<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: October 30, 1999
----------------
- 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 October 30, 1999 were 6,433,634 shares.
<PAGE>
HIBBETT SPORTING GOODS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at October 30, 1999 and
January 30, 1999 2
Condensed Consolidated Statements of Operations for the Thirteen Week
and Thirty-Nine Week Periods Ended October 30, 1999 and October 31, 1998 3
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine
Week Periods Ended October 30, 1999 and October 31, 1998 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to Vote of Security-Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
1
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
October 30, 1999 January 30, 1999
------------------------ -------------------------
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 586 $ 945
Accounts receivable, net 2,361 2,144
Inventories 64,655 47,694
Prepaid expenses and other 795 898
Deferred income taxes 882 738
----------------------- --------------------------
Total current assets 69,279 52,419
----------------------- --------------------------
Property and equipment, net 18,618 15,406
----------------------- --------------------------
Noncurrent Assets:
Deferred income taxes 537 505
Other, net 206 222
----------------------- --------------------------
Total noncurrent assets 743 727
----------------------- --------------------------
Total Assets $ 88,640 $ 68,552
======================= ==========================
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 23,803 $ 16,233
Accrued income taxes 435 2,477
Accrued expenses:
Payroll-related 2,586 2,638
Other 2,367 1,944
----------------------- --------------------------
Total current liabilities 29,191 23,292
----------------------- --------------------------
Long-Term Debt 8,000 -
----------------------- --------------------------
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, 6,433,634 shares issued and
outstanding at October 30, 1999 and 6,413,780
shares issued and outstanding at January 30, 1999 64 64
Paid-in capital 54,163 53,996
Retained earnings (deficit) (2,778) (8,800)
----------------------- --------------------------
Total stockholders' investment 51,449 45,260
----------------------- --------------------------
Total Liabilities and Stockholders' Investment $ 88,640 $ 68,552
======================= ==========================
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------------------- ------------------------------------
Oct 30, 1999 Oct 31, 1998 Oct 30, 1999 Oct 31, 1998
------------------ ----------------- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 42,223 $ 35,988 $ 124,369 $ 101,833
Cost of goods sold, including warehouse,
distribution and store occupancy costs 29,417 25,075 87,086 71,140
------------------ ----------------- ----------------- ----------------
Gross profit 12,806 10,913 37,283 30,693
Store operating, selling, and
administrative expenses 8,334 7,232 24,562 20,452
Depreciation and amortization 954 807 2,731 2,218
------------------ ----------------- ----------------- ----------------
Operating income 3,518 2,874 9,990 8,023
Interest expense, net 83 59 238 9
------------------ ----------------- ----------------- ----------------
Income before provision for income taxes 3,435 2,815 9,752 8,014
Provision for income taxes 1,314 1,076 3,730 3,065
------------------ ----------------- ----------------- ----------------
Net income $ 2,121 $ 1,739 $ 6,022 $ 4,949
================== ================= ================= ================
Earnings per common share:
Basic:
Net income $ 0.33 $ 0.27 $ 0.94 $ 0.77
================== ================= ================= ================
Diluted:
Net income $ 0.33 $ 0.27 $ 0.92 $ 0.75
================== ================= ================= ================
Weighted average shares outstanding:
Basic 6,432,523 6,406,771 6,425,578 6,401,412
================== ================= ================= ================
Diluted
6,504,315 6,534,748 6,540,641 6,561,372
================== ================= ================= ================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
---------------------------------------------
Oct 30, 1999 Oct 31, 1998
-------------------- --------------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,022 $ 4,949
--------------------- --------------------
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation and amortization 2,731 2,218
Deferred income taxes (176) (177)
Loss on disposal of assets 5 19
Change in assets and liabilities (11,185) (12,690)
--------------------- --------------------
Total adjustments (8,625) (10,630)
--------------------- --------------------
Net cash (used in) operating activities (2,603) (5,681)
--------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,034) (5,339)
Proceeds from sale of property 111 14
--------------------- --------------------
Net cash used in investing activities (5,923) (5,325)
--------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan borrowings and repayments, net 8,000 7,778
Proceeds from options exercised and purchase
of shares under the employee stock purchase plan 167 86
--------------------- --------------------
Net cash provided by financing activities 8,167 7,864
--------------------- --------------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (359) (3,142)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 945 4,498
--------------------- --------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 586 $ 1,356
===================== ====================
</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 30,
1999. 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 October 30, 1999 and October 31, 1998, 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
Basic earnings per share ("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.
