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 September 30, 2002 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 I.D. 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 [ ]
As of November 13, 2002, there were 4,753,810 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 September 30, September 30, December 31,
2002 2001 2001
---- ---- ----
CURRENT ASSETS
Cash and cash equivalents $ 2,606 $ 1,642 $ 8,592
Accounts receivable -- net 1,832 2,329 2,759
Inventory 28,066 29,797 21,076
Promotional material 4,347 4,476 3,614
Prepaid expenses 1,158 1,088 850
Other current assets 91 83 83
Deferred income taxes 1,428 - 1,482
-------- -------- --------
Total current assets 39,528 39,415 38,456
PROPERTY AND EQUIPMENT -- NET 2,924 3,904 3,632
-------- -------- --------
Total assets $ 42,452 $ 43,319 $ 42,088
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable -- bank $ - $ 9,127 $ -
Accounts payable 16,124 15,157 15,201
Accrued expenses 1,844 1,506 2,782
Income taxes payable 292 - 2,184
Deferred revenue 3,339 2,546 2,993
Returns reserve 1,499 735 1,402
Customer deposits and other liabilities 1,268 1,156 942
-------- -------- --------
Total current liabilities 24,366 30,227 25,504
LONG-TERM LIABILITIES
Deferred income taxes 112 - 241
-------- -------- --------
Total liabilities 24,478 30,227 25,745
COMMITMENTS AND CONTINGENCIES - - -
SHAREHOLDERS' EQUITY
Common Stock-$.01 par value; 36,800,000 shares authorized;
4,753,810 shares issued and outstanding at September 30,
2002 and 4,748,810 shares issued and outstanding at
December 31, 2001 47 47 47
Additional paid-in capital 11,588 11,565 11,565
Stock subscription receivable - (238) (238)
Retained earnings 6,339 1,718 4,969
-------- -------- --------
Total shareholders' equity 17,974 13,092 16,343
-------- -------- --------
Total liabilities & shareholders' equity $ 42,452 $ 43,319 $ 42,088
======== ======== ========
See accompanying condensed notes to financial statements
2
THE SPORTSMAN'S GUIDE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months and Nine Months Ended
September 30, 2002 and 2001
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Sales $ 36,946 $ 36,472 $ 113,505 $ 107,199
Cost of sales 25,557 24,575 77,959 73,082
--------- --------- --------- ---------
Gross profit 11,389 11,897 35,546 34,117
Selling, general and administrative expenses 11,023 11,888 33,470 34,260
--------- --------- --------- ---------
Earnings (loss) from operations 366 9 2,076 (143)
Interest expense (17) (135) (59) (283)
Miscellaneous income (expense), net 63 2 138 (51)
--------- --------- --------- ---------
Earnings (loss) before income taxes 412 (124) 2,155 (477)
Income tax expense 143 - 785 21
--------- --------- --------- ---------
Net earnings (loss) $ 269 $ (124) $ 1,370 $ (498)
========= ========= ========= =========
Net earnings (loss) per share:
Basic $ .06 $ (.03) $ .29 $ (.10)
========= ========= ========= =========
Diluted $ .05 $ (.03) $ .27 $ (.10)
========= ========= ========= =========
Weighted average common and common
equivalent shares outstanding:
Basic 4,754 4,749 4,752 4,749
========= ========= ========= =========
Diluted 5,070 4,749 5,001 4,749
========= ========= ========= =========
See accompanying condensed notes to financial statements
3
THE SPORTSMAN'S GUIDE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended
September 30, 2002 and 2001
(In thousands of dollars)
2002 2001
---- ----
Cash flows from operating activities:
Net earnings (loss) $ 1,370 $ (498)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Depreciation and amortization 1,120 1,365
Deferred income taxes (75) -
Other 9 72
Changes in assets and liabilities:
Accounts receivable 927 1,389
Inventory (6,990) (6,992)
Promotional material (733) (841)
Prepaid expenses (308) 351
Other current assets (8) -
Income taxes (1,892) 769
Accounts payable 923 1,053
Accrued expenses (938) (727)
Customer deposits and other liabilities 753 752
------- -------
Cash flows used in operating activities (5,842) (3,307)
Cash flows from investing activities:
Purchases of property and equipment (405) (308)
Other - 21
------- -------
Cash flows used in investing activities (405) (287)
Cash flows from financing activities:
Net proceeds from revolving credit line - 3,902
Payments on long-term debt - (10)
Proceeds from exercise of stock options 23 -
Proceeds from payment of stock subscription receivable 238 -
------- -------
Cash flows provided by financing activities 261 3,892
------- -------
Increase (decrease) in cash and cash equivalents (5,986) 298
Cash and cash equivalents at beginning of the period 8,592 1,344
------- -------
Cash and cash equivalents at end of the period $ 2,606 $ 1,642
======= =======
Supplemental disclosure of cash flow information
- ------------------------------------------------
Cash paid during the periods for:
Interest $ 85 $ 366
Income taxes 2,751 176
See accompanying condensed notes to 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
thereof. 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.
