<PAGE>
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: May 3, 1997
------------
- OR -
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
- -------- EXCHANGE ACT OF 1934.
For the transaction period from _________ to ________
COMMISSION FILE NUMBER 000-20969
HIBBETT SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-1074067
------------ ------------
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
451 INDUSTRIAL LANE, BIRMINGHAM, ALABAMA 35211
---------------------------------------- -----
(Address of principal executive offices) (Zip code)
(205)-942-4292
--------------
(Registrant's telephone number including area code)
NONE
----
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's common stock,
as of the latest practicable date: Shares of common stock, par value $.01 per
share, outstanding as of May 3, 1997 were 6,134,261 shares.
<PAGE>
HIBBETT SPORTING GOODS, INC.
INDEX
PAGE NO.
---------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
May 3, 1997 and February 1, 1997 2
Condensed Consolidated Statements of Operations for the
Thirteen Week Periods Ended May 3, 1997 and
May 4, 1996 3
Condensed Consolidated Statements of Cash Flows for the
Thirteen Week Periods Ended May 3, 1997
and May 4, 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to Vote of Security-Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
May 3,1997 February 1, 1997
---------- ----------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 2,046 $2,269
Accounts receivable, net 2,342 2,097
Inventories 28,889 24,521
Prepaid expenses and other 1,499 613
Deferred income taxes 672 626
---------- -----------
Total current assets 35,448 30,126
---------- -----------
Property and Equipment, net 10,334 9,884
---------- -----------
Noncurrent Assets:
Deferred income taxes 332 321
Other, net 46 27
---------- -----------
Total noncurrent assets 378 348
---------- -----------
Total Assets $46,160 $ 40,358
========== ===========
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $14,349 $ 10,381
Accrued income taxes 1,091 436
Accrued expenses:
Payroll-related 1,598 1,875
Other 1,184 1,144
Related-party 2 10
---------- -----------
Total current liabilities 18,224 13,846
---------- -----------
Long-Term Debt - -
---------- -----------
Stockholders' Investment:
Preferred stock, $.01 par value 1,000,000 shares
authorized, no shares outstanding - -
Common stock, $.01 par value, 12,000,000 shares
authorized, 6,134,261 shares issued and
outstanding at May 3, 1997 and February 1, 1997 61 61
Paid-in capital 47,974 47,974
Retained earnings (deficit) (20,099) (21,523)
---------- -----------
Total stockholders' investment 27,936 26,512
---------- -----------
Total Liabilities and Stockholders' Investment $46,160 $ 40,358
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------
May 3, 1997 May 4, 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Net sales $ 26,165 $ 20,251
Cost of goods sold,
(Including warehouse, distribution
and store occupancy costs) 18,126 14,035
----------- -----------
Gross profit 8,039 6,216
Store operating, selling, and
administrative expenses 5,241 3,394
Depreciation and amortization 517 393
----------- -----------
Operating income 2,281 2,429
Interest expense (income), net (25) 910
----------- -----------
Income before provision for income taxes 2,306 1,519
Provision for income taxes 882 584
----------- -----------
Net income $ 1,424 $ 935
=========== ===========
Earnings per common share:
Net income $ 0.23 $ 0.24
=========== ===========
Weighted average shares outstanding 6,248,910 3,896,415
=========== ===========
See notes to condensed consolidated financial statements.