A reconciliation of the weighted average shares for basic and diluted EPS
is as follows:
<TABLE>
<CAPTION>
Thirteen Week Period Ended Thirty-Nine Week Period Ended
------------------------------------------------------------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
-------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding:
Basic 6,432,523 6,406,771 6,425,578 6,401,412
Dilutive effect of stock options 71,792 127,977 115,063 159,960
-------------- ----------- ----------- ------------
Diluted 6,504,315 6,534,748 6,540,641 6,561,372
============== =========== =========== ============
</TABLE>
For the thirteen week and thirty-nine week periods ended October 30, 1999,
185,450 and 86,200 anti-dilutive options, respectively, were appropriately
excluded from the computation.
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 predominantly in the Southeast. 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 broad selection of brand name merchandise emphasizing team
and individual sports complemented by 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 192 Hibbett Sports stores as well as twelve
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 in enclosed malls and 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.
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 consolidated statement of operations items
expressed as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
Thirteen Week Thirty-Nine Week
Period Ended Period Ended
------------------------------- --------------------------------
October 30, October 31, October 30, October 31,
----------- ----------- ----------- -----------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold, including warehouse,
Distribution and store occupancy costs 69.7 69.7 70.0 69.9
----- ----- ----- -----
Gross profit 30.3 30.3 30.0 30.1
Store operating, selling, and administrative
Expenses 19.7 20.1 19.8 20.1
Depreciation and amortization 2.3 2.2 2.2 2.1
----- ----- ----- -----
Operating income 8.3 8.0 8.0 7.9
Interest expense, net 0.2 0.2 0.2 ---
----- ----- ----- -----
Income before provision for income taxes 8.1 7.8 7.8 7.9
Provision for income taxes 3.1 3.0 3.0 3.0
----- ----- ----- -----
Net income 5.0% 4.8% 4.8% 4.9%
===== ===== ===== =====
</TABLE>
6
<PAGE>
Thirteen Weeks Ended October 30, 1999 Compared to Thirteen Weeks Ended October
31, 1998
Net sales. Net sales increased $6.2 million, or 17.3%, to $42.2 million for
the thirteen weeks ended October 30, 1999, from $36.0 million for the comparable
period in the prior year. This increase is attributed to opening a net of forty-
two Hibbett Sports stores and one Sports Additions store in the last 52 week
period ended October 30, 1999, and a 2.4% increase in comparable store net
sales. The increase in comparable store net sales was primarily due to increased
equipment sales. New stores and stores not in the comparable store net sales
calculation accounted for $5.5 million of the increase in net sales, and
increases in comparable store net sales contributed $700,000. Comparable store
net sales data for the period reflect sales for the Company's traditional format
stores open throughout the period and the corresponding period of the prior
fiscal year. During the thirteen weeks ended October 30, 1999, the Company
opened thirteen new stores and closed one store.
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 $12.8 million, or 30.3% of net sales, in the thirteen weeks
ended October 30, 1999, as compared to $10.9 million, or 30.3% of net sales, in
the same period of the prior fiscal year. Improved leveraging of distribution
center costs over a larger store base was offset by slightly lower product
margins in the current year period.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $8.3 million, or 19.7% of net sales,
for the thirteen weeks ended October 30, 1999, as compared to $7.2 million, or
20.1% 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 October 30, 1999 is primarily attributable to improved
leveraging of administrative costs over a larger store base.
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales increased slightly to 2.3% in the thirteen weeks ended
October 30, 1999 compared to 2.2% in the thirteen weeks ended October 31, 1998.
Interest expense, net. Net interest expense for the thirteen weeks ended
October 30, 1999 was $83,000 compared to net interest expense of $59,000 in the
prior year period. The increase is attributable to higher levels of borrowing
under the Company's revolving credit facility in the current fiscal year to fund
new stores, the distribution center expansion and working capital needs.
Thirty-Nine Weeks Ended October 30, 1999 Compared to Thirty-Nine Weeks Ended
October 31, 1998
Net sales. Net sales increased $22.5 million, or 22.1%, to $124.4 million
for the thirty-nine weeks ended October 30, 1999, from $101.8 million for the
comparable period in the prior year. This increase is attributed to opening a
net of forty-two Hibbett Sports stores and one Sports Additions store in the
last 52 week period ended October 30, 1999, and a 3.0% increase in comparable
store net sales. The increase in comparable store net sales was due to increased
equipment and apparel sales. New stores and stores not in the comparable store
net sales calculation accounted for $20.2 million of the increase in net sales
and increases in comparable store net sales contributed $2.3 million. Comparable
store net sales data for the period reflect sales for the Company's traditional
format stores open throughout the period and the corresponding period of the
prior fiscal year. During the thirty-nine weeks ended October 30, 1999, the
Company opened thirty-six Hibbett Sports stores and one Sports Additions store.
