##### 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, 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. 1-15289
 COLLEGIATE PACIFIC INC.
  Delaware
    
    22-2795073(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)1901 Diplomat Drive, Dallas, Texas
    
    75234(Address of Principal Executive Offices)
    
    (Zip code)
 (972) 243-8100
  þ o
  o o þ
  o þ




---



##### 



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 PageNumberPART I: FINANCIAL INFORMATIONItem 1.
    
    Consolidated Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at December 31, 2006 and June 30, 2006
    
    
    1Condensed Consolidated Statements of Income for the three and six months ended December 31, 2006 and 2005
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2006 and 2005
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22PART II: OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    25Item 5.
    
    Other Information
    
    
    26Item 6.
    
    Exhibits
    
    
    28SIGNATURES
    
    
    29Form of Amended and Restated Change in Control AgreementCertification Pursuant to Rule 13a-14(a)/15d-14(a)Certification Pursuant to Rule 13a-14(a)/15d-14(a)Certification Pursuant to Section 1350




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements.
 COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share amounts)
 December 31,
    
    
    June 30,2006
    
    
    2006(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    4,675
    
    
    $
    4,079Accounts receivable, net of allowance for doubtful accounts of
$2,241 and $1,496 respectively
    
    
    31,837
    
    
    
    31,004Inventories
    
    
    40,072
    
    
    
    37,185Current portion of deferred taxes
    
    
    3,231
    
    
    
    2,625Prepaid income taxes
    
    
    1,068
    
    
    
    1,607Prepaid expenses and other current assets
    
    
    3,018
    
    
    
    2,199Total current assets
    
    
    83,901
    
    
    
    78,699PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$3,797 and $2,755, respectively
    
    
    9,867
    
    
    
    10,087DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of
$1,527 and $1,076, respectively
    
    
    2,817
    
    
    
    2,782INTANGIBLE ASSETS, net of accumulated amortization of
$2,834 and $2,188, respectively
    
    
    8,570
    
    
    
    9,014GOODWILL
    
    
    55,588
    
    
    
    40,280DEFERRED INCOME TAXES
    
    
    2,807
    
    
    
    3,156OTHER ASSETS, net
    
    
    160
    
    
    
    417Total assets
    
    $
    163,710
    
    
    $
    144,435LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    18,335
    
    
    $
    14,802Accrued liabilities
    
    
    6,812
    
    
    
    5,896Dividends payable
    
    
    256
    
    
    
    256Accrued interest
    
    
    358
    
    
    
    329Current portion of long-term debt
    
    
    3,145
    
    
    
    2,210Deferred tax liability
    
    
    18
    
    
    
    15Total current liabilities
    
    
    28,924
    
    
    
    23,508DEFERRED TAX LIABILITY
    
    
    3,101
    
    
    
    3,259NOTES PAYABLE AND OTHER LONG-TERM DEBT
    
    
    82,502
    
    
    
    62,284COMMITMENTS AND CONTINGENCIESMINORITY INTEREST IN SUBSIDIARY
    
    
    
    
    
    
    8,150STOCKHOLDERS 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;
10,319,586 and 10,315,191 shares issued and 10,233,560
and 10,229,165 shares outstanding, respectively
    
    
    103
    
    
    
    103Additional paid-in capital
    
    
    43,199
    
    
    
    43,162Retained earnings
    
    
    6,538
    
    
    
    4,626Treasury stock at cost, 86,026 shares
    
    
    (657
    )
    
    
    (657
    )Total stockholders equity
    
    
    49,183
    
    
    
    47,234Total liabilities and stockholders equity
    
    $
    163,710
    
    
    $
    144,435
  - 1 -




---



##### Table of Contents



COLLEGIATE PACIFIC 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 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    49,384
    
    
    $
    46,401
    
    
    $
    117,547
    
    
    $
    111,676Cost of sales
    
    
    32,009
    
    
    
    31,259
    
    
    