3
</TABLE>
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------
May 3, 1997 May 4, 1996
----------- -------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,424 $ 935
Adjustments to reconcile net income to net
cash privided by (used in) operating activities:
Depreciation and amortization 517 447
Deferred income taxes (57) (58)
(Gain) loss on disposal of assets 8 (478)
Interest expense funded through additional debt - 14
Change in assets and liabilities (1,143) (3,650)
------------ -------------
Total adjustments (675) (3,725)
------------ -------------
Net cash provided by (used in) operating activities 749 (2,790)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (976) (1,128)
Proceeds from sale of property 4 5,553
------------ -------------
Net cash provided by (used in) investing activities (972) 4,425
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt - (4,267)
Revolving loan borrowings and repayments, net - 2,633
------------ -------------
Net cash (used in) financing activities - (1,634)
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (223) 1
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,269 31
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,046 $ 32
============ =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Hibbett
Sporting Goods, Inc., and its wholly-owned subsidiaries (the "Company") have
been prepared in accordance with generally accepted accounting principles for
interim financial information and are presented in accordance with the
requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the fiscal year ended February 1, 1997. In the
opinion of management, the condensed consolidated financial statements included
herein contain all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of the Company's financial position
as of May 3, 1997 and May 4, 1996, and the results of its operations and cash
flows for the periods presented.
The Company has experienced and expects to continue to experience seasonal
fluctuations in its net sales and operating income. Therefore, the results of
the interim periods presented herein are not necessarily indicative of the
results to be expected for any other interim period or the full year.
2. EARNINGS PER SHARE
Earnings per share for the periods presented is calculated by dividing net
income by the number of weighted average shares outstanding. Common stock
equivalents in the form of stock options are included in the calculation
utilizing the treasury stock method in accordance with Accounting Principles
Board Opinion ("APB") No. 15 for all periods presented. In March 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share. SFAS No. 128 will supersede APB
No.15 effective for financial statements for periods ending after December 15,
1997. Under SFAS No. 128, the Company's earnings per share for the thirteen
weeks ended May 3, 1997 and May 4, 1996 would have been $.23 and $.24,
respectively, unchanged from the APB No. 15 calculation.
3. CONTINGENCIES
The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal counsel,
the ultimate liability, if any, with respect to those proceedings is not
presently expected to materially affect the financial position or results of
operations of the Company.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Hibbett Sporting Goods, Inc. ("Hibbett" or the "Company") is a rapidly-
growing operator of full-line sporting goods stores in small to mid-sized
markets in the southeastern United States. Hibbett's stores offer a broad
assortment of high quality athletic equipment, footwear, and apparel at
competitive prices with superior customer service. The Company's merchandise
assortment features a core selection of brand name merchandise emphasizing team
and individual sports complemented by a selection of localized apparel and
accessories designed to appeal to a wide range of customers within each market.
The Company believes that its stores are among the primary retail distribution
alternatives for brand name vendors that seek to reach Hibbett's target markets.
The Company operates 87 Hibbett Sports stores as well as eight smaller-
format Sports Additions athletic shoe stores and four larger-format Sports & Co.
superstores. Hibbett's primary retail format and growth vehicle is Hibbett
Sports, a 5,000 square foot store located predominantly in enclosed malls.
Although competitors in some markets may carry product lines and national brands
similar to Hibbett, the Company believes that its Hibbett Sports stores are
typically the primary, full-line sporting goods retailers in their markets due
to, among other factors, the extensive selection of traditional team and
individual sports merchandise offered and a high level of customer service.
The Company operates on a 52 or 53 week fiscal year ending on the Saturday
nearest to January 31 of each year. Hibbett is incorporated under the laws of
the state of Delaware.
RESULTS OF OPERATIONS
The following table sets forth statement of operations items expressed as a
percentage of net sales for the periods indicated.
THIRTEEN WEEK
PERIOD ENDED
----------------------
May 3, May 4,
1997 1996
---------- ----------
Net sales 100.0% 100.0%
Cost of goods sold, including warehouse,
distribution, and store occupancy costs 69.3 69.3
----- -----
Gross profit 30.7 30.7
Store operating, selling, and administrative
expenses 20.0 16.8 (1)
Depreciation and amortization 2.0 1.9
----- -----
Operating income 8.7 12.0 (1)
Interest (income) expense, net -0.1 4.5
----- -----
Income before provision for income taxes 8.8 7.5
Provision for income taxes 3.4 2.9
----- -----
Net income 5.4% 4.6%
===== =====
(1) Includes a $513,000 pre-tax gain on the sale of the Company's former
headquarters and distribution facility. Excluding this gain, store
operating, selling and administrative expenses represented 19.3% of net
sales and operating income would have been 9.6% of net sales for the
thirteen weeks ended May 4, 1996.
