<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
--------------------
For the fiscal year ended Commission file number
January 31, 1998 000-20969
HIBBETT SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-1074067
(State of other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
451 Industrial Lane
Birmingham, Alabama 35211
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(205)942-4292
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class CUSIP Number Which Registered
Common Stock, $.01 Par Value 428565-10-5 NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act:
None
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) and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ___.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant (assuming for purposes of this calculation that all executive
officers and directors are "affiliates") was $101,498,589 at April 2,1998, based
on the closing sale price of $27.875 for the Common Stock on such date on the
Nasdaq National Market.
The number of shares outstanding of the Registrant's Common Stock,
as of April 2, 1998 was 6,395,271.
DOCUMENTS INCORPORATED BY REFERENCE
Items 6, 7 and 8 of Part II are incorporated by reference from the Company's
1998 Annual Report to Stockholders. Items 10, 11, 12 and 13 of Part III are
incorporated by reference from the Company's definitive Proxy Statement for the
1998 Annual Meeting of Stockholders, to be held June 9, 1998. Registrant's
definitive Proxy Statement will be filed with the Securities and Exchange
Commission on or before May 1, 1998.
<PAGE>
HIBBETT SPORTING GOODS, INC.
INDEX
PART I
Item 1. Business 2
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6. Selected Consolidated Financial and Operating Data 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 8. Consolidated Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 7
PART III
Item 10. Directors and Executive Officers of Registrant 8
Item 11. Executive Compensation 8
Item 12. Security Ownership of Certain Beneficial Owners and Management 8
Item 13. Certain Relationships and Related Transactions 8
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 8
<PAGE>
PART I
Item 1. Business
GENERAL
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 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 107 Hibbett Sports stores as well as nine 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 the extensive selection of traditional team and individual sports merchandise
offered and a high level of customer service.
BUSINESS STRATEGY
The Company targets markets with county populations that range from 30,000 to
250,000. By targeting these smaller markets, the Company believes that it is
able to achieve significant strategic advantages, including numerous expansion
opportunities, comparatively low operating costs and a more limited competitive
environment than generally faced in larger markets. In addition, the Company
establishes greater customer and vendor recognition as the leading full-line
sporting goods retailer in these local communities.
Management believes that its ability to merchandise to local sporting or
community interests differentiates Hibbett from its national competitors. This
strong regional focus also enables the Company to achieve significant cost
benefits including lower corporate expenses, reduced distribution costs and
increased economies of scale from marketing activities. Additionally, Hibbett
also utilizes a number of sophisticated information systems to maintain tight
controls over operating costs.
The Company strives to hire enthusiastic sales personnel with an interest in
sports. The Company's extensive training program focuses on product knowledge
and selling skills and is conducted through the use of in-store clinics, videos,
self study courses, and interactive group discussions.
STORE CONCEPTS
Hibbett Sports
The Company's primary retail format is Hibbett Sports, a 5,000 square foot
store located predominantly in enclosed malls. The Company tailors its Hibbett
Sports concept to the size, demographics and competitive conditions of each
market. Seventy-nine Hibbett Sports stores are located in enclosed malls, the
majority of which are the only enclosed malls in the county, and the remaining
twenty-eight are located in strip centers.
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Hibbett Sports stores offer a core selection of quality, brand name
merchandise with an emphasis on team and individual sports. This merchandise
mix is complemented by a selection of localized apparel and accessories designed
to appeal to a wide range of customers within each market. For example, the
Company believes that apparel with logos of sports teams of local interest
represents a larger percentage of the merchandise mix in Hibbett Sports stores
than it does in the stores of national chain competitors. In addition, the
Company strives to quickly respond to major sports events of local interest.
Sports & Co.
The Company opened the first of its four Sports & Co. superstores in the
spring of 1995 in Huntsville, Alabama. Sports & Co. superstores average 25,000
square feet and offer a larger assortment of athletic footwear, apparel and
equipment than Hibbett Sports stores. Athletic equipment and apparel represent
a higher percentage of the overall merchandise mix at Sports & Co. superstores
than they do at Hibbett Sports stores. Sports & Co. superstores are designed to
project the same exciting and entertaining in-store atmosphere as Hibbett Sports
stores but on a larger scale. For example, Sports & Co. superstores offer
customer participation areas, such as putting greens and basketball hoop shoots,
and feature periodic special events including appearances by well-known
athletes.
Sports Additions
The Company's nine Sports Additions stores are small, mall-based stores,
averaging 1,500 square feet with approximately 90% of merchandise consisting of
athletic footwear and the remainder consisting of caps and a limited assortment
of apparel. Sports Additions stores offer a broader assortment of athletic
footwear, with a greater emphasis on fashion than the athletic footwear
assortment offered by Hibbett Sports stores. All but one Sports Additions
stores are currently located in the malls in which Hibbett Sports stores are
also present.
Team Sales
Hibbett Team Sales, Inc. ("Team Sales"), a wholly-owned subsidiary of the
Company, is a leading supplier of customized athletic apparel, equipment and
footwear to school, athletic and youth programs in Alabama. Team Sales sells its
merchandise directly to educational institutions and youth associations. The
operations of Team Sales are independent of the operations of the Company's
stores, and its warehousing and distribution are managed separately out of its
own warehouse.
EXPANSION STRATEGY
Hibbett targets markets ranging in population from 30,000 to 250,000. By
targeting smaller markets, the Company believes that it is able to achieve
significant strategic advantages, including numerous expansion opportunities,
comparatively low operating costs and a more limited competitive environment
than generally faced in larger markets. In addition, the Company establishes
greater customer and vendor recognition as the leading full-line sporting goods
retailer in the local community.
The Company has recently accelerated its rate of new store openings to take
advantage of the growth opportunities in its target markets. The Company has
identified over 500 potential markets for future Hibbett Sports stores within
the states in which it operates and in contiguous states. Hibbett's clustered
expansion program, which calls for opening new stores within a two-hour driving
radius of another Company location, allows it to take advantage of efficiencies
in distribution, marketing and regional management. In January 1996 the Company
moved its operations to its newly constructed distribution center which has
significant expansion potential to support the Company's growth for the
foreseeable future.
In evaluating potential markets, the Company considers population, economic
conditions, local competitive dynamics and availability of suitable real estate.
Although approximately 74% of Hibbett Sports
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stores are located in enclosed malls, the stores also operate profitably in
strip center locations. As the Company continues to expand, it will open new
stores in mall and strip center locations.
MERCHANDISING
The Company's merchandising strategy is to provide a broad assortment of
quality athletic equipment, footwear and apparel at competitive prices. The
Company's stores offer a core selection of brand name merchandise with an
emphasis on team and individual sports. This merchandise mix is complemented by
a selection of localized apparel and accessories designed to appeal to a wide
range of customers within each market. The Company's leading product category
is athletic footwear, followed by apparel and sporting equipment, ranked
according to sales.
The Company emphasizes quality brand name merchandise. The Company believes
that the breadth and depth of its brand name merchandise selection generally
exceeds the merchandise selection carried by local independent competitors.
Many of these branded products are highly technical and require considerable
sales assistance. The Company coordinates with its vendors to educate the sales
staff at the store level on new products and trends.
Although the core merchandise assortment tends to be similar for each Hibbett
Sports store, important local or regional differences frequently exist.
Accordingly, the Company's stores regularly offer products that reflect
preferences for particular sporting activities in each community and local
interest in college and professional sports teams. The Company's knowledge of
these interests, combined with its access to leading vendors, enables Hibbett
Sports stores to react quickly to emerging trends or special events, such as
college or professional championships.
The Company's merchandise staff analyzes current sporting goods trends by
maintaining close relationships with the Company's vendors, monitoring sales at
competing stores, communicating with customers, store managers and personnel and
reviewing industry trade publications. The merchandise staff works closely with
store personnel to meet the requirements of individual stores for appropriate
merchandise in sufficient quantities.
VENDOR RELATIONSHIPS
The sporting goods retail business is very brand name driven. Accordingly, the
Company maintains relationships with a number of well-known sporting goods
vendors to satisfy customer demand. 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. As a result, the Company is able to
attract considerable vendor interest and establish long-term partnerships with
vendors. As its vendors expand their product lines and grow in popularity, the
Company expands its sales and promotions of these products within its stores. In
addition, as the Company continues to increase its store base and enter new
markets, the vendors have increased their brand presence within these regions.
The Company also places significant emphasis on and works with its vendors to
establish the most favorable pricing and to receive cooperative marketing funds.
Management believes the Company maintains excellent working relationships with
vendors. During fiscal 1998, the Company's largest vendor, Nike, represented
approximately 40% of its total purchases.
The loss of key vendor support could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
believes that it has long-standing and strong relationships with its vendors and
that it has adequate sources of brand name merchandise on competitive terms;
however, there can be no assurance that the Company will be able to acquire such
merchandise at competitive prices or on competitive terms in the future. In
this regard, certain merchandise that is high profile and in high demand may be
allocated by vendors based upon the vendors' internal criteria which are beyond
the Company's control.
4
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ADVERTISING AND PROMOTION
The Company targets special advertising opportunities in its markets to
increase the effectiveness of its advertising spending. In particular, the
Company prefers advertising in local media as a way to further differentiate
itself from national chain competitors. Substantially all of the Company's
advertising and promotional spending is centrally directed, with some funds
allocated to district managers on an as-requested basis. Advertising in the
sports pages of local newspapers serves as the foundation of the Company's
promotional program, and in fiscal 1998 it accounted for the majority of the
Company's total advertising spending. Other media such as local radio,
television and outdoor billboards are used by the Company to reinforce Hibbett
name recognition and brand awareness in the community. In addition, direct mail
to customers on an in-house mailing list has been used by the Company to
reinforce already established buying patterns and to increase customer loyalty.
DISTRIBUTION
The Company maintains a single 130,000 square foot distribution center in
Birmingham, Alabama for all 120 of its existing stores and manages the
distribution process centrally from its corporate headquarters which are located
in the same building as the distribution center. In January 1996 the Company
moved its operations to this newly constructed distribution center which has
significant expansion potential to support the Company's growth for the
foreseeable future. The Company believes strong distribution support for its
stores is a critical element of its expansion strategy and is central to its
ability to maintain a low cost operating structure. As the Company continues
its expansion, it intends to open new stores in locations that can be supplied
from the Company's distribution center.