    76,109
    
    
    
    75,219Gross profit
    
    
    17,375
    
    
    
    15,142
    
    
    
    41,438
    
    
    
    36,457Selling, general and administrative expenses
    
    
    17,250
    
    
    
    16,192
    
    
    
    34,053
    
    
    
    31,928Operating profit (loss)
    
    
    125
    
    
    
    (1,050
    )
    
    
    7,385
    
    
    
    4,529Other income (expense):Interest income
    
    
    67
    
    
    
    28
    
    
    
    114
    
    
    
    74Interest expense
    
    
    (1,483
    )
    
    
    (1,119
    )
    
    
    (2,717
    )
    
    
    (2,118
    )Other income
    
    
    55
    
    
    
    64
    
    
    
    92
    
    
    
    89Total other expense
    
    
    (1,361
    )
    
    
    (1,027
    )
    
    
    (2,511
    )
    
    
    (1,955
    )Income (loss) before minority interest
in income (loss) of consolidated
subsidiary and income taxes
    
    
    (1,236
    )
    
    
    (2,077
    )
    
    
    4,874
    
    
    
    2,574Income tax provision (benefit)
    
    
    (393
    )
    
    
    (624
    )
    
    
    1,919
    
    
    
    1,026Minority interest in income (loss) of consolidated
subsidiary, net of tax
    
    
    28
    
    
    
    (482
    )
    
    
    531
    
    
    
    (56
    )Net income (loss)
    
    $
    (871
    )
    
    $
    (971
    )
    
    $
    2,424
    
    
    $
    1,604Weighted average number of shares outstanding:Basic
    
    
    10,230,428
    
    
    
    10,182,599
    
    
    
    10,229,796
    
    
    
    10,170,278Diluted
    
    
    10,230,428
    
    
    
    10,182,599
    
    
    
    10,382,510
    
    
    
    10,643,327Net income (loss) per share common stock  basic
    
    $
    (0.09
    )
    
    $
    (0.10
    )
    
    $
    0.24
    
    
    $
    0.16Net income (loss) per share common stock  diluted
    
    $
    (0.09
    )
    
    $
    (0.10
    )
    
    $
    0.23
    
    
    $
    0.15Dividends declared per share common stock
    
    $
    0.025
    
    
    $
    0.025
    
    
    $
    0.05
    
    
    $
    0.05
  - 2 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (In thousands)
 Six Months EndedDecember 31,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,424
    
    
    $
    1,604Adjustments to reconcile net income to cash provided by operating
activities:Provision for uncollectible accounts receivable
    
    
    999
    
    
    
    470Depreciation expense
    
    
    1,115
    
    
    
    551Amortization expense
    
    
    544
    
    
    
    836Amortization of deferred debt issuance costs
    
    
    451
    
    
    
    342Deferred taxes
    
    
    501
    
    
    
    (231
    )Stock-based compensation expense
    
    
    
    
    
    
    59Minority interest in consolidated subsidiary
    
    
    531
    
    
    
    (56
    )Changes in operating assets and liabilities (net of effects of acquisitions):Accounts receivable
    
    
    (1,832
    )
    
    
    (3,508
    )Inventories
    
    
    (2,887
    )
    
    
    (2,936
    )Prepaid expenses and other current assets
    
    
    (819
    )
    
    
    (1,481
    )Other assets, net
    
    
    (329
    )
    
    
    116Accounts payable
    
    
    3,533
    
    
    
    3,302Accrued liabilities and interest
    
    
    945
    
    
    
    (1,630
    )Taxes payable
    
    
    539
    
    
    
    278Net cash provided by (used in) operating activities:
    
    
    5,715
    
    
    
    (2,284
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (895
    )
    
    
    (172
    )Cash used in business acquisitions, net of cash acquired of $0
and $970, respectively
    
    
    (24,902
    )
    
    
    (43,165
    )Net cash used in investing activities:
    
    
    (25,797
    )
    
