8-K 1 ssg8k111803.txt CURRENT REPORT NOVEMBER 18, 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ____________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 3, 2003 (November 18, 2003) Sport Supply Group, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 001-10704 75-2241783 --------------- ----------- ------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 1901 Diplomat Drive Farmers Branch, Texas 75234 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (972) 484-9484 Item 2. Acquisition or Disposition of Assets. Effective November 18, 2003, Sport Supply Group, Inc., a Delaware corporation (the "Company"), sold all of the issued and outstanding capital stock of Athletic Training Equipment Company, Inc., a Delaware corporation ("ATEC") and wholly-owned subsidiary of the Company (the "ATEC Stock"), to Amer Sports Company, a Delaware corporation (the "Purchaser"), for a purchase price of $10,500,000. The purchase price was paid in full in cash at closing and was determined by arm's length negotiations between representatives of the Company and representatives of the Purchaser. The sale of the ATEC Stock was consummated pursuant to a Stock Purchase Agreement dated November 18, 2003, between the Company and the Purchaser (the "Purchase Agreement"). Wilson Sporting Goods Co., a Delaware corporation and wholly-owned subsidiary of the Purchaser ("Wilson"), is a vendor to the Company. The Company's purchases from Wilson in the Company's most recent fiscal year, and the Company's expected purchases from Wilson in its current fiscal year, did not exceed and are not expected to exceed one percent (1%) of the Company's total cost of goods sold for such periods. The Company's relationship with Wilson is an arm's length relationship. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Business Acquired. Not applicable. (b) Pro Forma Financial Information. The following unaudited pro forma financial statements are based on our historical consolidated financial statements and have been adjusted to give effect to (i) the sale of ATEC Stock, which occurred on November 18, 2003 and (ii) the disposal of our Team Dealer locations in Enid, Oklahoma and Wichita, Kansas, which occurred on October 31, 2003 and November 7, 2003 respectively. The unaudited pro forma Consolidated Balance Sheet at September 26, 2003 has been prepared to reflect the sale of the ATEC Stock and the disposal of our Team Dealer locations in Wichita, Kansas and Enid, Oklahoma, as if these transactions had occurred on September 26, 2003. The unaudited pro forma Consolidated Statement of Operations for the fiscal year ended March 28, 2003 and the six month period ended September 26, 2003 have been prepared to present the results of our continuing operations as if the disposals had occurred at the beginning of each period presented. The disposal of our Team Dealer located in Little Rock, Arkansas occurred on July 15, 2003 and is already reflected in the Historical unaudited pro forma Statement of Operations as of September 26, 2003. The following consolidated pro forma financial statements should be read in conjunction with our consolidated financial statements and notes thereto that are incorporated by reference in our Annual Report on Form 10-K for the year ended March 28, 2003 and our consolidated financial statements and notes thereto that are incorporated by reference in our Quarterly Report on Form 10-Q for the six months ended September 26, 2003. In our opinion, all significant adjustments necessary to reflect the dispositions have been made. SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA BALANCE SHEET September 26, 2003 (Unaudited) ATEC TDD Pro Forma Historical Disposition Disposition Consolidated (A) (B) (C) ------------------------------------------------------------- CURRENT ASSETS : Cash and equivalents $ 787,352 $ - $ - $ 787,352 Accounts receivable: Trade, net 15,147,330 (1,771,809) (1,012,326) 12,363,195 Other 349,333 (336) - 348,997 Inventories, net 18,325,469 (2,894,778) (1,781,036) 13,649,655 Other current assets 522,982 (74,649) (4,583) 443,750 Deferred tax assets 1,525,472 - - 1,525,472 Net assets of discontinued operations 253,525 - 1,215,036 1,468,561 ------------------------------------------------------------- Total current assets 36,911,463 (4,741,572) (1,582,909) 30,586,982 ------------------------------------------------------------- DEFERRED