The Company receives substantially all of its merchandise at its distribution
center. For key products, the Company maintains backstock at the distribution
center that is allocated and distributed to stores through an automatic
replenishment program based on items sold during the prior week. Merchandise is
typically delivered to stores weekly via Company-operated vehicles.
COMPETITION
The business in which the Company is engaged is highly competitive and many of
the items sold by the Company are sold by local sporting goods stores,
department and discount stores, athletic footwear and other specialty athletic
stores, traditional shoe stores and national and regional full-line sporting
goods stores. The marketplace for sporting goods remains highly fragmented as
many different retailers compete for market share by utilizing a variety of
store formats and merchandising strategies. In recent years, the growth of
large format retailers has resulted in significant consolidation in large
metropolitan markets. However, the Company believes that the competitive
environment for sporting goods remains different in small to mid-sized markets
where retail demand may not support larger format stores. In smaller markets
such as those targeted by the Company's Hibbett Sports format, national chains
compete by focusing on a specialty category like athletic footwear in the case
of Foot Locker and Foot Action. Accordingly, many of the stores with which the
Company competes are units of national chains that have substantially greater
financial and other resources than the Company. Hibbett Sports format stores
compete with national chains that focus on athletic footwear, local sporting
goods stores, department and discount stores and traditional shoe stores.
Although its Hibbett Sports format may face competition from a variety of
competitors, the Company believes that its Hibbett Sports format is able to
compete effectively by distinguishing itself as a full-line sporting goods store
with an emphasis on team and individual sports merchandise complemented by a
selection of localized apparel and accessories. The larger markets targeted by
Sports & Co. superstores are also highly competitive. The Company's Sports &
Co. superstores compete with sporting goods superstores, athletic footwear
superstores and mass merchandisers. Competitors of Sports & Co. superstores may
carry similar product lines and national brands and a broader assortment. The
Company believes the principal competitive factors in its markets are service,
breadth of merchandise offered, availability of brand names, availability of
local merchandise and price. The Company believes it competes favorably with
respect to
5
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these factors in the small to mid-sized markets in the Southeast. However, there
can be no assurance that the Company will continue to be able to compete
successfully against existing or future competitors. Expansion by the Company
into markets served by its competitors, entry of new competitors or expansion of
existing competitors into the Company's markets, could have a material adverse
effect on the Company's business, financial condition and results of operations.
EMPLOYEES
The Company employed approximately 523 full-time and approximately 912 part-
time employees at January 31, 1998, none of whom are represented by a labor
union. The number of part-time employees fluctuates depending on seasonal
needs. There can be no assurance that the Company's employees will not, in the
future, elect to be represented by a union. The Company considers its
relationship with its employees to be good and has not experienced significant
interruptions of operations due to labor disagreements.
ITEM 2. PROPERTIES
The Company currently leases all of its existing 120 store locations and
expects that its policy of leasing rather than owning will continue as it
expands. The Company's leases typically provide for a short initial lease term
with options on the part of the Company to extend. Management believes that
this lease strategy enhances the Company's flexibility to pursue various
expansion opportunities resulting from changing market conditions and to
periodically re-evaluate store locations. The Company's ability to open new
stores is contingent upon locating satisfactory sites, negotiating favorable
leases and recruiting and training additional qualified management personnel.
As current leases expire, the Company believes that it will be able either to
obtain lease renewals if desired for present store locations or to obtain leases
for equivalent or better locations in the same general area. To date, the
Company has not experienced difficulty in either renewing leases for existing
locations or securing leases for suitable locations for new stores. The
Company's leases may contain certain provisions with which the Company may not
be in compliance. Based primarily on the Company's belief that it maintains
good relations with its landlords, that most of its leases are at market rents
and that it has historically been able to secure leases for suitable locations,
management believes that these provisions will not have a material adverse
effect on the business or financial condition of the Company.
The Company moved its operations to the newly-built corporate offices and
distribution center in Birmingham, Alabama in January 1996. The offices and the
distribution center are leased by the Company under a long term operating lease.
Team Sales owns its warehousing and distribution center located in Birmingham,
Alabama.
ITEM 3. 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 business, financial position or
results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
6
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the NASDAQ National Market
(NASDAQ) under the symbol HIBB. Trading of the Company's stock commenced on
October 11, 1996. The following table sets forth, for the periods indicated, the
high and low closing sales prices of shares of the Common Stock as reported by
NASDAQ.
<TABLE>
<CAPTION>
FISCAL 1998: High Low
------- -------
<S> <C> <C>
First Quarter (February 2 to May 3) $ 17 3/4 $ 15
Second Quarter (May 4 to August 2) $ 23 1/2 $ 15
Third Quarter (August 3 to November 1) $ 32 1/4 $ 22
Fourth Quarter (November 2 to January 31) $ 28 $ 17
FISCAL 1997:
Third Quarter (October 11 to November 2) $ 21 1/2 $ 19 1/2
Fourth Quarter (November 3 to February 1) $ 19 1/2 $ 12 1/8
</TABLE>
On April 2, 1998, the last reported sale price for the Company's Common Stock
as quoted by NASDAQ was $27 7/8 per share. As of April 2, 1998, the Company had
approximately 46 registered shareholders.
The Company has never declared or paid any dividends on its common stock. The
Company currently intends to retain its future earnings to finance the growth
and development of its business and therefore does not anticipate declaring or
paying cash dividends on its common stock for the foreseeable future. Any
future decision to declare or pay dividends will be at the discretion of the
Board of Directors and will be dependent upon the Company's financial condition,
results of operations, capital requirements, and such other factors as the Board
of Directors deems relevant.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The information required is incorporated by reference from page 28 of the
Company's 1998 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required is incorporated by reference from pages 10 to 14 of
the Company's 1998 Annual Report to Stockholders.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required is incorporated by reference from pages 15 to 27 of
the Company's 1998 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
7
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required is incorporated by reference from the sections
entitled "Directors and Executive Officers", "The Board of Directors", and
"Certain Relationships and Related Transactions" in the Proxy Statement for the
Annual Meeting of Stockholders to be held June 9, 1998 (the "Proxy Statement"),
which is to be filed with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
The information required is incorporated by reference from the section
entitled "Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required is incorporated by reference from the sections
entitled "Security Ownership of Certain Beneficial Owners" and "Directors and
Executive Officers" in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required is incorporated by reference from the section
entitled "Certain Relationships and Related Transactions" in the Proxy
Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements:
The following Financial Statements and Supplementary Data of the
Registrant and Independent Auditors' Report on such Financial
Statements are incorporated by reference from the Company's 1998 Annual
Report to Stockholders, in Part II, Item 8:
Consolidated Balance Sheets as of January 31, 1998 and February 1, 1997
Consolidated Statements of Operations for the fiscal years ended
January 31,1998, February 1, 1997 and February 3,1996
Consolidated Statements of Stockholders' Investment for the fiscal
years ended January 31, 1998, February 1, 1997 and February 3, 1996
Consolidated Statements of Cash Flows for the fiscal years ended
January 31, 1998, February 1, 1997 and February 3, 1996
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
2. Financial Statement Schedules:
8
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The following consolidated financial statement schedule of Hibbett
Sporting Goods, Inc. is attached hereto:
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are not applicable, and
therefore have been omitted.
3. Exhibits.
The Exhibits listed on the accompanying Exhibits Index are filed as
part of, or incorporated by reference into, this report.
EXHIBITS INDEX
Exhibit #
- ---------
3.1 (a) Certificate of Incorporation of the Company
3.2 (a) Bylaws of the Company
10.1.1(a) Revolving Credit Facility dated as of October 31, 1996 between
the Company, Hibbett Team Sales, Inc. and Amsouth Bank of Alabama
10.2 (b) Advisory Agreement dated November 1, 1995 between the Company and
Saunders, Karp & Co., L.P.
10.3 (b) Employment and Post-Employment Agreement dated as of November 1,
1995 between the Company and Michael J. Newsome
10.4 (b) Letter from the Company to Michael J. Newsome dated November 1, 1995
re: Incentive Compensation Arrangements
10.5 (b) Non-competition Agreement dated November 1, 1995 among Charles C.
Anderson, Joel R. Anderson, Clyde B. Anderson, the Company, The SK
Equity Fund, L.P. and SK Investment Fund, L.P.
10.6 (d) The Company's Stock Option Plan (as amended effective as of October
10, 1996)
10.7 (d) The Company's Amended and Restated 1996 Stock Option Plan
("1996 Plan")
10.8 (d) The Company's Employee Stock Purchase Plan
10.9 (d) The Company's Stock Plan for Outside Directors
10.10.1 (b) Lease Agreement dated as of February 12, 1996 between QRS 12-14
(AL), Inc. and Sports Wholesale, Inc. (the "Lease Agreement")
10.10.2 (c) Landlord's Waiver and Consent re: Lease Agreement dated February
12, 1996 by QRS 12-14 (AL), Inc.
9
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10.11 (d) Letter from the Company to Clyde B. Anderson dated September 13,
1996 re: Consulting Agreement
13.1 + Fiscal 1998 Annual Report
21 (b) List of Company's Subsidiaries
23.1 + Consent of Arthur Andersen LLP
27 + Financial Data Schedule
(a) Filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended February 1, 1997, and incorporated
herein by reference.
(b) Filed as an exhibit to the Company's Registration Statement on
Form S-1, (Registration No. 333-07023) filed with the Securities
and Exchange Commission June 27, 1996, and incorporated herein by
reference.
(c) Filed as an exhibit to Amendment No. 1 to the Company's
Registration Statement on Form S-1(Registration No. 333-07023),
filed with the Securities and Exchange Commission July 16, 1996,
and incorporated herein by reference.
(d) Filed as an exhibit to Amendment No. 2 to the Company's
Registration Statement on Form S-1(Registration No. 333-07023),
filed with the Securities and Exchange Commission September 16,
1996, and incorporated herein by reference.
+ Filed heretowith
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the three months ended
January 31, 1998.
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HIBBETT SPORTING GOODS, INC.
