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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2003 or
[ ] 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. 015767
THE SPORTSMAN'S GUIDE, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1293081
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
411 FARWELL AVE., SO. ST. PAUL, MINNESOTA 55075
(Address of principal executive offices)
(651) 451-3030
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [ X ]
As of August 8, 2003, there were 4,829,008 shares of the registrant's Common
Stock outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SPORTSMAN'S GUIDE, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands of dollars)
ASSETS June 30, December 31,
2003 2002
---------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 11,497 $ 17,152
Accounts receivable - net 1,682 3,014
Inventory 23,946 20,593
Promotional material 1,889 2,540
Prepaid expenses and other 2,034 1,133
Deferred income taxes 2,525 2,409
---------- ----------
Total current assets 43,573 46,841
PROPERTY AND EQUIPMENT - NET 2,440 2,672
---------- ----------
Total assets $ 46,013 $ 49,513
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 13,370 $ 16,230
Accrued expenses 3,172 3,896
Income taxes payable 691 1,882
Deferred revenue 3,729 3,706
Returns reserve 1,528 1,738
Customer deposits and other liabilities 1,485 1,321
---------- ----------
Total current liabilities 23,975 28,773
LONG-TERM LIABILITIES
Deferred income taxes 48 119
Other 170 --
---------- ----------
Total long-term liabilities 218 119
---------- ----------
Total liabilities 24,193 28,892
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Common Stock-$.01 par value; 36,800,000 shares authorized;
4,723,860 shares issued and outstanding at June 30, 2003
and 4,753,810 shares issued and outstanding at December 31, 2002 47 47
Additional paid-in capital 11,184 11,588
Retained earnings 10,589 8,986
---------- ----------
Total shareholders' equity 21,820 20,621
---------- ----------
Total liabilities and shareholders' equity $ 46,013 $ 49,513
========== ==========
See accompanying notes to consolidated financial statements.
2
THE SPORTSMAN'S GUIDE, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
For the Three Months and Six Months Ended
June 30, 2003 and 2002
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Sales $ 38,041 $ 34,791 $ 81,790 $ 76,256
Cost of sales 26,097 24,240 55,649 52,402
---------- ---------- ---------- ----------
Gross profit 11,944 10,551 26,141 23,854
Selling, general and administrative expenses 10,902 10,057 23,632 22,144
---------- ---------- ---------- ----------
Earnings from operations 1,042 494 2,509 1,710
Miscellaneous income (expense), net (33) 4 (4) 33
---------- ---------- ---------- ----------
Earnings before income taxes 1,009 498 2,505 1,743
Income tax expense 363 181 902 642
---------- ---------- ---------- ----------
Net earnings $ 646 $ 317 $ 1,603 $ 1,101
========== ========== ========== ==========
Net earnings per share:
Basic $ .14 $ .07 $ .34 $ .23
========== ========== ========== ==========
Diluted $ .12 $ .06 $ .31 $ .22
========== ========== ========== ==========
Weighted average common and common
equivalent shares outstanding:
Basic 4,748 4,753 4,753 4,751
========== ========== ========== ==========
Diluted 5,249 5,047 5,184 4,966
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
3
THE SPORTSMAN'S GUIDE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended
June 30, 2003 and 2002
(In thousands of dollars)
2003 2002
---------- ----------
Cash flows from operating activities:
Net earnings $ 1,603 $ 1,101
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization 662 759
Deferred income taxes (187) (271)
Other 16 9
Changes in operating assets and liabilities:
Accounts receivable 1,332 1,146
Inventory (3,353) (652)
Promotional material 651 769
Prepaid expenses (905) (443)
Income taxes (1,191) (1,838)
Accounts payable (2,860) (4,457)
Accrued expenses (724) (783)
Customer deposits and other liabilities 152 25
---------- ----------
Cash flows used in operating activities (4,804) (4,635)
Cash flows from investing activities:
Purchases of property and equipment (461) (280)
Other 14 --
---------- ----------
Cash flows used in investing activities (447) (280)
Cash flows from financing activities:
Proceeds from exercise of stock options 58 23
Proceeds from payment of stock subscription receivable -- 238
Repurchase of common stock (462) --
---------- ----------
Cash flows provided by (used in ) financing activities (404) 261
---------- ----------
Decrease in cash and cash equivalents (5,655) (4,654)
Cash and cash equivalents at beginning of the period 17,152 8,592
---------- ----------
Cash and cash equivalents at end of the period $ 11,497 $ 3,938
========== ==========
Supplemental disclosure of cash flow information
Cash paid during the periods for:
Income taxes $ 2,280 $ 2,751
See accompanying notes to consolidated financial statements.
