<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934.
For the quarterly period ended: May 2, 1998
------------
- OR -
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transaction period from _________ to ________
COMMISSION FILE NUMBER 000-20969
HIBBETT SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 63-1074067
--------- ----------
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
451 INDUSTRIAL LANE, BIRMINGHAM, ALABAMA 35211
---------------------------------------- -----
(Address of principal executive offices) (Zip code)
(205)-942-4292
--------------
(Registrant's telephone number including area code)
NONE
----
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------------- -------------
Indicate the number of shares outstanding of each of the issuer's common stock,
as of the latest practicable date: Shares of common stock, par value $.01 per
share, outstanding as of May 2, 1998 were 6,395,889 shares.
<PAGE>
HIBBETT SPORTING GOODS, INC.
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
May 2, 1998 and January 31, 1998 2
Condensed Consolidated Statements of Operations for the
Thirteen Week Periods Ended May 2, 1998 and May 3, 1997 3
Condensed Consolidated Statements of Cash Flows for the
Thirteen Week Periods Ended May 2, 1998 and May 3, 1997 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to Vote of Security-Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
1
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HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
May 2, 1998 January 31, 1998
--------------- -------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 6,110 $ 4,498
Accounts receivable, net 1,588 1,839
Inventories 39,200 33,267
Prepaid expenses and other 1,558 650
Deferred income taxes 654 606
-------------- -------------
Total current assets 49,110 40,860
-------------- -------------
Property and equipment, net 13,301 12,115
-------------- -------------
Noncurrent Assets:
Deferred income taxes 375 364
Other, net 122 27
-------------- -------------
Total noncurrent assets 497 391
-------------- -------------
Total Assets $ 62,908 $ 53,366
============== =============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable $ 17,972 $ 10,951
Accrued income taxes 1,553 860
Accrued expenses:
Payroll-related 1,728 1,813
Other 1,619 1,587
-------------- -------------
Total current liabilities 22,872 15,211
-------------- -------------
Long-Term Debt - -
-------------- -------------
Stockholders' Investment:
Preferred stock, $.01 par value 1,000,000 shares
authorized, no shares outstanding - -
Common stock, $.01 par value, 12,000,000 shares
authorized, 6,395,889 shares issued and
outstanding at May 2, 1998 and 6,393,977
shares issued and outstanding at January 31, 1998 64 64
Paid-in capital 53,704 53,681
Retained earnings (deficit) (13,732) (15,590)
-------------- -------------
Total stockholders' investment 40,036 38,155
-------------- -------------
Total Liabilities and Stockholders' Investment $ 62,908 $ 53,366
============== =============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------------
MAY 2, 1998 MAY 3, 1997
-------------- -------------
(Unaudited)
<S> <C> <C>
Net sales $ 33,321 $ 26,165
Cost of goods sold,
including warehouse, distribution
and store occupancy costs 23,158 18,126
-------------- -------------
Gross profit 10,163 8,039
Store operating, selling, and
administrative expenses 6,519 5,241
Depreciation and amortization 680 517
-------------- -------------
Operating income 2,964 2,281
Interest expense (income), net (45) (25)
-------------- -------------
Income before provision for income
taxes 3,009 2,306
Provision for income taxes 1,151 882
-------------- -------------
Net income $ 1,858 $ 1,424
============== =============
Earnings per common share:
Basic:
Net income $ 0.29 $ 0.23
============== =============
Diluted:
Net income $ 0.28 $ 0.23
============== =============
Weighted average shares outstanding:
Basic 6,394,515 6,134,261
============= =============
Diluted 6,551,278 6,248,910
============= =============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
Thirteen Weeks Ended
------------------------------
May 2, 1998 May 3, 1997
-------------- ---------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,858 $ 1,424
-------------- -------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 680 517
Deferred income taxes (59) (57)
Loss on disposal of assets 13 8
Change in assets and liabilities 970 (1,143)
-------------- -------------
Total adjustments 1,604 (675)
-------------- -------------
Net cash provided by operating activities 3,462 749
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,874) (976)
Proceeds from sale of property 1 4
-------------- -------------
Net cash (used in) investing activities (1,873) (972)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from options exercised and purchase
of shares under employee stock purchase plan 23 -
-------------- -------------
Net cash provided by financing activities 23 -
-------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,612 (223)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,498 2,269
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,110 $ 2,046
============== =============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Hibbett Sporting Goods, Inc. and its wholly-owned subsidiaries (the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and are presented in accordance with the
requirements of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. These
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the fiscal year ended January 31,
1998. In the opinion of management, the condensed consolidated financial
statements included herein contain all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation of the
Company's financial position as of May 2,1998 and May 3, 1997, and the
results of its operations and cash flows for the periods presented.
The Company has experienced and expects to continue to experience seasonal
fluctuations in its net sales and operating income. Therefore, the results of
the interim periods presented herein are not necessarily indicative of the
results to be expected for any other interim period or the full year.
2. EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 128, Earnings per Share, effective January 31, 1998, and restated earnings
per share ("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>
MAY 2, 1998 MAY 3, 1997
-------------------------- -------------------------
Weighted average shares outstanding:
<S> <C> <C>
Weighted average shares, excluding the
effect of stock options 6,394,515 6,134,261
Effect of stock options 156,763 114,649
-------------------------- -------------------------
Weighted average shares including the
effect of stock options 6,551,278 6,248,910
=========================== =========================
</TABLE>
3. CONTINGENCIES
The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal counsel,
the ultimate liability, if any, with respect to those proceedings is not
presently expected to materially affect the financial position or results of
operations of the Company.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Hibbett Sporting Goods, Inc. ("Hibbett" or the "Company") is a rapidly-
growing operator of full-line sporting goods stores in small to mid-sized
markets in the southeastern United States. Hibbett's stores offer a broad
assortment of high quality athletic equipment, footwear, and apparel at
competitive prices with superior customer service. The Company's merchandise
assortment features a core selection of brand name merchandise emphasizing team
and individual sports complemented by a selection of localized apparel and
accessories designed to appeal to a wide range of customers within each market.
The Company believes that its stores are among the primary retail distribution
alternatives for brand name vendors that seek to reach Hibbett's target markets.
The Company operates 122 Hibbett Sports stores as well as nine smaller-format
Sports Addition 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 centers. Although competitors in some markets may carry product
lines and national brands similar to Hibbett, the Company believes that its
Hibbett Sports stores are typically the primary, full-line sporting goods
retailers in their markets due to, among other factors, the extensive selection
of traditional team and individual sports merchandise offered and a high level
of customer service.
The Company operates on a 52 or 53 week fiscal year ending on the
Saturday nearest to January 31 of each year. Hibbett is incorporated under the
laws of the state of Delaware.
RESULTS OF OPERATIONS
The following table sets forth statement of operations items expressed as a
percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
THIRTEEN WEEK
PERIOD ENDED
-----------------------------------
May 2, 1998 May 3, 1997
----------------- ---------------
<S> <S> <C> <C>
Net sales 100.0% 100.0%
Cost of goods sold, including warehouse,
distribution and store occupancy costs 69.5 69.3
----- -----
Gross profit 30.5 30.7
Store operating, selling, and administrative
expenses 19.6 20.0
Depreciation and amortization 2.0 2.0
----- -----
Operating income 8.9 8.7
Interest expense (income), net (0.1) (0.1)
----- -----
Income before provision for income taxes 9.0 8.8
Provision for income taxes 3.4 3.4
----- -----
Net income 5.6% 5.4%
===== =====
</TABLE>
6
<PAGE>
THIRTEEN WEEKS ENDED MAY 2, 1998 COMPARED TO THIRTEEN WEEKS ENDED MAY 3, 1997
Net sales. Net sales increased $7.2 million, or 27.4%, to $33.3 million for
the thirteen weeks ended May 2, 1998, from $26.2 million for the comparable
period in the prior year. This increase is attributed to opening a net of
thirty-five Hibbett Sports stores and one Sports Additions store in the last 52
week period ended May 2, 1998, and a 5.5% increase in comparable store net
sales. The increase in comparable net sales was due primarily to increased
equipment and footwear sales. During the thirteen weeks ended May 2, 1998, the
Company opened fifteen Hibbett Sports stores. New stores and stores not in the
comparable store net sales calculation accounted for $6.0 million of the
increase in net sales and increases in comparable store net sales contributed
$1.2 million. Comparable store net sales data for a period reflect stores open
throughout that period and the corresponding period of the prior fiscal year.
Comparable store net sales do not include sales by the Company's four larger
format Sports & Co. superstores or the Company's wholly-owned subsidiary,
Hibbett Team Sales, Inc.
Gross profit. Cost of goods sold includes the cost of inventory, occupancy
costs for stores and occupancy and operating costs for the distribution center.
Gross profit was $10.2 million, or 30.5% of net sales, in the thirteen weeks
ended May 2, 1998, as compared to $8.0 million, or 30.7% of net sales, in the
same period of the prior fiscal year. The decrease in gross profit as a
percentage of net sales in the thirteen weeks ended May 2, 1998 was due
primarily to higher store occupancy costs as a percentage of net sales as a
result of the increased number of new stores in the store base.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $6.5 million, or 19.6% of net sales,
for the thirteen weeks ended May 2, 1998, as compared to $5.2 million, or 20.0%
of net sales, for the comparable period a year ago. The decrease in store
operating, selling and administrative expenses as a percentage of net sales in
the thirteen weeks ended May 2, 1998 is primarily attributable to improved
leveraging of administrative costs over higher sales.
Depreciation and amortization. Depreciation and amortization as a percentage
of net sales remained constant at 2.0% in the thirteen weeks ended May 2, 1998
and May 3, 1997.
