BOO Collegiate Pacific

Collegiate Pacific Inc. (AMEX: BOO): -- Net Sales up 120% to $59.4 Million vs. $27.0 Million -- Operating Profit up 88% to $3.2 Million vs. $2.0 Million -- Gross Profit Margins Exceed 35% for the Quarter Collegiate Pacific Inc. (AMEX: BOO) today announced results for its third fiscal quarter ended March 31, 2006. The company will host a conference call to discuss the results of the quarter and future plans today, May 15, 2006 at 10AM CST / 11AM EST. The dial in number for the call is 800-299-7928. The password for the call is 92158914. A replay of the call may be accessed for 30 days by using dial in number 888-286-8010 and password 35888336. Michael J. Blumenfeld, Chairman and CEO of Collegiate Pacific stated: "We are pleased to report significant increases in net sales, operating profit and fully diluted earnings per share for the third fiscal quarter. To achieve this substantial increase in profitability while absorbing the final costs of our S-3 registration process, which was completed in February, is most gratifying and a tribute to our hard working employees across the country." Adam Blumenfeld, President of Collegiate Pacific stated: "We are extremely pleased with operations for the quarter. The 120% increase in sales for the quarter was underscored by double digit organic sales growth for businesses owned at least 12 months - suggesting continued strong demand from our core base of customers. Our catalog group and team dealer group (Dixie, OTS, Kesslers and Salkeld - "DOKS") contributed to the significant, sequential gross margin improvement in the quarter to 35.3%. Margins increased sequentially by approximately 200 basis points over Q206 and actually surpassed Q305 on a comparative basis by 20 basis points. This accomplishment is meaningful as the Company acquired several businesses which carry historically lower gross margins (28-32% range) within the last 12 months. This margin strength and improvement, we believe, is a testament to successful implementation of pricing and selling strategies across our catalog and DOKS road sales groups, effective cross selling of our high margin proprietary products through our road sales professionals, and the effects of our continuing efforts at reducing cost of goods. We are particularly pleased to have demonstrated such margin enhancement during a period of inflated fuel and raw material costs worldwide. It speaks, we believe, to our continued ability to attract and retain customers through the company's bundling of proprietary services and products such as 24-hour quick shipping and best of breed Internet technology - reducing the customers' focus and dependency on price." "The company continues to review new product lines, new business development relationships, and acquisition targets, which may either extend our geographic reach or provide unique product and/or brands that allow for deeper, vertical penetration into our marketplace. We intend to continue to leverage our position as the nation's largest one-stop shop for sporting goods equipment and team uniforms to the institutional market." Company Announces Sales Force Expansion Plans Mr. Adam Blumenfeld continued: "Given the growing success and managerial talent of our DOKS road sales team, the company is embarking upon a long term aggressive salesman acquisition plan to bolster the size and geographic reach of its 175 man sales force. Over a multi year period, the company seeks to add seasoned sales teams and/or individuals that can contribute to revenues and earnings on a near immediate basis. Our management infrastructure has proven capable of effectively managing growth in existing territories and we will now look to expand this footprint - thereby bringing our combination of factory direct equipment and branded team uniforms to a broader swath of high schools and colleges across the country." -0- *T COLLEGIATE PACIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, 2006 2005 ---- ---- ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $4,410,957 $40,325,716 Accounts receivable, net of allowance for doubtful accounts of $1,551,497 and $1,042,496, respectively 37,003,133 18,131,753 Inventories 37,841,033 17,478,805 Current portion of deferred taxes 803,278 775,231 Prepaid income taxes 262,920 644,596 Prepaid expenses and other current assets 3,888,002 601,439 ------------- ------------- Total current assets 84,209,323 77,957,540 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $2,321,171 and $1,294,135, respectively 10,204,815 1,501,096 DEFERRED DEBT ISSUANCE COSTS, net of accumulated amortization of $905,325 and $392,932, respectively 2,505,034 3,017,427 INTANGIBLE ASSETS, net of accumulated amortization of $1,977,190 and $853,333, respectively 9,234,100 1,862,606 GOODWILL 43,090,458 23,848,345 OTHER ASSETS, net 592,622 409,068 ------------- ------------- Total assets $149,836,352 $108,596,082 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $17,797,867 $9,782,479 Accrued liabilities 6,865,093 1,724,783 Dividends payable 254,853 255,144 Accrued interest 1,032,986 250,000 Current portion of long-term debt 12,161,922 329,867 ------------- ------------- Total current liabilities 38,112,721 12,342,273 DEFERRED TAX LIABILITY 497,405 700,146 NOTES PAYABLE AND OTHER LONG-TERM DEBT 55,138,337 50,448,153 MINORITY INTEREST IN SUBSIDIARY 8,111,294 -- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value, 1,000,000 shares authorized; no shares issued or outstanding -- -- Common stock, $0.01 par value, 50,000,000 shares authorized; 10,271,778 and 10,205,780 shares issued and 10,185,752 and 10,119,754 shares outstanding, respectively 102,718 102,058 Additional paid-in capital 42,709,494 41,911,008 Retained earnings 5,821,834 3,749,895 Treasury stock at cost, 86,026 shares (657,451) (657,451) ------------- ------------- Total stockholders' equity 47,976,595 45,105,510 ------------- ------------- Total liabilities and stockholders' equity $149,836,352 $108,596,082 ============= ============= COLLEGIATE PACIFIC INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended March 31, March 31, ------------------------- -------------------------- 2006 2005 2006 2005 ---- ---- ---- ---- (As restated) Net sales $59,417,658 $27,018,429 $171,093,834 $78,523,315 Cost of sales 38,420,621 17,544,088 113,639,708 52,012,219 ------------ ------------ ------------- ------------ Gross profit 20,997,037 9,474,341 57,454,126 26,551,096 Selling, general and administrative expenses 17,252,696 7,484,598 49,180,817 20,149,485 ------------ ------------ ------------- ------------ Operating profit 3,744,341 1,989,743 8,273,309 6,361,611 ------------ ------------ ------------- ------------ Other income (expense): Interest income 25,005 179,288 99,343 237,732 Interest expense (1,261,064) (899,372) (3,378,970) (1,240,891) Other income 155,198 32,774 243,671 153,337 ------------ ------------ ------------- ------------ Total other (expense) (1,080,861) (687,310) (3,035,956) (849,822) ------------ ------------ ------------- ------------ Income before minority interest in income of consolidated subsidiary and income taxes 2,663,480 1,302,433 5,237,353 5,511,789 Income tax provision 787,326 514,772 1,813,376 2,266,426 Minority interest in income of consolidated subsidiary, net of tax 643,856 -- 587,665 -- ------------ ------------ ------------- ------------ Net income $1,232,298 $787,661 $2,836,312 $3,245,363 ============ ============ ============= ============ Weighted average number of shares outstanding: Basic 10,183,973 10,094,747 10,174,843 10,002,640 ============ ============ ============= ============ Diluted 10,359,528 10,410,933 10,389,740 10,277,970 ============ ============ ============= ============ Net income per share common stock - basic $0.12 $0.08 $0.28 $0.32 ============ ============ ============= ============ Net income per share common stock - diluted $0.12 $0.08 $0.27 $0.32 ============ ============ ============= ============ Dividends declared per share common stock $0.025 $0.025 $0.075 $0.075 ============ ============ ============= ============ *T Collegiate Pacific is the nation's fastest growing manufacturer and supplier of sports equipment primarily to the institutional and team dealer markets. The company offers more than 4,500 products to 300,000 prospective and existing customers. The company distributes approximately 1.5 million catalogs annually and employs approximately 175 professional road salesmen. 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, 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.