The accompanying financial statements include the accounts of The
Sportsman's Guide, Inc. and its wholly-owned subsidiary. All
intercompany balances and transactions have been eliminated.
Amounts billed to customers for shipping and handling are recorded in
revenues. Sales include shipping and handling revenues of $4.8 million
and $5.0 million for the three months ended September 30, 2002 and
2001 and $15.1 million and $15.0 million for the nine months ended
September 30, 2002 and 2001.
In preparing the Company's 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 Company's fiscal quarter ends on the Sunday nearest September 30
for 2002 and 2001, but for clarity of presentation, all periods are
described as if the three and nine month periods end September 30.
Each fiscal third quarter of 2002 and 2001 consisted of thirteen
weeks. The three fiscal quarters of 2002 and 2001 each consisted of
thirty-nine weeks.
Note 2: Net Earnings (Loss) Per Share
The Company's basic net earnings (loss) per share amounts have been
computed by dividing net earnings (loss) 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 nine months ended September 30, 2002, 316,614
and 248,975 share equivalents were included in the computation of
diluted net earnings per share.
For the three months and nine months ended September 30, 2001, no
common share equivalents were included in the computation of diluted
net loss per share. If the Company had reported net income in the
three months ended September 30, 2001, 8,758 common share equivalents
would have been included in the computation of diluted net earnings
per share. If the Company had reported net income in the nine months
ended September 30, 2001, 5,760 common share equivalents would have
been included in the computation of diluted net earnings per share.
Options and warrants to purchase 114,950 and 642,156 shares of common
stock with a weighted average exercise price of $8.48 and $5.83 were
outstanding during the three months ended September 30, 2002 and 2001,
but were not included in the computation of diluted net earnings per
share because their exercise price exceeded the average market price
of the common shares during the period.
Options and warrants to purchase 226,892 and 643,456 shares of common
stock with a weighted average exercise price of $7.43 and $5.83 were
outstanding during the nine months ended September 30, 2002 and 2001,
but were not included in the computation of diluted net earnings per
share because their exercise price exceeded the average market price
of the common shares during the period.
5
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 consumers 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 $36.0 million in sales in 2001 compared to $1.3 million
in 1998. Product sales on the sites accounted for approximately 29% of our sales
for the nine months ended September 30, 2002, 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 $170 million in 2001.
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.
Accounts receivable consist primarily of amounts owed for merchandise by
customers utilizing an installment payment plan and amounts owed for list rental
and other advertising services provided by the Company to third parties. We had
an allowance for doubtful accounts of $172,000 at September 30, 2002 and
$211,000 at December 31, 2001.
Inventory consists of purchased finished merchandise available for sale and is
recorded at the lower of cost or market with the first-in, first-out method used
to determine cost.
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. 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.
6
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information from
our Consolidated Statements of Operations expressed as a percentage of sales:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2002 2001 2002 2001
---- ---- ---- ----
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 69.2 67.4 68.7 68.2
----- ----- ----- -----
Gross profit 30.8 32.6 31.3 31.8
Selling, general and administrative expenses 29.8 32.6 29.5 32.0
----- ----- ----- -----
Earnings (loss) from operations 1.0 - 1.8 (0.2)
Interest and miscellaneous income (expense) 0.1 (0.4) 0.1 (0.3)
----- ----- ----- -----
Earnings (loss) before income taxes 1.1 (0.4) 1.9 (0.5)
Income tax expense 0.4 - 0.7 -
----- ----- ----- -----
Net earnings (loss) 0.7% (0.4)% 1.2% (0.5)%
===== ===== ===== =====
Three months and nine months ended September 30, 2002 compared to three months
and nine months ended September 30, 2001
SALES. Sales for the three months and nine months ended September 30, 2002 of
$36.9 million and $113.5 million were $0.4 million or 1.3% higher and $6.3
million or 5.9% higher than sales of $36.5 million and $107.2 million during the
same periods last year. The increase in sales for the third quarter and the
first nine months was primarily due to higher sales generated from unique
product offerings on the Internet. Catalog related sales for the three months
and nine months ended September 30, 2002 decreased primarily as the result of a
9% and 4% planned reduction in catalog circulation for the respective periods.
