Sportsman’s Guide Posts 11% Q1 Sales Gain

The Sportsman's Guide, Inc. saw net sales for the first quarter increase 11% to $71.6 million from $64.6 million for the same period in 2005. The increase in net sales for the period was primarily due to increased Internet-related sales.

Net earnings for the first quarter of 2006 were $2.2 million, or 27 cents per fully diluted share (32 cents per fully diluted share before stock-based compensation expense), compared to net earnings of $2.3 million, or 28 cents per fully diluted share, for the quarter ended March 31, 2005. The decrease in net earnings and fully diluted earnings per share for the most recent period was due to the adoption of SFAS 123R effective January 1, 2006 and applied on a modified prospective basis, which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values over the requisite service period. The first quarter of 2006 is the first period that stock-based compensation expense has been recognized in the company's consolidated financial statements. For the first quarter of 2006, the stock-based compensation expense totaled $568,000 on a pre-tax basis. Since the company applied the modified prospective method in adopting SFAS 123R, periods prior to adoption have not been restated.

Gregory R. Binkley, President and Chief Executive Officer of the Company, stated, “It was another strong first quarter at The Sportsman's Guide. We saw net sales increases at both TSG and TGW; TSG's net sales grew in excess of 10% and TGW's net sales grew 13%. This double-digit sales growth at both was once again primarily due to our success in generating higher levels of Internet-related sales.”

Consolidated selling, general and administrative expenses for the quarter ended March 31, 2006 were $18.7 million, or 26.1% of net sales, compared to $16.5 million, or 25.5% of net sales, for the same period last year. Consolidated selling, general and administrative expenses, as a percentage of net sales, were higher compared to the same quarter a year ago primarily as a result of the adoption of SFAS 123R, with stock-based compensation of $467,000 included in selling, general and administrative expenses.

Total consolidated catalog circulation during the first quarter of 2006 was 13.7 million catalogs compared to 13.3 million catalogs during the first quarter of 2005. TGW circulated 1.3 million catalogs during the first quarter of both 2006 and 2005. TSG mailed ten catalog editions consisting of three main catalogs, three Buyer's Club Advantage(TM) catalogs and four specialty catalogs during the quarter ended March 31, 2006 compared to nine catalog editions consisting of three main catalogs, three Buyer's Club Advantage(TM) catalogs and three specialty catalogs mailed during the quarter ended March 31, 2005.

On May 5, 2006, the company announced that it had reached a definitive agreement to be acquired by Redcats USA for $31 per share. The board of directors of The Sportsman's Guide has unanimously approved the merger agreement and has agreed to recommend to The Sportsman's Guide's shareholders that they vote to adopt the merger agreement and approve the merger. The transaction is expected to close during the third calendar quarter of this year, and is subject to The Sportsman's Guide shareholder approval, as well as other customary closing conditions, including the expiration of the Hart-Scott-Rodino waiting period. The transaction is not subject to financing.

            The Sportsman's Guide, Inc. and Subsidiaries
                   Consolidated Statements of Earnings

                               (Unaudited)

                          For the quarters ended
                          March 31, 2006 and 2005

                   (In thousands, except per share data)

                                           For the quarters ended March 31,
                                                   2006          2005
                                                ---------     ---------
Net sales                                       $  71,648     $  64,578
Cost of sales                                      49,528        44,544
                                                ---------     ---------
  Gross profit                                     22,120        20,034
Selling, general and administrative expenses       18,678        16,472
                                                ---------     ---------
  Earnings from operations                          3,442         3,562
Interest expense                                       (1)          (64)
Miscellaneous income, net                             136            68
                                                ---------     ---------
  Earnings before income taxes                      3,577         3,566
Income tax expense                                  1,373         1,309
                                                ---------     ---------
  Net earnings                                  $   2,204     $   2,257
                                                =========     =========

Net earnings per share:
  Basic                                         $     .30     $     .32
                                                =========     =========
  Diluted                                       $     .27     $     .28
                                                =========     =========

Weighted average common and common equivalent
 shares outstanding:
  Basic                                             7,323         7,107
                                                =========     =========
  Diluted                                           8,220         8,066
                                                =========     =========