Collegiate Pacific (AMEX:BOO): -- Fourth Quarter EPS Results of
($.09) in line with recent guidance -- Fiscal 2006 Year-End results
of $.18 in line with recent guidance -- Company sees solid start to
Fiscal 2007 Q1 across Operating Platform A conference call to
discuss these results will be held today, September 21, 2006, at
3:15 p.m. CDT /4:15 p.m. EDT and may be accessed by dialing
888-396-2369 and entering passcode 43485605. A replay of the call
will be available until September 29, 2006 by dialing 888-286-8010
and entering passcode 46605247. Collegiate Pacific Inc. (AMEX:BOO)
today announced results for its full fiscal year and fiscal quarter
ending June 30, 2006, and also announced the execution of a
definitive merger agreement to acquire the remaining shares of
Sport Supply Group Inc. it does not currently own for approximately
$24 million in cash, or $8.80 per share, for each issued and
outstanding share of Sport Supply Group, Inc.'s common stock,
except for shares owned by Collegiate Pacific, or any of its
subsidiaries. The merger agreement has been approved by the board
of directors of SSPY, upon the recommendation of a special
committee of the SSPY board of directors. The special committee
received a fairness opinion that the transaction is fair to the
minority SSPY stockholders from a financial point of view. The
merger agreement is subject to, among other things, the approval of
the stockholders of SSPY and the obtaining of financing. Collegiate
Pacific, which controls 73.2% of SSPY's voting power, has agreed to
vote its shares of SSPY in favor of the merger at the SSPY
stockholders meeting. Collegiate expects to finance the merger
through borrowings under a new credit facility with Merrill Lynch
Business Financial Services. Commenting on the fourth fiscal
quarter and fiscal year-end financial results, Michael J.
Blumenfeld, Chairman and CEO of Collegiate Pacific, stated: "The
fourth quarter and year end periods finished in line with the
guidance we provided on August 9, 2006. Fiscal 2006 net sales and
gross profit came in generally at or near original plan, with
selling, general and administrative expenses finishing higher due
to a number of both one-time expenses and platform building related
expenses throughout the fiscal year. Despite a delay in the
seasonal shipment of football uniforms and installation orders
during the fourth quarter of fiscal 2006 and the expenses referred
to above, fiscal 2006 still produced increased operating profits
over the year ago period -- to $8.3 million -- on net sales growth
of 111% to $224 million and gross profit margins of 33.5%, which
met the high-end of internal projections. "We have forecasted
fiscal 2007 to produce 10%+ top line organic growth with gross
profit margins increasing to approximately 35% producing an
operating profit of approximately $17 million. The Company has
forecasted fiscal 2007 earnings per share of $0.52 -- $0.64 based
upon the current ownership of 73.2% of SSPY. The hard work and
internal processes put in place during fiscal 2006 should serve as
a sound platform for earnings leverage and delivery in the coming
years." Commenting on the pending SSPY transaction, Mr. Blumenfeld
stated: "I am very pleased to announce the execution of a
definitive merger agreement to acquire the remaining shares of SSPY
we do not currently own for $8.80 per share or approximately $24
million. This is an all cash transaction. Using cash versus stock
to complete this acquisition is a benefit we believe to all parties
involved as it speeds the time to closure -- allowing for potential
synergy work once the companies are fully under common ownership to
begin during the slower winter months -- while also removing
potential overhang and dilution from newly issued shares had they
been issued at these levels. Subject to the satisfaction of all
conditions, we anticipate closure of the transaction within the
next 60 to 90 days. Completion of this transaction allows, we
believe, for the full potential between Collegiate Pacific and
Sport Supply Group to be realized. We anticipate -- with the hard
work and dedication of both Sport Supply Group and Collegiate
Pacific employees -- the transaction will offer significant
accretion over the next 12-36 months as we work to accelerate top
line growth, combine our manufacturing and distribution assets, and
aggressively attack unnecessary costs throughout the system. "Once
the transaction is complete, and in keeping with my comments during
the past year, I do intend to retire sometime toward the end of the
calendar year. I will likely remain involved with the Company in a
consulting capacity subject to the requests of the board of
directors. Managerially, it is likely that current Collegiate
Pacific President, Adam Blumenfeld, will occupy the position of
Chief Executive Officer and current Sport Supply Group President
Terry Babilla will occupy the position of President and COO. This
too is subject to approval by Collegiate Pacific's board of
directors and we will formally announce our succession plans as
soon as those have become definitive. With the consummation of this
transaction, I believe we have assembled the strongest managerial
team and family of operating assets in team sports history to take
this business forward." Commenting on the Year End and Go-Forward
plans, Collegiate Pacific President Adam Blumenfeld stated: "Fiscal
2006 allowed for a number of essential building blocks to be put in
place for future periods. For example, enhanced inventory
management and financial reporting initiatives have been put into
place in our recently acquired DOKS subsidiaries (Dixie, OTS,
Kesslers and Salkeld). Substantial improvement in both executive
and mid-level managerial talent will allow us, we believe, greater
visibility and potential for execution moving ahead. "With the
first two months of fiscal 2007 behind us, preliminary unaudited
results suggest a solid start to the new fiscal year across the
operating platform, with August producing the highest single month
of net sales in corporate history. The first fiscal quarter is