4
THE SPORTSMAN'S GUIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Basis of Presentation
The accompanying financial statements are unaudited and reflect all
adjustments which are normal and recurring in nature, and which, in the
opinion of management, are necessary for a fair presentation.
Reclassifications have been made to prior year financial information
wherever necessary to conform to the current year presentation. Results
of operations for the interim periods are not necessarily indicative of
full-year results.
In preparing the Company's consolidated financial statements,
management is required to make estimates and assumptions that affect
reported amounts of assets and liabilities and related revenues and
expenses. Actual results could differ from the estimates used by
management.
The accompanying consolidated financial statements include the accounts
of the company and its wholly-owned subsidiary. All significant
intercompany balances and transactions have been eliminated in
consolidation.
The Company's fiscal quarter ends on the Sunday nearest June 30 for
2003 and 2002, but for clarity of presentation, all periods are
described as if the three and six month periods end June 30. Fiscal
second quarters 2003 and 2002 each consisted of 13 weeks.
Amounts billed to customers for shipping and handling are recorded in
revenues at the time of shipment. Sales include shipping and handling
revenues of $5.0 million and $4.6 million for the three months ended
June 30, 2003 and 2002 and $10.8 million and $10.3 million for the six
months ended June 30, 2003 and 2002.
Note 2: Stock Options
Stock options issued to employees are accounted for under the intrinsic
value method. No stock-based compensation cost is reflected in the net
earnings, as all options granted had an exercise price equal to the
market value of the underlying common stock on the date of grant. The
following table illustrates the effect on net earnings and earnings per
share as if the Company had applied the fair value method of accounting
for stock options (in thousands, except per share data):
Three months ended June 30, Six months ended June 30,
------------------------------ ------------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net earnings as reported $ 646 $ 317 $ 1,603 $ 1,101
Deduct: Total stock-based employee compensation
expense under the fair value method for all awards,
net of related tax effects 116 37 233 96
---------- ---------- ---------- ----------
Pro-forma net earnings $ 530 $ 280 $ 1,370 $ 1,005
Earnings Per Share:
Basic - as reported $ .14 $ .07 $ .34 $ .23
Basic - pro-forma .12 .06 .30 .22
Diluted - as reported $ .12 $ .06 $ .31 $ .22
Diluted - pro-forma .10 .06 .27 .21
5
Note 3: Net Earnings Per Share
The Company's basic net earnings per share amounts have been computed
by dividing net earnings by the weighted average number of outstanding
common shares. Diluted net earnings per share amounts have been
computed by dividing net earnings by the weighted average number of
outstanding common shares and common share equivalents relating to the
stock options and warrants, when dilutive.
For the three months and six months ended June 30, 2003, 500,466 and
431,075 common share equivalents were included in the computation of
diluted net earnings per share.
For the three months and six months ended June 30, 2002, 294,144 and
215,156 common share equivalents were included in the computation of
diluted net earnings per share.
All outstanding options during the three months ended June 30, 2003
were included in the computation of diluted earnings per share because
the average market price of the common shares during the period
exceeded the exercise price of the options.
Options and warrants to purchase 114,950 shares of common stock with a
weighted average exercise price of $8.48 were outstanding during the
three months ended June 30, 2002, but were not included in the
computation of diluted earnings per share because their exercise price
exceeded the average market price of the common shares during the
period.