    
    (43,337
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from bank line of credit
    
    
    33,263
    
    
    
    72,064Payments on notes payable and line of credit
    
    
    (12,110
    )
    
    
    (57,290
    )Payment of dividends
    
    
    (512
    )
    
    
    (510
    )Proceeds from issuance of common stock
    
    
    37
    
    
    
    70Net cash provided by financing activities:
    
    
    20,678
    
    
    
    14,334Net change in cash and cash equivalents
    
    
    596
    
    
    
    (31,287
    )Cash and cash equivalents at beginning of period
    
    
    4,079
    
    
    
    40,326Cash and cash equivalents at end of period
    
    $
    4,675
    
    
    $
    9,039SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    2,238
    
    
    $
    1,702Cash paid for income taxes
    
    $
    835
    
    
    $
    723SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES (See
Note 2 for non-cash acquisition disclosures)
  - 3 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation:
 Company US GAAP
  2. Business Combinations:
 SSG
 Original Merger Agreement
  Merger Transaction
 - 4 -




---



##### 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 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited, in thousands)Sporting goods equipment
    
    $
    27,403
    
    
    $
    26,221
    
    
    $
    69,970
    
    
    $
    68,526Soft goods
    
    
    21,981
    
    
    
    20,180
    
    
    
    47,577
    
    
    
    43,150Net sales
    
    $
    49,384
    
    
    $
    46,401
    
    
    $
    117,547
    
    
    $
    111,676
 4. Inventories:
  - 5 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  December 31,
    
    
    June 30,2006
    
    
    2006Raw materials
    
    $
    2,452
    
    
    $
    1,893Work in progress
    
    
    197
    
    
    
    116Finished goods
    
    
    37,423
    
    
    
    35,176Inventories
    
    $
    40,072
    
    
    $
    37,185
 5. Allowance for Doubtful Accounts:
  December 31,
    
    
    June 30,2006
    
    
    2006Balance at beginning of period
    
    $
    1,496
    
    
    $
    1,042Provision for uncollectible accounts receivable
    
    
    999
    
    
    
    982Accounts written off, net of recoveries
    
    
    (254
    )
    
    
    (528
    )Balance at end of period
    
    $
    2,241
    
    
    $
    1,496
 6. Income Per Share:
  For the Three Months
    
    
    For the Six MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(In thousands except share and per share data)Determination of diluted number of shares:Net income available to common
    
    $
    (871
    )
    
    $
    (971
    )
    
    $
    2,424
    
    
    $
    1,604Average common shares outstanding
    
    
    10,230,428
    
    
    
    10,182,599
    
    
    
    10,229,796
    
    
    
    10,170,278Assumed exercise of dilutive stock options(1)
    
    
    
    
    
    
    
    
    
    
    152,714
    
    
    
    473,049Assumed conversion of subordinated
debentures(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted average common shares outstanding (b)
    
    
    10,230,428
    
    
    
    10,182,599
    
    
    
    10,382,510
    
    
    
    10,643,327Calculation of diluted earnings per share:Net income
    
    $
    (871
    )
    
    $
    (971
    )
    
    $
    2,424
    
    
    $
    1,604Add: interest component on assumed conversion
of subordinated debentures, net of taxes(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income, adjusted (a)
    
    $
    (871
    )
    
    $
    (971
    )
    
    $
    2,424
    
    
    $
    1,604Diluted earnings per share (a/b)
    
    $
    (.09
    )
    
    $
    (.10
    )
    
    $
    0.23
    
    
    $
    0.15
 - 6 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 (1)
    
    For the three and six months ended December 31, 2006 and December 31, 2005, 4,527,769 and
4,912,311 shares and 3,759,469 and 4,259,640 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 have been antidilutive.(2)
    
    Convertible bonds of $50,000,000 were issued in November 2004. For all periods ended
December 31, 2006 and 2005, these bonds 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
 2007 Collegiate Pacific Inc. Stock Option Plan
 Share Based Payments
   WeightedAverageOptions
    