Interest expense (income), net. Interest income for the thirteen weeks ended
May 2, 1998 was $45,000 compared to interest income of $25,000 in the prior year
period. The increase is attributable to income earned on higher levels of
temporary cash investments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements relate primarily to new store openings and
working capital requirements. The Company's working capital needs are somewhat
seasonal in nature and typically reach their peak near the end of the third and
the beginning of the fourth quarter of its fiscal year. Historically, the
Company has funded its cash requirements primarily through cash flows from
operations and borrowings under its revolving 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. The Company has continued to increase inventory levels in the
thirteen weeks ended May 2, 1998 as the number of new stores has increased. The
Company has financed this increase through increased net income and accounts
payable balances. Net cash provided by operating activities was $3.5 million for
the thirteen week period ending May 2, 1998 as compared to net cash provided by
operating activities of $749,000 for the thirteen week period ending May 3,
1997.
With respect to cash flows from investing activities, capital expenditures
were $1.9 million in the thirteen week period ended May 2, 1998 compared to
$976,000 for the prior year period. Capital expenditures in the thirteen weeks
ended May 2, 1998 primarily related to the opening of fifteen new stores,
construction costs incurred on stores not yet open, and distribution center-
related expenditures. The increase in capital expenditures in the current year
period resulted from additional new store activity and new distribution center
equipment.
Net cash provided by financing activities of $23,000 for the thirteen week
period ending May 2, 1998 was the result of purchases of shares under the
employee stock purchase plan and the exercise of stock options.
7
<PAGE>
The Company estimates capital expenditures in fiscal 1999 to be approximately
$6.4 million which includes resources budgeted to (i) fund the opening of
approximately 42 Hibbett Sports stores, (ii) remodel selected existing stores
and (iii) fund headquarters and distribution center-related capital
expenditures.
The Company maintains an unsecured $20 million Revolving Credit Facility (the
"Facility") provided by AmSouth Bank of Alabama. Borrowings under the Facility
bear interest at the Company's option either at a base rate, a quoted cost of
funds rate, or a LIBOR based rate. As of May 2, 1998, there was no outstanding
balance under the Facility which expires October 31,1999. Based on its current
operating and store opening plans, the Company believes that it can fund its
cash needs for the foreseeable future through borrowings under the Facility and
cash generated from operations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("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 was adopted on February 1, 1998 and did not have a significant
impact on the Company's financial reporting.
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 standard 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 does not offer pensions or other post-retirement
benefits. Therefore, the standard will not have an impact on the Company's
financial reporting.
The American Institute of Certified Public Accountants ("AICPA"), has issued
Statement of Position ("SOP"), 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. This statement requires
capitalization of external direct costs of materials and services, payroll and
payroll related costs for employees directly associated, and interest cost
during development of computer software for internal use. Planning and
preliminary costs should be amortized on a straight-line basis unless another
systematic and rational basis is more representative of the software's use.
This statement is not expected to have a material effect on the Company's
financial reporting.
The AICPA has issued SOP 98-5, Reporting on the Costs of Start-up Activities.
This statement provides guidance on the financial reporting of start-up costs
and organization costs, and requires these costs to be expensed as incurred.
The new rules are not expected to have a significant impact on the Company's
financial reporting upon adoption in fiscal 2000.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
The statements contained in this report that are not purely historical or
which might be considered an opinion or projection concerning the Company or its
business, whether express or implied, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements may include statements regarding the Company's expectations,
intentions, plans or strategies regarding the future. All forward-looking
statements included in this document are based upon information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward-looking statements. It is important to note that the Company's
actual results could differ materially from those described or implied in such
forward-looking statements because of, among other factors, the ability of the
Company to execute its expansion plans, a shift in demand for the merchandise
8
<PAGE>
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.
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings
The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal
counsel, the ultimate liability, if any, with respect to those proceedings
is not presently expected to materially affect the financial position or
results of operations of the Company.
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matters to Vote of Security-Holders
None
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit # Description
---------- ------------
27 Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
HIBBETT SPORTING GOODS, INC.
Date: June 9, 1998 By: /s/ Susan H. Fitzgibbon
------------------- -----------------------
Susan H. Fitzgibbon
Vice President and
Chief Financial Officer
10
<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 period ended May 2,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<CASH> 6,110
<SECURITIES> 0
<RECEIVABLES> 1,779
<ALLOWANCES> 191
<INVENTORY> 39,200
<CURRENT-ASSETS> 49,110
<PP&E> 24,433
<DEPRECIATION> 11,132
<TOTAL-ASSETS> 62,908
<CURRENT-LIABILITIES> 22,872
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 39,972
<TOTAL-LIABILITY-AND-EQUITY> 62,908
<SALES> 33,321
<TOTAL-REVENUES> 33,321
<CGS> 23,158
<TOTAL-COSTS> 23,158
<OTHER-EXPENSES> 7,199
<LOSS-PROVISION> 8
<INTEREST-EXPENSE> (45)
<INCOME-PRETAX> 3,009
<INCOME-TAX> 1,151
<INCOME-CONTINUING> 1,858
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,858
<EPS-PRIMARY> 0.29<F1>
<EPS-DILUTED> 0.28<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>