CATALOG EXPENSES 1,589,379 (49,325) - 1,540,054 Net PP&E 7,764,132 (206,116) (117,513) 7,440,503 DEFERRED TAX ASSETS 3,974,753 (2,351,678) - 1,623,075 TRADEMARKS, less accumulated amortization 2,872,536 - - 2,872,536 OTHER ASSETS, less accumulated amortization 512,480 - (1,964) 510,516 ------------------------------------------------------------- $ 53,624,743 $ (7,348,691) $ (1,702,386) $ 44,573,666 ============================================================= CURRENT LIABILITIES : Accounts payable $ 7,760,037 $ (644,354) $ (550,256) $ 6,565,427 Other accrued liabilities 4,393,145 (167,653) (442,198) 3,783,294 Notes payable and capital lease obligations, current 72,287 (14,729) - 57,558 ------------------------------------------------------------- Total current liabilities 12,225,469 (826,736) (992,454) 10,406,279 ------------------------------------------------------------- NOTES PAYABLE 13,528,961 (10,526,163) - 3,002,798 STOCKHOLDERS' EQUITY : Preferred stock, par value $0.01 - - - - Common stock, par value $0.01 93,624 - - 93,624 Additional paid-in capital 48,101,331 - - 48,101,331 Accumulated deficit (16,523,360 4,004,208 (709,932) (13,229,084) Treasury stock, at cost, 445,153 shares (3,801,282) - - (3,801,282) ------------------------------------------------------------- 27,870,313 4,004,208 (709,932) 31,164,589 ------------------------------------------------------------- $ 53,624,743 $ (7,348,691) $ (1,702,386) $ 44,573,666 ============================================================= (A) Consolidated balance sheet as reported in our Form 10-Q for the quarter ended September 26, 2003. (B) Reflects proceeds of approximately $10.5 million less closing costs from the November 2003 sale of ATEC stock. The proceeds are reflected as a reduction of notes payable. The resulting gain of approximately $4.0 million, after tax, is reflected as a reduction of accumulated deficit. The taxes provided for in this gain are reflected as a reduction to deferred tax assets. (C) Reflects removal of disposition assets and other miscellaneous accounts for the November 2003 disposal of Team Dealer operations in Wichita, Kansas and Enid, Oklahoma.

SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS For the Six Months Ended September 26, 2003 (UNAUDITED) ATEC Team Dealer Pro Forma Pro Forma Consolidated Historical Adjustment Adjustment Pro Forma (A) (B) (C) (D) ------------------------------------------------------------- Net revenues $ 51,687,793 $ 4,493,791 $ 2,455,478 $ 44,738,524 Cost of sales 37,044,925 2,848,291 1,693,139 32,503,495 ------------------------------------------------------------- Gross profit 14,642,868 1,645,500 762,339 12,235,029 Selling, general & administrative expenses 14,171,971 1,235,355 819,139 12,117,477 ------------------------------------------------------------- Operating income (loss) 470,897 410,145 (56,800) 117,552 Interest expense (299,518) (212,477) - (87,041) Other income (expense), net 11,741 105 9,320 2,316 ------------------------------------------------------------- Income (loss) from continuing operations before income taxes 183,120 197,773 (47,480) 32,827 (Provision for) benefit of income taxes for continuing operations (68,909) (74,363) 17,582 (12,399) ------------------------------------------------------------- Income (loss) from continuing operations $ 114,211 $ 123,410 $ (29,628) $ 20,428 ============================================================= Income (loss) from continuing operations Basic $ 0.01 $ 0.01 $ 0.00 $ 0.01 Diluted $ 0.01 $ 0.01 $ 0.00 $ 0.01 Weighted average common shares outstanding Basic 8,917,244 8,917,244 8,917,244 8,917,244 Diluted 8,917,244 8,917,244 8,917,244 8,917,244 (A) Consolidated Statement of Operations as reported in our Form 10-Q for the six months ended September 26, 2003. (B) Reflects the unaudited Statement of Operations for ATEC for the six months ended September 26, 2003, and includes a pro forma adjustment for a reduction in interest expense as if the sale had occurred at the beginning of the six month period. Interest was computed based on interest rates under our Loan Agreement in effect at the time of the sale. (C) Reflects the unaudited Statement of Operations for Enid, Oklahoma and Wichita, Kansas for the six months ended September 26, 2003. (D) Consolidated Pro Forma is equal to the Historical less the ATEC Pro Forma Adjustments and less the TDD Pro Forma Adjustment.