Options and warrants to purchase 7,475 and 282,863 shares of common
stock with a weighted average exercise price of $8.70 and $7.22 were
outstanding during the six months ended June 30, 2003 and 2002, but
were not included in the computation of diluted earnings per share
because their exercise price exceeded the average market price of the
common shares during the period.
Note 4: Repurchase of Common Stock
On May 5, 2003, the Company announced that its board of directors
authorized a plan to repurchase up to ten percent of its outstanding
common stock in the open market or in privately negotiated transactions
over the next 12 months. Under this plan 46,650 shares of common stock
at a total cost of $462,000 were repurchased during the three months
ended June 30, 2003.
Note 5: Commitments
During July 2003, the Company executed a new lease for warehouse
storage. The facility contains approximately 68,000 square feet of
warehouse space, located in Inver Grove Heights, Minnesota. The lease
term is for 41 months commencing in August 2003. Minimum annual lease
payments are approximately $8,785, $210,828, $210,828, $210,828, and
$17,569 for 2003, 2004, 2005, 2006, and 2007. This lease replaces the
existing lease of approximately 176,000 square feet of warehouse space
in Mendota Heights, Minnesota which will expire in the third quarter
2003.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We are a leading marketer of value priced outdoor gear and general merchandise,
with a special emphasis on outdoor clothing, equipment and footwear. We market
and sell our merchandise through main, specialty and Buyer's Club Advantage(TM)
catalogs and two e-commerce Web sites. Our catalogs as well as our Web sites
offer high quality products at low prices. Our catalogs are advertised as The
"Fun-to-Read" Catalog(R) and our primary Web site is advertised as the
"Fun-to-Browse" Website(R). Our Web sites include www.sportsmansguide.com, our
online retail store modeled on our print catalogs and www.bargainoutfitters.com,
our online liquidation outlet.
Our business was started in 1970 by Gary Olen, our Chairman. Over time, our
product offerings and marketing efforts have broadened from the deer hunter to
include those interested in pursuing and living the outdoor lifestyle in general
and the value-oriented outdoorsman in particular. In 1992, we began our value
pricing strategy of offering outdoor equipment and supplies at discount prices,
later adding government surplus, manufacturers' close-outs and other merchandise
lines. In 1994, we began to publish specialty catalogs which allowed us to
utilize a customized marketing plan to individual customer groups.
Sales generated through the Internet have grown rapidly over the last several
years. We launched our online retail store in April 1998 and began posting our
catalogs and full product offerings on the site in February 1999. Our e-commerce
offerings generated over $53.0 million in sales in 2002 compared to $1.3 million
in 1998. Product sales on the sites accounted for approximately 35% of our sales
in the first half of 2003 compared to less than 1% for all of 1998.
In the fall of 2000, we began to aggressively promote and sell the Buyer's Club
membership program. In addition, unique Buyer's Club Advantage(TM) catalogs were
developed and promoted exclusively to members allowing us to maximize sales and
profitability from our best customers.
We believe that our value pricing, specialty catalog titles, the Internet and
Buyer's Club memberships have been important to our growth in sales and
profitability. Our sales have increased from $43 million in 1992 to
approximately $180 million in 2002.
FISCAL YEAR
Our fiscal quarter ends on the Sunday nearest June 30 for 2003 and 2002, but for
clarity of presentation, all periods are described as if the quarter end is June
30. Fiscal second quarter 2003 and 2002 each consisted of 13 weeks.
CRITICAL ACCOUNTING POLICIES
Sales are recorded at the time of shipment along with a provision for
anticipated merchandise returns, net of exchanges, which is recorded based upon
historical experience and current expectations. Amounts billed to customers for
shipping and handling are recorded in sales at the time of shipment.
Customers can purchase one year memberships in our Buyer's Club for a $29.99
annual fee. We also offer two year memberships for $49.99. Club members receive
merchandise discounts of 10% on regularly priced items and 5% on ammunition.
Membership fees are deferred and recognized in income as the individual members
place orders and receive discounts. Any remaining deferred membership fees are
recognized in income after the expiration of the membership.