By: /s/ Michael J. Newsome
------------------------------------------
Michael J. Newsome
President
10
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------------------------------- ------------------------------------- ----------------------
<S> <C> <C>
/s/ Michael J. Newsome Principal Executive Officer and April 23, 1998
- ----------------------------------------------------- Director --------------
Michael J. Newsome
Principal Financial Officer and
/s/ Susan H. Fitzgibbon Principal Accounting Officer April 23, 1998
- ----------------------------------------------------- --------------
Susan H. Fitzgibbon
/s/ Clyde B. Anderson Director April 23, 1998
- ----------------------------------------------------- --------------
Clyde B. Anderson
/s/ H. Ray Compton Director April 23, 1998
- ----------------------------------------------------- --------------
H. Ray Compton
/s/ F. Barron Fletcher, III Director April 23, 1998
- ----------------------------------------------------- --------------
F. Barron Fletcher, III
/s/ Carl Kirkland Director April 23, 1998
- ----------------------------------------------------- --------------
Carl Kirkland
/s/ John F. Megrue, Jr. Director April 23, 1998
- ----------------------------------------------------- --------------
John F. Megrue, Jr.
/s/ Thomas A. Saunders, III Director April 23, 1998
- ----------------------------------------------------- --------------
Thomas A. Saunders, III
</TABLE>
11
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULES AND EXHIBITS
TO
ANNUAL REPORT
ON
FORM 10-K
FOR THE FISCAL YEAR ENDED
JANUARY 31, 1998
----------------------
HIBBETT SPORTING GOODS, INC.
12
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Hibbett Sporting Goods, Inc.:
We have audited in accordance with generally accepted auditing standards, the
financial statements of HIBBETT SPORTING GOODS, INC. (a Delaware corporation,
formerly an Alabama corporation) AND SUBSIDIARIES, included in this Form 10-K
and have issued our report thereon dated March 12, 1998. Our audit was made for
the purpose of forming an opinion on the basic financial statements taken as a
whole. Schedule II included in Part IV of the Form 10-K is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 12, 1998
13
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HIBBETT SPORTING GOODS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 1998, FEBRUARY 1, 1997, AND FEBRUARY 3, 1996
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------
January 31, February 1, February 3,
1998 1997 1996
------------------ --------------- -----------------
<S> <C> <C> <C>
Balance of allowance for doubtful accounts
at beginning of period $134,000 $ 86,000 $ 61,000
Charged to costs and expenses 110,000 71,000 62,000
Write-offs, net of recoveries (60,000) (23,000) (37,000)
------------------ --------------- -----------------
Balance of allowance for doubtful accounts
at end of period $184,000 $134,000 $ 86,000
================== =============== =================
</TABLE>
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<PAGE>
EXHIBIT 13.1
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
January 31, February 1, February 3, January 28, January 29,
1998 1997 1996 1995 1994 (1)
----------- ----------- ----------- ----------- -----------
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks)
<S> <C> <C> <C> <C> <C>
Income Statement Data :
Net sales $ 113,563 $ 86,401 $ 67,077 $ 52,266 $ 40,119
Cost of goods sold, including warehouse,
distribution, and store occupancy costs 78,714 60,017 46,642 36,225 27,731
----------- ----------- ----------- ----------- -----------
Gross profit 34,849 26,384 20,435 16,041 12,388
Store operating, selling, and administrative
expenses 22,947 17,339 (2) 13,471 10,453 8,579
Depreciation and amortization 2,286 1,821 1,322 1,066 932
----------- ----------- ----------- ----------- -----------
Operating income 9,616 7,224 5,642 4,522 2,877
Interest expense, net 8 2,642 1,685 (3) 654 488
----------- ----------- ----------- ----------- -----------
Income before provision for income
taxes and extraordinary item 9,608 4,582 3,957 3,868 2,389
Provision for income taxes 3,675 1,752 1,514 1,479 920
----------- ----------- ----------- ----------- -----------
Income before extraordinary item 5,933 2,830 2,443 2,389 1,469
Extraordinary item, net - (1,093) (4) - - -
----------- ----------- ----------- ----------- -----------
Net income $ 5,933 $ 1,737 $ 2,443 $ 2,389 $ 1,469
=========== =========== =========== =========== ===========
Earnings per common share (5) :
Basic:
Income before extraordinary item $ 0.95 $ 0.62 $ 0.42 $ 0.37 $ 0.23
Extraordinary item, net - (0.24) (4) - - -
----------- ----------- ----------- ----------- -----------
Net income $ 0.95 $ 0.38 $ 0.42 $ 0.37 $ 0.23
=========== =========== =========== =========== ===========
Diluted:
Income before extraordinary item $ 0.93 $ 0.61 $ 0.42 $ 0.37 $ 0.23
Extraordinary item, net - (0.24) (4) - - -
----------- ----------- ----------- ----------- -----------
Net income $ 0.93 $ 0.37 $ 0.42 $ 0.37 $ 0.23
=========== =========== =========== =========== ===========
Weighted average shares outstanding:
Basic 6,227,415 4,552,118 5,820,763 (3) 6,504,521 6,504,521
Diluted 6,362,755 4,671,268 5,838,267 (3) 6,504,521 6,504,521
Selected Operating Data :
Number of stores open at end of period :
Hibbett Sports 107 77 56 52 41
Sports & Co. 4 4 3 - -
Sports Additions 9 8 8 8 8
----------- ----------- ----------- ----------- -----------
Total 120 89 67 60 49
=========== =========== =========== =========== ===========
Balance Sheet Data :
Working capital $ 25,649 $ 16,280 $ 10,907 $ 7,459 $ 4,030
Total assets 53,366 40,358 36,702 22,787 17,507
Total debt - - (4) 31,912 (3) 5,328 6,179
Stockholders' investment (deficit) 38,155 26,512 (4) (8,093) (3) 8,259 5,871
</TABLE>
<PAGE>
FOOTNOTES (DOLLARS IN THOUSANDS):
(1) During fiscal year 1994, the Company changed its fiscal year from a twelve-
month period ending January 31 to a 52-53 week period ending on the
Saturday nearest to January 31.
(2) Includes a $513 pre-tax gain on the sale of the Company's former
headquarters and distribution facility and a one-time pre-tax compensation
expense of $462 related to stock options issued on August 1, 1996.
(3) In November 1995, the Company completed the Recapitalization. The
Recapitalization included the repurchase and retirement of 5,609,836 shares
of common stock for cash and debt and the issuance of 2,886,721 new shares
of common stock and debt in exchange for cash. The Recapitalization
resulted in a substantial increase in total debt outstanding and a deficit
in stockholders' investment.
(4) During the third quarter of fiscal 1997 ended November 2, 1996, the Company
completed its initial public offering with net proceeds of $32,868. In
connection therewith, a substantial portion of the Company's long-term debt
was repaid resulting in an extraordinary loss of $1,093 (net of applicable
tax benefit of $677).
(5) The Company adopted Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("EPS"), effective January 31, 1998, and restated EPS
for all periods presented.
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Hibbett is a rapidly-growing operator of full-line sporting goods stores in
small to mid-sized markets in fourteen states in the southeastern United States.
Hibbett's stores offer a broad assortment of 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.
As of January 31, 1998, the Company operated 107 Hibbett Sports stores as well
as nine 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 primarily in
enclosed malls as well as dominant strip center locations. 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.
Beginning in fiscal 1994, Hibbett accelerated its store opening rate to
approximately 10 stores per year. In fiscal 1997 and 1998, the Company further
accelerated its rate of new store openings to take advantage of the growth
opportunities in its target markets. In fiscal 1998, the Company opened 31 new
Hibbett Sports stores and two Sports Additions. The Company closed one Hibbett
Sports store and one Sports Additions store in fiscal 1998.
The Company's expansion strategy is to continue to open new Hibbett Sports
stores in its target markets. The Company plans to open at least 42 Hibbett
Sports stores in fiscal 1999.
In fiscal 1996 and 1997, the Company increased its staffing levels in finance,
merchandising, real estate, distribution and field management to support its
expansion plans. In addition, in January 1996, the Company moved into its new
headquarters and distribution center which has significant expansion potential
to support the Company's growth for the foreseeable future. The Company expects
to benefit from leveraging these additional costs over a larger store base as it
continues to implement its expansion plans.
In October 1996, the Company completed its initial public offering of
2,300,000 shares of common stock at the initial public offering price of $16.00
per share. The net proceeds to the Company of approximately $33.0 million were
used to repay the subordinated notes and accrued interest thereon, to repay the
term loan and accrued interest thereon, and to reduce borrowings under the
revolving loan agreement.
In October 1997, the Company completed a secondary public offering of
1,133,197 shares of common stock at the offering price of $27.75 per share. Of
the 1,133,197 shares of common stock offered, 933,197 shares were offered by
certain selling shareholders and 200,000 shares were offered by the Company.
The net proceeds to the Company of approximately $4.8 million were used to
reduce borrowings under the revolving credit facility and for working capital
and general corporate purposes.
<PAGE>
The Company operates on a 52 or 53 week fiscal year ending on the Saturday
nearest to January 31 of each year. The consolidated statements of operations
for the fiscal years ended January 31, 1998, and February 1, 1997, include 52
weeks of operations while the fiscal year ended February 3, 1996, includes 53
weeks of operations. Hibbett is incorporated under the laws of the State of
Delaware.
RESULTS OF OPERATIONS
The following table sets forth consolidated statements of operations expressed
as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
January 31, February 1, February 3,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0%
Cost of goods sold, including warehouse,
distribution, and store occupancy costs 69.3 69.5 69.5
----- ----- -----
Gross Profit 30.7 30.5 30.5
Store operating, selling, and administrative expenses 20.2 20.1 20.1
Depreciation and amortization 2.0 2.1 2.0
----- ----- -----
Operating Income 8.5 8.3 8.4
Interest expense, net 0.0 3.0 2.5
----- ----- -----
Income before provision for income taxes
and extraordinary item 8.5 5.3 5.9
Provision for income taxes 3.3 2.0 2.3
----- ----- -----
Income before extraordinary item 5.2 3.3 3.6
Extraordinary item, net 0.0 ( 1.3) 0.0
----- ----- -----
Net income 5.2% 2.0% 3.6%
====== ====== ======
</TABLE>
FISCAL 1998 COMPARED TO FISCAL 1997
Net sales. Net sales increased $27.2 million, or 31.4%, to $113.6 million for
the fifty-two weeks ended January 31, 1998, from $86.4 million for the fifty-two
weeks ended February 1, 1997. The increase is attributable to the opening of
thirty-one Hibbett Sports stores, two Sports Additions stores, and a 6.4%
increase in comparable store net sales. The increase in comparable store net
sales was due primarily to increased ladies and kids footwear and apparel sales
as well as increased equipment sales and improved inventory processing at the
distribution center. New stores and stores not in the comparable store net
sales calculation accounted for $23.1 million of the increase in net sales and
increases in comparable store net sales contributed $4.1 million. During fiscal
1998, the Company also closed one Hibbett Sports store and one Sports Additions
store. Comparable store net sales data for the period reflect stores open
throughout the period and the corresponding period of the prior fiscal year.