SPORT SUPPLY GROUP, INC. AND SUBSIDIARIES CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS For the Twelve Months Ended March 28, 2003 (UNAUDITED) ATEC Team Dealer Pro Forma Pro Forma Consolidated Historical Adjustment Adjustment Pro Forma (A) (B) (C) (D) ------------------------------------------------------------- Net revenues $ 102,617,413 $ 10,864,873 $ 7,279,642 $ 84,472,898 Cost of sales 72,588,247 6,757,437 5,119,641 60,711,169 ------------------------------------------------------------- Gross profit 30,029,166 4,107,436 2,160,001 23,761,729 Selling, general & administrative expenses 30,972,496 2,470,470 2,952,507 25,549,519 ------------------------------------------------------------- Operating income (loss) (943,330) 1,636,966 (792,506) (1,787,790) Interest expense (629,026) (426,758) - (202,268) Other income (expense), net 11,398 213 (2,822) 14,007 ------------------------------------------------------------- Income (loss) from continuing operations before income taxes (1,560,958) 1,210,421 (795,328) (1,976,051) (Provision for) benefit of income taxes for continuing operations - - - - ------------------------------------------------------------- Income (loss) from continuing operations (1,560,958) $ 1,210,421 $ (795,328) $ (1,976,051) ============================================================= Income (loss) from continuing operations Basic $ (0.18) $ 0.14 $ (0.09) $ (0.22) Diluted $ (0.18) $ 0.14 $ (0.09) $ (0.22) Weighted average common shares outstanding Basic 8,917,244 8,917,244 8,917,244 8,917,244 Diluted 8,917,244 8,917,244 8,917,244 8,917,244 (A) Consolidated Statement of Operations as reported in our Form 10-K for the year ended March 28, 2003. (B) Reflects unaudited Statement of Operations for ATEC for the year ended March 28, 2003 and includes a pro forma adjustment for a reduction in interest expense as if the sale would have occurred at the beginning of the twelve month period. Interest was computed based on interest rates under our Loan Agreement in effect at the time of the sale. (C) Reflects the unaudited Statement of Operations for Enid, Oklahoma, Wichita, Kansas and Little Rock, Arkansas for the year ended March 28, 2003. (D) Consolidated Pro Forma is equal to the Historical less the ATEC Pro Forma Adjustments and less the TDD Pro Forma Adjustment.

(c) Exhibits. Exhibit Number Description ------ ----------- *2.1 Stock Purchase Agreement, dated as of November 18, 2003, between the Company and the Purchaser. * The schedules to the Purchase Agreement were omitted in reliance upon Item 601(b)(2) of Regulation S-K. A description of each omitted schedule is included with the Purchase Agreement. The Company agrees to furnish a copy of any omitted schedule to the Securities and Exchange Commission upon request. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: December 3, 2003 SPORT SUPPLY GROUP, INC. By: /s/ Robert K. Mitchell ----------------------- Robert K. Mitchell Chief Financial Officer INDEX TO EXHIBITS ----------------- Exhibit Number Description ------ ----------- *2.1 Stock Purchase Agreement, dated as of November 18, 2003, between the Company and the Purchaser. * The schedules to the Purchase Agreement were omitted in reliance upon Item 601(b)(2) of Regulation S-K. A description of each omitted schedule is included with the Purchase Agreement. The Company agrees to furnish a copy of any omitted schedule to the Securities and Exchange Commission upon request.

SPORT SUPPLY GROUP INC 8-K