    
    
    465
    
    
    
    (2,887
    )Prepaid income taxes
    
    
    2,843
    
    
    
    539Prepaid expenses and other current assets
    
    
    149
    
    
    
    (819
    )Other assets, net
    
    
    17
    
    
    
    (329
    )Accounts payable
    
    
    2,794
    
    
    
    3,533Accrued liabilities and accrued interest
    
    
    1,548
    
    
    
    945Net cash provided by operating activities:
    
    
    12,306
    
    
    
    5,715CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (1,358
    )
    
    
    (895
    )Cash used in business acquisitions
    
    
    
    
    
    
    (24,902
    )Net cash used in investing activities:
    
    
    (1,358
    )
    
    
    (25,797
    )CASH FLOWS FROM FINANCING ACTIVITIES:Deferred debt issuance cost
    
    
    (18
    )
    
    
    Proceeds from bank line of credit
    
    
    1,015
    
    
    
    33,263Payments on notes payable and line of credit
    
    
    (25,780
    )
    
    
    (12,110
    )Payment of dividends
    
    
    (564
    )
    
    
    (512
    )Proceeds from issuance of common stock
    
    
    18,764
    
    
    
    37Net cash provided by (used in) financing activities:
    
    
    (6,583
    )
    
    
    20,678Net change in cash and cash equivalents
    
    
    4,365
    
    
    
    596Cash and cash equivalents, beginning of year
    
    
    5,670
    
    
    
    4,079Cash and cash equivalents, end of period
    
    $
    10,035
    
    
    $
    4,675SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    1,971
    
    
    $
    2,238Cash paid (refunded) for income taxes
    
    $
    (1,595
    )
    
    $
    835
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation:
 Company US GAAP
  2. Recent Accounting Pronouncements:
 FASB Accounting for Uncertainty in Income Taxes FIN 48 . SFAS Accounting for Income Taxes
 Fair Value Measurements SFAS 157
 The Fair Value Option for Financial Assets and
Financial Liabilities including an Amendment of FASB Statement No. 115 SFAS 159
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements
 3. Business Combinations:
 Old SSG Merger Transaction
   4. Net Sales:
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(Unaudited, in thousands)Catalog
    
    $
    27,291
    
    
    $
    25,197
    
    
    $
    64,592
    
    
    $
    61,675Team Dealer
    
    
    26,798
    
    
    
    24,187
    
    
    
    59,871
    
    
    
    55,872Net sales
    
    $
    54,089
    
    
    $
    49,384
    
    
    $
    124,463
    
    
    $
    117,547
 5. Inventories:
   December 31,
    
    
    June 30,2007
    
    
    2007(Unaudited)(In thousands)Raw materials
    
    $
    2,411
    
    
    $
    1,784Work in progress
    
    
    84
    
    
    
    114Finished goods
    
    
    29,281
    
    
    
    30,343Inventories
    
    $
    31,776
    
    
    $
    32,241
 6. Allowance for Doubtful Accounts:
  December 31,
    
    
    June 30,2007
    
    
    2007(Unaudited)(In thousands)Balance at beginning of period
    
    $
    1,296
    
    
    $
    1,496Provision for uncollectible accounts receivable
    
    
    486
    
    
    
    1,099Accounts written off, net of recoveries
    
    
    (285
    )
    
    
    (1,299
    )Balance at end of period
    
    $
    1,497
    
    
    $
    1,296
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 7. Income (Loss) Per Share:
  For the Three Months
    
    
    For the Six MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands except share and per share data)Determination of diluted number of shares:Average common shares outstanding
    
    
    12,242,845
    
    
    
    10,230,428
    
    
    
    11,916,216
    
    
    
    10,229,796Assumed exercise of dilutive stock options
    
    
    104,330
    
    
    
    
    
    
    
    117,178
    
    
    
    152,714Assumed conversion of subordinated
Debentures
    
    
    
    
    
    
    
    
    
    
    3,412,969
    
    
    
    Diluted average common shares outstanding (b)
    
    
    12,347,175
    
    
    
    10,230,428
    
    
    
    15,446,363
    
    
    
    10,382,510Calculation of diluted earnings per share:Net income (loss)
    
    $
    452
    
    
    $
    (871
    )
    
    $
    4,548
    
    
    $
    2,424Add: interest component on assumed conversion
of subordinated debentures, net of taxes
    
    
    
    
    
    
    
    
    
    
    1,103
    
    
    
