<PAGE> 1
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 CHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACTION OF 1934
For the transition period from to
-------------------- -------------------
COMMISSION FILE NUMBER 000-24381
HASTINGS ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-1386375
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3601 PLAINS BOULEVARD, SUITE 1, AMARILLO, TEXAS 79102
(Address of principal executive offices) (Zip Code)
(806) 351-2300
(Registrant's telephone number, including area code)
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 [ ] No [X]
Number of shares outstanding of the issuer's common stock, as of July 16, 1998:
Class Shares Outstanding
- -------------------------------------- ------------------------
Common Stock, $.01 par value per share 11,549,734
1
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HASTINGS ENTERTAINMENT, INC.,
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of April 30, 1998 and January 31, 1998 3
Consolidated Statements of Income for the First Quarter ended
April 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the First Quarter ended
April 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-12
PART II - OTHER INFORMATION
Item 2 - Changes in Securities and Use of Proceeds 13
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports of Form 8-K 13
SIGNATURE PAGE 14
INDEX TO EXHIBITS 15
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
HASTINGS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1998 AND JANUARY 31, 1998
(Dollars in thousands, except par value)
<TABLE>
<CAPTION>
April 30, January 31,
1998 1998
------------- ----------
<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash 1,368 3,840
Merchandise inventories 125,289 126,835
Other current assets 4,270 3,889
------------- ----------
Total current assets 130,927 134,564
Property and equipment, net of accumulated depreciation
of $78,909 and $80,114, respectively 79,221 80,703
Other assets 31 31
============= ==========
$ 210,179 $ 215,298
============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt 301 301
Trade accounts payable 42,390 60,747
Accrued expenses and other liabilities 16,369 17,590
Deferred income taxes 1,305 1,305
Income taxes payable -- 3,428
------------ ----------
Total current liabilities 60,365 83,371
------------ ----------
Long term debt, excluding current maturities 67,992 51,311
Deferred income taxes 898 898
Redemption value of common stock held by estate of Company's founder 8,000 8,000
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued -- --
Common stock, $.01 par value; 75,000,000 shares authorized; 8,652,914
shares issued; 8,465,726 shares outstanding in 1998,
and 8,465,189 shares outstanding in 1997 87 87
Additional paid-in capital 1,654 1,654
Retained earnings 81,370 80,168
Treasury stock, at cost (2,187) (2,191)
------------ ----------
Redemption value of common stock held by estate of Company's founder (8,000) (8,000)
------------ ----------
72,924 71,718
Commitments and contingencies ------------ ----------
$ 210,179 $ 215,298
============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
HASTINGS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FIRST QUARTER ENDED APRIL 30, 1998 AND 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter ended April 30,
----------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Merchandise revenue $70,834 61,575
Video rental revenue 18,553 16,861
---------- ----------
Total revenues 89,387 78,436
Merchandise cost of revenue 50,180 43,173
Rental video cost of revenue 7,537 6,117
---------- ----------
Total cost of revenues 57,717 49,290
---------- ----------
Gross profit 31,670 29,146
Selling, general and administrative expenses 28,373 26,593
Pre-opening expense 159 134
---------- ----------
28,532 26,727
---------- ----------
Operating income 3,138 2,419
Interest expense (1,199) (934)
---------- ----------
Income before income taxes 1,939 1,485
Income taxes 737 565
========== ===========
Net income $1,202 $920
========== ===========
Basic earnings per share $0.14 $0.11
========== ===========
Diluted earnings per share $0.14 $0.10
========== ===========
Weighted-average number of common shares outstanding - basic 8,466 8,558
Dilutive effect of stock options 229 211
========== ===========
Weighted-average number of common shares outstanding - diluted 8,695 8,769
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
HASTINGS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST QUARTER ENDED APRIL 30, 1998 AND 1997
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
First Quarter ended April 30,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,202 $ 920
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization 9,902 7,456
Loss on rental videos lost, stolen and defective 1,129 823
Loss on disposal of other assets 185 8
Changes in operating assets and liabilities:
Merchandise inventory 1,546 (1,186)
Other current assets (381) (42)
Trade accounts payable, accrued expenses
and other liabilities (19,578) 1,559
Income taxes payable (3,428) 565
---------- -----------
Net cash provided by (used by) operations (9,423) 10,103
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and improvements (9,734) (10,266)
---------- -----------
Net cash used in investing activities (9,734) (10,266)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility 101,700 59,050
Repayments under revolving credit facility (85,019) (61,027)
Dividends and treasury stock transactions 4 (21)
---------- -----------
Net cash provided by (used in) financing activities 16,685 (1,998)
---------- -----------
Net decrease in cash (2,472) (2,161)
Cash at beginning of period 3,840 4,972
---------- -----------
CASH AT END OF PERIOD $ 1,368 $ 2,811
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
HASTINGS ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Hastings
Entertainment, Inc. and Subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with instructions in Form 10-Q and Article 10 of Regulation S-X.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. All
adjustments, consisting only of normal recurring adjustments, have been made
which, in the opinion of management, are necessary for a fair presentation of
the results of the interim period. The results of operations for such interim
periods are not necessarily indicative of the results which may be expected for
a full year. The financial statements contained herein should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Registration Statement on Form S-1 (File no. 333-47969) as filed
with the Securities and Exchange Commission and declared effective on June 11,
1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of February 1, 1998, the Company adopted a new method of depreciation for its
rental videos. Under this new method, the Company depreciates all rental videos
on a straight-line basis to their estimated salvage value of $5. Videos
identified as base stock (including the first four copies per store of hit
titles) are depreciated over 36 months, and new releases (hit titles five copies
and up) are depreciated over six months. The Company believes this accelerated
methodology is appropriate for matching revenues and expenses. Adoption of the
new method was not material to retained earnings at February 1, 1998, or to
results of operations for the first quarter of fiscal 1998.