Comparable store net sales reflect sales by the Company's traditional format
stores only.
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 $34.9 million, or 30.7% of net sales, in the fifty-two weeks
ended January 31, 1998, as compared to $26.4 million, or 30.5% of net sales, in
the prior fiscal year. The increase in gross profit as a percent to sales was
the result of a slightly higher product margin combined with improved leveraging
of warehouse and distribution costs over higher sales.
<PAGE>
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $23.0 million, or 20.2% of net sales,
in fiscal 1998 as compared to $17.3 million, or 20.1% of net sales, in fiscal
1997. Lower advertising costs in fiscal 1998 as a percent of sales were offset
by higher public company related costs in the Company's first full year as a
public company, as well as the costs associated with the opening of 33 new
stores as compared to 22 new stores in the prior year.
Depreciation and amortization. Depreciation and amortization as a percentage
of net sales declined slightly to 2.0% in the fifty-two weeks ended January 31,
1998 from 2.1% in the prior year due to the increase in net sales.
Interest expense, net. The $2.6 million decrease in net interest expense for
the fifty-two weeks ended January 31, 1998 compared to the prior year period is
primarily the result of the repayment of long-term debt with the proceeds of the
initial public offering in October 1996.
FISCAL 1997 COMPARED TO FISCAL 1996
Net sales. Net sales increased $19.3 million, or 28.8%, to $86.4 million for
the fifty-two weeks ended February 1, 1997, from $67.1 million for the fifty-
three weeks ended February 3, 1996. New stores and stores not in the comparable
store net sales calculation accounted for $14.3 million of the increase in net
sales and increases in comparable store net sales contributed $5.0 million.
Excluding the effect of the additional week of sales in the prior year period,
net sales increased 30.4%. The increase in sales in fiscal 1997 is attributable
to the opening of twenty-one Hibbett Sports stores and one Sports & Co.
superstore and a 10.2% increase in comparable store net sales for the 52 week
comparable period. The increase in comparable store net sales was due primarily
to increased footwear sales and improved inventory processing at the new
distribution center.
Gross profit. Gross profit was $26.4 million, or 30.5% of net sales, in the
fifty-two weeks ended February 1, 1997, as compared to $20.4 million, or 30.5%
of net sales, in the prior fiscal year. Improved leveraging of store occupancy
costs over higher sales was offset by higher markdowns in the current year.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses for the fifty-two weeks ended February 1,
1997 include a net gain of $533,000 on the disposal of assets which primarily
relates to the $513,000 gain on the sale of the former headquarters and
distribution facility. The net gain was substantially offset by a one-time
compensation expense of approximately $462,000 related to the issuance of stock
options on August 1, 1996. Excluding these items, store operating, selling and
administrative expenses were $17.4 million, or 20.1% of net sales, for the
fifty-two weeks ended February 1, 1997, as compared to $13.5 million, or 20.1%
of net sales, for the fifty-three weeks in the year ago period.
Depreciation and amortization. Depreciation and amortization as a percentage
of net sales increased slightly to 2.1% in the fifty-two weeks ended February 1,
1997 from 2.0% in the prior year.
Interest expense. The $957,000 increase in interest expense for the fifty-two
weeks ended February 1, 1997 compared to the prior year is due primarily to the
interest expense associated with the subordinated notes which were issued in
connection with the Recapitalization in November 1995 (see Note 2 to the
Consolidated Financial Statements) and, to a lesser extent, to an increase in
borrowings under the revolving loan agreement to fund new store openings. In
connection with the initial public offering, the Company repaid a substantial
portion of its long-term debt.
Extraordinary item, net. The $1.1 million extraordinary item is the result of
the early extinguishment of debt with the proceeds of the initial public
offering. This item is shown net of the applicable income tax benefit of
$677,000.
<PAGE>
FISCAL 1996 COMPARED TO FISCAL 1995
Net sales. Net sales increased $14.8 million, or 28.3%, to $67.1 million in
fiscal 1996 from $52.3 million in fiscal 1995. This increase is attributable to
the opening of four Hibbett Sports stores, three Sports & Co. superstores and
one Sports Additions store, an increase in comparable store net sales of 6.2%
and an additional week of sales as fiscal 1996 included 53 weeks of operations,
offset in part by the closing of one Sports Additions store. The increase in
comparable store net sales was due primarily to increased sales of footwear and
apparel. New stores and stores not in the comparable store net sales
calculation accounted for $11.8 million of the increase in net sales and
increases in comparable store net sales contributed $3.0 million.
Gross profit. Gross profit was $20.4 million, or 30.5% of net sales, in
fiscal 1996 as compared to $16.0 million, or 30.7% of net sales, in fiscal 1995.
The decline in gross profit as a percentage of net sales primarily resulted from
higher distribution costs. In anticipation of its accelerated expansion plan,
the Company increased staff positions at its distribution center, adding two
senior distribution center managers. Additionally, distribution costs were
higher as a result of the higher occupancy costs associated with the Company's
new headquarters and distribution center.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $13.5 million, or 20.1% of net sales,
in fiscal 1996 as compared to $10.5 million, or 20.0% of net sales, in fiscal
1995. This increase as a percentage of net sales is primarily attributable to
the costs associated with increasing the Company's corporate staff to support
future growth, including the addition of one real estate professional, one loss
prevention professional, one merchandise buyer and one visual merchandise
manager.
Depreciation and amortization. Depreciation and amortization as a percentage
of net sales remained constant at 2.0% in fiscal 1996 and fiscal 1995.
Interest expense. The $1.0 million increase in interest expense for fiscal
1996 is primarily due to the interest expense associated with the subordinated
notes which were issued in connection with the Recapitalization, as discussed in
the Notes to Consolidated Financial Statements, the increase in borrowings under
the revolving loan agreement and the previous loan agreement to fund new store
openings.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to new store openings and
working capital requirements. The Company's working capital requirements 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 flow from
operations and borrowings under its revolving loan 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. Income before extraordinary item has increased in each of the
last three fiscal years. In addition, the Company has continued to increase its
inventory levels throughout these periods as the number of stores has increased
and the larger Sports & Co. superstores have opened. These inventory increases
were primarily financed with cash from operations in each of the last three
fiscal years. These activities resulted in cash flows provided by (used in)
operating activities of $1.5 million, $1.8 million, and $(158,000) in fiscal
1998, fiscal 1997, and fiscal 1996, respectively.
With respect to cash flows from investing activities, capital expenditures for
fiscal 1998 were $4.6 million compared with $4.3 million in fiscal 1997 and $8.2
million in fiscal 1996. Capital expenditures in fiscal 1998 were primarily used
to open 31 new Hibbett Sports stores and two Sports Additions stores. During
fiscal 1997, the Company completed the sale-leaseback of its new headquarters
and distribution
<PAGE>
center and the sale of the former headquarters and warehouse facilities. The
Company used the proceeds of $5.3 million to (1) repay $4.3 million then
outstanding under the senior subordinated notes issued to temporarily finance
the new headquarters and distribution center, and (2) to fund its working
capital requirements. The higher capital expenditures in fiscal 1996 resulted
primarily from the construction of the new headquarters and distribution center
for approximately $4.7 million.
The Company estimates capital expenditures in fiscal 1999 to be approximately
$6.4 million which will fund the opening of approximately 42 Hibbett Sports
stores, remodel selected existing stores, and fund headquarters and distribution
center related capital expenditures.
Net cash provided by (used in) financing activities was $5.2 million,
($539,000), and $7.6 million in fiscal 1998, fiscal 1997, and fiscal 1996,
respectively. Cash flows from financing activities have historically
represented the Company's financing of its long-term growth. Proceeds from the
Company's secondary public stock offering in October 1997 were $4.8 million.
The proceeds were used to reduce borrowings under the revolving credit facility
and for working capital and general corporate purposes. In fiscal 1997, the
Company used the net proceeds of $32.9 million from the initial public stock
offering to repay long-term debt and revolving loan borrowings. The financing
activities in fiscal 1996 related to the Recapitalization of the Company in
November 1995 as discussed in the Notes to Consolidated Financial Statements.
In October 1996, the Company entered into 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 January
31,1998, the Company had no borrowings outstanding under the Facility which
expires October 31, 1999. Based on its current operating and store opening
plans, the Company believes that it can adequately fund its cash needs for the
foreseeable future through borrowings under the Facility and cash generated from
operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income, which establishes standards for reporting and display of
"comprehensive income," which is the total of net income and all other non-owner
changes in stockholders' equity, and its components. This standard is not
expected to have a significant impact on the Company's financial reporting in
fiscal 1999.
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131, which supersedes SFAS Nos.
14,18, 24 and 30, establishes new standards for segment reporting, using the
"management approach," in which reportable segments are based on the same
criteria on which management disaggregates a business for making operating
decisions and assessing performance. The Company will adopt the new rules in
fiscal 1999. The new rules are not expected to have a significant impact on the
Company's financial reporting.
In February 1998, the FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Post-retirement Benefits. SFAS No. 132, which supersedes
SFAS Nos. 87, 88, and 106, standardizes the disclosure requirements for pensions
and other post-retirement benefits to the extent practicable, requires
additional information on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis, and eliminates certain
disclosures that are no longer as useful as they were when SFAS Nos. 87, 88 and
106, were issued. The Company will adopt the new rules in fiscal 1999. The new
rules are not expected to have a significant impact on the Company's financial
reporting.
<PAGE>
DIVIDEND POLICY
The Company has never declared or paid any dividends on its common stock. The
Company currently intends to retain its future earnings to finance the growth
and development of its business and therefore does not anticipate declaring or
paying cash dividends on its common stock for the foreseeable future. Any
future decision to declare or pay dividends will be at the discretion of the
Board of Directors and will be dependent upon the Company's financial condition,
results of operations, capital requirements and other factors as the Board of
Directors deems relevant.