    
    Exercise PriceOutstanding at July 1, 2006
    
    
    1,144,600
    
    
    $
    8.56Granted
    
    
    
    
    
    
    Exercised
    
    
    (4,400
    )
    
    
    8.37Forfeited or cancelled
    
    
    (25,400
    )
    
    
    9.42Outstanding at December 31, 2006
    
    
    1,114,800
    
    
    $
    8.54Exercisable at December 31, 2006
    
    
    1,114,800
    
    
    $
    8.54
 - 7 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    OutstandingWeightedAverageRemaining
    
    WeightedContractual
    
    AverageLife
    
    ExerciseExercise price
    
    Shares
    
    (In Years)
    
    Price$3.89 - $4.81
    
    
    120,500
    
    
    
    4.35
    
    
    $
    3.91$4.90 - $6.13
    
    
    317,550
    
    
    
    5.06
    
    
    $
    5.85$8.73 - $9.73
    
    
    470,750
    
    
    
    7.13
    
    
    $
    9.30$10.70 - $14.34
    
    
    206,000
    
    
    
    7.95
    
    
    $
    13.681,114,800
 8. Intangible Assets:
  December 31, 2006
    
    
    June 30, 2006Asset
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(Years)
    
    
    Value
    
    
    Amortization
    
    
    Value
    
    
    Value
    
    
    Amortization
    
    
    Value(In thousands)
    
    
    
    
    
    
    
    
    
    
    (In thousands)Amortizable intangible assets:Trademarks
    
    
    10-15
    
    
    $
    343
    
    
    $
    187
    
    
    $
    156
    
    
    $
    343
    
    
    $
    166
    
    
    $
    177Non-compete agreements
    
    
    10
    
    
    
    3,200
    
    
    
    480
    
    
    
    2,720
    
    
    
    3,200
    
    
    
    320
    
    
    
    2,880Customer relationships
    
    
    10
    
    
    
    3,343
    
    
    
    1,007
    
    
    
    2,336
    
    
    
    3,343
    
    
    
    788
    
    
    
    2,555Contractual backlog
    
    
    0.25-0.50
    
    
    
    427
    
    
    
    427
    
    
    
    
    
    
    
    427
    
    
    
    427
    
    
    
    Customer database
    
    
    3
    
    
    
    660
    
    
    
    330
    
    
    
    330
    
    
    
    660
    
    
    
    220
    
    
    
    440Significant contracts
    
    
    5
    
    
    
    327
    
    
    
    98
    
    
    
    229
    
    
    
    327
    
    
    
    65
    
    
    
    262License agreements and
other
    
    
    3-10
    
    
    
    494
    
    
    
    305
    
    
    
    189
    
    
    
    292
    
    
    
    202
    
    
    
    90Total amortizable intangible
assets
    
    
    
    
    
    $
    8,794
    
    
    $
    2,834
    
    
    $
    5,960
    
    
    $
    8,592
    
    
    $
    2,188
    
    
    $
    6,404Non-amortizable intangible
assets:Trademarks
    
    
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total non-amortizable
intangible assets
    
    
    
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610
    
    
    $
    2,610
    
    
    
    
    
    
    $
    2,610Total identifiable intangible
assets
    
    
    
    
    
    $
    11,404
    
    
    $
    2,834
    
    
    $
    8,570
    
    
    $
    11,202
    
    
    $
    2,188
    
    
    $
    9,014Goodwill  June 30, 2006
    
    
    
    
    
    $
    40,280Acquisitions
    
    
    
    
    
    
    16,221Changes in deferred tax
valuation allowance
    
    
    
    
    
    
    (913
    )Goodwill  December 31, 2006
    
    
    
    
    
    $
    55,588
 - 8 -




---



##### Table of Contents



COLLEGIATE PACIFIC INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 9. Stockholders Equity:
  Stockholders equity at June 30, 2006
    