The cost of producing and mailing catalogs is deferred and expensed over the
estimated useful lives of the catalogs. Catalog production and mailing costs are
amortized over periods ranging from four to six months from the in-home date of
the catalog with the majority of the costs amortized within the first month of
the catalog's life cycle. We estimate the in-home date to be one week from the
known mailing date of the catalog. The ongoing cost of developing and
maintaining our customer list is charged to operations as incurred. All other
advertising costs are expensed as incurred.
Stock options issued to employees are accounted for under the intrinsic value
method. Pro-forma disclosures as if the fair value method were used are included
in Note 2 to the Consolidated Financial Statements.
7
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information from our
Consolidated Statements of Earnings expressed as a percentage of sales:
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 68.6 69.7 68.0 68.7
---------- ---------- ---------- ----------
Gross profit 31.4 30.3 32.0 31.3
Selling, general and administrative expenses 28.7 28.9 28.9 29.0
---------- ---------- ---------- ----------
Earnings from operations 2.7 1.4 3.1 2.3
Miscellaneous income (expense) -- -- -- --
---------- ---------- ---------- ----------
Earnings before income taxes 2.7 1.4 3.1 2.3
Income tax expense 1.0 0.5 1.1 0.9
---------- ---------- ---------- ----------
Net earnings 1.7% 0.9% 2.0% 1.4%
========== ========== ========== ==========
Three months and six months ended June 30, 2003 compared to three months and six
months ended June 30, 2002
SALES. Sales for the three months and six months ended June 30, 2003 of $38.0
million and $81.8 million were $3.2 million or 9.3% and $5.5 million or 7.3%
higher than sales of $34.8 million and $76.3 million during the same periods
last year. The increase in sales for the second quarter and first half of 2003
was primarily due to higher sales generated from unique product offerings on the
Internet. For the second quarter of 2003, sales of catalog related products
increased approximately 5% over the prior year same period, largely driven by an
increase in our catalog circulation. For the first half of 2003, sales of
catalog related products increased approximately 2% in spite of a reduction in
our catalog circulation. As of the end of the second quarter 2003, the Buyer's
Club membership had increased to approximately 335,000, up 8% over the 310,000
reported at December 31, 2002 and up 22% over the membership count one year ago.
Sales generated through the Internet for the second quarter and first half of
2003 were approximately 36.5% and 35% of total sales, compared to 30% and 28%,
respectively, during the same periods last year. We define sales generated
through the Internet as sales that are derived from our web sites, catalog
orders processed online and online offers placed by telephone. Internet related
sales continue to grow, period over period, as we continue to make enhancements
to our Web sites and implement and improve upon various marketing and
merchandising programs.
Gross returns and allowances for the three months and six months ended June 30,
2003 were $2.6 million or 6.3% of gross sales and $5.9 million or 6.7% of gross
sales compared to $2.5 million or 6.8% of gross sales and $5.9 million or 7.2%
of gross sales during the same periods last year. The decrease in gross returns
and allowances, as a percentage of sales, for the three months and six months
ended June 30, 2003 was primarily due to favorable trends in actual customer
return activity.
GROSS PROFIT. Gross profit for the three months and six months ended June 30,
2003 was $11.9 million or 31.4% of sales and $26.1 million or 32.0% of sales
compared to $10.6 million or 30.3% of sales and $23.9 million or 31.3% of sales
during the same periods last year. The increase in gross profit percentage for
the second quarter and the first half of 2003 was primarily from an increase in
product margins offset somewhat by higher shipping costs. In the second quarter
and the first half of 2003, product margin increased particularly in the
camping, optics, automotive and hardware product categories aided by an increase
in sales of higher margin, direct import products in these categories and an
overall decline in the sale of lower margin, clearance items. The higher
shipping costs incurred in the second quarter and the first half of 2003 was
largely due to an increase in the average weight of our outgoing shipment to the
customer as sales of our hardline product categories increased period over
period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months and six months ended June 30, 2003
were $10.9 million or 28.7% of sales and $23.6 million or 28.9% of sales
compared to $10.0 million or 28.9% of sales and $22.1 million or 29.0% of sales
for the same periods last year. For the three months and six months ended June
30, 2003, selling, general and administrative expenses, as a percentage of
sales, were lower compared to
8
the same periods a year ago with the favorable impact of higher Internet related
sales and improved catalog productivity being offset for the most part by higher
general and administrative expenses. The dollar increase in selling, general and
administrative expenses for the three months and six months ended June 30, 2003
was primarily due to increased facility costs as a result of leasing additional
temporary warehouse space, additional costs incurred in moving inventory to a
new smaller leased warehouse and increased costs related to medical claims,
workers compensation and other business insurance.
