<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 28, 2000
----------------
- 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
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(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
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(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 28, 2000 were 6,472,883 shares.
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HIBBETT SPORTING GOODS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at October 28, 2000 and
January 29, 2000 2
Condensed Consolidated Statements of Operations for the Thirteen Week and
Thirty-Nine Week Periods Ended October 28, 2000 and October 30, 1999 3
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine
Week Periods Ended October 28, 2000 and October 30, 1999 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 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
</TABLE>
1
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HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<TABLE>
<CAPTION>
October 28, 2000 January 29, 2000
---------------- ----------------
(Unaudited) (Audited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 1,092 $ 860
Accounts receivable, net 2,634 2,123
Inventories 79,605 58,066
Prepaid expenses and other 748 750
Deferred income taxes 673 718
---------------- ----------------
Total current assets 84,752 62,517
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Property and equipment, net 22,147 19,957
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Noncurrent Assets:
Deferred income taxes 694 610
Other, net 299 194
---------------- ----------------
Total noncurrent assets 993 804
---------------- ----------------
Total Assets $ 107,892 $ 83,278
================ ================
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 29,076 $ 19,047
Accrued income taxes 938 546
Accrued expenses:
Payroll-related 2,447 3,044
Other 2,484 2,049
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Total current liabilities 34,945 24,686
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Long-Term Debt 10,999 4,391
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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, 6,472,883 shares issued and
outstanding at October 28, 2000 and 6,435,552
shares issued and outstanding at January 29, 2000 65 64
Paid-in capital 54,603 54,277
Retained earnings (deficit) 7,280 (140)
---------------- ----------------
Total stockholders' investment 61,948 54,201
---------------- ----------------
Total Liabilities and Stockholders' Investment $ 107,892 $ 83,278
================ ================
</TABLE>
See notes to condensed consolidated financial statements.
2
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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 28, 2000 Oct 30, 1999 Oct 28, 2000 Oct 30, 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 52,075 $ 42,223 $ 149,224 $ 124,369
Cost of goods sold,
including warehouse, distribution
and store occupancy costs 36,242 29,417 104,305 87,086
------------ ------------ ------------ ------------
Gross profit 15,833 12,806 44,919 37,283
Store operating, selling, and
administrative expenses 10,147 8,334 28,986 24,562
Depreciation and amortization 1,252 954 3,522 2,731
------------ ------------ ------------ ------------
Operating income 4,434 3,518 12,411 9,990
Interest expense 195 83 455 238
------------ ------------ ------------ ------------
Income before provision for income taxes 4,239 3,435 11,956 9,752
Provision for income taxes 1,600 1,314 4,536 3,730
------------ ------------ ------------ ------------
Net income $ 2,639 $ 2,121 $ 7,420 $ 6,022
============ ============ ============ ============
Basic earnings per common share $ 0.41 $ 0.33 $ 1.15 $ 0.94
============ ============ ============ ============
Diluted earnings per common share $ 0.40 $ 0.33 $ 1.13 $ 0.92
============ ============ ============ ============
Weighted average shares outstanding:
Basic 6,469,122 6,432,523 6,450,559 6,425,578
============ ============ ============ ============
Diluted 6,629,707 6,504,315 6,593,340 6,540,641
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
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HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
----------------------------------
Oct 28, 2000 Oct 30, 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,420 $ 6,022
------------ ------------
Adjustments to reconcile net income to net
cash (used in) operating activities:
Depreciation and amortization 3,522 2,731
Deferred income taxes (39) (176)
Loss on disposal of assets 13 5
Change in assets and liabilities (11,923) (11,185)
------------ ------------
Total adjustments (8,427) (8,625)
------------ ------------
Net cash (used in) operating activities (1,007) (2,603)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,721) (6,034)
Proceeds from sale of property 25 111
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Net cash (used in) investing activities (5,696) (5,923)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan activity, net 6,608 8,000
Proceeds from options exercised and purchase
of shares under employee stock purchase plan 327 167
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Net cash provided by financing activities 6,935 8,167
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 232 (359)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 860 945
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,092 $ 586
============ ============
</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 29, 2000. 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 28, 2000 and October 30, 1999, 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 period.
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 28, October 30, October 28, October 30,
2000 1999 2000 1999
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding:
Basic 6,469,122 6,432,523 6,450,559 6,425,578
Dilutive effect of stock options 160,585 71,792 142,781 115,063
------------ ------------ ------------- -------------
Diluted 6,629,707 6,504,315 6,593,340 6,540,641
============ ============ ============= =============
</TABLE>
For the thirteen week periods ended October 28, 2000 and October 30, 1999,
79,600 and 185,450 anti-dilutive options, respectively, were appropriately
excluded from the computation. For the thirty-nine week periods ended October
28, 2000 and October 30, 1999, 84,600 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. ("we" or "Hibbett" or the "Company") is a
rapidly-growing operator of full-line sporting goods stores in small to mid-
sized markets predominantly in the southeastern United States. Our stores offer
a broad assortment of quality athletic equipment, footwear and apparel at
competitive prices with superior customer service. Our merchandise assortment
features a broad 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.
