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: May 5, 2001
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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
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(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 June 13, 2001 were 6,587,425 shares.
HIBBETT SPORTING GOODS, INC.
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets at May 5, 2001 and
February 3, 2001 2
Unaudited Condensed Consolidated Statements of Operations for the Thirteen
Week Periods Ended May 5, 2001 and April 29, 2000 3
Unaudited Condensed Consolidated Statements of Cash Flows for the Thirteen
Week Periods Ended May 5, 2001 and April 29, 2000 4
Notes to Unaudited 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 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to Vote of Security-Holders 8
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
i
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
May 5, 2001 February 3, 2001
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Assets
Current Assets:
Cash and cash equivalents $ 2,049 $ 1,884
Accounts receivable, net 2,184 2,649
Inventories 78,014 70,058
Prepaid expenses and other 2,909 822
Deferred income taxes 1,095 1,110
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Total current assets 86,251 76,523
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Property and equipment, net 23,798 23,710
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Noncurrent Assets:
Deferred income taxes 769 741
Other, net 302 278
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Total noncurrent assets 1,071 1,019
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Total Assets $ 111,120 $ 101,252
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Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 28,645 $ 18,268
Accrued income taxes 2,200 1,859
Accrued expenses:
Payroll-related 2,376 2,640
Other 2,332 2,072
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Total current liabilities 35,553 24,839
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Long-Term Debt 4,614 9,748
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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, 6,575,482 shares issued and
outstanding at May 5, 2001 and 6,532,885
shares issued and outstanding at February 3, 2001 66 65
Paid-in capital 56,796 55,928
Retained earnings 14,091 10,672
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Total stockholders' investment 70,953 66,665
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Total Liabilities and Stockholders' Investment $ 111,120 $ 101,252
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See notes to unaudited condensed consolidated financial statements.
2
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
Thirteen Weeks Ended
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May 5, 2001 April 29, 2000
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Net sales $ 60,345 $ 50,522
Cost of goods sold,
including warehouse, distribution
and store occupancy costs 41,881 35,130
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Gross profit 18,464 15,392
Store operating, selling, and
administrative expenses 11,437 9,716
Depreciation and amortization 1,382 1,135
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Operating income 5,645 4,541
Interest expense, net 152 69
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Income before provision for income taxes 5,493 4,472
Provision for income taxes 2,074 1,711
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Net income $ 3,419 $ 2,761
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Basic earnings per common share $ 0.52 $ 0.43
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Diluted earnings per common share $ 0.51 $ 0.42
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Weighted average shares outstanding:
Basic 6,548,228 6,436,278
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Diluted 6,698,866 6,530,192
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See notes to unaudited condensed consolidated financial statements.
3
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
Thirteen Weeks Ended
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May 5, 2001 April 29, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,419 $ 2,761
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Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,382 1,135
Deferred income taxes (13) (13)
Loss on disposal of assets (3) 2
Change in assets and liabilities 1,105 (155)
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Total adjustments 2,471 969
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Net cash provided by operating activities 5,890 3,730
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,467) (1,319)
Proceeds from sale of property 7 10
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Net cash used in investing activities (1,460) (1,309)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan activity, net (5,134) (3,088)
Proceeds from options exercised and purchase
of shares under employee stock purchase plan,
including tax benefit 869 35
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Net cash used in financing activities (4,265) (3,053)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 165 (632)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,884 860
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,049 $ 228
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See notes to unaudited condensed consolidated financial statements.
4
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 accounting principles generally accepted
in the United States 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 February 3,
2001. In the opinion of management, the unaudited 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 May 5, 2001 and April 29, 2000, 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:
Thirteen Week Period Ended
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May 5, 2001 April 29, 2000
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Weighted average shares outstanding:
Basic 6,548,228 6,436,278
Dilutive effect of stock options 150,638 93,914
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Diluted 6,698,866 6,530,192
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For the thirteen week periods ended May 5, 2001 and April 29, 2000, 90,300
and 94,600 anti-dilutive options, respectively, were appropriately excluded from
the computation.
3. Stockholders' Investment
The Company offers participation in stock option plans to certain employees
and individuals. Awards typically vest and become exercisable in incremental
installments over a period of either three or five years and expire on the tenth
anniversary of the date of grant. For the thirteen weeks ended May 5, 2001,
42,597 shares were exercised resulting in an increase to Stockholders'
Investment of $869,000, including a related tax benefit of $180,000.