Total catalog circulation during the second quarter and first half of 2003 was
9.2 million and 20.4 million catalogs compared to 8.8 million and 20.6 million
catalogs during the same periods last year. We mailed seven catalog editions
consisting of three main catalogs, three Buyer's Club Advantage(TM) catalogs and
one specialty catalog edition during the three months ended June 30, 2003 and
2002. We mailed 16 catalog editions consisting of six main catalogs, six Buyer's
Club Advantage(TM) catalogs and four specialty catalog editions during the six
months ended June 30, 2002 compared to 18 catalog editions consisting of six
main catalogs, six Buyer's Club Advantage(TM) catalogs and six specialty catalog
editions during the same period last year.
Advertising expense for the three months and six months ended June 30, 2002 was
$5.7 million or 14.9% of sales and $12.6 million or 15.4% of sales compared to
$5.6 million or 16.1% of sales and $12.6 million or 16.5% of sales for the same
periods last year. The decrease in advertising expense for the second quarter
and first half of 2003, as a percentage of sales, compared to the same periods
last year was primarily due to the increase in sales generated from unique
product offerings on the Internet and improved catalog productivity.
The minor increase in advertising dollars for the second quarter, compared to
the same period last year, was primarily due to an increase in the catalog
circulation. The advertising dollars for the six months ended June 30, 2003 were
virtually unchanged from that of the comparable period last year as the decrease
in catalog advertising dollars was offset by the increase in commissions to
Internet affiliate partners.
EARNINGS FROM OPERATIONS. Earnings from operations for the three months and six
months ended June 30, 2003 was $1.0 million and $2.5 million compared to $0.5
million and $1.7 million for the same periods last year.
INTEREST EXPENSE. We did not borrow under the revolving line of credit during
the three and six months ended June 30, 2003 and 2002.
NET EARNINGS. Net earnings for the three months and six months ended June 30,
2003 were $0.6 million and $1.6 million compared to $0.3 million and $1.1
million for the same periods last year.
9
SEASONALITY AND QUARTERLY RESULTS
The majority of our sales historically occur during the second half of the year.
The seasonal nature of our business is due to our focus on outdoor merchandise
and related accessories for the fall, as well as winter apparel and gifts for
the holiday season. We expect this seasonality will continue in the future. In
anticipation of increased sales activity during the third and fourth fiscal
quarters, we incur significant additional expenses for hiring employees and
building inventory levels.
The following table sets forth certain unaudited financial information for each
of the quarters shown:
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------- --------- --------- ---------
2003
Sales $ 43,749 $ 38,041
Gross profit 14,197 11,944
Earnings from operations 1,467 1,042
Net earnings 957 646
Net diluted earnings per share .19 .12
2002
Sales $ 41,465 $ 34,791 $ 36,746 $ 66,312
Gross profit 13,303 10,551 11,189 23,564
Earnings from operations 1,216 494 366 4,549
Net earnings 784 317 269 2,647
Net diluted earnings per share .16 .06 .05 .53
LIQUIDITY AND CAPITAL RESOURCES
We meet our operating cash requirements through funds generated from operations
and borrowings under our revolving line of credit.
WORKING CAPITAL. We had working capital of $19.6 million as of June 30, 2003
compared to $18.1 million as of December 31, 2002, with current ratios of 1.8 to
1 and 1.6 to 1, respectively. We purchase large quantities of manufacturers'
closeouts and direct imports, particularly in footwear and apparel merchandise
categories. The seasonal nature of the merchandise may require that it be held
for several months before being offered in a catalog. This can result in
increased inventory levels and lower inventory turnover, thereby increasing our
working capital requirements and related carrying costs.