YEAR 2000 COMPLIANCE
The Company is in the process of evaluating its management and information
systems to identify and address Year 2000 issues. Based on present information,
management does not believe that its related costs with Year 2000 compliance
will be material.
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, including statements
related to the Year 2000 issue. 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 October 1, 1997, and any amendments
thereto.
QUARTERLY FLUCTUATIONS
The Company has historically experienced and expects to continue to experience
seasonal fluctuations in its net sales and operating income. The Company's net
sales and operating income are typically higher in the fourth quarter due to
sales increases during the holiday selling season. However, the seasonal
fluctuations are mitigated by the strong product demand in the spring, summer
and back-to-school sales periods. The Company's quarterly results of operations
may also fluctuate significantly as a result of a variety of factors, including
the timing of new store openings, the amount and timing of net sales contributed
by new stores, the level of pre-opening expenses associated with new stores, the
relative proportion of new stores to mature stores, merchandise mix, the
relative proportion of stores represented by each of the Company's three store
concepts and demand for apparel and accessories driven by local interest in
sporting events.
<PAGE>
The following tables set forth certain unaudited financial data for the quarters
indicated:
Unaudited Quarterly Financial Data
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Fiscal Year Ended January 31, 1998
--------------------------------------------------------------
First Second Third Fourth
(13 Weeks) (13 Weeks) (13 Weeks) (13 Weeks)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 26,165 $ 26,393 $ 27,797 $ 33,208
Gross profit 8,039 7,838 8,491 10,481
Operating income 2,281 1,611 2,193 3,531
Net income $ 1,424 $ 986 $ 1,350 $ 2,173
======== ======== ======== ========
Basic earnings per common share (4) :
Net income $ 0.23 $ 0.16 $ 0.22 $ 0.34
======== ======== ======== ========
Diluted earnings per common share (4) :
Net income $ 0.23 $ 0.16 $ 0.21 $ 0.33
======== ======== ======== ========
Fiscal Year Ended February 1, 1997
--------------------------------------------------------------
First Second Third Fourth
(13 Weeks) (13 Weeks) (13 Weeks) (13 Weeks)
---------- ---------- ---------- ----------
Net sales $ 20,251 $ 18,768 $ 20,618 $ 26,764
Gross profit 6,216 5,531 6,417 8,220
Operating income 2,429 (1) 725 (2) 1,543 2,527
Income before extraordinary item 935 (109) 464 1,540
Extraordinary item, net - - (1,093) (3) -
Net income $ 935 $ (109) $ (629) (3) $ 1,540
======== ======= ======== ========
Basic earnings per common share (4) :
Income before extraordinary item $ 0.24 $ (0.03) (2) $ 0.11 $ 0.25
Extraordinary item, net - - (0.24) (3) -
-------- ------- -------- --------
Net income $ 0.24 $ (0.03) (2) $ (0.13) (3) $ 0.25
======== ======= ======== ========
Diluted earnings per common share (4) :
Income before extraordinary item $ 0.24 $ (0.03) (2) $ 0.10 $ 0.25
Extraordinary item, net - - (0.24) (3) -
-------- ------- -------- --------
Net income $ 0.24 $ (0.03) (2) $ (0.14) (3) $ 0.25
======== ======= ======== ========
</TABLE>
Footnotes (dollars in thousands):
(1) In the first quarter of the fiscal year ended February 1, 1997, the
Company recorded a $513 pre-tax gain on the sale of the Company's
former headquarters and distribution facility. Excluding this gain,
operating income would have been $1,916.
(2) In the second quarter of the fiscal year ended February 1, 1997, the
Company recorded a one-time compensation expense of $462 related to
the issuance of stock options on August 1, 1996. Excluding this
expense, operating income would have been $1,187.
(3) In the third quarter of the fiscal year ended February 1, 1997, the
Company completed its initial public offering with net proceeds of
$32,868. In connection therewith, a substantial portion of the
Company's long-term debt was repaid resulting in an extraordinary loss
of $1,093, net of applicable tax benefit of $677.
(4) The Company adopted Statement of Financial Accounting Standard No.
128, Earnings Per Share ("EPS"), effective January 31, 1998, and
restated EPS for all periods presented.
In the opinion of the Company's management, this unaudited information has been
prepared on the same basis as the audited information presented elsewhere herein
and includes all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein. The operating
results from any quarter are not necessarily indicative of the results to be
expected for any future period.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
January 31, February 1,
1998 1997
----------- -----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 4,498 $ 2,269
Accounts receivable, net 1,839 2,097
Inventories 33,267 24,521
Prepaid expenses and other 603 485
Refundable income taxes 47 128
Deferred income taxes 606 626
-------- --------
40,860 30,126
-------- --------
Property and Equipment:
Land 24 24
Buildings 216 216
Equipment 6,903 5,798
Furniture and fixtures 5,341 4,564
Leasehold improvements 8,864 7,321
Construction in progress 1,242 683
-------- --------
22,590 18,606
Less accumulated depreciation & amortization 10,475 8,722
-------- --------
12,115 9,884
-------- --------
Noncurrent Assets:
Deferred income taxes 364 321
Other, net 27 27
-------- --------
391 348
-------- --------
$ 53,366 $ 40,358
======== ========
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 10,951 $ 10,381
Accrued income taxes 860 436
Accrued expenses:
Payroll-related 1,813 1,875
Other 1,587 1,154
-------- --------
15,211 13,846
-------- --------
Long-Term Debt - -
-------- --------
Commitments and Contingencies
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, 6,393,977 and 6,134,261 shares issued
and outstanding at January 31, 1998 and
February 1, 1997, respectively 64 61
Paid-in capital 53,681 47,974
Retained earnings (deficit) (15,590) (21,523)
-------- --------
38,155 26,512
-------- --------
$ 53,366 $ 40,358
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
January 31, February 1, February 3,
1998 1997 1996
(52 Weeks) (52 Weeks) (53 Weeks)
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 113,563 $ 86,401 $ 67,077
Cost of goods sold, including warehouse,
distribution, and store occupancy costs 78,714 60,017 46,642
----------- ----------- -----------
Gross profit 34,849 26,384 20,435
Store operating, selling, and administrative
expenses 22,947 17,339 13,471
Depreciation and amortization 2,286 1,821 1,322
----------- ----------- -----------
Operating income 9,616 7,224 5,642
Interest expense, net 8 2,642 1,685
----------- ----------- -----------
Income before provision for income taxes
and extraordinary item 9,608 4,582 3,957
Provision for income taxes 3,675 1,752 1,514
----------- ----------- -----------
Income before extraordinary item 5,933 2,830 2,443
Extraordinary item, net of income tax
benefit of $677 - (1,093) -
----------- ----------- -----------
Net income $ 5,933 $ 1,737 $ 2,443
=========== =========== ===========
Earnings per common share:
Basic:
Income before extraordinary item $ 0.95 $ 0.62 $ 0.42
Extraordinary item, net - (0.24) -
----------- ----------- -----------
Net income $ 0.95 $ 0.38 $ 0.42
=========== =========== ===========
Diluted:
Income before extraordinary item $ 0.93 $ 0.61 $ 0.42
Extraordinary item, net - (0.24) -
----------- ----------- -----------
Net income $ 0.93 $ 0.37 $ 0.42
=========== =========== ===========
Weighted average shares outstanding:
Basic 6,227,415 4,552,118 5,820,763
=========== =========== ===========
Diluted 6,362,755 4,671,268 5,838,267
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(Dollars In Thousands)
<TABLE>
<CAPTION>
Common Stock
-------------------- Retained
Number of Paid-In Earnings
Shares Amount Capital (Deficit)
----------- ------ ------- ---------
<S> <C> <C> <C> <C>
BALANCE, January 28, 1995 1,025,600 $ 10 $ 117 $ 8,132
Net income - - - 2,443
Issuance of shares in connection with a
38.687189-for-1 stock split 38,651,981 387 (387) -
Purchase and retirement of shares (34,220,000) (342) (43) (33,835)
Issuance of shares 17,609,000 176 17,433 -
Expenses related to capital transactions 322,419 3 (2,187) -
----------- ------ ------- ---------
BALANCE, February 3, 1996 23,389,000 234 14,933 (23,260)
Net income - - - 1,737
Retroactive effect of 1-for-6.1 reverse stock split (19,554,739) (196) 196 -
Initial public offering of common stock, net
of offering costs of $1,356 2,300,000 23 32,845 -
----------- ------ ------- ---------
BALANCE, February 1, 1997 6,134,261 61 47,974 (21,523)
Net income - - - 5,933
Secondary public offering of common stock,
net of offering costs of $449 200,000 2 4,815 -
Issuance of shares from the employee stock
purchase plan and the exercise of stock options 59,716 1 892 -
----------- ------ ------- ---------
BALANCE, January 31, 1998 6,393,977 $ 64 $53,681 $ (15,590)
=========== ====== ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------
January 31, February 1, February 3,
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,933 $ 1,737 $ 2,443
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary item - 1,770 -
Depreciation and amortization 2,286 1,969 1,475
Deferred income taxes (23) (101) (140)
(Gain) loss on disposal of assets 31 (533) 6
Interest expense funded through additional debt - 14 128
(Increase) decrease in assets:
Accounts receivable, net 258 (756) (247)
Inventories (8,746) (3,816) (5,969)
Prepaid expenses and other (120) 271 (644)
Refundable income taxes 81 291 (419)
Other noncurrent assets (12) 9 (474)
Increase (decrease) in liabilities:
Accounts payable 570 10 2,828
Accrued income taxes 424 436 (71)
Accrued expenses 833 517 926
----------- ----------- -----------
Total adjustments (4,418) 81 (2,601)
----------- ----------- -----------
Net cash provided by (used in) operating activities 1,515 1,818 (158)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,548) (4,308) (8,172)
Proceeds from sale of property 14 5,267 6
----------- ----------- -----------
Net cash provided by (used in) investing activities (4,534) 959 (8,166)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common shares in
public offering 4,817 32,868 -
Repayment of subordinated and senior subordinated notes
payable to stockholders - (20,267) -
Revolving loan borrowings and repayments, net - (12,140) 12,140
Repayment of term loan - (1,000) -
Purchase and retirement of shares in the Recapitalization - - (22,250)
Issuance of shares in the Recapitalization - - 17,609
Expenses related to the Recapitalization - - (2,184)
Principal payments on long-term debt - - (5,328)
Proceeds from issuance of long-term debt to stockholders - - 6,641
Proceeds from term loan - - 1,000
Proceeds from options exercised and purchase of shares
under the employee stock purchase plan 431 - -
----------- ----------- -----------
Net cash provided by (used in) financing activities 5,248 (539) 7,628
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,229 2,238 (696)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,269 31 727
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,498 $ 2,269 $ 31
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 43 $ 3,006 $ 1,038
=========== =========== ===========
Income taxes, net of refunds $ 3,153 $ 846 $ 2,144
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING
ACTIVITIES:
Issuance of debt (including unamortized debt discount)
to stockholders for the purchase of shares in
the Recapitalization $ - $ - $ 13,051
=========== =========== ===========
Issuance of stock as compensation related to capital
transactions in the Recapitalization $ - $ - $ 322
=========== =========== ===========
Noncash recognition of paid-in capital related to exercise
of stock options $ 462 $ - $ -
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Hibbett Sporting Goods, Inc. (the "Company") is an operator of full-line
sporting goods retail stores in small to mid-sized markets in the Southeastern
United States. The Company's fiscal year ends on the Saturday closest to
January 31 of each year. 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.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of the Company include its accounts and
the accounts of all wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect (1) the reported amounts of certain assets and liabilities and disclosure
of certain contingent assets and liabilities at the date of the financial
statements, and (2) the reported amounts of certain revenues and expenses during
the reporting period. Actual results could differ from those estimates.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company
considers all short-term, highly liquid investments with original maturities of
three months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market using the retail
inventory method of accounting, with cost determined on a first-in, first-out
basis and market based on the lower of replacement cost or estimated realizable
value. The Company's business is dependent to a significant degree upon close
relationships with its vendors. During fiscal 1998, the company's largest
vendor, Nike, represented approximately 40% of its purchases.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. It is the Company's policy to
depreciate assets acquired prior to January 28, 1995 using accelerated and
straight-line methods over the estimated service lives (3 to 10 years for
equipment, 5 to 10 years for furniture and fixtures, and 10 to 31.5 years for
buildings) and to amortize leasehold improvements using the straight-line method
over the periods of the applicable leases. Depreciation on assets acquired
subsequent to January 28, 1995 is provided using the straight-line method over
the estimated service lives (3 to 5 years for equipment, 7 years for furniture
and
<PAGE>
fixtures, and 39 years for buildings) or, in the case of leasehold improvements,
10 years or over the lives of the respective leases, if shorter.