3. CONSOLIDATION POLICY
The Company established two wholly-owned subsidiaries during the first quarter
of fiscal 1998, Hastings Properties, Inc. and Hastings Internet, Inc. The
consolidated financial statements present the results of Hastings
Entertainment, Inc. and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
4. SUBSEQUENT EVENTS
The Company completed an initial public offering as described in the Company's
Registration Statement on Form S-1 (File no. 333-47969) as filed with the
Securities and Exchange Commission and declared effective on June 11, 1998. The
Company sold 3,084,000 shares of Common Stock, $.01 par value per share, at an
offering price of $13.00 per share. In addition, 293,333 shares of Common Stock
were sold by the estate of the Company's founder. The Company did not receive
any of the proceeds from the sale of shares by the selling shareholder. The
Common Stock is listed on The Nasdaq National Market under the symbol "HAST."
The Company plans to use the net proceeds from the offering to fund the opening
of new superstores, the expansion and remodeling of existing superstores and for
working capital and general corporate purposes. Upon receipt of the proceeds
from the Company's June 1998 initial public offering, the
6
<PAGE> 7
Company repaid approximately $36.8 million under the Facility. At June 30, 1998
the outstanding balance under Facility was approximately $3.4 million.
The stock redemption agreement with the estate of the Company's founder was
terminated upon completion of the Company's initial public offering.
The Company effected a 5.059-for-1 stock split on June 4, 1998, the effects of
which have been retroactively applied to the consolidated financial statements.
In May 1998, the Company incorporated a wholly-owned subsidiary, Hastings
College Stores, Inc., and acquired a small college textbook store located in
Stephenville, Texas. In July 1998 the Company reached agreement with Tarleton
State University in Stephenville, Texas to operate the on-campus college
bookstore. The Company will assume operation of the store in August 1998.
5. MODIFICATION OF BORROWING ARRANGEMENT
On April 15, 1998, the Company amended its unsecured, $45.0 million Revolving
Credit Facility (the "Facility") placed with a syndicate of banks. The amendment
extends the termination date of the Facility from April 30, 1999 to June 30,
1999. All other terms and conditions remained unchanged. As of April 30, 1998,
the outstanding balance under the Facility was $42.0 million. Other financing
arrangements remained unchanged during the quarter. As of April 30, 1998, the
Company is in compliance with all covenant and reporting requirements.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Hastings is a multimedia entertainment retailer that combines the sale of books,
music, software, periodicals, and videotapes with the rental of videotapes and
video games in a superstore format. As of April 30, 1998, the Company operated
117 superstores averaging 21,200 square feet in small to medium-sized markets
located throughout the Midwestern and Western United States. No new stores were
opened in the fiscal quarter ending April 30, 1998.