    Net income (loss), adjusted (a)
    
    $
    452
    
    
    $
    (871
    )
    
    $
    5,651
    
    
    $
    2,424Diluted earnings (loss) per share (a/b)
    
    $
    0.04
    
    
    $
    (0.09
    )
    
    $
    0.37
    
    
    $
    0.23
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 8. Intangible Assets:
  December 31, 2007
    
    
    June 30, 2007(Unaudited)Asset
    
    Gross
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetLife
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(Years)
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Value(In thousands)Amortizable intangible assets:Trademarks
    
    10-15
    
    $
    343
    
    
    $
    210
    
    
    $
    133
    
    
    $
    343
    
    
    $
    199
    
    
    $
    144Non-compete agreements
    
    10
    
    
    3,200
    
    
    
    800
    
    
    
    2,400
    
    
    
    3,200
    
    
    
    640
    
    
    
    2,560Customer relationships
    
    10
    
    
    3,343
    
    
    
    1,387
    
    
    
    1,956
    
    
    
    3,343
    
    
    
    1,200
    
    
    
    2,143Contractual backlog
    
    .25-.50
    
    
    427
    
    
    
    427
    
    
    
    
    
    
    
    427
    
    
    
    427
    
    
    
    Customer database
    
    3
    
    
    660
    
    
    
    550
    
    
    
    110
    
    
    
    660
    
    
    
    440
    
    
    
    220Significant contracts
    
    5
    
    
    327
    
    
    
    163
    
    
    
    164
    
    
    
    327
    
    
    
    130
    
    
    
    197License agreements and
other
    
    3-10
    
    
    493
    
    
    
    375
    
    
    
    118
    
    
    
    493
    
    
    
    343
    
    
    
    150Total amortizable intangible
assets
    
    
    
    $
    8,793
    
    
    $
    3,912
    
    
    $
    4,881
    
    
    $
    8,793
    
    
    $
    3,379
    
    
    $
    5,414Non-amortizable intangible
assets:Trademarks
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total non-amortizable
intangible assets
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total intangible assets
    
    
    
    $
    11,403
    
    
    $
    3,912
    
    
    $
    7,491
    
    
    $
    11,403
    
    
    $
    3,379
    
    
    $
    8,024Goodwill  June 30, 2007
    
    
    
    $
    54,949Changes in goodwill
    
    
    
    
    Goodwill  December 31, 2007
    
    
    
    $
    54,949
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 9. Stockholders Equity:
  (In thousands)Stockholders equity at June 30, 2007
    
    $
    50,536Issuance of stock for cash
    
    
    18,764Stock-based compensation
    
    
    218Net income
    
    
    4,548Dividends declared
    
    
    (613
    )Stockholders equity at December 31, 2007
    
    $
    73,453
 10. Legal proceedings:
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SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 11. Sales tax:
  12. Subsequent events:
  Amendment No. 1
  - 10 -




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
  Sport Supply Group we us our Company)
 Critical Accounting Policies
   Inventories.
  - 11 -




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Allowance for Doubtful Accounts.
  Goodwill, Intangibles and Long-lived Assets.
 Consolidated Results of Operations
   - 12 -




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For the Three Months Ended December 31,
    
    
    For the Six Months Ended December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    PercentNet sales
    
    $
    54,089
    
    
    
    100.0
    %
    
    $
    49,384
    
    
    
    100.0
    %
    
    $
    124,463
    
    
    
    100.0
    %
    
    $
    117,547
    
    
    
    100.0
    %Gross profit
    
    
    19,273
    
    
    
    35.6
    %
    
    
    17,375
    
    
    
    35.2
    %
    
    
    44,901
    
    
    
    36.1
    %
    
    
    41,438
    
    
    
    35.3
    %Selling, general
and administrative
expenses
    
    
    17,635
    
    
    
    32.6
    %
    
    
    17,250
    
    
    
    34.9
    %
    
    
    35,578
    
    
    
    28.6
    %
    
    
    34,053
    
    
    
    29.0
    %Operating profit
    
    
    1,638
    
    
    
    3.0
    %
    
    
    125
    
    
    
    0.3
    %
    
    
    9,323
    
    
    
    7.5
    %
    
    
    7,385
    
    
    
    6.3
    %Net income (loss)
    
    
    452
    
    
    
    0.8
    %
    
    
    (871
    )
    
    
    (1.8
    %)
    
    
    4,548
    
    
    
