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 August 1, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 1-13322
JumboSports Inc.
(Exact name of registrant as specified in its charter)
Florida 52-1643157
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification number)
4701 W. Hillsborough Avenue Tampa, FL 33614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 813/886-9688
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date 20,364,377 as of August 1, 1997.
<PAGE>
JumboSports Inc.
Index to Form 10-Q
August 1, 1997
Page Number
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis 8-13
Part II - Other Information 14
Signatures 15
<PAGE>
JUMBOSPORTS INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE DATA)
January 31, 1997 August 1, 1997
---------------- ---------------
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $4,944 $1,120
Accounts receivable, net 2,338 7,193
Inventories 201,090 277,610
Prepaid expenses and other assets 4,495 2,906
Income tax receivable 11,386 24
Deferred tax asset 1,586 4,116
---------- ----------
Total current assets 225,839 292,969
---------- ----------
Property and Equipment - net 282,651 284,100
---------- ----------
Other Assets:
Cost in excess of fair value of
net assets acquired, net 11,145 10,974
Other 5,951 8,617
---------- ----------
Total other assets 17,096 19,591
---------- ----------
Total assets $525,586 $596,660
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $185 $526
Accounts payable 37,050 57,295
Accrued expenses 16,462 16,131
Other 13,464 11,728
---------- ----------
Total current liabilities 67,161 85,680
Deferred rent and other
long-term liabilities 4,476 4,136
Long-term debt less current maturities 294,325 350,468
---------- ----------
Total liabilities 365,962 440,284
Stockholders' Equity
Common stock, $.01 par value, 100,000,000
shares authorized, 20,339,409 and
20,364,377 issued and outstanding,
respectively 203 204
Additional paid-in capital 149,639 149,774
Retained earnings 9,782 6,398
---------- ----------
Total stockholders' equity 159,624 156,376
---------- ----------
Total liabilities & stockholders' equity $525,586 $596,660
========== ==========
See Notes to the Consolidated Financial Statements.
3
<PAGE>
JUMBOSPORTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR SHARE DATA)
(UNAUDITED)
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 28, August 1, July 28, August 1,
1996 1997 1996 1997
-------- -------- -------- --------
Sales $169,014 $136,225 $312,672 $266,359
Cost of sales including
buying & occupancy costs 162,583 102,671 273,418 202,151
--------- --------- -------- --------
Gross profit 6,431 33,554 39,254 64,208
Selling, general and
administrative expenses 31,512 30,546 61,207 57,724
Non-recurring and
other charges 22,568 -- 22,568 --
--------- -------- -------- --------
Income (loss) from
operations (47,649) 3,008 (44,521) 6,484
Interest expense 5,066 5,939 8,751 11,754
--------- -------- -------- --------
Loss before benefit
for income taxes (52,715) (2,931) (53,272) (5,270)
Benefit for income taxes (19,482) (1,052) (19,694) (1,886)
--------- -------- -------- --------
Net loss $(33,233) $(1,879) $(33,578) $(3,384)
========= ======== ======== ========
Net loss per common share $(1.67) $(0.09) $(1.69) $(0.17)
Weighted average
shares outstanding 19,918 20,360 19,858 20,353
Stores opened during period 1 0 5 0
Store open at end of period 85 85 85 85
See Notes to the Consolidated Financial Statements.
4
<PAGE>
JUMBOSPORTS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE TWENTY-SIX WEEKS ENDED JULY 28, 1996 AND AUGUST 1, 1997
(IN THOUSANDS)
(UNAUDITED)
Additional
Common Stock Paid in Retained
Shares Par Value Capital Earnings Total
------ --------- ------- -------- -----
Balance, January 28, 1996 19,769 $198 $147,006 $40,326 $187,530
Issuance of common stock 240 2 598 600
Net loss (33,578) (33,578)
------ ---- -------- ------ ------
Balance July 28, 1996 20,009 $200 $147,604 $6,748 $154,552
====== ==== ======== ====== =======
Balance, January 31, 1997 20,339 $203 $149,639 $9,782 $159,624
Issuance of common stock 25 1 135 136
Net loss (3,384) (3,384)
------ ---- -------- ------ -------
Balance August 1, 1997 20,364 $204 $149,774 $6,398 $156,376
====== ==== ======== ====== =======
See Notes to the Consolidated Financial Statements.