As of the end of the third quarter 2002, the Buyer's Club membership had
increased to 286,000, up 13% over the 254,000 members reported at December 31,
2001 and up 33% over the membership count one year ago.
Sales generated through the Internet for the third quarter and the nine months
ended September 30, 2002 were approximately 30% and 29% of total sales compared
to 21% during each of 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.
Gross returns and allowances for the three months and nine months ended
September 30, 2002 were $2.7 million or 6.8% of gross sales and $8.6 million or
7.1% of gross sales compared to $2.9 million or 7.4% of gross sales and $8.7
million or 7.5% 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 nine months ended September 30, 2002 was primarily due to lower than
anticipated customer returns on several 2001 and 2002 catalogs.
GROSS PROFIT. Gross profit for the three months and nine months ended September
30, 2002 was $11.4 million or 30.8% of sales and $35.6 million or 31.3% of sales
compared to $11.9 million or 32.6% of sales and $34.1 million or 31.8% of sales
during the same periods last year. The decrease in the gross profit percentage
for the third quarter and the nine months ended September 30, 2002 was primarily
due to promotional pricing and a shift of sales within various product
categories. We continue to employ promotional pricing techniques to maintain our
competitive position. For the three months and nine months ended September 30,
2002, sales in the higher gross profit categories of footwear and government
surplus were down compared to the prior year and sales in lower gross profit
category of optics were up compared to the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months and nine months ended September 30,
2002 were $11.0 million or 29.8% of sales and $33.5 million or 29.5% of sales
compared to $11.9 million or 32.6% of sales and $34.3 million or 32.0% of sales
for the same periods last year.
Selling, general and administrative expenses, as a percentage of sales, for the
third quarter and the nine months ended September 30, 2002 were lower compared
to the same periods last year primarily due to higher Internet sales, improved
catalog productivity and lower order processing costs as a result of the
increase in sales generated through the Internet. For the three months and nine
months ended September 30, 2002, the decrease in dollars, compared to the same
periods last year,
7
in selling, general and administrative expenses was primarily due to lower
advertising spending from the planned reduction in the catalog circulation.
Total catalog circulation during the third quarter and the first nine months of
2002 was 9.6 million and 29.7 million catalogs compared to 10.6 million and 31.5
million catalogs during the same periods last year. We mailed nine catalog
editions, consisting of three main catalogs, three Buyer's Club Advantage (TM)
catalogs and three specialty catalog editions, during the three months ended
September 30, 2002 compared to nine catalog editions, consisting of three main
catalogs, two Buyer's Club Advantage (TM) catalogs, and four specialty catalog
editions, during the same period last year. We mailed 28 catalog editions,
consisting of nine main catalogs, nine Buyer's Club Advantage (TM) catalogs and
ten specialty catalog editions, during the nine months ended September 30, 2002
compared to 29 catalog editions, consisting of nine main catalogs, seven Buyer's
Club Advantage (TM) catalogs and 13 specialty catalog editions, during the same
period last year.
Advertising expense for the third quarter and the first nine months of 2002 was
$6.2 million or 16.8% of sales and $19.1 million or 16.8% of sales compared to
$7.2 million or 19.7% of sales and $20.3 million or 18.9% of sales for the same
periods last year. The decrease in advertising expense for the third quarter and
the first nine months of 2002, as a percentage of sales, compared to the same
periods last year was primarily due to the increase in sales generated through
the Internet and the improved catalog productivity. Advertising expense, in
terms of dollars, for the third quarter and nine months ended September 30, 2002
was lower compared to the same periods last year primarily as a result of the
planned reduction in the catalog circulation partially offset by the impact of a
postage rate increase and increase in catalog pages.