    3.7
    %
    
    
    2,424
    
    
    
    2.1
    %Net income (loss)
per share  basic
    
    $
    0.04
    
    
    
    
    
    
    $
    (0.09
    )
    
    
    
    
    
    $
    0.38
    
    
    
    
    
    
    $
    0.24Net income (loss)
per share  diluted
    
    $
    0.04
    
    
    
    
    
    
    $
    (0.09
    )
    
    
    
    
    
    $
    0.37
    
    
    
    
    
    
    $
    0.23
 Acquisitions Since July 1, 2006 and Related Developments
 Old SSG Merger Transaction
   Three Months Ended December 31, 2007 Compared to Three Months Ended December 31, 2006
 Net Sales.
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Gross Profit.
   Selling, General and Administrative Expense. SG&A
 
    
    personnel and group insurance related expenses of approximately $10.3 million;
    
    advertising and catalog production expenses of approximately $1.5 million;
    
    depreciation and amortization of approximately $898 thousand;
    
    rent expense of approximately $702 thousand;
    
    computer services and supplies of approximately $658 thousand;
    
    travel expenses of approximately $525 thousand;
    
    outside professional services expenses of approximately $395 thousand; and
    
    general insurance related expenses of approximately $303 thousand.
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Operating Profit.
 Interest Expense.
 Minority Interest
 Income Taxes.
 Net Income.
 Six Months Ended December 31, 2007 Compared to Six Months Ended December 31, 2006
 Net Sales.
 Gross Profit.
   - 15 -




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Selling, General and Administrative Expense.
 
    
    personnel and group insurance related expenses of approximately $20.5 million;
    
    advertising and catalog production expenses of approximately $3.1 million;
    
    depreciation and amortization of approximately $1.8 million;
    
    rent expense of approximately $1.4 million;
    
    computer services and supplies of approximately $1.1 million;
    
    legal and accounting fees of approximately $1.0 million;
    
    travel expenses of approximately $985 thousand;
    
    outside professional services expenses of approximately $616 thousand;
    
    bank charges of approximately $566 thousand;
    
    general insurance related expenses of approximately $560 thousand; and
    
    bad debt expenses of approximately $486 thousand.
  Operating Profit.
 Interest Expense.
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Minority Interest
 Income Taxes.
 Net Income.
 Liquidity and Capital Resources
 Liquidity
 Purchase
Agreement Purchaser Shares
 Operating Activities.
  
    
    a decrease in prepaid taxes of $2.8 million during the six months ended December
31, 2007, compared to a $539 thousand decrease in prepaid taxes during the six months
ended December 31, 2006, which is primarily attributable to the $1.6 million in taxes
refunded;
    
    a decrease in inventories of $465 thousand during the six months ended December
31, 2007, compared to a $2.9 million increase in inventories during the six months
ended December 31, 2006, which is attributable to the increase in net sales, improved
inventory management in our catalog and team dealer operations, and the ongoing
consolidation of inventories and manufacturing operations following the consummation
of the Merger Transaction; and
    
    a decrease in deferred taxes of $2.0 million during the six months ended December
31, 2007, compared to a $501 thousand decrease in deferred taxes during the six
months ended December 31, 2006, which is due primarily to the utilization of the net
operating loss carryforwards.
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Investing Activities.
 Financing Activities.
 
    
    payments on notes payable and the Companys revolving line of credit and term loan
of $25.8 million.
  
    
    proceeds from the issuance of common stock of approximately $18.8 million.
  Capital Resources
 Notes
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Indenture
 SEC Registration Statement
 Amended Credit Agreement MLBFS
 Amended Credit Agreement Senior Credit Facility Revolving Facility
 Amendment No. 1 MLCFC
 
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EBITDA Senior Leverage Ratio
 Fixed Charge Coverage Ratio
   Purchase
Agreement Purchaser Shares
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Long-Term Financial Obligations and Other Commercial Commitments
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    5 years(In thousands)Long-term debt, including current portion
    
    $
    50,229
    
    
    $
    108
    
    
    $
    50,121
    
    
    $
    
    
    
    $
    Operating leases
    
    
    7,068
    
    
    
    2,910
    
    
    
    4,073
    
    
    
    85
    
    
    
    Interest expense on long-term debt
    
    
    5,831
    
    
    
    2,909
    
    
    