5
<PAGE>
JUMBOSPORTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Twenty-Six Weeks Ended
July 28, 1996 August 1, 1997
------------- --------------
Cash flows from operating activities:
Net loss $(33,578) $(3,384)
Adjustments to reconcile net income
to cash used in operating activities:
Depreciation 4,150 4,460
Loss (gain) on asset sales (223) 11
Goodwill amortization 171 171
Deferred loan cost amortization &
other amortization 262 864
Non-recurring and other charges 22,568 --
Increase in deferred tax asset (17,607) (2,530)
Decrease (increase) in accounts receivable 850 (4,855)
Decrease (increase) in income tax receivable (2,444) 11,362
Decrease (increase) in inventories 35,655 (76,520)
Decrease in prepaid expenses 643 1,458
Decrease (increase) in other assets (1,474) 83
Increase (decrease) in accounts payable (11,114) 20,245
Increase (decrease) in accrued expenses 5,742 (1,002)
Increase (decrease) in other current liabilities 1,582 (1,562)
Increase (decrease) in deferred rent 221 (340)
Increase in income taxes payable 398 --
------- -------
Net cash provided by (used in)
operating activities 5,802 (51,539)
------- -------
Cash flow from investing activities:
Capital expenditures (7,806) (7,782)
Net collections under note receivable 25 132
Cash proceeds from sale of property -- 1,474
------- -------
Net cash used in investing activities (7,781) (6,176)
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock-net 600 136
Stock purchase loan (304) --
Borrowings under revolving credit agreement 24,595 20,003
Payments under revolving credit agreement (20,250) (444)
Proceeds from mortgage financing -- 37,000
Repayments of long term debt (267) (74)
Loan costs (2,726) (2,730)
------- -------
Net cash provided by financing activities 1,648 53,891
------- -------
Net decrease in cash
and cash equivalents (331) (3,824)
------- -------
Cash, beginning of period 3,590 4,944
------- -------
Cash, end of period $3,259 $1,120
======= =======
See Notes to the Consolidated Financial Statements
6
<PAGE>
JUMBOSPORTS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and, therefore, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all material adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Interim results are not necessarily indicative of results for a full year.
The financial statements should be read in conjunction with the audited
financial statements and notes thereto for the fiscal year ended January 31,
1997 contained in the Company's Form 10-K dated May 1, 1997.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
This management's discussion and analysis contains forward-looking
statements. These forward-looking statements are subject to the inherent
uncertainties in predicting future results and conditions. Certain factors could
cause actual results to differ materially from these forward-looking statements.
Management's discussion and analysis of financial condition and results of
operations for the twenty-six weeks of fiscal 1997 should be read in conjunction
with the discussion and analysis set forth in Form 10-K filed May 1, 1997 for
the fiscal year ended January 31, 1997.
Results of Operations
The following table set forth certain operating data as a percentage of
sales for the periods indicated:
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 28, August 1, July 28, August 1,
1996 1997 1996 1997
-------- -------- -------- ---------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales including buying
and occupancy costs 96.2 75.4 87.4 75.9
------- ------- ------- ------
Gross profit 3.8 24.6 12.6 24.1
Selling, general and
administrative expenses 18.6 22.4 19.6 21.7
Non-recurring and
other charges 13.4 -- 7.2 --
------- ------- ------- ------
Income (loss) from operations (28.2) 2.2 (14.2) 2.4
Interest expense-net 3.0 4.4 2.8 4.4
------- ------- ------- ------
Loss before benefit
for income taxes (31.2) (2.2) (17.0) (2.0)
Benefit for income taxes (11.5) (0.8) (6.3) (0.7)
------- ------- ------- ------
Net loss (19.7)% (1.4)% (10.7)% (1.3)%
======= ======= ======= ======
8
<PAGE>
Thirteen Weeks Ended (Second Quarter) August 1, 1997 Compared To Thirteen Weeks
Ended July 28, 1996
The Company did not open any new stores in its second quarter compared to
one new store in the same quarter last year, ending the quarter with 85 stores
in both the current and prior year.