    $
    47,234Issuance of stock for cash
    
    
    37Net income
    
    
    2,424Dividends declared
    
    
    (512
    )Stockholders equity at December 31, 2006
    
    $
    49,183
 - 9 -




---



##### 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 2005 fiscal 2006 fiscal 2007
 Consolidated Results of Operations
  For the Three Months Ended
    
    For the Six Months EndedDecember 31,
    
    December 31,Increase
    
    
    
    
    
    
    
    
    
    Increase2006
    
    2005
    
    Dollars
    
    Percentage
    
    2006
    
    2005
    
    Dollars
    
    Percentage(dollars in thousands, except per share amounts)Net sales
    
    $
    49,384
    
    
    $
    46,401
    
    
    $
    2,983
    
    
    
    6.4
    %
    
    $
    117,547
    
    
    $
    111,676
    
    
    $
    5,871
    
    
    
    5.3
    %Gross profit
    
    
    17,375
    
    
    
    15,142
    
    
    
    2,233
    
    
    
    14.8
    %
    
    
    41,438
    
    
    
    36,457
    
    
    
    4,981
    
    
    
    13.7
    %Operating profit (loss)
    
    
    125
    
    
    
    (1,050
    )
    
    
    1,175
    
    
    
    111.9
    %
    
    
    7,385
    
    
    
    4,529
    
    
    
    2,856
    
    
    
    63.1
    %Net income (loss)
    
    
    (871
    )
    
    
    (971
    )
    
    
    100
    
    
    
    10.3
    %
    
    
    2,424
    
    
    
    1,604
    
    
    
    820
    
    
    
    51.1
    %Net income (loss)
per share  basic
    
    $
    (0.09
    )
    
    $
    (0.10
    )
    
    $
    0.01
    
    
    
    10.0
    %
    
    $
    0.24
    
    
    $
    0.16
    
    
    $
    0.08
    
    
    
    50.0
    %Net income (loss)
per share  diluted
    
    $
    (0.09
    )
    
    $
    (0.10
    )
    
    $
    0.01
    
    
    
    10.0
    %
    
    $
    0.23
    
    
    $
    0.15
    
    
    $
    0.08
    
    
    
    53.3
    %Expressed as a percentage of net sales:Gross profit margin
    
    
    35.2
    %
    
    
    32.6
    %
    
    
    
    
    
    
    
    
    
    
    35.3
    %
    
    
    32.6
    %Selling, general
and administrative
expenses
    
    
    34.9
    %
    
    
    34.9
    %
    
    
    
    
    
    
    
    
    
    
    29.0
    %
    
    
    28.6
    %Operating profit (loss)
    
    
    0.3
    %
    
    
    (2.3
    %)
    
    
    
    
    
    
    
    
    
    
    6.3
    %
    
    
    4.1
    %
 - 10 -




---



##### Table of Contents



Acquisitions Since July 1, 2005 and Related Developments
 SSG B2B
 Original Merger Agreement
  Merger Transaction
  Salkeld Kesslers
 - 11 -




---



##### Table of Contents



OTS Dixie
 Three Months Ended December 31, 2006 Compared to Three Months Ended December 31, 2005
 Net Sales.
  Gross Profit
  - 12 -




---



##### Table of Contents



Selling, General and Administrative Expenses. SG&A
 
    
    personnel related expenses of approximately $9.2 million;
    
    advertising of approximately $1.7 million;
    
    depreciation and amortization of approximately $808 thousand;
    
    bad debt of approximately $730 thousand;
    
    rent expense of approximately $699 thousand;
    
    computer services and supplies of approximately $658 thousand;
    
    travel of approximately $511 thousand;
    
    legal and accounting fees in the amount of approximately $368 thousand;
    
    insurance related expenses of approximately $213 thousand; and
    
    Sarbanes-Oxley related compliance costs in the amount of approximately $73 thousand.
  Operating Profit (Loss).
 Interest Expense, and Interest and Other Income.
 Minority Interest
 Income Taxes.
 - 13 -




