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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
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EXCHANGE ACT OF 1934.
For the quarterly period ended: April 29, 2000
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- 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
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(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 ______
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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 April 29, 2000 were 6,438,249 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 April 29, 2000 and
January 29, 2000 2
Condensed Consolidated Statements of Operations for the Thirteen
Week Periods Ended April 29, 2000 and May 1, 1999 3
Condensed Consolidated Statements of Cash Flows for the Thirteen
Week Periods Ended April 29, 2000 and May 1, 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>
April 29, 2000 January 29, 2000
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(Unaudited) (Audited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 228 $ 860
Accounts receivable, net 1,849 2,123
Inventories 64,622 58,066
Prepaid expenses and other 976 750
Deferred income taxes 703 718
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Total current assets 68,378 62,517
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Property and equipment, net 20,139 19,957
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Noncurrent Assets:
Deferred income taxes 638 610
Other, net 365 194
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Total noncurrent assets 1,003 804
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Total Assets $ 89,520 $ 83,278
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Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 24,576 $ 19,047
Accrued income taxes 1,931 546
Accrued expenses:
Payroll-related 2,520 3,044
Other 2,193 2,049
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Total current liabilities 31,220 24,686
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Long-Term Debt 1,303 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, 6,438,249 shares issued and
outstanding at April 29, 2000 and 6,435,552
shares issued and outstanding at January 29, 2000 64 64
Paid-in capital 54,312 54,277
Retained earnings (deficit) 2,621 (140)
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Total stockholders' investment 56,997 54,201
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Total Liabilities and Stockholders' Investment $ 89,520 $ 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
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April 29, 2000 May 1, 1999
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(Unaudited) (Unaudited)
<S> <C> <C>
Net sales $ 50,522 $ 42,804
Cost of goods sold,
including warehouse, distribution
and store occupancy costs 35,130 29,812
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Gross profit 15,392 12,992
Store operating, selling, and
administrative expenses 9,716 8,412
Depreciation and amortization 1,135 863
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Operating income 4,541 3,717
Interest expense, net 69 53
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Income before provision for income taxes 4,472 3,664
Provision for income taxes 1,711 1,401
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Net income $ 2,761 $ 2,263
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Basic earnings per common share $ 0.43 $ 0.35
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Diluted earnings per common share $ 0.42 $ 0.35
===================== =====================
Weighted average shares outstanding:
Basic 6,436,278 6,416,189
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Diluted 6,530,192 6,540,392
===================== =====================
</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>
Thirteen Weeks Ended
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April 29, 2000 May 1, 1999
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(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,761 $ 2,263
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Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,135 863
Deferred income taxes (13) (58)
Loss on disposal of assets 2 13
Change in assets and liabilities (155) (5,735)
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Total adjustments 969 (4,917)
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Net cash provided by (used in) operating activities 3,730 (2,654)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,319) (1,098)
Proceeds from sale of property 10 4
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Net cash (used in) investing activities (1,309) (1,094)
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan activity, net (3,088) 3,406
Proceeds from options exercised and purchase
of shares under employee stock purchase plan 35 57
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Net cash provided by (used in) financing activities (3,053) 3,463
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NET (DECREASE) IN CASH AND CASH EQUIVALENTS (632) (285)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 860 945
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 228 $ 660
======================== ========================
</TABLE>
See notes to condensed consolidated financial statements.