Sales for the second quarter decreased 19.4% to $136.2 million compared
with sales of $169.0 million in the second quarter of the prior year. Same store
sales for the second fiscal quarter decreased by 19.4%. While these same store
sales were unfavorable, they are not truly comparable because sales in the prior
year were bolstered by the 1996 inventory clearance sale the Company started in
June 1996 and continued through November 1996. Sales below cost for the
inventory clearance sale were $18.2 million in the second quarter of the prior
year which represents 10.7% of last years sales. Adjusting same store sales in
the prior year for the below cost clearance sale, leaves a comparable store
sales decrease of 9.7% for the second fiscal quarter. Sales have been adversely
affected by the following:
1. Sales were generally soft throughout the sporting goods retail segment
partially as a result of comparisons against last year's Olympic
merchandise sales and last year's increased foot traffic due to the
Olympics;
2. Certain merchandise categories were further affected. Fitness
continues to be lower due to fewer "infomercial"-driven product
introductions. In-line skates across the industry are a declining
business. The hunting category is also experiencing a continued
decline;
3. Competition continues to increase. Fourteen additional stores this
quarter were adversely affected by new big-box competitors which
opened after the second quarter of the prior year.
Gross profit for the second quarter was $33.6 million, or 24.6% of sales,
as compared to $6.4 million or 3.8% of sales for the second quarter of the prior
year. In the prior year, an inventory write-down of $32.4 million, or 19.2% of
sales was taken for slow moving and obsolete inventory. The primary difference
in gross margin percent relates to increased margin contributions from the soft
goods departments as slightly offset by higher buying and occupancy costs and a
higher shrinkage accrual based on the prior year's experience.
Selling, general and administrative expenses for the second quarter were
$30.5 million, or 22.4% of sales, as compared to $31.5 million, or 18.6% of
sales, for the second quarter of the prior year. The increase as a percentage of
sales was due to lower sales volume leverage on fixed costs and certain higher
operating costs. Payroll expense was up 174 basis points due to the in-store
problems encountered by the introduction of the new merchandise systems as well
as problems experienced in the implementation of a new distribution center;
also, a higher average wage resulted from the "ripple-effect" of the minimum
wage increase and a generally tighter labor market. Advertising expense was up
163 basis points. Most of the overage occurred early in the quarter.
In addition to the $32.4 million inventory write-down, the Company incurred
$22.6 million of non-recurring and other charges, or 13.4% of sales in the prior
year.
Income from operations in the second quarter was $3.0 million, or 2.2% of
sales, as compared to a loss from operations of $47.6 million, or (28.2)% of
sales in the same quarter of the prior year. The loss from operations in the
prior year was primarily the result of the $55 million one time charges.
9
<PAGE>
Interest expense for the second quarter was $5.9 million, or 4.4% of sales
as compared to $5.1 million or 3.0% of sales in the same quarter of the prior
year. The increase in interest rates was the result of increased debt, the
result of higher inventory levels, and the refinancing of $58 million of tax
retention operating leases into the revolving credit facility in the middle of
the second quarter of the prior year.
The Company's income tax benefit for the quarter was $1.1 million with an
effective rate of approximately 35.9%. The tax benefit was $19.5 million in the
same quarter of the prior year with an effective tax rate of 37.0%.
For the second quarter the Company posted a net loss of $1.9 million or
(1.4)% of sales, as compared to a net loss of $33.2 million, or (19.7)% of sales
for the same quarter of the prior year. The net loss in the second quarter of
the prior year was attributable to the after-tax effect, $34.6 million, of the
inventory write-down and one time charges.