4. 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
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 athletic sporting goods stores in small to
mid-sized markets predominantly in the southeast, mid-Atlantic and midwest. 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 avenue for brand name vendors that seek to penetrate our target
markets.
As of May 5, 2001, we operated 267 Hibbett Sports stores as well as
seventeen 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, an approximately 5,000 square foot store
located in enclosed malls and dominant power 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:
Thirteen Week
Period Ended
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May 5, 2001 April 29, 2000
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Net sales 100.0% 100.0%
Cost of goods sold, including warehouse,
distribution and store occupancy costs 69.4 69.5
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Gross profit 30.6 30.5
Store operating, selling, and administrative
expenses 18.9 19.2
Depreciation and amortization 2.3 2.3
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Operating income 9.4 9.0
Interest expense, net 0.3 0.1
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Income before provision for income taxes 9.1 8.9
Provision for income taxes 3.4 3.4
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Net income 5.7% 5.5%
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6
Thirteen Weeks Ended May 5, 2001 Compared to Thirteen Weeks Ended April 29, 2000
Net sales. Net sales increased $9.8 million, or 19.4%, to $60.3 million for
the thirteen weeks ended May 5, 2001, from $50.5 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 four Sports Additions stores in the 52 week
period ended May 5, 2001, and a 3.5% increase in comparable store net sales for
the quarter ended May 5, 2001. The increase in comparable store net sales was
primarily due to increased equipment and licensed apparel sales. New stores and
stores not in the comparable store net sales calculation accounted for $8.1
million of the increase in net sales, and increases in comparable store net
sales contributed $1.7 million. Comparable store net sales data for the period
reflect sales for our Hibbett Sports and Sports Additions stores open throughout
the period and the corresponding period of the prior fiscal year. During the
thirteen weeks ended May 5, 2001, we opened seven new stores and closed one as
compared to the thirteen weeks ended April 29, 2000, in which 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 $18.5 million, or 30.6% of net sales, in the thirteen weeks
ended May 5, 2001, as compared to $15.4 million, or 30.5% 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 $11.4 million, or 18.9% of net sales, for the
thirteen weeks ended May 5, 2001, as compared to $9.7 million, or 19.2% 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 May 5, 2001 are attributable to improved leveraging of
administrative costs over a larger store base.
Depreciation and amortization. Depreciation and amortization as a percentage
of net sales remained consistent with the prior year at 2.3% for the thirteen
weeks ended May 5, 2001.
Interest expense, net. Net interest expense for the thirteen weeks ended May
5, 2001 was $152,000 compared to net interest expense of $69,000 in the prior
year period. The increase is attributable to higher levels of borrowings on the
Company's revolving credit facilities in the current year period to fund
increased working capital requirements due to the increase in the number of
stores opened.
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 May 5, 2001 as the number of stores has increased, which is
partially offset by reductions in our inventory on a per store basis. We have
financed this increase primarily through increased net income and increases in
accounts payable balances. Net cash provided by operating activities was $5.9
million for the thirteen week period ending May 5, 2001 as compared to net cash
provided by operating activities of $3.7 million for the thirteen week period
ending April 29, 2000.
With respect to cash flows used in investing activities, capital expenditures
were $1.5 million in the thirteen week period ended May 5, 2001 compared to $1.3
million for the comparable period in the prior year. Capital expenditures in the
thirteen weeks ended May 5, 2001 primarily related to the opening of seven new
stores, the rollout of the new POS system, and certain office and distribution
center-related expenditures.
Net cash used in financing activities was $4.3 million in the thirteen week
period ended May 5, 2001 compared with $3.1 million used in financing activities
in the prior year period. Financing activities primarily relate to borrowings
and
7
repayments under our credit facilities. The increase in debt repayment during
the thirteen week period ended May 5, 2001 resulted from an increase in cash
provided from operations.
The Company estimates capital expenditures in fiscal 2002 to be approximately
$9.9 million which includes resources budgeted to (i) fund the opening of
approximately 65 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, 2003 and allows borrowings up to $35 million. We also maintain an
unsecured working capital line of credit for $7 million, which is subject to
annual renewal. As of May 5, 2001, the Company had $4.6 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.
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. 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,
the effect of competitive pressures from other retailers and the ability to
attract and retain qualified personnel. 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
8
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
None
(B) Reports on Form 8-K
No reports on Form 8-K were filed by us during the three months ended May
5, 2001.
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 15, 2001 BY:/s/ Gary A. Smith
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Gary A. Smith
Vice President & Chief Financial Officer
9