EARNINGS (LOSS) FROM OPERATIONS. Earnings from operations for the three months
ended September 30, 2002 were $0.4 million compared to $9,000 during the same
period last year. Earnings from operations for the nine months ended September
30, 2002 were $2.1 million compared to a loss of ($143,000) for the same period
last year.
INTEREST EXPENSE. Interest expense for the three months and nine months ended
September 30, 2002 was $17,000 and $59,000 compared to $135,000 and $283,000 for
the same periods last year. The decrease in interest expense for the quarter and
year to date was due to lower average levels of bank borrowings.
NET EARNINGS (LOSS). Net earnings for the three months and nine months ended
September 30, 2002 were $0.3 million and $1.4 million compared to a net loss of
($124,000) and ($498,000) for the same periods last year.
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 (in thousands, except per share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
2002
Sales $41,631 $34,928 $36,946
Gross profit 13,469 10,688 11,389
Earnings from operations 1,216 494 366
Net earnings 784 317 269
Net earnings per share, diluted .16 .06 .05
2001
Sales $38,931 $31,796 $36,472 $62,476
Gross profit 11,740 10,480 11,897 22,472
Earnings (loss) from operations (14) (138) 9 4,482
Net earnings (loss) (167) (207) (124) 3,251
Net earnings (loss) per share, diluted (.04) (.04) (.03) .68
8
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 $15.2 million as of September 30,
2002 compared to $9.2 million as of September 30, 2001 and $13.0 million as of
December 31, 2001, with current ratios of 1.62 to 1, 1.30 to 1 and 1.50 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 approximately $1.4 million at September 30, 2002
compared to approximately $1.5 million at September 30, 2001 and approximately
$2.1 million at December 31, 2001. 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 and Restated Credit and Security Agreement, dated September
5, 2002, 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, which 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.
As of September 30, 2002, September 30, 2001 and December 31, 2001, we were in
compliance with all applicable covenants under the revolving line of credit
agreement. We had no borrowings against the revolving line of credit as of
September 30, 2002 and December 31, 2001 compared to $9.1 million at September
30, 2001. Outstanding letters of credit were $1.0 million at September 30, 2002
compared to $1.3 million at September 30, 2001 and $2.4 million at December 31,
2001.
OPERATING ACTIVITIES. Cash flows used in operating activities for the nine
months ended September 30, 2002 were $5.8 million compared to $3.3 million for
the same period last year. The increase in cash flows used in operating
activities was primarily the result of the payment of income taxes due for the
year ended December 31, 2001.
INVESTING ACTIVITIES. Cash flows used in investing activities for the nine
months ended September 30, 2002 were $0.4 million compared to $0.3 million for
the same period last year.
FINANCING ACTIVITIES. Cash flows provided by financing activities during the
nine months ended September 30, 2002 were $0.3 million compared to $3.9 million
during the same period last year. The change in cash flows provided by financing
activities during the nine months ended September 30, 2002, compared to the
prior year, was largely due to a reduction of advances required under the
revolving line of credit.
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 twelve 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. 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, 2001 filed with the Securities and Exchange Commission.
9
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
Within 90 days prior to the filing date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. 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 significant changes in the Company's internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amended and Restated Credit and Security Agreement by and
among The Sportsman's Guide, Inc., The Sportsman's Guide
Outlet, Inc. and Wells Fargo Bank Minnesota, National
Association dated September 5, 2002.
10.2 The Sportsman's Guide, Inc. Deferred Compensation Plan
effective September 1, 2002.
(b) Reports on Form 8-K
On September 18, 2002, the Company filed a Form 8-K reporting
under Item 5 that Todd D. Peterson resigned as a director of
the Company effective September 3, 2002.
10
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: November 13, 2002 /s/Charles B. Lingen
--------------------
Charles B. Lingen
Executive Vice President of Finance
and Administration/CFO
CERTIFICATIONS
I, Gregory R. Binkley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The
Sportsman's Guide, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
By: /s/ Gregory R. Binkley
----------------------
Gregory R. Binkley
President and CEO
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I, Charles B. Lingen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The
Sportsman's Guide, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
By: /s/ Charles B. Lingen
----------------------
Charles B. Lingen
Executive Vice President of
Finance & Administration/CFO
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