6
<PAGE>
THIRTEEN WEEKS ENDED MAY 3, 1997 COMPARED TO THIRTEEN WEEKS ENDED MAY 4, 1996
Net sales. Net sales increased $5.9 million, or 29.2%, to $26.2 million for
the thirteen weeks ended May 3, 1997, from $20.3 million for the comparable
period in the prior year. This increase is attributed to the opening of twenty-
nine Hibbett Sports stores and one Sports & Co. superstore and a 7.9% increase
in comparable store net sales. The increase in comparable net sales was due
primarily to increased footwear and equipment sales as well as improved
inventory processing at the distribution center. During the thirteen weeks ended
May 3, 1997, the Company opened ten Hibbett Sports stores. New stores and stores
not in the comparable store net sales calculation accounted for $4.6 million of
the increase in net sales and increases in comparable store net sales
contributed $1.3 million. Comparable store net sales data for a period reflect
stores open throughout that period and the corresponding period of the prior
fiscal year. Comparable store net sales do not include sales by the Company's
four larger format Sports & Co. superstores or the Company's wholly-owned
subsidiary, Hibbett Team Sales, Inc.
Gross profit. Cost of goods sold includes the cost of inventory, occupancy
costs for stores and occupancy and operating costs for the distribution center.
Gross profit was $8.0 million, or 30.7% of net sales, in the thirteen weeks
ended May 3, 1997, as compared to $6.2 million, or 30.7% of net sales, in the
same period of the prior fiscal year. A slight decline in product margin was
offset by improved leveraging of warehouse, distribution and occupancy costs in
the current year period.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $5.2 million, or 20.0% of net sales,
for the thirteen weeks ended May 3, 1997, as compared to $3.4 million, or 16.8%
of net sales, for the comparable period a year ago. Store operating, selling and
administrative expenses for the thirteen weeks ended May 4, 1996 include a net
gain on the disposal of assets which primarily relates to the gain on the sale
of the Company's former headquarters and distribution facility. Excluding the
net gain on the disposal of assets, store operating, selling and administrative
expenses were $3.9 million, or 19.3% of net sales for the thirteen weeks ended
May 4, 1996. The increase in store operating, selling and administrative
expenses as a percentage of net sales in the thirteen weeks ended May 3, 1997 is
primarily attributable to costs associated with the opening of ten new stores in
the period as compared to two stores in the prior year period.
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales increased to 2.0% in the thirteen weeks ended May 3,
1997, from 1.9% for the comparable period in the prior year due to the increased
number of new store openings.
Interest expense. The $935,000 decrease in interest expense for the
thirteen weeks ended May 3, 1997 compared to the prior year period is the result
of the repayment of long-term debt from the proceeds of the initial public
offering in October 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to new store openings
and working capital requirements. The Company's working capital needs are
somewhat seasonal in nature and typically reach their peak near the end of the
third and the beginning of the fourth quarter of its fiscal year. Historically,
the Company has funded its cash requirements primarily through cash flows from
operations and borrowings under its revolving credit facilities.
Net cash provided by (used in) operating activities has historically been
driven by net income levels combined with fluctuations in inventory and accounts
payable balances. The Company has continued to increase inventory levels in the
thirteen weeks ended May 3, 1997 as the number of new stores has increased and
has financed this increase primarily through increased accounts payable
balances. Net cash provided by operating activities was $749,000 for the
thirteen week period ending May 3, 1997 as compared to net cash used in
operating activities of $2.8 million for the thirteen week period ending May 4,
1996.