4
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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 April 29, 2000 and May 1, 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
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April 29, 2000 May 1, 1999
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<S> <C> <C>
Weighted average shares outstanding:
Basic 6,436,278 6,416,189
Dilutive effect of stock options 93,914 124,203
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Diluted 6,530,192 6,540,392
=============== ===============
</TABLE>
For the thirteen week periods ended April 29, 2000 and May 1, 1999,
94,600 and 81,200 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
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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 April 29, 2000, we operated 213 Hibbett Sports stores as well as
thirteen 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
Period Ended
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April 29, 2000 May 1, 1999
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<S> <C> <C>
Net sales 100.0% 100.0%
Cost of goods sold, including warehouse,
distribution and store occupancy costs 69.5 69.6
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Gross profit 30.5 30.4
Store operating, selling, and administrative
expenses 19.2 19.7
Depreciation and amortization 2.3 2.0
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Operating income 9.0 8.7
Interest expense, net 0.1 0.1
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Income before provision for income taxes 8.9 8.6
Provision for income taxes 3.4 3.3
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Net income 5.5% 5.3%
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</TABLE>
6
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Thirteen Weeks Ended April 29, 2000 Compared to Thirteen Weeks Ended May 1, 1999
Net sales. Net sales increased $7.7 million, or 18.0%, to $50.5 million for
the thirteen weeks ended April 29, 2000, from $42.8 million for the comparable
period in the prior year. This increase is attributed to the opening of a net of
forty-seven Hibbett Sports stores and two Sports Additions stores in the 52 week
period ended April 29, 2000, and a 1.4% 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 $7.2 million of the increase in net sales, and
increases in comparable store net sales contributed $500,000. 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 April 29, 2000, we opened seven new
stores.
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 $15.4 million, or 30.5% of net sales, in the thirteen weeks
ended April 29, 2000, as compared to $13.0 million, or 30.4% 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 distribution center costs over
a larger store base in the current year period.
Store operating, selling and administrative expenses. Store operating,
selling and administrative expenses were $9.7 million, or 19.2% of net sales,
for the thirteen weeks ended April 29, 2000, as compared to $8.4 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 April 29, 2000 is attributable to improved leveraging
of administrative costs over a larger store base and fewer new store openings in
the current year period.
Depreciation and amortization. Depreciation and amortization as a
percentage of net sales was 2.3% in the thirteen weeks ended April 29, 2000
compared to 2.0% in the thirteen weeks ended May 1, 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, net. Net interest expense for the thirteen weeks ended
April 29, 2000 was $69,000 compared to net interest expense of $53,000 in the
prior year period. The increase is attributable to higher market interest
rates.
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 has historically been
driven by net income levels combined with fluctuations in inventory and accounts
payable balances. We have continued to increase our inventory levels in the
thirteen weeks ended April 29, 2000 as the number of stores has increased. We
have financed this increase primarily through increased net income and increases
in accounts payable balances. Net cash provided by operating activities was
$3.7 million for the thirteen week period ending April 29, 2000 as compared to
net cash used in operating activities of $2.7 million for the thirteen week
period ending May 1, 1999.
With respect to cash flows from investing activities, capital expenditures
were $1.3 million in the thirteen week period ended April 29, 2000 compared to
$1.1 million for the comparable period in the prior year. Capital expenditures
in the thirteen weeks ended April 29, 2000 primarily related to the opening of
seven new stores and certain office and distribution center-related
expenditures.
Net cash used in financing activities was $3.1 million in the thirteen week
period ended April 29, 2000 compared with $3.5 million provided by financing
activities in the prior year period. Financing activities primarily result from
borrowings and repayments under our credit facilities. The decline in
borrowings during the thirteen week period ended April 29, 2000 resulted from
the completion of the distribution center expansion and lower working capital
requirements.
7
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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.
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 April 29, 2000, the Company had $1.3 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 April 29, 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, 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
8
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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
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10.1 Credit Agreement dated as of April 17, 2000 between the
Company, Hibbett Team Sales, Inc., Sports Wholesale,
Inc. and AmSouth Bank, Fleet National Bank and Bank of
America, N.A.
27 Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K
The Company filed a Form 8-K on April 4, 2000 in connection with the
announcement of the stock repurchase program.
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 7, 2000 By: /s/ Susan H. Fitzgibbon
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Susan H. Fitzgibbon
Vice President and
Chief Financial Officer
9