SUMMARY OF STORE ACTIVITY
<TABLE>
<CAPTION>
First Quarter Ended Year Ended
------------------------ -------------
<S> <C> <C>
April 30, April 30, January 31,
1998 1997 1998
--------- --------- -----------
Hastings Superstores:
Beginning number of stores 117 111 111
Openings - 1 8
Closings - - (2)
--- --- ----
Ending number of stores 117 112 117
=== === ====
</TABLE>
RESULTS OF OPERATIONS
The following table sets forth certain items from the Company's unaudited
consolidated statements of income as a percentage of total revenues:
<TABLE>
<CAPTION>
First Quarter Ended April 30,
-----------------------------
1998 1997
------ ------
<S> <C> <C>
Merchandise revenue 79.2% 78.5%
Video rental revenue 20.8 21.5
----- -----
Total revenues 100.0 100.0
Merchandise cost of revenue 70.8 70.1
Rental video cost of revenue 40.6 36.3
----- -----
Total cost of revenues 64.6 62.8
----- -----
Gross profit 35.4 37.2
Selling, general and administrative expenses 31.7 33.9
New store expense 0.2 0.2
----- -----
31.9 34.1
----- -----
Operating income 3.5 3.1
Interest expense (1.3) (1.2)
----- -----
Income before income taxes 2.2 1.9
Income taxes 0.8 0.7
===== =====
Net income 1.3% 1.2%
===== =====
</TABLE>
8
<PAGE> 9
Total revenues in the first quarter of fiscal 1998 increased $11.0 million, or
14.0% to $89.4 million from $78.4 million during the first quarter of fiscal
1997. Merchandise sales totaled $70.8 million in the first quarter of fiscal
1998, an increase of $9.3 million or 15.0%, from $61.6 million for the first
quarter in fiscal 1997. Revenues in the first quarter of fiscal 1998 from the
rental of videotapes rose $1.7 million or 10.0%, to $18.6 million from $16.9
million in the first quarter of fiscal 1997.
Comparable store sales increased by 9% for the first quarter of fiscal 1998. A
store's revenue is included in the comparable store revenue growth calculation
after it has been open for 60 weeks.
Total cost of revenues increased by $8.4 million or 17.1%, to $57.7 million in
the first quarter of fiscal 1998, compared with $49.3 million in the first
quarter of fiscal 1997. Gross profit as a percentage of revenues was 35.4% in
the first quarter of 1998 versus 37.2% in the first quarter of 1997. Gross
profit from merchandise sales increased to $20.7 million, or 29.2% of
merchandise sales, compared to gross profit from merchandise sales of $18.4
million or 29.9% of merchandise sales for the first quarter of fiscal 1997.
Management attributes the decrease in merchandise gross profit percentage to a
slight increase in inventory shrinkage and other inventory cost adjustments.
Video rental gross profit increased to $11.0 million in the first quarter of
fiscal 1998, an increase of $0.3 million or 2.5% compared to $10.7 million for
the first quarter of fiscal 1997. The video rental gross profit percentage
dropped from 63.7% in the first quarter of fiscal 1997 to 59.4% in the fiscal
1998 first quarter primarily as a result of lower margin rental video leasing
arrangements that commenced in August 1997.
Selling, general and administrative expenses ("SG&A"), including pre-opening
expenses related to new stores, totaled $28.5 million in the first quarter of
fiscal 1998, versus $26.7 million in the first quarter of fiscal 1997. SG&A as a
percentage of revenues dropped to 31.9% in the current year from 34.1% in the
first quarter of the previous year. Management believes the primary factors
contributing to this decrease in SG&A as a percentage of revenues were reduced
overall advertising expenses, combined with on-going leverage of corporate
overhead. Pre-opening expenses include labor, rent, utilities, supplies and
certain other costs incurred prior to a superstore's opening. The Company
expenses pre-opening costs as incurred.
Net interest expense was $1.2 million, or 1.3% of revenues, in the first quarter
of fiscal 1998, versus $0.9 million, or 1.2% of revenues, in the first quarter
of fiscal 1997. Income tax expense was $0.7 million, or 0.8% of revenues, in the
first quarter of fiscal 1998, versus $0.6 million, or 0.7% of revenues, in the
first quarter of fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund working capital needs,
the opening of new superstores, and the expansion and refurbishment of existing
superstores. The Company's primary sources of working capital are cash flow from
operations, trade credit from vendors, proceeds from the Company's initial
public offering of common stock described below and borrowings from its
Revolving Credit Facility. As of April 30, 1998, the Company's total debt
capacity consisted of $25.0 million of its unsecured Series A Senior Notes due
2003 and its $45.0 million Revolving Credit Facility.
9
<PAGE> 10
Net cash used for operations for the first quarter of fiscal 1998 was $9.4
million, compared with net cash generated from operations of $10.1 million in
the first quarter of fiscal 1997. The operating cash inflows for the first
quarter of fiscal 1998 primarily reflect net income, depreciation, other
non-cash expenses and changes in inventory totaling $14.0 million. Cash outflows
for the first quarter of fiscal 1998 of $23.4 million were primarily a result of
a significant decrease in trade accounts payable due to strategic buying and
payment decisions made during the fourth quarter of 1997 and increased credit
taken against vendor accounts payable for return of product during the first
quarter of 1998.