    2,922
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    63,128
    
    
    $
    5,927
    
    
    $
    57,116
    
    
    $
    85
    
    
    $
    
 Long-Term Debt and Advances Under Credit Facilities.
   Operating Leases.
 Off-Balance Sheet Arrangements.
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Subsequent Events
   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 never materialize or are proven
incorrect, could cause the results of Sport Supply Group 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 but not limited to 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 Sport Supply Groups ability to integrate
acquired businesses, global economic conditions, product demand, financial market performance and
other risks that are described herein, as well as those items described from time to time in Sport
Supply Groups SEC reports, including Sport Supply Groups annual report on Form 10-K for the
fiscal year ended June 30, 2007. Sport Supply Group cautions that the foregoing list of important
factors is not all encompassing. Any forward-looking statements included in this report are made
as of the date of filing of this report with the SEC, and we assume no obligation and do not intend
to update these forward-looking statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Interest Rates.
  Foreign Currency and Derivatives.
 
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures. CEO CFO 1934
Act
 Changes in Internal Control Over Financial Reporting.
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
     - 24 -




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Item 4. Submission of Matters to a Vote of Security Holders.
   No. of Votes Cast
    
    
    No. of Votes CastNominee for Election
    
    
    Against or WithheldAdam Blumenfeld
    
    
    9,786,148
    
    
    
    428,644Jeff Davidowitz
    
    
    9,987,088
    
    
    
    227,704Richard Elman
    
    
    10,078,213
    
    
    
    136,579William H. Watkins
    
    
    10,077,213
    
    
    
    137,579
  Votes For
    
    
    9,835,405Votes Against
    
    
    374,787Abstentions
    
    
    4,600Broker Non-Votes
    
    
    0
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Item 6. Exhibits.
  ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation
of the Registrant.
    
    Exhibit 1 to the
Registrants
Registration Statement
on Form 8-A filed on
September 9, 1999.3.1.1
    
    Certificate of Amendment to
Certificate of Incorporation
of Collegiate Pacific Inc.
    
    Exhibit 3.10 to the
Registrants
Registration Statement
on Form SB-2
(No. 333-34294)
originally filed on
April 7, 2000.3.1.2
    
    Amendment to Certificate of
Incorporation of Collegiate
Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on July 2, 2007.3.2
    
    By-Laws of the Registrant.
    
    Exhibit 2 to the
Registrants
Registration Statement
on Form 8-A filed on
September 9, 1999.3.2.1
    
    Amendment to the Bylaws of
Collegiate Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on June 14, 2007.3.2.2
    
    Amendment to the Bylaws of
Collegiate Pacific Inc.
    
    Exhibit 3.2 to the
Registrants Current
Report on Form 8-K
filed on July 2, 2007.4.1
    
    Specimen Certificate of
Common Stock, $0.01 par
value, of Sport Supply Group,
Inc.
    
    Exhibit 4.1 to the
Registrants Annual
Report on Form 10-K
filed on September 13,
2007.4.2
    
    Indenture, dated as of
November 26, 2004, by and
between Collegiate Pacific
Inc. and The Bank of New York
Trust Company N.A., as
Trustee.
    
    Exhibit 99.1 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.4.3
    
    Form of 5.75% Convertible
Senior Subordinated Note Due
2009 (included in Section 2.2
of Exhibit 4.2 to this
report).
    
    Exhibit 99.2 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.10.1
    
    Third Amendment to Lease,
dated as of September 6,
2007, by and between
Collegiate Pacific Inc. and
The Realty Associates Fund
VI, L.P.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-K
filed on September 13,
2007.10.2
    
    Purchase Agreement, dated as
of July 26, 2007, by and
between Sport Supply Group,
Inc. and CBT Holdings, LLC.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 31, 2007.10.3
    
    Form of Nonstatutory Stock
Option Agreement under the
Sport Supply Group, Inc. 2007
Stock Option Plan.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on September 4,
2007.10.4
    
    Form of Incentive Stock
Option Agreement under the
Sport Supply Group, Inc. 2007
Stock Option Plan.
    
    Exhibit 10.2 to the
Registrants Current
Report on Form 8-K
filed on September 4,
2007.
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ExhibitNumber
    
    Description10.5
    
    Amended and Restated Credit
Agreement, dated October 30,
2007, by and among Sport
Supply Group, Inc., the
financial institutions or
other entities from time to
time parties thereto, each as
a Lender, and Merrill Lynch
Business Financial Services
Inc., individually as a
Lender, as Administrative
Agent, Sole Bookrunner and
Sole Lead Manager.
    