Twenty-Six Weeks (First-Half) Ended August 1, 1997 Compared To Twenty-Six
Weeks Ended July 28, 1996
The Company did not open any new stores in its first half compared to 5 new
stores in its first half last year.
Sales for the first twenty-six weeks decreased 14.8% to $266.4 million
compared to sales of $312.7 million in the comparable period last year. Same
store sales for this twenty-six week period declined 15.8%. While these same
store sales were unfavorable, they are not truly comparable, because sales in
the prior year were bolstered by an inventory clearance in the second quarter of
the prior year. Adjusting same store sales in the prior year for the below cost
clearance sales, leaves a comparable store sales decrease of only 10.6%. Sales
have been adversely impacted by the following:
1. The Company's new information management systems were installed at the
beginning of the year. There have been significant disruptions in
merchandise flow due to problems encountered in receiving and making
product ready to sell at the store level through part of the second
quarter;
2. The Company's new centralized cross-dock operation began in late
November of last year. As the amount of merchandise ordered by the new
system increased, the facility became overloaded causing mis-shipments
and delays that adversely affected stock levels through part of the
second quarter;
3. Certain merchandise categories were further affected. Outerwear sales
in the prior year were substantially higher due to clearance sales
necessitated by a poor sell-through during the winter-wear season.
There was little clearance product available for sale this year.
Fitness continues to be lower due to fewer new "infomercial"-driven
product introductions, and in-line skates are a declining business
across the industry;
4. Sales were generally soft throughout the sporting goods retail
segment, partially as a result of comparisons against last year's
Olympic merchandise sales and last year's increased foot traffic due
to the Olympics;
5. Competition continues to increase. Seventeen additional stores this
year were adversely affected by new big-box competitors which have
opened since the beginning of the prior year.
10
<PAGE>
Gross profit for the twenty-six week period of the current year was $64.2
million, or 24.1% of sales, compared to $39.3 million, or 12.6% of sales for the
prior year. The Company incurred an inventory write-down charge of $32.4
million, or 10.4% of sales. Gross margin contributions from the soft goods
departments were the primary reason for the increase offset slightly by higher
buying and occupancy costs, and a higher shrinkage accrual based on prior year's
experience.
Selling general and administrative expenses for the twenty-six weeks of the
current year were $57.7 million, or 21.7% of sales, as compared to $61.2
million, or 19.6% of sales, for the twenty-six weeks of the prior year. The
increase as a percentage of sales was due to lower sales volume leverage on
fixed costs and certain higher operating costs. Payroll expense was up 79 basis
points due to the in-store problems encountered by the introduction of the new
merchandise systems as well as problems experienced in the implementation of a
new distribution center; also a higher average wage resulted from the
"ripple-effect" of the minimum wage increase and a generally tighter labor
market. Advertising expense was up 134 basis points, a result of the corporate
name change and increased expenditures for radio advertising, television
advertising and the multi-page advertising book.
In addition to the $32.4 million inventory charge, the Company incurred a
$22.6 million charge, or 7.2% of sales, in the second quarter of the prior year,
for non-recurring and other charges.
Income from operations in the twenty-six weeks of this year was $6.5
million, or 2.4% of sales, as compared to loss from operations of $44.5 million,
or (14.2)% of sales, in the twenty-six weeks of the prior year. The loss in the
prior year was attributable to the $55 million in charges taken in the second
quarter of the prior year.
Interest expense for the first half of the current year was $11.8 million,
or 4.4% of sales, as compared to $8.8 million, or 2.8% of sales, for the
comparable period in the prior year. This increase in interest expense was the
result of the following:
1. Average debt increased due to refinancing $58 million of tax retention
operating leases into the revolving credit facility and higher
inventory levels;
2. The re-negotiated credit facility calls for borrowings at LIBOR plus
2% versus LIBOR plus 1% contributing to an overall 83 basis point
increase in average interest rates.
The Company's income tax benefit for the first half was $1.9 million with
an effective tax benefit of 36.5% compared to a tax benefit of $19.7 million in
the prior year with an effective tax rate of 37.0%.