Maintenance and repairs are charged to expense as incurred. Costs of renewals
and betterments are capitalized by charges to property accounts and are
depreciated using applicable annual rates. The cost and accumulated depreciation
of assets sold, retired, or otherwise disposed of are removed from the accounts,
and the related gain or loss is credited or charged to income.
STORE OPENING COSTS
Non-capital expenditures incurred in preparation for opening new retail stores
are expensed in the period each store opens.
STOCK-BASED COMPENSATION
Compensation cost is measured under the intrinsic value method in accordance
with Accounting Principles Bulletin No. 25. Pro forma disclosures of net income
and earnings per share are presented as if the fair value method had been
applied, as required under Statement of Financial Accounting Standards ("SFAS")
No. 123.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In preparing disclosures about the fair value of financial instruments,
management has assumed that the carrying amount approximates fair value for cash
and cash equivalents, receivables, short-term borrowings and accounts payable,
because of the short maturities of those instruments. The estimated fair values
of any long-term debt instruments outstanding at year end are based upon the
current interest rate environment and remaining term to maturity.
ADVERTISING COSTS
Costs incurred for producing and communicating advertising are expensed when
incurred.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method,
which generally requires recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse. In
addition, the asset and liability method requires the adjustment of previously
deferred income taxes for changes in tax rates.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, Earnings per Share. This statement is effective for financial
statements issued for periods after December 15, 1997 and requires restatement
for all prior-period earnings per share ("EPS") data presented.
SFAS No. 128 simplifies the standards for computing EPS previously found in
APB Opinion No. 15, Earnings per Share, and makes them comparable to
international EPS standards. It requires dual presentation of basic and diluted
EPS on the face of the statement of operations.
<PAGE>
Basic EPS excludes dilution and is computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock are exercised or converted into common stock or
resulted in the issuance of common stock that then shared in earnings. Diluted
EPS has been computed based on the weighted average number of shares
outstanding, including the effect of outstanding stock options, if dilutive, in
each respective year.
The Company adopted SFAS No. 128 effective January 31,1998, and restated
EPS for all periods presented in the consolidated statements of operations. A
reconciliation of the weighted average shares for basic and diluted EPS is as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------------------
January 31, February 1, February 3,
1998 1997 1996
--------------------- --------------------- ----------------------
<S> <C> <C> <C>
Weighted average shares outstanding:
Basic 6,227,415 4,552,118 5,820,763
Dilutive effect of stock options outstanding 135,340 119,150 17,504
--------------------- --------------------- ----------------------
Diluted 6,362,755 4,671,268 5,838,267
===================== ===================== ======================
</TABLE>
All earnings per share, weighted average shares outstanding, stock options and
stock option per share amounts have been retroactively restated for all periods
presented to reflect the 1-for-6.1 reverse stock split discussed in Note 2.
Supplemental basic earnings per share for fiscal 1997 is calculated by dividing
net income after adjustment for applicable interest expense of $1,491,000 (net
of tax), by the adjusted number of weighted average shares outstanding
(6,134,261 shares after giving effect to the number of shares to repay
$31,012,000 of debt). Supplemental basic earnings per share before and after
the extraordinary item for the fiscal year ended February 1, 1997 was $ .70 and
$ .53, respectively.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
During 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, was issued. The new standard
requires all businesses to recognize an impairment loss on a long-lived asset as
a charge to current income when certain events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable. The
Company adopted the new standard effective February 4, 1996 with no significant
impact on its financial position or results of operations.
NEW ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and display of "comprehensive income,"
which is the total of net income and all other non-owner changes in
stockholders' equity, and its components. This standard is not expected to have
a significant impact on the Company's financial reporting in fiscal 1999.
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131, which supersedes SFAS Nos.
14,18, 24 and 30, establishes new standards for segment reporting, using the
"management approach," in which reportable segments are based on the same
criteria on which management disaggregates a business for making operating
decisions and assessing performance. The Company will adopt the new rules in
fiscal 1999. The new rules are not expected to have a significant impact on the
Company's financial reporting.
<PAGE>
In February 1998, the FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Post-retirement Benefits. SFAS No. 132, which supersedes
SFAS Nos. 87, 88, and 106, standardizes the disclosure requirements for pensions
and other post-retirement benefits to the extent practicable, requires
additional information on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis, and eliminates certain
disclosures that are no longer as useful as they were when SFAS Nos. 87, 88 and
106, were issued. The Company will adopt the new rules in fiscal 1999. The new
rules are not expected to have a significant impact on the Company's financial
reporting.
PRIOR YEAR RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. STOCKHOLDERS' INVESTMENT TRANSACTIONS
On November 1, 1995, the Company's Board of Directors approved a series of
equity and debt transactions which resulted in a recapitalization of the Company
and a change in controlling ownership of the common stock outstanding (the
"Recapitalization"). In connection with the Recapitalization, the Company's
Board of Directors (i) increased the number of authorized shares of common stock
from 3,000,000 to 50,000,000 shares, (ii) declared a 38.687189-for-1 stock
split, (iii) approved the repurchase and retirement of 34,220,000 shares
(5,609,836 shares after giving retroactive effect to the 1-for-6.1 reverse stock
split discussed below) of common stock for $1.00 per share ($6.10 per share
after giving retroactive effect to the 1-for-6.1 reverse stock split discussed
below) with $22,250,000 cash and the issuance of $13,051,000 of debt (including
unamortized debt discount), and (iv) approved the issuance of 17,609,000 new
shares (2,886,721 shares after giving effect of the 1-for-6.1 reverse stock
split discussed below) of common stock at $1.00 per share ($6.10 per share after
giving retroactive effect to the 1-for-6.1 reverse stock split discussed below)
and $7,074,000 of debt (including unamortized debt discount) for $24,250,000
cash. Expenses of $2,506,000 were incurred in connection with the
Recapitalization and reduced paid-in capital.
On September 13, 1996, the Company's Board of Directors approved a 1-for-6.1
reverse stock split of the Company's Common Stock. In addition, the Board of
Directors approved a plan of reorganization which included (i) reincorporating
the Company in the state of Delaware, (ii) decreasing the number of authorized
shares of common stock from 50,000,000 to 12,000,000 shares, and (iii)
authorizing 1,000,000 shares of preferred stock, par value $.01 per share.
All references in the financial statements to weighted average shares
outstanding, earnings per share, and stock options have been restated to reflect
the above stock splits and the reverse stock split.
In October 1996, the Company completed its initial public offering of
2,300,000 shares of common stock at the initial public offering price of $16 per
share. The net proceeds to the Company of $32,868,000 were used to repay the
subordinated notes and accrued interest thereon, to repay the term loan and
accrued interest thereon, and to reduce borrowings under the revolving loan
agreement.
In October 1997, the Company and certain shareholders completed a public
offering of 200,000 primary shares and 933,197 secondary shares at a price of
$27.75 per share. The Company's net proceeds of $4,817,000 were used to reduce
borrowings under the revolving credit facility and for working capital and
general corporate purposes.
<PAGE>
3. LONG-TERM DEBT
At January 31, 1998, the Company maintained an unsecured revolving credit
facility (the "Facility") totaling $20,000,000 which expires October 31, 1999.
There were no amounts outstanding under the Facility at January 31, 1998 or
February 1, 1997. Under the Facility, the Company may borrow amounts against a
base rate, a quoted costs of funds rate, or a LIBOR based rate. The average
amount of borrowings outstanding under the Facility during fiscal 1998 was
$1,652,450, the maximum amount outstanding was $4,394,250, and the weighted
average interest rate was 6.93%. The average amount of borrowings outstanding
under the Facility during fiscal 1997 was $5,028,000, the maximum amount
outstanding was $6,261,000, and the weighted average interest rate was 7.44%.