We offer our Buyer's Club members an installment credit plan with no finance
fees, known as the "Buyer's Club 4-Pay Plan". Each of the four consecutive
monthly installments is billed directly to customers' credit cards. We had
installment receivables of $1.2 million at June 30, 2003 compared to $2.3
million at December 31, 2002. The installment plan will continue to require the
allocation of working capital, which we expect to fund from operations and
availability under our revolving credit facility.
We have an Amended Credit and Security Agreement with Wells Fargo Bank
Minnesota, National Association, providing a revolving line of credit up to
$15.0 million, subject to an adequate borrowing base, expiring in May 2005. The
revolving line of credit is for working capital and letters of credit. Letters
of credit may not exceed $10.0 million at any one time. Funding under the credit
facility consists of a collateral base of 45% of eligible inventory plus 80% of
eligible trade accounts receivable. Borrowings bear interest at the bank's prime
rate. The revolving line of credit is collateralized by substantially all of our
assets. All borrowings are subject to various covenants. The most restrictive
covenants include a limit on quarterly measurements of year-to-date earnings
(loss), minimum gross margin percentage, maximum days inventory levels (as
defined) and maximum annual spending levels for capital assets. The agreement
also prohibits the payment of dividends to shareholders. We had no borrowings
against the revolving credit line as of June 30, 2003 and December 31, 2002.
10
Outstanding letters of credit were $3.1 million at June 30, 2003 compared to
$2.6 million at December 31, 2002.
OPERATING ACTIVITIES. Cash flows used in operating activities for the six months
ended June 30, 2003 were $4.8 million compared to $4.6 million for the same
period last year. The increase in cash flows used in operating activities was
primarily the result of a higher inventory levels due to several seasonal,
opportunistic product purchases virtually offset by higher earnings and lower
vendor payments.
INVESTING ACTIVITIES. Cash flows used in investing activities during the six
months ended June 30, 2003 were $0.4 million compared to $0.3 million during the
same period last year.
FINANCING ACTIVITIES. Cash flows used in financing activities during the six
months ended June 30, 2003 were $0.4 million compared to cash flows provided by
financing activities of $0.3 million during the same period last year. The
change in cash flows from financing activities during the first half of 2003 was
largely due to the Company's repurchase of its common stock during the three
months ended June 30, 2003.
We believe that cash flows from operations and borrowing capacity under our
revolving credit facility will be sufficient to fund operations and future
growth for the next 12 months.
FORWARD-LOOKING STATEMENTS
This report may contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. We use words such as "may," "believe," "estimate," "plan," "expect,"
"intend," "anticipate" and similar expressions to identify forward-looking
statements. These forward-looking statements involve risk and uncertainties.
Actual results could differ materially from those projected in the
forward-looking statements due to a number of factors, including general
economic conditions, a changing market environment for our products and the
market acceptance of our product offerings as well as the factors set forth in
Exhibit 99 "Risk Factors" to the Company's Annual Report on Form 10-K for the
year ended December 31, 2002 filed with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company does not have any material, near-term, market rate risk.
ITEM 4. CONTROLS AND PROCEDURES
The Company's management evaluated, with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, the effectiveness of the
Company's disclosure controls and procedures, as of the end of the period
covered by this report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms.
There were no changes in the Company's internal control over financial reporting
that occurred during the Company's last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31 Section 302 Certifications
32 Section 906 Certifications
(b) Reports on Form 8-K
On April 18, 2003, the Company filed a Form 8-K under Item 12
reporting in a press release expected sales and earnings per
share for the quarter ended March 31, 2003.
On May 1, 2003, the Company filed a Form 8-K under Item 12
reporting in a press release its financial results for the
quarter ended March 31, 2003.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE SPORTSMAN'S GUIDE, INC.
Date: August 8, 2003 /s/ Charles B. Lingen
-------------------------------------
Charles B. Lingen
Executive Vice President of Finance
and Administration/CFO
13