The Company posted a net loss of $3.4 million or (1.3)% of sales, as
compared to a net loss of $33.6 million or (10.7)% of sales, for the same period
of the prior year. The net loss for the twenty-six week period of the prior year
was attributable to the $55 million charge for inventory, non-recurring and
other items incurred in the second quarter resulting in a net charge after tax
of $34.6 million.
11
<PAGE>
Liquidity and Capital Resources
The Company's primary capital requirements have been to support capital
investment for the opening of new stores, to purchase inventory for new stores,
to meet seasonal working capital needs and to retire indebtedness. The Company's
working capital needs peak in the fourth fiscal quarter.
Operating activities used cash of $51.5 million for the twenty-six weeks of
fiscal 1997 as compared to cash provided of $5.8 million for the same period of
fiscal 1996. The increased use of cash was primarily due to a substantial
increase in merchandise inventory. Management attributes this above-normal level
to problems encountered as a result of the new merchandising system, the new
distribution facility and to certain over-reactions to out-of-stock inventory
positions. Some product returns have been arranged, future orders have been
adjusted and an orderly sell down plan has been developed. Controls have been
installed to assure that these conditions do not recur. Merchandise inventories
are expected to return to prior year levels by December.
Net cash of $6.2 million was used in investing activities during the first
twenty-six weeks of fiscal 1997, compared to net cash used in investing
activities during the first twenty-six of fiscal 1996 of $7.8 million. This
year's amount was related to the store signage for the name change to
JumboSports and maintenance capital spending. In the prior year, the amount
related primarily to the completion of new stores.
Cash flows from financing activities provided $53.9 million for the first
twenty-six weeks of fiscal 1997, compared to $1.6 million for the first
twenty-six weeks of fiscal 1996. The increase in cash provided by financing
activities in fiscal 1997 was primarily due to increased borrowing activity of
the Company's revolving line of credit from the prior year, and the completion
of $37.0 million of mortgage financings.
As of August 1, 1997, the Company had $52.7 million of capital lease and
mortgage obligations, $74.8 million of 4 1/4% convertible subordinated notes due
2000 outstanding and had drawn $223.6 million on its $235.0 million revolving
credit facility.
The current credit facility limits the amount of capital expenditures to
$22 million for fiscal 1997. The Company has spent $7.8 million through
twenty-six weeks.
Management believes its current cash position, along with expected net cash
provided by operating activities and its revolving credit facility will be
sufficient to fund anticipated capital expenditures and working capital
requirements for the upcoming year.
12
<PAGE>
Seasonality and Inflation
The Company's business is seasonal in nature, with its highest sales and
operating profitability historically occurring during the fiscal fourth quarter,
which includes the Christmas selling season. During the fourth quarter, the
Company recorded 28.0% of its sales and 52.0% of its income from operations,
prior to the inventory write-down for shrink and obsolete and slow moving
merchandise and non-recurring and other charges taken in the second quarter in
fiscal 1996. In the future, the number and timing of the opening of new stores
may impact this historical trend.
The Company does not believe that inflation had a material effect on its
results form operations for the first twenty-six weeks of fiscal 1997 or 1996.
There can be no assurance, however, that Company's business will not be affected
by inflation in the future.
Change in Accounting Principle
The Company elected to change its method of accounting for merchandise
inventories effective February 1, 1997. The Company changed from the lower of
average first-in, first-out (FIFO) cost or market method of accounting to the
lower of cost (computed using the FIFO retail method) or market. The Company
believes that the FIFO retail method provides improved information for the
operation of its business in a manner consistent with the method used widely in
the retail industry. The cumulative effect of the change to the FIFO retail
method was immaterial. Proforma effects of the change for prior periods is not
determinable.
13
<PAGE>
JUMBOSPORTS INC.
PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of the Shareholders-Holders.
a. Annual Meeting of Shareholders held June 4, 1997
b. The following directors were elected to office at that meeting:
For Withheld
----- --------
Stephen Bebis 14,437,517 1,433,259
Harold Compton 14,588,499 1,282,277
Samuel Northrop, Jr. 14,660,911 1,209,865
Steven A. Raymund 14,453,176 1,417,600
Ronald L. Vaughn 14,649,395 1,221,381
Jack E. Bush 14,448,723 1,422,053
c. The following matters were voted on at the Annual Meeting, with
the number of votes cast for, against or withheld in each case,
indicated next to each such matter:
1. Election of six directors
(See Item 4b above)
2. Approval of amendment to Articles
For: 7,903,579 Against: 6,883,246 Abstain: 49,781
3. Approval of Amendment to 1989 Incentive Stock Plan
For: 7,599,076 Against: 5,420,841 Abstain: 34,410
4. Ratification of V.P. Stock Purchase Program
For:11,045,702 Against: 2,079,161 Abstain: 37,060
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
1) Exhibits.
Exhibit 3(i) - Amendment to Articles of Incorporation
Exhibit 11 - Weighted Average Shares Outstanding Calculation
Exhibit 27 - Financial Data Schedule
2) Reports on Form 8-K.
None
14
<PAGE>
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 thereunto duly authorized.
JumboSports Inc.
(Registrant)
09/12/97 /S/ Stephen Bebis
Date Chairman of the Board, Chief
Executive Officer and President
09/12/97 /S/ Raymond P. Springer
Date Executive Vice President and
Chief Financial Officer
15
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
JUMBOSPORTS INC.
===============================================================================
WHEREAS, the Articles of Incorporation of SPORTS & RECREATION
REINCORPORATION, INC. were originally filed with and approved by the Secretary
of State of Florida on the 22nd day of April, 1996; and
WHEREAS, Articles of Merger for SPORTS & RECREATION REINCORPORATION, INC.
were filed with and approved by the Secretary of State of Florida on the 14th
day of February, 1997, pursuant to which SPORTS & RECREATION REINCORPORATION,
INC. changed its name to JUMBOSPORTS INC. as the surviving corporation; and
WHEREAS, it is the intention of the directors and the shareholders of
JUMBOSPORTS INC. that the Articles of Incorporation be amended in accordance
with the Amendment to the Articles of Incorporation hereinafter set forth; and
WHEREAS, the proposed Amendment to the Articles of Incorporation of
JUMBOSPORTS INC. hereinafter set forth was approved by the requisite number of
shareholders of JUMBOSPORTS INC. on the 16th day of June, 1997; and
WHEREAS, the approval of the Secretary of State of Florida of the proposed
Amendment hereinafter set forth is hereby requested.
RESOLVED, that the Articles of Incorporation of the Corporation be amended
by the addition of Article IX which shall be and read in its entirety as
follows:
ARTICLE IX - DIRECTORS
(a) The number of directors which shall constitute the entire Board of
Directors shall be not less than three (3) nor more than fifteen (15) directors.
Within these limits, the number of directors shall be fixed from time to time in
accordance with the Bylaws. The directors shall be elected at the annual
shareholders' meeting, except as provided in subparagraph (b) of this Article
IX. The directors shall be divided into three (3) classes as nearly equal in
number as may be. At the annual shareholders' meeting in 1997, one class of two
directors shall be elected for a one-year term, one class of two directors shall
be elected for a two-year term, and one class of three directors shall be
elected for a three-year term. Commencing with the annual shareholders' meeting
in 1998 and at each succeeding annual shareholders' meeting, successors to the
class of directors whose terms expire at such annual shareholders' meeting shall
be elected for a three-year term. If the number of directors is changed, any
increase or decrease in directors shall be apportioned among the classes so as
to maintain the number of directors comprising each class as nearly equal as
possible. Any additional directors of a class shall hold office for a term which
will coincide with the remaining term of the other directors of the class.