---



##### Table of Contents



Net Loss.
 Six Months Ended December 31, 2006 Compared to Six Months Ended December 31, 2005
 Net Sales.
  Gross Profit
  Selling, General and Administrative Expenses.
 
    
    personnel related expenses of approximately $18.9 million;
    
    advertising of approximately $3.1 million;
 - 14 -




---



##### Table of Contents




    
    depreciation and amortization of approximately $1.6 million;
    
    rent of approximately $1.4 million;
    
    computer services and supplies of approximately $1.3 million;
    
    travel of approximately $1.1 million;
    
    bad debt of approximately $1.0 million;
    
    legal and accounting fees in the amount of approximately $786 thousand;
    
    bank charges of approximately $531 thousand;
    
    insurance related expenses of approximately $462 thousand; and
    
    Sarbanes-Oxley related compliance costs in the amount of approximately $124 thousand.
  Operating Profit.
 Interest Expense, and Interest and Other Income.
 Minority Interest
 Income Taxes.
 Net Income.
 - 15 -




---



##### Table of Contents



Liquidity and Capital Resources
 Liquidity
  Operating Activities.
  
    
    an increase in accounts receivable of $1.8 million during the six months ended
December 31, 2006, compared to a $3.5 million increase in accounts receivable during
the six months ended December 31, 2005, which is primarily attributable to the
improved management of accounts receivable in our catalog operations; and
    
    an increase in non-cash expenses including depreciation, amortization and bad debt
expense during the six months ended December 31, 2006, compared to the six months
ended December 31, 2005; and
    
    an increase in accrued liabilities and interest of $945 thousand during the six
months ended December 31, 2006, compared to a decrease of $1.6 million during the six
months ended December 31, 2005, which was primarily due to accrued personnel related
expenses, state franchise taxes and other accrued liabilities.
 Investing Activities.
 Financing Activities.
 
    
    proceeds from the Companys revolving credit facility of $33.3 million; and
    
    proceeds from the issuance of common stock upon the exercise of options of
approximately $37 thousand; and,
 - 16 -




---



##### Table of Contents




    
    the payment of dividends in the amount of approximately $512 thousand; and,
    
    payments on notes payable and the Companys revolving line of credit of $12.1 million.
  Capital Resources
 Notes Thomas Weisel
 Indenture
 Registration Rights
Agreement SEC Registration Statement
 Senior Credit Agreement MLBFS
 - 17 -




---



##### Table of Contents



Term Loan Revolving Facility Senior Credit Facility
  LIBOR EBITDA Senior Leverage Ratio
 Fixed Charge Coverage Ratio
   - 18 -




---



##### 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(In thousands)Long-term debt, including current portion
    
    $
    85,647
    
    
    $
    3,145
    
    
    $
    82,470
    
    
    $
    32
    
    
    $
    Operating leases
    
    
    8,519
    
    
    
    3,182
    
    
    
    3,586
    
    
    
    1,751
    
    
    
    Interest expense and fees on long-term debt
    
    
    15,054
    
    
    
    5,756
    
    
    
    9,298
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    109,220
    
    
    $
    12,083
    
    
    $
    95,354
    
    
    $
    1,783
    
    
    $
    
 Operating Leases.
 Off-Balance Sheet Arrangements.
 - 19 -




---



##### Table of Contents



Long-Term Debt and Advances Under Credit Facilities.
  Recent Accounting Pronouncements
 Accounting for Uncertainty in Income Taxes Interpretation 48 . Accounting for Income Taxes
 Fair Value Measurements FAS 157
 Considering the Effects of Prior Year Misstatements When Quantifying
Misstatements in Current Year Financial Statements SAB 108
 Critical Accounting Policies
  - 20 -




---



##### Table of Contents



Inventories.
 Allowance for Doubtful Accounts.
  Goodwill, Intangibles and Long-lived Assets.
 - 21 -




---



##### Table of Contents



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-K for the fiscal year ended June 30, 2006. Collegiate Pacific 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 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.
 Interest Rates. LIBOR
  Foreign Currency and Derivatives.
 