In addition, during the thirty-nine weeks ended October 30, 1999, the Company
closed one Hibbett Sports store and reopened one Hibbett Sports store that had
been temporarily closed.
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 $37.3 million, or 30.0% of net sales, in the thirty-nine weeks
ended October 30, 1999, as compared to $30.7 million, or 30.1% of net sales, in
the same period of the prior fiscal year. The slight decrease in gross profit
as a percentage of net sales in the thirty-nine weeks ended October 30, 1999 was
primarily due 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 $24.6 million, or 19.8% of net sales,
for the thirty-nine weeks ended October 30, 1999, as compared to $20.5 million,
or 20.1% of net sales, for the comparable period a year ago. The decrease in
store operating, selling and administrative
7
<PAGE>
expenses as a percentage of net sales in the thirty-nine weeks ended October 30,
1999, is primarily attributable to improved leveraging of administrative costs
over a larger store base.
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales increased slightly to 2.2% in the thirty-nine weeks
ended October 30, 1999 compared to 2.1% in the same period of the prior year.
Interest expense, net. Net interest expense for the thirty-nine weeks ended
October 30, 1999 was $238,000 compared to net interest expense of $9,000 in the
prior year period. The increase is attributable to higher levels of borrowing on
the Company's revolving credit facility in the current fiscal year to fund new
stores, the distribution center expansion and working capital needs.
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
thirty-nine weeks ended October 30, 1999 as the number of stores has increased.
The Company has financed this increase through increased net income, increases
in accounts payable balances and borrowings under a revolving credit facility.
Net cash used in operating activities was $2.6 million for the thirty-nine week
period ending October 30, 1999 as compared to net cash used in operating
activities of $5.7 million for the thirty-nine week period ending October 31,
1998. The decrease in net cash used in operating activities primarily resulted
from lower average inventory levels due to the timing of holiday inventory
receipts.
With respect to cash flows from investing activities, capital expenditures
were $6.0 million in the thirty-nine week period ended October 30, 1999 compared
to $5.3 million for the comparable period in the prior year. Capital
expenditures in the thirty-nine weeks ended October 30, 1999 primarily related
to the opening of thirty-seven new stores, construction costs for the
distribution center expansion, various store remodels as well as office and
distribution center-related expenditures. The increase in capital expenditures
in the current year period primarily related to costs associated with the
distribution center expansion.
Net cash provided by financing activities was $8.2 million in the
thirty-nine week period ended October 30, 1999 compared with $7.9 million for
the prior year period. The financing activities in the current year and prior
year periods were primarily the result of borrowings under the revolving credit
facility. These borrowings were used to fund new stores, the distribution center
expansion and working capital requirements.
The Company estimates capital expenditures in fiscal 2000 to be
approximately $7.0 million which includes resources budgeted to (i) fund the
opening of approximately 55 Hibbett Sports stores, (ii) remodel selected
existing stores and (iii) fund headquarters and distribution center-related
capital expenditures. This amount excludes expenditures for the expansion
currently underway of the Company's existing distribution center. The Company's
expenditures of approximately $2.5 million toward the construction of the
expanded distribution center will be reimbursed upon the completion of the
construction through a sale-leaseback transaction. The Company expects to spend
approximately $1.4 million of funds on related capital equipment for the
distribution center expansion. The Company anticipates the expansion will be
completed by the end of fiscal 2000 and will be incorporated into the existing
long-term operating lease for the facility.
The Company maintains an unsecured revolving credit facility which will
expire November 5, 2002 and allows borrowings up to $25 million. The Company
also maintains an unsecured working capital line of credit for $7 million which
is subject to annual renewal. As of October 30, 1999, the Company had $8.0
million outstanding under the facilities. 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 new facility, the working
capital line of credit and cash generated from operations.
8
<PAGE>
New Accounting Pronouncements
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. Capitalized software
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 was
adopted on January 31, 1999 with no material effect on the Company's financial
statements.
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 adoption of this statement on January 31, 1999 did not have a
significant impact on the Company's financial statements.
Year 2000 Compliance
During fiscal 2000, the Company has continued to evaluate its management
information systems to identify and address Year 2000 issues. In connection
therewith, the Company has classified its Year 2000 emphasis into five areas:
1. Information systems that are critical to daily operations (i.e.
receiving and processing of merchandise, executing sales at store
level, and processing payroll and other financial accounting
functions)
2. Information systems that are important but not critical to daily
operations (tracking supply inventories, electronically sending
purchase orders, etc.)