<PAGE>
(b) A director shall hold office until the annual shareholders' meeting for
the year in which his or her term expires and until his or her successor shall
be elected. Directors may be removed only by the holders of at least a majority
of the outstanding Common Stock and only for cause at a meeting called for such
purpose. Except as may otherwise be provided by law, cause for removal shall be
construed to exist only if (i) the director whose removal is proposed has been
convicted of a felony by a court of competent jurisdiction and the conviction is
no longer subject to direct appeal, (ii) the director has been adjudged by a
court of competent jurisdiction to be liable for negligence or misconduct in the
performance of his or her duty to the corporation in a matter of substantial
importance to the corporation, and the adjudication is no longer subject to
direct appeal or (iii) any other situation exists which eighty (80%) of the
other directors, in their sole discretion, agree constitutes cause for removal.
(c) If any vacancy occurs on the Board of Directors or any new directorship
is created by an increase in the authorized number of directors, a majority of
the directors in office, though less than a quorum, may fill the vacancy or fill
the newly created directorship. Any director elected to fill a vacancy shall
have the same term as that of his or her predecessor, or, if such vacancy is a
result of an increase in the number of directors, as that of the other directors
of the class of which he or she shall be a member.
IN WITNESS WHEREOF, this Amendment to the Articles of Incorporation is
hereby adopted and executed on behalf of JUMBOSPORTS INC. by its President
effective the 6th day of August, 1997.
JUMBOSPORTS INC.
/S/ Stephen Bebis
President
JUMBOSPORTS INC.
EXHIBIT 11
WEIGHTED AVERAGE SHARES OUTSTANDING CALCULATION
FOR THE PERIOD ENDED AUGUST 1, 1997
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 1, 1997 August 1, 1997
-------------------- ----------------------
PRIMARY
Weighted average common
stock shares outstanding 20,359,866 20,353,047
Weighted average stock issued
assuming exercise of stock
options using the treasury stock
method at average market price 0 (1) 0 (1)
Total weighted average
shares outstanding 20,359,866 20,353,047
Net loss $(1,879,000) $(3,384,000)
Primary Loss Per Share $(0.09) $(0.17)
FULLY DILUTED
Weighted average common
stock shares outstanding 20,359,866 20,353,047
Weighted average stock issued
assuming exercise of stock
options using the treasury
stock method at the higher of
average market price or ending
market price 0 (1) 0 (1)
Weighted average stock issued
assuming the as adjusted method
for the 4 1/4% Convertible
Subordinated Notes Due 2000 0 (2) 0 (2)
Total weighted average
shares outstanding 20,359,866 20,353,047
Net loss as reported $(1,879,000) $(3,384,000)
Interest adjustment net of
tax for the 4 1/4%
Convertible Subordinated Notes 0 (2) 0 (2)
Net loss $(1,879,000) $(3,384,000)
Fully diluted loss per share $(0.09) $(0.17)
(1) Not reported under GAAP as conversion would be anti-dilutive.
(2) Not reported under GAAP as conversion would be anti-dilutive, and dilution
less than 3%.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JUMBOSPORTS INC. FOR THE THREE MONTHS ENDED AUGUST 1,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jan-30-1998
<PERIOD-START> Feb-1-1997
<PERIOD-END> Aug-01-1997
<CASH> 1,120
<SECURITIES> 0
<RECEIVABLES> 7,420
<ALLOWANCES> 227
<INVENTORY> 277,610
<CURRENT-ASSETS> 292,969
<PP&E> 315,053
<DEPRECIATION> 30,953
<TOTAL-ASSETS> 596,660
<CURRENT-LIABILITIES> 85,680
<BONDS> 74,750
0
0
<COMMON> 204
<OTHER-SE> 156,172
<TOTAL-LIABILITY-AND-EQUITY> 596,660
<SALES> 266,359
<TOTAL-REVENUES> 266,359
<CGS> 185,573
<TOTAL-COSTS> 202,151
<OTHER-EXPENSES> 57,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,754
<INCOME-PRETAX> (5,270)
<INCOME-TAX> (1,886)
<INCOME-CONTINUING> (3,384)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,384)
<EPS-PRIMARY> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