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures CEO CFO
 - 22 -




---



##### Table of Contents



1934 Act
 Changes in Internal Control Over Financial Reporting.
 - 23 -




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  Costa Brava Partnership III L.P. v. Sport
Supply Group, Inc.
  - 24 -




---



##### 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
    
    
    9,042,266
    
    
    
    1,119,102Adam Blumenfeld
    
    
    9,235,616
    
    
    
    925,752Jeff Davidowitz
    
    
    9,043,468
    
    
    
    1,117,900William H. Watkins
    
    
    9,043,123
    
    
    
    1,118,245Robert W. Hampton
    
    
    9,039,468
    
    
    
    1,121,900
  Votes For
    
    
    9,842,877Votes Against
    
    
    318,486Abstentions
    
    
    5Broker Non-Votes
    
    
    0
  Votes For
    
    
    5,134,292Votes Against
    
    
    1,622,868Abstentions
    
    
    4,500Broker Non-Votes
    
    
    3,399,708
 - 25 -




---



##### Table of Contents



Item 5. Other Information.
   Severance Payment
  - 26 -




---



##### Table of Contents



Code
  - 27 -




---



##### Table of Contents



Item 6. Exhibits.
 A.
    
    Exhibits. The following exhibits are filed as part of this report:
 ExhibitNumber
    
    Description10.1
    
    Letter Agreement, dated
November 10, 2006, by and
between Collegiate Pacific
Inc. and Merrill Lynch
Business Financial
Services Inc.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K filed
on November 13, 2006.10.2
    
    Amended and Restated
Credit Agreement, dated
November 13, 2006, by and
among Collegiate Pacific
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 10.2 to the
Registrants Current
Report on Form 8-K filed
on November 13, 2006.10.3
    
    Indemnification Agreement,
dated November 13, 2006,
by and between Collegiate
Pacific Inc. and Terrence
M. Babilla.
    
    Exhibit 10.3 to the
Registrants Current
Report on Form 8-K filed
on November 13, 2006.10.4
    
    2007 Stock Option Plan and
form of Nonqualified and
Incentive Stock Option
Agreements.
    
    Exhibit 10.1 to the
Registrants Current
Report on Form 8-K filed
on December 18, 2006.10.5
    
    Form of Amended and
Restated Change in Control
Agreement.*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 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 Adam
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 - 28 -




---



##### Table of Contents



SIGNATURES
  COLLEGIATE PACIFIC INC.Dated: February 14, 2007
    /s/ Adam BlumenfeldAdam Blumenfeld, Chief Executive Officer/s/ William R. EstillWilliam R. Estill, Chief Financial Officer(Principal Financial and Accounting Officer) - 29 -




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description10.1
    
    Letter Agreement, dated
November 10, 2006, by and
between Collegiate Pacific
Inc. and Merrill Lynch
Business Financial Services
Inc.
    
    Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed on November
13, 2006.10.2
    
    Amended and Restated Credit
Agreement, dated November 13,
2006, by and among Collegiate
Pacific 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 10.2 to the
Registrants Current Report
on Form 8-K filed on November
13, 2006.10.3
    
    Indemnification Agreement,
dated November 13, 2006, by
and between Collegiate
Pacific Inc. and Terrence M.
Babilla.
    
    Exhibit 10.3 to the
Registrants Current Report
on Form 8-K filed on November
13, 2006.10.4
    
    2007 Stock Option Plan and
form of Nonqualified and
Incentive Stock Option
Agreements.
    
    Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed on December
18, 2006.10.5
    
    Form of Amended and Restated
Change in Control Agreement.*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 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 Adam
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