Our management team believes that our stores are among the primary retail
distribution alternatives for brand name vendors that seek to reach our target
markets.
As of October 28, 2000, we operated 247 Hibbett Sports stores as well as
sixteen smaller-format Sports Additions athletic shoe stores and four larger-
format Sports & Co. superstores in 19 states. Our primary retail format and
growth vehicle is Hibbett Sports a 5,000 square foot store located in enclosed
malls and dominant strip centers. We target markets with county populations
that range from 30,000 to 250,000. By targeting smaller markets, we believe
that we 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, we establish
greater customer and vendor recognition as the leading full-line sporting goods
retailer in these local communities. Although competitors in some markets may
carry similar product lines and national brands, we believe that the 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.
Hibbett 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 28, October 30, October 28, October 30,
----------- ----------- ----------- -----------
2000 1999 2000 1999
---- ---- ---- ----
<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 69.6 69.7 69.9 70.0
----- ----- ----- -----
Gross profit 30.4 30.3 30.1 30.0
Store operating, selling, and administrative
expenses 19.5 19.7 19.4 19.8
Depreciation and amortization 2.4 2.3 2.4 2.2
----- ----- ----- -----
Operating income 8.5 8.3 8.3 8.0
Interest expense, net 0.4 0.2 0.3 0.2
----- ----- ----- -----
Income before provision for income taxes 8.1 8.1 8.0 7.8
Provision for income taxes 3.1 3.1 3.0 3.0
----- ----- ----- -----
Net income 5.0% 5.0% 5.0% 4.8%
===== ===== ===== =====
</TABLE>
6
<PAGE>
Thirteen Weeks Ended October 28, 2000 Compared to Thirteen Weeks Ended October
30, 1999
Net sales. Net sales increased $9.9 million, or 23.3%, to $52.1 million for
the thirteen weeks ended October 28, 2000, from $42.2 million for the comparable
period in the prior year. This increase is attributed to the opening of a net of
fifty-four Hibbett Sports stores and five Sports Additions stores in the 52 week
period ended October 28, 2000, and a 6.4% increase in comparable store net
sales. The increase in comparable store net sales was due to positive comparable
sales in equipment, apparel and footwear categories and improved industry
conditions. New stores and stores not in the comparable store net sales
calculation accounted for $7.5 million of the increase in net sales, and
increases in comparable store net sales contributed $2.4 million. Comparable
store net sales data for the period reflect sales for our traditional format
stores open throughout the period and the corresponding period of the prior
fiscal year. During the thirteen weeks ended October 28, 2000, we opened twenty-
four Hibbett Sports stores and one Sports Additions store. Additionally, we
closed one store during the thirteen weeks ended October 28, 2000.
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 $15.8 million, or 30.4% of net sales, in the thirteen weeks
ended October 28, 2000, as compared to $12.8 million, or 30.3% of net sales, in
the same period of the prior fiscal year. The improved gross margin was due to
higher product margins and improved leveraging of store occupancy costs over
higher comparable store sales.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $10.1 million, or 19.5% of net sales,
for the thirteen weeks ended October 28, 2000, as compared to $8.3 million, or
19.7% 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 28, 2000 is attributable to improved leveraging
of administrative costs over a larger store base.
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales was 2.4% in the thirteen weeks ended October 28, 2000
compared to 2.3% in the thirteen weeks ended October 30, 1999. The increase as a
percent to sales is primarily attributable to depreciation associated with the
warehouse expansion completed in the fourth quarter of fiscal 2000.
Interest expense. Interest expense for the thirteen weeks ended October 28,
2000 was $195,000 compared to $83,000 in the prior year period. The increase is
attributable to higher levels of borrowing under the Company's credit facilities
in the current year to fund working capital requirements and new store growth.
Thirty-Nine Weeks Ended October 28, 2000 Compared to Thirty-Nine Weeks Ended
October 30, 1999
Net sales. Net sales increased $24.8 million, or 20.0%, to $149.2 million
for the thirty-nine weeks ended October 28, 2000, from $124.4 million for the
comparable period in the prior year. This increase is attributed to the opening
of a net of fifty-four Hibbett Sports stores and five Sports Additions stores in
the 52 week period ended October 28, 2000, and a 2.5% 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 $22.1 million of the increase in net sales, and
increases in comparable store net sales contributed $2.7 million. Comparable
store net sales data for the period reflect sales for our traditional format
stores open throughout the period and the corresponding period of the prior
fiscal year. During the thirty-nine weeks ended October 28, 2000, we opened
forty-two Hibbett Sports stores and three Sports Additions stores. Additionally,
we closed one store during the period.