traditionally the Company's largest quarter of the fiscal year and
sets the pace we hope for the seasons ahead. We are excited and
prepared to move forward with a number of initiatives to maximize
the performance of both Collegiate Pacific and Sport Supply Group
upon closure of the pending transaction. We look forward to working
with the many talented employees of Sport Supply Group and
welcoming them fully into the Collegiate Pacific family." -0- *T
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS June 30, --------------------------- 2006 2005 -------------
------------- (In thousands, except share and per share amounts)
ASSETS CURRENT ASSETS: Cash and cash equivalents $4,079 $40,326
Accounts receivable, net of allowance for doubtful accounts of
$1,496 and $1,042, respectively 31,004 18,132 Inventories 37,185
17,479 Current portion of deferred income taxes 2,625 775 Prepaid
income taxes 1,607 645 Prepaid expenses and other current assets
2,199 601 ------------- ------------- Total current assets 78,699
77,958 PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$2,755 and $1,294, respectively 10,087 1,501 DEFERRED DEBT ISSUANCE
COSTS, net of accumulated amortization of $1,076 and $393,
respectively 2,782 3,017 INTANGIBLE ASSETS, net of accumulated
amortization of $2,188 and $853, respectively 9,014 1,863 GOODWILL
40,280 23,848 DEFERRED INCOME TAXES 3,156 -- OTHER ASSETS, net 417
409 ------------- ------------- Total assets $144,435 $108,596
============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable $14,802 $9,782 Accrued
liabilities 5,896 1,725 Dividends payable 256 255 Accrued interest
329 250 Current portion of long-term debt 2,210 330 Deferred tax
liability 15 -- ------------ ------------- Total current
liabilities 23,508 12,342 DEFERRED TAX LIABILITY 3,259 700 NOTES
PAYABLE AND OTHER LONG-TERM DEBT 62,284 50,448 COMMITMENTS AND
CONTINGENCIES MINORITY INTEREST IN SUBSIDIARY 8,150 --
STOCKHOLDERS' 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; 10,315,191 and 10,205,780
shares issued and 10,229,165 and 10,119,754 shares outstanding,
respectively 103 102 Additional paid-in capital 43,162 41,911
Retained earnings 4,626 3,750 Treasury stock at cost, 86,026 shares
(657) (657) ------------ ------------- Total stockholders' equity
47,234 45,106 ------------ ------------- Total liabilities and
stockholders' equity $144,435 $108,596 ============ =============
COLLEGIATE PACIFIC INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
INCOME For the fiscal years ended June 30,
------------------------------------- 2006 2005 2004 ------------
----------- ------------ (In thousands, except per share data) Net
sales $224,238 $106,339 $39,562 Cost of sales 149,159 70,385 25,606
------------ ----------- ------------ Gross profit 75,079 35,954
13,956 Selling, general and administrative expenses 66,767 28,651
11,109 Operating profit 8,312 7,303 2,847 ------------ -----------
------------ Other income (expense): Interest income 117 581 22
Interest expense (4,545) (2,160) (52) Other income 223 174 18
------------ ----------- ------------ Total other expense (4,205)
(1,405) (12) ------------ ----------- ------------ Income before
minority interest in income of consolidated subsidiary and income
taxes 4,107 5,898 2,835 Income tax provision 1,603 2,297 1,162
Minority interest in income of consolidated subsidiary, net of tax
608 -- -- ------------ ----------- ------------ Net income $1,896
$3,601 $1,673 ============ =========== ============ Weighted
average number of shares outstanding: Basic 10,182,428 10,031,314
6,324,950 ============ =========== ============ Diluted 10,399,130
10,279,185 7,571,910 ============ =========== ============ Net
income per share of common stock - basic $0.19 $0.36 $0.26
============ =========== ============ Net income per share of
common stock - diluted $0.18 $0.35 $0.22 ============ ===========
============ Dividends declared per share of common stock $0.10
$0.10 $0.10 ============ =========== ============ *T This press
release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include statements relating to
Collegiate Pacific's anticipated financial performance, business
prospects, new developments and similar matters, and/or statements
preceded by, followed by or that include the words "believes,"
"could," "expects," "anticipates," "estimates," "intends," "plans,"
or similar expressions. These forward-looking statements are based
on management's current expectations and assumptions, which are
inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results may
differ materially from those suggested by the forward-looking
statements due to a variety of factors, including changes in
business, political, and economic conditions due to the threat of
future terrorist activity or otherwise, actions and initiatives by
current and potential competitors, the satisfaction of the closing
conditions to the merger with Sport Supply Group including the
receipt of financing on terms acceptable to Collegiate Pacific, and
certain other additional factors described in Collegiate Pacific's
filings with the Securities and Exchange Commission. Other unknown
or unpredictable factors also could have material adverse effects
on Collegiate Pacific's future results, performance or
achievements. In light of these risks, uncertainties, assumptions
and factors, the forward-looking events discussed in this press
release may not occur. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date stated, or if no date is stated, as of the date of this
press release. Collegiate Pacific is not under any obligation and
does not intend to make publicly available any update or other
revisions to any of the forward-looking statements contained in
this press release to reflect circumstances existing after the date
of this press release or to reflect the occurrence of future events
even if experience or future events make it clear that any expected
results expressed or implied by those forward-looking statements
will not be realized.
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