The Company's Facility contains certain restrictive covenants common to such
agreements. The Company was in compliance with respect to all of its covenants
at January 31, 1998.
From November 1, 1995 until October 1996, the company maintained a revolving
loan agreement totaling $25,000,000 which was secured by certain levels of the
Company's accounts receivable and inventories. In connection with the Company's
initial public offering, the amount outstanding under the agreement was repaid
and the revolving loan agreement was terminated. The average amount of
borrowings outstanding under the revolving loan agreement during fiscal 1997 was
$15,996,000, the maximum amount outstanding was $18,522,000, and the weighted
average interest rate was 9.0%.
As part of the Recapitalization, in November 1995, the Company issued to
stockholders subordinated notes and senior subordinated bridge notes totaling
$20,125,000 with an original issue discount of $1,514,000 related solely to the
stockholders' subordinated notes. A portion of the proceeds of these borrowings
were utilized to retire existing debt. In January 1996, the Company issued
$128,000 of additional notes as satisfaction for interest on the Company's
bridge notes. The Company repaid the senior subordinated bridge notes in
February 1996. In connection with the Company's initial public offering in
October 1996, the subordinated notes were repaid. The repayment resulted in a
loss of $1,093,000 (net of the applicable income tax benefit of $677,000) which
is classified as an extraordinary item in the accompanying statement of
operations.
4. LEASES
The Company leases the premises for its retail sporting goods stores under
operating leases which expire in various years through the year 2008. Many of
these leases contain renewal options and require the Company to pay executory
costs (such as property taxes, maintenance, and insurance). Rental payments
typically include minimum rentals plus contingent rentals based on sales.
In February 1996, the Company entered into a sale-leaseback transaction to
finance its new warehouse and office facilities. The sales price of $4,700,000
approximated the book value of the facility after considering transaction
expenses. The related lease term is for 15 years at $476,000 per year and is
structured as an operating lease.
<PAGE>
Minimum future rental payments under noncancelable operating leases having
remaining terms in excess of one year as of January 31, 1998 are as follows:
FISCAL YEAR ENDING
------------------
1999 $ 6,709,000
2000 6,573,000
2001 5,869,000
2002 5,510,000
2003 2,704,000
Thereafter 12,718,000
-----------
$40,083,000
===========
Rental expense for all operating leases consisted of the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
JANUARY 31, FEBRUARY 1, FEBRUARY 3,
1998 1997 1996
----------------------------------------------
<S> <C> <C> <C>
Minimum rentals $5,645,000 $4,365,000 $3,080,000
Contingent rentals 822,500 682,000 487,000
---------- ---------- ----------
$6,467,500 $5,047,000 $3,567,000
========== ========== ==========
</TABLE>
5. PROFIT-SHARING PLAN
The Company maintains a 401(k) profit sharing plan (the "Plan") which permits
participants to make pretax contributions to the Plan. The Plan covers all
employees who have completed one year of service and who are at least 21 years
of age. Participants of the Plan may voluntarily contribute from 2% to 15% of
their compensation within certain dollar limits as allowed by law. These
elective contributions are made under the provisions of Section 401(k) of the
Internal Revenue Code which allows deferral of income taxes on the amount
contributed to the Plan. The Company's contribution to the Plan equals
(1) an amount determined at the discretion of the Board of Directors plus (2) a
matching contribution equal to a discretionary percentage of up to 6% of a
participant's compensation. Contribution expense for fiscal years 1998, 1997,
and 1996 was $303,000, $238,000, and $165,000, respectively.
6. RELATED-PARTY TRANSACTIONS
Subsequent to November 1, 1995, the Company's new majority stockholder began
providing financial advisory services to the Company for an annual fee of
$200,000. Such services include, but are not necessarily limited to, advice and
assistance concerning any and all aspects of the operation, planning, and
financing of the Company. Management fee expense under this arrangement was
$200,000 in both fiscal 1998 and fiscal 1997, and $50,000 in fiscal 1996.
Prior to November 1, 1995, the Company's previous majority stockholders (now
minority stockholders) provided to the Company similar services as discussed
above. Fees for these services amounted to $0 and $95,000 in fiscal
years 1997 and 1996, respectively.
<PAGE>
Subordinated notes payable to stockholders, net of the related unamortized
debt discount, were outstanding and included in long-term debt in the amount of
$18,772,000 at February 3, 1996. Related to these notes, the Company incurred
approximately $1,355,000 of interest expense in fiscal 1997. In fiscal 1996,
the Company incurred approximately $620,000 of interest expense, of which
approximately $492,000 was included in accrued expenses and approximately
$128,000 was capitalized into the senior subordinated bridge notes payable at
February 3, 1996.
In connection with services provided to the Company related to the
Recapitalization discussed in Note 2, the Company paid the majority stockholder
and minority stockholders approximately $575,000 and $63,000, respectively, and
issued to a minority stockholder 322,419 shares (52,855 shares after giving
retroactive effect to the 1-for-6.1 reverse stock split discussed in Note 2) of
common stock with an aggregate value of approximately $322,000. These costs
were recorded as a reduction to paid-in capital.
In November 1995, the Company entered into a sublease for one store with an
entity that is controlled by a minority stockholder which expires in June 2008.
Minimum lease payments were $190,800 in both fiscal 1998 and fiscal 1997, and
$27,000 in fiscal 1996. Future minimum lease payments under this noncancelable
sublease aggregate $1,987,500.
The Company leased its previous warehouse and office facilities under a lease-
purchase agreement which was fully paid in a previous year. Subsequent to
February 3, 1996, the Company sold an assignment of its interest in the lease on
this property to a related party for $850,000, which resulted in a gain of
approximately $513,000 in the fiscal year ended February 1, 1997.
On August 1, 1996, the Company entered into an agreement with a minority
stockholder which provided for an annual fee of $50,000 and the grant of 70,820
stock options discussed in Note 8 in consideration for his advisory services to
the Company. In consideration of these services, this stockholder received a
fee of $25,000 in the fiscal year ended January 31, 1998, and the agreement has
been terminated.
7. INCOME TAXES
A summary of the components of the provision for income taxes is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------
JANUARY 31, FEBRUARY 1, FEBRUARY 3,
1998 1997 1996
-----------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $3,211,000 $1,650,000 $1,476,000
Deferred (19,000) (90,000) (126,000)
---------------- ----------------- --------------
3,192,000 1,560,000 1,350,000
---------------- ----------------- --------------
State:
Current 487,000 203,000 178,000
Deferred (4,000) (11,000) (14,000)
---------------- ----------------- --------------
483,000 192,000 164,000
---------------- ----------------- --------------
Provision for income taxes $3,675,000 $1,752,000 $1,514,000
================ ================= ==============
</TABLE>
<PAGE>
The provision for income taxes differs from the amounts computed by applying
federal statutory rates due to the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------
JANUARY 31, FEBRUARY 1, FEBRUARY 3,
1998 1997 1996
------------------------------------------------
<S> <C> <C> <C>
Tax provision computed at the federal
statutory rate (34%) $3,267,000 $1,558,000 $1,345,000
Effect of state income taxes, net of benefits 393,000 151,000 118,000
Other 15,000 43,000 51,000
---------- ---------- ----------
$3,675,000 $1,752,000 $1,514,000
========== ========== ==========
</TABLE>
Temporary differences which create deferred tax assets are detailed below:
<TABLE>
<CAPTION>
JANUARY 31, 1998 FEBRUARY 1, 1997
-----------------------------------------------------------
CURRENT NONCURRENT CURRENT NONCURRENT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $ 0 $364,000 $ 0 $321,000
Inventory 90,000 0 101,000 0
Accruals 560,000 0 539,000 0
Other (44,000) 0 (14,000) 0
-------- -------- -------- --------
Deferred tax asset $606,000 $364,000 $626,000 $321,000
======== ======== ======== ========
</TABLE>
The Company has not recorded a valuation allowance for deferred tax assets as
realization is considered more likely than not.
8. STOCK OPTIONS AND STOCK PURCHASE PLANS
Stock Option Plans
The Company utilizes the intrinsic value method of accounting for stock option
grants. As the option exercise price is generally equal to the fair value of the
shares of common stock at the date of the option grant, no compensation cost is
recognized.
The Hibbett Sporting Goods, Inc. Employee Stock Option Plan, as amended (the
"Original Option Plan") authorizes the granting of stock options for the
purchase of up to 66,352 shares of common stock. Options granted vest over a
three-year period for 25,369 shares and a five-year period for 40,983 shares and
expire on the tenth anniversary of the date of grant.
In fiscal 1997, the Company adopted the Hibbett Sporting Goods, Inc. 1996
Stock Option Plan, as amended (the "1996 Option Plan"). The 1996 Option Plan
authorizes the granting of stock options for the purchase of up to 238,566
shares of common stock. Options granted vest over a five-year period and expire
on the tenth anniversary of the date of grant. As of January 31, 1998, a total
of 57,870 shares of the Company's authorized and unissued common stock were
reserved for future grants under the 1996 Option Plan, and options for 177,736
shares were outstanding at that date.
<PAGE>
On August 1, 1996, the Company granted options pursuant to the agreement
discussed in Note 6 for 70,820 shares which became exercisable six months after
October 17, 1996, the date of the Company's initial public offering.
A summary of the status of the Company's stock option plans is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------------------
JANUARY 31, 1998 FEBRUARY 1, 1997
-------------------------- -------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------- -------------- ------- --------------
<S> <C> <C> <C> <C>
Outstanding at beginning of
year 265,086 $ 9.42 66,352 $ 4.49
Granted 52,500 15.00 199,016 11.07
Exercised (70,820) 8.48 0 0.00
Forfeited (2,678) 14.51 (282) 13.12
------- -------------- ------- --------------
Outstanding at end of year 244,088 $10.83 265,086 $ 9.42
======= ============== ======= ==============
Exercisable at end of year 58,503 $ 7.62 16,652 $ 3.96
======= ============== ======= ==============
Weighted average market value
of options granted $15.00 $14.99
============== ==============
</TABLE>
The following table summarizes information about stock options outstanding at
January 31, 1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------------------- ---------------------------------------
Weighted
Number Average Number
Outstanding at Remaining Weighted Exercisable at Weighted
Range of January 31, Contractual Average January 31, Average
Exercise Price 1998 Life (Years) Exercise Price 1998 Exercise Price
- -------------------- ------------------ ---------------- ------------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
$1.89 to $6.10 111,351 8.0 $ 5.14 42,306 $ 4.42
$15.00 to $16.00 132,737 8.9 $15.61 16,197 $16.00
</TABLE>
Compensation costs of $50,000 and $500,000 were accrued in fiscal 1998 and
1997, respectively, related to the difference in the estimated market value of
the stock and the nonqualified option exercise price, including the related tax
benefit. As these options are exercised, the excess of the proceeds and
accruals over the par value is credited to paid-in capital.