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 $44.9 million, or 30.1% of net sales, in the thirty-nine weeks
ended October 28, 2000, as compared to $37.3 million, or 30.0% of net sales, in
the same period of the prior fiscal year. The improved gross margin was
primarily due to higher product margins in the current year period.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $29.0 million, or 19.4% of net sales,
for the thirty-nine weeks ended October 28, 2000, as compared to $24.6 million,
or 19.8% 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 thirty-nine weeks ended October 28, 2000 is attributable to
improved leveraging of administrative costs over a larger store base.
7
<PAGE>
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales was 2.4% in the thirty-nine weeks ended October 28, 2000
compared to 2.2% in the thirty-nine weeks ended October 30, 1999. The increase
as a percent to sales is primarily attributable to depreciation associated with
the warehouse expansion completed in the fourth quarter of fiscal 2000.
Interest expense. Interest expense for the thirty-nine weeks ended October
28, 2000 was $455,000 compared to $238,000 in the prior year period. The
increase is attributable to higher market interest rates and higher levels of
borrowing on the Company's credit facilities in the current year to fund new
stores and working capital requirements.
Liquidity and Capital Resources
Our capital requirements relate primarily to new store openings and working
capital requirements. Our 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 our fiscal year. Historically, we have funded our cash
requirements primarily through cash flows from operations and borrowings under
our revolving loan facilities.
Net cash provided by (used in) operating activities for the periods
presented was primarily driven by net income levels combined with fluctuations
in inventory and accounts payable balances. Net cash used in operating
activities was $1.0 million for the thirty-nine week period ending October 28,
2000 as compared to net cash used in operating activities of $2.6 million for
the thirty-nine week period ending October 30, 1999. We have continued to
increase our inventory levels in the thirty-nine weeks ended October 28, 2000
and October 30, 1999, as the number of stores has increased. The Company
typically finances these increases through increased net income, increases in
accounts payable balances and borrowings under our revolving credit facilities.
With respect to cash flows from investing activities, capital expenditures
were $5.7 million in the thirty-nine week period ended October 28, 2000 compared
to $6.0 million for the comparable period in the prior year. Capital
expenditures in the thirty-nine weeks ended October 28, 2000 primarily related
to the opening of forty-five new stores, certain store remodels, and certain
office and distribution center-related expenditures. The prior year period
included approximately $2.5 million of expenditures related to the expansion of
the distribution center.
The Company estimates capital expenditures in fiscal 2001 to be
approximately $8.0 million which includes resources budgeted to (i) fund the
opening of approximately 60 Hibbett Sports stores, (ii) remodel selected
existing stores and (iii) fund headquarters and distribution center related
capital expenditures.
Net cash provided by financing activities was $6.9 million in the thirty-
nine week period ended October 28, 2000 compared with $8.2 million in the prior
year period. Financing activities in the current year and prior year periods
were primarily the result of borrowings under our credit facilities. These
borrowings were used to fund new stores and working capital requirements.
Hibbett maintains an unsecured revolving credit facility which will expire
November 5, 2002 and allows borrowings up to $25 million. We also maintain an
unsecured working capital line of credit for $7 million which is subject to
annual renewal. As of October 28, 2000, the Company had $11.0 million
outstanding under these facilities. Based on our current operating and store
opening plans, management believes that we can fund our cash needs for the
foreseeable future through borrowings under the credit facility, the working
capital line of credit and cash generated from operations.
In April 2000, the Company established a $20 million unsecured Future
Advance Facility ("The Future Advance Facility"). The Future Advance Facility
will be used as needed through March 31, 2001 or such later date as the lenders
may agree to for the purpose of financing the potential buyback of Hibbett's
common stock. There were no amounts outstanding under the Future Advance
Facility at October 28, 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
8
<PAGE>
Company's expectations, intentions, plans or strategies regarding the future.
All forward-looking statements included in this document are based upon
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking statements. It is important to
note that the Company's actual results could differ materially from those
described or implied in such forward-looking statements because of, among other
factors, the ability of the Company to execute its expansion plans, a shift in
demand for the merchandise offered by the Company, the Company's ability to
obtain brand name merchandise at competitive prices, the effect of regional or
national economic conditions and the effect of competitive pressures from other
retailers. In addition, the reader should consider the risk factors described
from time to time in the Company's other documents and reports, including the
factors described under "Risk Factors" in the Company's Registration Statement
on Form S-1, filed with the Securities and Exchange Commission on 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
9
<PAGE>
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
HIBBETT SPORTING GOODS, INC.
Date: December 7, 2000 By: /s/ Susan H. Fitzgibbon
------------------------ --------------------------
Susan H. Fitzgibbon
Vice President and
Chief Financial Officer
10
