Sport Supply Group Reports Third Quarter Fiscal 2010 Financial Results

Sport Supply Group, Inc. (NASDAQ: RBI) today reported results for its third fiscal quarter ended March 31, 2010. Financial highlights for the quarter include:

• Net Sales increase 2.8% to $65.5 million vs. $63.7 million in prior year period
• Gross Margins increase 70 basis points to 36.1% vs. 35.4% in prior year period
• Net Income decreases 8.5% to $3.2 million vs. $3.5 million in prior year period, principally due to $1.1 million of legal, professional and other expenses related to the pending merger agreement with affiliates of ONCAP Investment Partners II L.P. and a $0.9 million decrease in tax reserves for sales and use taxes related to the settlement of a tax assessment in Fiscal 2009.
• Fully Diluted EPS decreases 3.8% to $0.25 vs. $0.26 in prior year period
• Adjusted Net Income per Diluted share increases 25.0% to $0.30 vs. $0.24 in the prior period
• Adjusted EBITDA increases 6.8% to $7.2 million for the three months ended March 31, 2010 vs. $6.7 million for the comparable period in 2009

Financial Highlights for the nine months ended March 31, 2010 include:

• Net Sales increase 4.2% to $198.5 million vs. $190.5 million in prior year period
• Gross Margins increase 30 basis points to 36.1% vs. 35.8% in prior year period
• Net Income decreases 4.5% to $9.2 million vs. $9.6 million in prior year period, principally due to $1.1 million of legal, professional and other expenses related to the pending merger agreement with affiliates of ONCAP Investment Partners II L.P. and $0.1 million of expenses related to other acquisition activity in Fiscal 2010 as well as the $1.4 million one-time gain from the early retirement of 5.75% notes that occurred in Fiscal 2009 and the settlement of a tax assessment in February 2009 reducing our sales and use tax reserves.
• Fully Diluted EPS increases 2.9% to $0.70 vs. $0.68 in prior year period
• Adjusted Net Income per Diluted share increases 24.6% to $0.76 vs. $0.61 in prior year period
• Adjusted EBITDA increases 7.7% to $25.8 million for the trailing twelve months ended March 31, 2010 vs. $24.0 million for the comparable period in 2009
• Net Cash Provided by Operating Activities of $18.9 million versus $3.2 million in the prior year period
• Free Cash Flow from Operations of $18.5 million versus $2.6 million in the prior year period

Balance sheet highlights as of March 31, 2010 include:

• Debt reduced to $3.0 million
• Cash on hand of $2.2 million

“We are pleased to report increased sales and gross margins for the third fiscal quarter despite the continuing challenges of a difficult macroeconomic environment for spending, and, to a lesser extent, very unusual weather in the eastern half of the United States during the month of February,” stated Adam Blumenfeld, Chairman and Chief Executive Officer. “We are equally as pleased with the success of our continued debt reduction efforts, with the Company approaching debt-free levels as of March 31, 2010. This is a credit to continued vigilance in our management of inventory and receivable levels.”