Net cash used in investing activities for the first quarter of fiscal 1998 was
$9.7 million, primarily related to the purchase of rental video tapes and the
expansion of superstores, compared to $10.3 million in the first quarter of
fiscal 1997. The Company opened no superstores in the first quarter of fiscal
1998, versus one superstore in the first quarter of fiscal 1997.
Net cash provided by financing activities in the first quarter of fiscal 1998
was $16.7 million, versus net cash used in financing activities of $2.0 million
in the first quarter of fiscal 1997. Net cash provided by or used in financing
activities results primarily from net borrowings or repayments under the
Company's unsecured $45.0 million Revolving Credit Facility (the "Facility")
placed with a syndicate of banks.
On April 15, 1998, the Company amended the Facility. The amendment extends the
termination date of the Facility from April 30, 1999 to June 30, 1999. All other
terms and conditions remained unchanged. As of April 30, 1999, the outstanding
balance under the Facility was $42.0 million, and the Company is in compliance
with all covenants and reporting requirements.
The Company completed an initial public offering as described in the Company's
Registration Statement on Form S-1 (File no. 333-47969) as filed with the
Securities and Exchange Commission and declared effective on June 11, 1998. The
Company sold 3,084,000 shares of Common Stock, $.01 par value per share, at an
offering price of $13.00 per share. In addition, 293,333 shares of Common Stock
were sold by the estate of the Company's founder, a non-management shareholder
of the Company. The Company did not receive any of the proceeds from the sale of
shares by the selling shareholder. The Common Stock is listed on The Nasdaq
National Market under the symbol "HAST."
The Company plans to use the net proceeds from the offering to fund the opening
of new superstores, the expansion and remodeling of existing superstores and for
working capital and general corporate purposes. Upon receipt of the proceeds
from the Company's June 1998 initial public offering, the Company repaid
approximately $36.8 million under the Facility. At June 30, 1998 the outstanding
balance under the Facility was approximately $3.4 million.
The stock redemption agreement with the estate of the Company's founder was
terminated upon completion of the Company's initial public offering.
Based upon the Company's current operating levels and superstore expansion
plans, management believes net cash flows from operating activities, the $45.0
million Facility, the $25.0 million unsecured senior notes and the proceeds from
the Company's June 1998 initial public offering will be sufficient to meet the
Company's working capital and debt service payments and capital required to
support management's superstore expansion program through January 2000.
10
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RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) recently issued several
Statements of Financial Accounting Standards (SFAS's) that may impact the
Company's accounting treatment and/or its disclosure obligations. The new SFAS's
impacting the Company are as follows:
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" was issued in June 1997 and supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise." The new rules change the
manner in which operating segments are defined and reported externally to be
consistent with the basis on which they are reported and evaluated internally.
The new rules are effective for periods beginning after December 15, 1997.
Adoption of this statement does not result in significant additional disclosure
by the Company. However, the Company considers the anticipated initiation of the
sale of products on its Web site to be a separate segment and when and if such
operations are material will include the disclosure required by the statement.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was
issued in June 1998. The statement establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The adoption is not expected to have a material impact on the Company.
The American Institute of Certified Public Accountants issued Statement of
Position (SOP) 98-5 in April 1998. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. The SOP is
effective for financial statements for fiscal years beginning after December 15,
1998. The adoption will not have a material impact on the Company.
SEASONALITY AND INFLATION
As is the case with many retailers, a significant portion of the Company's
revenues, and an even greater portion of its operating profit, is generated in
the fourth fiscal quarter, which includes the Christmas selling season. As a
result, a substantial portion of the Company's annual earnings has been, and
will continue to be, dependent on the results of this quarter. The Company
experiences reduced videotape rental in the Spring because customers spend more
time outdoors. Major world or sporting events, such as the Super Bowl, the
Olympics or the World Series, also have a temporary adverse effect on revenues.
Future operating results may be affected by many factors, including variations
in the number and timing of store openings, the number and popularity of new
book, music and videotape titles, the cost of the new release or "best renter"
titles, changes in comparable store revenue, competition, marketing programs,
increases in the minimum wage, weather, special or unusual events and other
factors that may affect retailers in general and the Company in particular.
The Company does not believe that inflation has materially impacted net income
during the past three years. Substantial increases in costs and expenses could
have a significant impact on the Company's operating results to the extent such
increases are not passed along to customers.