3. Customized, internally developed programs or interfaces with the above
mentioned systems (radio frequency system in the warehouse, sales
audit system, etc.)
4. Non information technology items (phone system, security system,
warehouse conveyors, heating and air systems, etc.)
5. Third party (vendor) compliance
The Company has classified its Year 2000 implementation program into four areas:
1. Evaluation and Initial Assessment
2. Remediation/Reprogramming
3. Testing
4. Contingency Planning
The following table outlines the Company's current status regarding the
first two areas of its Year 2000 implementation program:
<TABLE>
<CAPTION>
Percent Complete
------------------------------------------------------------
Evaluation & Remediation &
Classification/ Program Assessment Reprogramming
- --------------------------------------------------- --------------- ----------------------
<S> <C> <C>
1. Critical Systems:
----------------
Merchandising & Distribution 100% 100%
Financial & Payroll 100% 100%
Point of Sale/Store Registers 100% 100%
Mainframe Processing 100% 100%
2. Important but not critical systems 100% 100%
3. Custom developed programs & interfaces 100% 100%
4. Non Information Technology items 100% 100%
5. Third Party Compliance 100% 80%
</TABLE>
9
<PAGE>
The Company has substantially completed its Year 2000 implementation,
including testing of all systems, and has relied primarily on internal resources
in doing so. The Company's financial, merchandising, distribution and point of
sale systems are third party vendor software programs which have been recently
upgraded and are certified as Year 2000 compliant by the software vendors.
These upgrades were previously planned and were not accelerated due to Year 2000
issues. The Company has not deferred any significant information technology
projects in order to address the Year 2000 issue.
Based on present information, the Company believes that its current plans
as outlined above will substantially mitigate the risk of a material disruption
in the Company's operations due to internal Year 2000 factors. However,
possible consequences of the Company not being Year 2000 compliant include, but
are not limited to, loss of revenues, loss of communication capability with
stores, inability to process or quantify merchandise, and inability to engage in
other operational and financial activities.
At the present time, the Company is developing a contingency plan for
possible Year 2000 issues. The Company expects to establish contingency plans
based on the results of its Year 2000 testing and its assessment of related
risks.
Additionally, the Company is in the process of communicating with third
parties in order to assess their Year 2000 readiness and the extent to which the
Company may be vulnerable to any third parties' failure to remediate their Year
2000 issues. Many of these parties have stated their ability to supply the
Company will not be affected by the Year 2000 issue. Management believes that
the Company's largest vendor, Nike, has made significant progress toward their
Year 2000 compliance and does not expect any material disruption therefrom.
However, the Company cannot assure timely compliance of third parties, including
any other material vendors, and may be adversely affected by failure of a
significant third party to become Year 2000 compliant.
Approximately $175,000 has been expended to date related to Year 2000
compliance. The Company currently expects that the total costs of Year 2000
compliance for the Company's current systems will not exceed $190,000. These
costs are not expected to have a significant impact on the Company's financial
position or results of operations.
The costs associated with Year 2000 compliance are based on management's
current views with respect to future events and may be updated as additional
information becomes available. Please refer to the Special Note Regarding
Forward Looking Statements.
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
10
<PAGE>
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
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: December 10, 1999 By: /s/ Susan Fitzgibbon
--------------------- -----------------------------------
Susan H. Fitzgibbon
Vice President and
Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of Hibbett Sporting Goods, Inc. for the year to date period ended
October 30, 1999 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> OCT-30-1999
<CASH> 586
<SECURITIES> 0
<RECEIVABLES> 2,630
<ALLOWANCES> 269
<INVENTORY> 64,655
<CURRENT-ASSETS> 69,279
<PP&E> 34,488
<DEPRECIATION> 15,870
<TOTAL-ASSETS> 88,640
<CURRENT-LIABILITIES> 29,191
<BONDS> 0
0
0
<COMMON> 64
<OTHER-SE> 51,385
<TOTAL-LIABILITY-AND-EQUITY> 88,640
<SALES> 124,369
<TOTAL-REVENUES> 124,369
<CGS> 87,086
<TOTAL-COSTS> 87,086
<OTHER-EXPENSES> 27,293
<LOSS-PROVISION> 52
<INTEREST-EXPENSE> 238
<INCOME-PRETAX> 9,752
<INCOME-TAX> 3,730
<INCOME-CONTINUING> 6,022
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,022
<EPS-BASIC> 0.94
<EPS-DILUTED> 0.92
</TABLE>