With respect to cash flows from investing activities, the $976,000 of
capital expenditures in the thirteen week period ended May 3, 1997 primarily
related to the opening of ten new stores, store remodels, and headquarters and
distribution center related capital expenditures. During the first quarter of
fiscal 1997, the Company completed the sale-
7
<PAGE>
leaseback of its new headquarters and distribution center and the sale of the
former headquarters and warehouse facilities for combined proceeds of $5.6
million and used the proceeds to repay $4.3 million of long-term debt then
outstanding.
Net cash used in financing activities of $1.6 million for the period ending
May 4, 1996 was the result of (1) the principal payments of long-term debt, and
(2) loan borrowings and repayments under the Company's revolving credit
facility.
The Company estimates capital expenditures in fiscal 1998 to be
approximately $3.9 million which includes resources budgeted to (i) fund the
opening of approximately 27 Hibbett Sports stores, (ii) remodel selected
existing stores and (iii) fund headquarters and distribution center-related
capital expenditures.
In October 1996, the Company established a new unsecured $20 million
Revolving Credit Facility (the "Facility") provided by AmSouth Bank of Alabama.
Borrowings under the Facility bear interest at the Company's option either at a
base rate, a quoted cost of funds rate, or a LIBOR based rate. As of May 3,
1997, there were no amounts outstanding under the Facility which expires October
31,1999. Based on its current operating and store opening plans, the Company
believes that it can fund its cash needs for the foreseeable future through
borrowings under the Revolving Credit Facility and cash generated from
operations.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
The statements contained in this report that are not purely historical or
which might be considered an opinion or projection concerning the Company or its
business, whether express or implied, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements may include statements regarding the Company's expectations,
intentions, plans or strategies regarding the future. All forward-looking
statements included in this document are based upon information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward-looking statements. It is important to note that the Company's
actual results could differ materially from those described or implied in such
forward-looking statements because of, among other factors, the ability of the
Company to execute its expansion plans, a shift in demand for the merchandise
offered by the Company, the Company's ability to obtain brand name merchandise
at competitive prices, the effect of regional or national economic conditions
and the effect of competitive pressures from other retailers. In addition, the
reader should consider the risk factors described from time to time in the
Company's other documents and reports, including the factors described under
"Risk Factors" in the Company's Registration Statement on Form S-1, filed with
the Securities and Exchange Commission on June 27, 1996, as amended, as well as
the Company's reports on Forms 10-Q and 10-K.
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings
The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal
counsel, the ultimate liability, if any, with respect to those
proceedings is not presently expected to materially affect the financial
position or results of operations of the Company.
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
8
<PAGE>
ITEM 4: Submission of Matters to Vote of Security-Holders
None
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit # Description
--------- -----------
27 Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
HIBBETT SPORTING GOODS, INC.
Date: by: /s/ Susan H. Fitzgibbon
------------------------- --------------------------
Susan H. Fitzgibbon
Vice President and
Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of Hibbett Sporting Goods, Inc. for the year to date period ended May
3, 1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-2-1997
<PERIOD-END> MAY-3-1997
<CASH> 2,046
<SECURITIES> 0
<RECEIVABLES> 2,484
<ALLOWANCES> 142
<INVENTORY> 28,889
<CURRENT-ASSETS> 35,448
<PP&E> 19,542
<DEPRECIATION> 9,208
<TOTAL-ASSETS> 46,160
<CURRENT-LIABILITIES> 18,224
<BONDS> 0
0
0
<COMMON> 61
<OTHER-SE> 27,875
<TOTAL-LIABILITY-AND-EQUITY> 46,160
<SALES> 26,165
<TOTAL-REVENUES> 26,165
<CGS> 18,126
<TOTAL-COSTS> 18,126
<OTHER-EXPENSES> 5,758
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> (25)
<INCOME-PRETAX> 2,306
<INCOME-TAX> 882
<INCOME-CONTINUING> 1,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,424
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