YEAR 2000 COMPLIANCE
Due to the recent development and implementation of its proprietary information
system corporate infrastructure, the Company has taken measures to ensure its
Year 2000 compliance. The Company believes its systems to be Year 2000 compliant
and does not anticipate any material or adverse effect associated with the
transition to the new millennium. The Company understands exposure for Year 2000
11
<PAGE> 12
compliance extends beyond its own systems. During calendar years 1998 and 1999,
the Company is requiring its major vendors to validate their Year 2000
compliance and compliance process. Upon completion of the process, each vendor
is required to provide confirmation of its Year 2000 compliance. If a major
vendor cannot prove its compliance, it is expected that the vendor will be
removed as an authorized vendor of the Company and products will be obtained
from alternative and compliant vendors.
STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE
Certain of the statements set forth above are forward looking statements within
the meaning of the Securities Exchange Act of 1934. Such statements are based
upon management's current expectations and are subject to a number of factors
and uncertainties which could cause actual results to differ materially from
those described herein. The forward-looking statements set forth above are
subject to the factors and uncertainties set forth under the heading "Risk
Factors" in the Company's Registration Statement on Form S-1 (File No.
333-47969) as filed with the Securities and Exchange Commission and declared
effective on June 11, 1998.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 17, 1998, the Company completed an initial public offering of its Common
Stock, $.01 par value, as described in the Company's Registration Statement on
Form S-1 (File no. 333-47969) as filed with the Securities and Exchange
Commission and declared effective on June 11, 1998. The Company sold 3,084,000
shares of Common Stock, $.01 par value per share, at an offering price of $13.00
per share or $11.79 net of underwriting discount and offering expenses. In
addition, 293,333 shares of Common Stock were sold by a non-management
shareholder of the Company. The Company did not receive any of the proceeds from
the sale of shares by the selling shareholder. Underwriters for the shares of
Common Stock offered were Salomon Smith Barney, A. G. Edwards & Sons, Inc. and
Furman Selz. Proceeds to the Company were $36,363,560, net of estimated offering
expenses. The Common Stock is listed on The Nasdaq National Market under the
symbol "HAST."
Through June 30, 1998, the Company has used $36.8 million to repay outstanding
indebtedness under its Revolving Credit Facility. At June 30, 1998, $3.4 million
was outstanding under the Revolving Credit Facility.
The Company effected a 5.059-for-1 stock split on June 4, 1998, prior to the
completion of its initial public offering, the effects of which have been
retroactively applied to all share data in this report.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 30, 1998, at
which election of directors listed below was submitted to a vote of the
stockholders with the voting results as indicated.
(1) Election of directors for a three-year term expiring at the Company's Year
2001 Annual Meeting of Shareholders:
<TABLE>
<CAPTION>
Nominee For Against Abstain
------- --- ------- -------
<S> <C> <C> <C>
Ron G. Stegall 7,617,189 0 70,937
Peter A. Dallas 7,642,105 4,836 41,185
Craig R. Lenzsch 7,617,189 0 70,937
</TABLE>
Directors whose term of office continued after the meeting are Phillip Hill,
Stephen S. Marmaduke, Leonard L. Berry, John H. Marmaduke, Gaines L. Godfrey and
Jeffrey G. Shrader.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a. Listing of Exhibits
27.1 Financial Data Schedule
b. No report on Form 8-K was filed by the registrant during the fiscal quarter
for which this report is filed.
13
<PAGE> 14
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, on behalf of the registrant and as registrant's Principal Financial
Officer, thereunto duly authorized:
HASTINGS ENTERTAINMENT, INC.
DATE: July 27, 1998 By: /s/ Dennis McGill
----------------------------------------
Dennis McGill
Vice President, Chief Financial Officer,
Treasurer and Secretary
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------ ------------------------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
UNAUDITED FINANCIAL STATEMENTS AS AND OF THE THREE MONTHS APRIL 30,1998
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,368
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 125,289
<CURRENT-ASSETS> 130,927
<PP&E> 158,130
<DEPRECIATION> 78,909
<TOTAL-ASSETS> 210,179
<CURRENT-LIABILITIES> 60,365
<BONDS> 0
0
0
<COMMON> 87
<OTHER-SE> 72,837
<TOTAL-LIABILITY-AND-EQUITY> 210,179
<SALES> 89,387
<TOTAL-REVENUES> 89,387
<CGS> 57,717
<TOTAL-COSTS> 57,717
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,199
<INCOME-PRETAX> 1,939
<INCOME-TAX> 737
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<CHANGES> 0
<NET-INCOME> 1,202
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