    Exhibit 10.5 to the
Registrants Quarterly
Report on Form 10-Q
filed on October 31,
2007.10.6
    
    Amendment No. 1 to Amended
and Restated Credit
Agreement, dated January 7,
2008 by and between Sport
Supply Group, Inc. and
Merrill Lynch Commercial
financing Corp.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 9, 2007.31.1
    
    Certification of Adam
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 John Pitts
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 Adam
Blumenfeld and John Pitts
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
  - 27 -




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SIGNATURES
  SPORT SUPPLY GROUP, INC.Dated: January 30, 2008
    /s/ Adam BlumenfeldAdam Blumenfeld, Chief Executive Officer/s/ John PittsJohn Pitts, Chief Financial Officer(Principal Financial and Accounting Officer)  - 28 -




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EXHIBIT INDEX
  ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation
of the Registrant.
    
    Exhibit 1 to the
Registrants
Registration Statement
on Form 8-A filed on
September 9, 1999.3.1.1
    
    Certificate of Amendment to
Certificate of Incorporation
of Collegiate Pacific Inc.
    
    Exhibit 3.10 to the
Registrants
Registration Statement
on Form SB-2
(No. 333-34294)
originally filed on
April 7, 2000.3.1.2
    
    Amendment to Certificate of
Incorporation of Collegiate
Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on July 2, 2007.3.2
    
    By-Laws of the Registrant.
    
    Exhibit 2 to the
Registrants
Registration Statement
on Form 8-A filed on
September 9, 1999.3.2.1
    
    Amendment to the Bylaws of
Collegiate Pacific Inc.
    
    Exhibit 3.1 to the
Registrants Current
Report on Form 8-K
filed on June 14, 2007.3.2.2
    
    Amendment to the Bylaws of
Collegiate Pacific Inc.
    
    Exhibit 3.2 to the
Registrants Current
Report on Form 8-K
filed on July 2, 2007.4.1
    
    Specimen Certificate of
Common Stock, $0.01 par
value, of Sport Supply Group,
Inc.
    
    Exhibit 4.1 to the
Registrants Annual
Report on Form 10-K
filed on September 13,
2007.4.2
    
    Indenture, dated as of
November 26, 2004, by and
between Collegiate Pacific
Inc. and The Bank of New York
Trust Company N.A., as
Trustee.
    
    Exhibit 99.1 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.4.3
    
    Form of 5.75% Convertible
Senior Subordinated Note Due
2009 (included in Section 2.2
of Exhibit 4.2 to this
report).
    
    Exhibit 99.2 to the
Registrants Current
Report on Form 8-K
filed on November 29,
2004.10.1
    
    Third Amendment to Lease,
dated as of September 6,
2007, by and between
Collegiate Pacific Inc. and
The Realty Associates Fund
VI, L.P.
    
    Exhibit 10.6 to the
Registrants Annual
Report on Form 10-K
filed on September 13,
2007.10.2
    
    Purchase Agreement, dated as
of July 26, 2007, by and
between Sport Supply Group,
Inc. and CBT Holdings, LLC.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 31, 2007.10.3
    
    Form of Nonstatutory Stock
Option Agreement under the
Sport Supply Group, Inc. 2007
Stock Option Plan.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on September 4,
2007.10.4
    
    Form of Incentive Stock
Option Agreement under the
Sport Supply Group, Inc. 2007
Stock Option Plan.
    
    Exhibit 10.2 to the
Registrants Current
Report on Form 8-K
filed on September 4,
2007.




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ExhibitNumber
    
    Description10.5
    
    Amended and Restated Credit
Agreement, dated October 30,
2007, by and among Sport
Supply Group, Inc., the
financial institutions or
other entities from time to
time parties thereto, each as
a Lender, and Merrill Lynch
Business Financial Services
Inc., individually as a
Lender, as Administrative
Agent, Sole Bookrunner and
Sole Lead Manager.
    
    Exhibit 10.5 to the
Registrants Quarterly
Report on Form 10-Q
filed on October 31,
2007.10.6
    
    Amendment No. 1 to Amended
and Restated Credit
Agreement, dated January 7,
2008 by and between Sport
Supply Group, Inc. and
Merrill Lynch Commercial
financing Corp.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K
filed on July 9, 2007.31.1
    
    Certification of Adam
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 John Pitts
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 Adam
Blumenfeld and John Pitts
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