<PAGE>
If the Company had recorded compensation costs in accordance with SFAS No. 123
under the fair value based method (using the Black-Scholes option pricing
model), the Company's net income and earnings per share would have been reduced
to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------
JANUARY 31, FEBRUARY 1, FEBRUARY 3,
1998 1997 1996
---------------------------------------
<S> <C> <C> <C>
Net income--as reported $5,933 $1,737 $2,443
Net income--pro forma 5,681 1,510 2,420
Diluted earnings per share--as reported .93 .37 .42
Diluted earnings per share--pro forma .89 .32 .41
</TABLE>
The weighted average assumptions for determining compensation costs under the
fair value method include (i) a risk-free interest rate based on zero-coupon
governmental issues on each grant date with the maturity equal to the expected
term of the options (6.5%, 6.1% and 5.8% for fiscal 1998, 1997 and 1996,
respectively), (ii) an expected forfeiture rate of 4.4%, (iii) an expected
stock volatility of 50%, and (iv) no expected dividend yield. The weighted
average fair value of options granted in fiscal 1998, fiscal 1997 and fiscal
1996 was $7.77, $7.82 and $3.53, respectively.
Other Plans
On September 13, 1996, the Company adopted an Employee Stock Purchase Plan and
Outside Director Stock Plan reserving 75,000 shares and 50,000 shares of the
Company's common stock, respectively, for purchase by the employees and
directors at 85% and 100% of the fair value of the common stock, respectively.
On January 30, 1998 and January 10, 1997, the Company granted 5,000 and 10,000
options, respectively, at an exercise price of $22.56 and $12.13 (market value
at the date of grant) respectively, under the Outside Director Stock Plan.
These options vest immediately and expire on the earlier of the tenth
anniversary of the grant or one year from the date on which the director is no
longer eligible. The Employee Stock Purchase Plan became effective on April 1,
1997, and as of January 31, 1998, 2,510 shares have been issued.
9. COMMITMENTS AND CONTINGENCIES
Employment Agreement
On November 1, 1995, the Company entered into an employment agreement with an
employee which provides for a three-year employment period at a base salary plus
various incentives.
Legal
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.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hibbett Sporting Goods, Inc.:
We have audited the accompanying consolidated balance sheets of HIBBETT
SPORTING GOODS, INC. (a Delaware corporation, formerly an Alabama corporation)
AND SUBSIDIARIES as of January 31, 1998 and February 1, 1997, and the related
consolidated statements of operations, stockholders' investment, and cash flows
for each of the three fiscal years in the period ended January 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hibbett Sporting Goods, Inc.
and subsidiaries as of January 31, 1998 and February 1, 1997, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended January 31, 1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 12, 1998
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into Hibbett Sporting Goods, Inc.'s
previously filed Registration Statements File Nos. 333-07023, 333-21299, 333-
21301, 333-21303, and 333-21305.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
April 17, 1998
<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 PERIODS ENDED
JANUARY 31, 1998, FEBRUARY 1, 1997, AND FEBRUARY 3, 1996, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> JAN-31-1998 FEB-1-1997 FEB-3-1996
<PERIOD-START> FEB-2-1997 FEB-4-1996 JAN-29-1995
<PERIOD-END> JAN-31-1998 FEB-1-1997 FEB-3-1996
<CASH> 4,498 2,269 31
<SECURITIES> 0 0 0
<RECEIVABLES> 2,023 2,231 1,427
<ALLOWANCES> 184 134 86
<INVENTORY> 33,267 24,521 20,705
<CURRENT-ASSETS> 40,860 30,126 23,790
<PP&E> 22,590 18,606 19,739
<DEPRECIATION> 10,475 8,722 7,605
<TOTAL-ASSETS> 53,366 40,358 36,702
<CURRENT-LIABILITIES> 15,211 13,846 12,883
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 64 61 234
<OTHER-SE> 38,091 26,451 (8,327)
<TOTAL-LIABILITY-AND-EQUITY> 53,366 40,358 36,702
<SALES> 113,563 86,401 67,077
<TOTAL-REVENUES> 113,563 86,401 67,077
<CGS> 78,714 60,017 46,642
<TOTAL-COSTS> 78,714 60,017 46,642
<OTHER-EXPENSES> 25,233 19,160 14,793
<LOSS-PROVISION> 110 71 62
<INTEREST-EXPENSE> 8 2,642 1,685
<INCOME-PRETAX> 9,608 4,582 3,957
<INCOME-TAX> 3,675 1,752 1,514
<INCOME-CONTINUING> 5,933 2,830 2,443
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (1,093) 0
<CHANGES> 0 0 0
<NET-INCOME> 5,933 1,737 2,443
<EPS-PRIMARY> 0.95<F1> 0.38<F1> 0.42<F1>
<EPS-DILUTED> 0.93<F1> 0.37<F1> 0.42<F1>
<FN>
<F1>THE EARNINGS PER SHARE CALCULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128, AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF HIBBETT SPORTING GOODS, INC. FOR THE INTERIM PERIODS ENDED MAY 4,
1996, AUGUST 3, 1996, NOVEMBER 2, 1996, AND FEBRUARY 1, 1997, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> FEB-1-1997 FEB-1-1997 FEB-1-1997 FEB-1-1997
<PERIOD-START> FEB-4-1996 MAY-5-1996 AUG-4-1996 NOV-3-1996
<PERIOD-END> MAY-4-1996 AUG-3-1996 NOV-2-1996 FEB-1-1997
<CASH> 32 36 289 2,269
<SECURITIES> 0 0 0 0
<RECEIVABLES> 1,513 1,810 2,614 2,231
<ALLOWANCES> 95 105 115 134
<INVENTORY> 26,065 26,946 29,693 24,521
<CURRENT-ASSETS> 29,134 31,005 34,555 30,126
<PP&E> 15,020 16,289 17,620 18,606
<DEPRECIATION> 7,226 7,646 8,074 8,722
<TOTAL-ASSETS> 37,703 40,408 44,489 40,358
<CURRENT-LIABILITIES> 14,536 14,527 14,042 13,846
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 234 38 61 61
<OTHER-SE> (7,392) (7,305) 25,117 26,451
<TOTAL-LIABILITY-AND-EQUITY> 37,703 40,408 44,489 40,358
<SALES> 20,251 18,768 20,618 26,764
<TOTAL-REVENUES> 20,251 18,768 20,618 26,764
<CGS> 14,035 13,237 14,201 18,544
<TOTAL-COSTS> 14,035 13,237 14,201 18,544
<OTHER-EXPENSES> 3,787 4,806 4,874 5,693
<LOSS-PROVISION> 9 10 15 37
<INTEREST-EXPENSE> 910 904 792 36
<INCOME-PRETAX> 1,519 (179) 751 2,491
<INCOME-TAX> 584 (70) 287 951
<INCOME-CONTINUING> 935 (109) 464 1,540
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 (1,093) 0
<CHANGES> 0 0 0 0
<NET-INCOME> 935 (109) (629) 1,540
<EPS-PRIMARY> 0.24<F1> (0.03)<F1> (0.13)<F1> 0.25<F1>
<EPS-DILUTED> 0.24<F1> (0.03)<F1> (0.14)<F1> 0.25<F1>
<FN>
<F1>THE EARNINGS PER SHARE CALCULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128, AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF HIBBETT SPORTING GOODS, INC. FOR THE INTERIM PERIODS ENDED MAY 3,
1997, AUGUST 2, 1997, NOVEMBER 1, 1997 AND JANUARY 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> JAN-31-1998 JAN-31-1998 JAN-31-1998 JAN-31-1998
<PERIOD-START> FEB-2-1997 MAY-4-1997 AUG-3-1997 NOV-2-1997
<PERIOD-END> MAY-3-1997 AUG-2-1997 NOV-1-1997 JAN-31-1998
<CASH> 2,046 1,073 2,498 4,498
<SECURITIES> 0 0 0 0
<RECEIVABLES> 2,484 2,395 2,228 2,023
<ALLOWANCES> 142 148 134 184
<INVENTORY> 28,889 33,546 41,307 33,267
<CURRENT-ASSETS> 35,448 39,142 47,549 40,860
<PP&E> 19,542 20,231 21,749 22,590
<DEPRECIATION> 9,208 9,746 10,270 10,475
<TOTAL-ASSETS> 46,160 49,994 59,414 53,366
<CURRENT-LIABILITIES> 18,224 19,501 23,496 15,211
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 61 62 64 64
<OTHER-SE> 27,875 29,727 35,854 38,091
<TOTAL-LIABILITY-AND-EQUITY> 46,160 49,994 59,414 53,366
<SALES> 26,165 26,393 27,797 33,208
<TOTAL-REVENUES> 26,165 26,393 27,797 33,208
<CGS> 18,126 18,555 19,306 22,727
<TOTAL-COSTS> 18,126 18,555 19,306 22,727
<OTHER-EXPENSES> 5,758 6,227 6,298 6,950
<LOSS-PROVISION> 9 (2) 37 66
<INTEREST-EXPENSE> (25) 14 6 13
<INCOME-PRETAX> 2,306 1,597 2,187 3,518
<INCOME-TAX> 882 611 837 1,345
<INCOME-CONTINUING> 1,424 986 1,350 2,173
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,424 986 1,350 2,173
<EPS-PRIMARY> 0.23<F1> 0.16<F1> 0.22<F1> 0.34<F1>
<EPS-DILUTED> 0.23<F1> 0.16<F1> 0.21<F1> 0.33<F1>
<FN>
<F1>THE EARNINGS PER SHARE CALULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH SFAS.
NO. 128, AND BASIC AND DILUTED EARNINGS PER SHARE HAVE ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
