SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
February 2, 2002 000-20969
HIBBETT SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-1074067
(State of other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
451 Industrial Lane
Birmingham, Alabama 35211
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(205) 942-4292
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class CUSIP Number Which Registered
Common Stock, $.01 Par Value 428565-10-5 NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Act:
None
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) and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ___.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant (assuming for purposes of this calculation that all executive
officers and directors are "affiliates") was $199,388,668 at April 15, 2002,
based on the closing sale price of $25.49 for the Common Stock on such date on
the Nasdaq National Market.
The number of shares outstanding of the Registrant's Common Stock, as of
April 15, 2002 was 10,031,433.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 of Part III are incorporated by reference from the
Company's definitive Proxy Statement for the 2002 Annual Meeting of
Stockholders, to be held June 5, 2002. Registrant's definitive Proxy Statement
was filed with the Securities and Exchange Commission on May 2, 2002.
PART II
Item 8. Consolidated Financial Statements and Supplementary Data
In the original filing of our Form 10-K, certain information in the
Consolidated Statements of Stockholders' Investment Schedule was dropped during
EDGAR transmission to the Securities and Exchange Commission. The number of
shares of common stock was incorrectly stated. Therefore, we are refilling to
correctly set forth in its entirety Item 8 of the previously filed Form 10-K.
1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hibbett Sporting Goods, Inc.:
We have audited the accompanying consolidated balance sheets of HIBBETT
SPORTING GOODS, INC. (a Delaware corporation) AND SUBSIDIARIES as of February 2,
2002 and February 3, 2001, and the related consolidated statements of
operations, stockholders' investment, and cash flows for each of the three
fiscal years in the period ended February 2, 2002. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hibbett Sporting Goods, Inc.
and subsidiaries as of February 2, 2002 and February 3, 2001, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended February 2, 2002, in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 13, 2002
2
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
February 2, February 3,
2002 2001
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $ 1,972 $ 1,884
Accounts receivable, net 2,352 2,649
Inventories 81,082 70,058
Prepaid expenses and other 902 822
Deferred income taxes 1,375 1,110
----------- -----------
Total current assets 87,683 76,523
----------- -----------
Property and Equipment:
Land 24 24
Buildings 221 221
Equipment 19,331 15,318
Furniture and fixtures 11,480 10,978
Leasehold improvements 17,137 17,506
Construction in progress 289 995
----------- -----------
48,482 45,042
Less accumulated depreciation & amortization 22,011 21,332
----------- -----------
Total property and equipment 26,471 23,710
----------- -----------
Noncurrent Assets:
Deferred income taxes 945 741
Other, net 216 278
----------- -----------
Total noncurrent assets 1,161 1,019
----------- -----------
Total Assets $ 115,315 $ 101,252
=========== ===========
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable $ 23,721 $ 18,268
Accrued income taxes 2,308 1,859
Accrued expenses:
Payroll-related 2,954 2,640
Other 2,366 2,072
----------- -----------
Total current liabilities 31,349 24,839
----------- -----------
Long-Term Debt 3,903 9,748
----------- -----------
Commitments and Contingencies
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,
9,927,317 and 9,799,328 shares issued and outstanding at
February 2, 2002 and February 3, 2001 respectively 99 98
Paid-in capital 57,739 55,895
Retained earnings 22,225 10,672
----------- -----------
Total stockholders' investment 80,063 66,665
----------- -----------
Total Liabilities and Stockholders' Investment $ 115,315 $ 101,252
=========== ===========
The accompanying notes are an integral part of these
consolidated balance sheets.
3
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Amounts)
Fiscal Year Ended
----------------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
(52 Weeks) (53 Weeks) (52 Weeks)
----------- ----------- ------------
Net sales $ 241,130 $ 209,626 $ 174,312
Cost of goods sold, including warehouse,
distribution, and store occupancy costs 167,402 145,800 121,962
----------- ----------- ------------
Gross profit 73,728 63,826 52,350
Store operating, selling, and administrative
expenses 48,891 40,789 34,142
Depreciation and amortization 5,873 4,802 3,762
----------- ----------- ------------
Operating income 18,964 18,235 14,446
Interest expense, net 625 830 422
----------- ----------- ------------
Income before provision for income taxes 18,339 17,405 14,024
Provision for income taxes 6,786 6,593 5,364
----------- ----------- ------------
Net income $ 11,553 $ 10,812 $ 8,660
=========== =========== ============
Basic earnings per share $ 1.17 $ 1.11 $ 0.90
=========== =========== ============
Diluted earnings per share $ 1.15 $ 1.09 $ 0.88
=========== =========== ============
Weighted average shares outstanding:
Basic 9,875,182 9,699,419 9,641,618
=========== =========== ============
Diluted 10,079,040 9,939,577 9,794,971
=========== =========== ============
The accompanying notes are an integral part of these consolidated statements.
4
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(Dollars In Thousands)
Common Stock
------------------------- Retained
Number of Paid-In Earnings
Shares Amount Capital (Deficit)
----------- --------- --------- ---------
BALANCE, January 30, 1999 9,620,670 $ 96 $ 53,964 $(8,800)
Net income - - - 8,660
Issuance of shares from the employee stock
purchase plan and the exercise of stock options,
including tax benefit 32,658 1 280 -
--------- ------- ------- -------
BALANCE, January 29, 2000 9,653,328 97 54,244 (140)
Net income - - - 10,812
Issuance of shares from the employee stock
purchase plan and the exercise of stock options,
including tax benefit 146,000 1 1,651 -
--------- ------- ------- -------
BALANCE, February 3, 2001 9,799,328 98 55,895 10,672
Net income - - - 11,553
Issuance of shares from the employee stock
purchase plan and the exercise of stock options,
including tax benefit 127,989 1 1,844 -
--------- ------- ------- -------
BALANCE, February 2, 2002 9,927,317 $ 99 $57,739 $22,225
========= ======= ======= =======
The accompanying notes are an integral part of these consolidated statements.
5
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
Fiscal Year Ended
-------------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,553 $ 10,812 $ 8,660
-------- -------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,873 4,802 3,762
Deferred income taxes (469) (523) (85)
Loss on disposal of assets 118 16 25
(Increase) decrease in assets:
Accounts receivable, net 297 (526) 21
Inventories (11,024) (11,992) (10,372)
Prepaid expenses and other (90) (86) 66
Refundable income taxes - 14 82
Other noncurrent assets 19 (124) (6)
Increase (decrease) in liabilities:
Accounts payable 5,453 (779) 2,814
Accrued income taxes 449 1,313 (1,844)
Accrued expenses 608 (381) 511
-------- -------- --------
Total adjustments 1,234 (8,266) (5,026)
-------- -------- --------
Net cash provided by operating activities 12,787 2,546 3,634
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,726) (8,557) (10,619)
Proceeds from sales of property and equipment 28 26 2,315
-------- -------- --------
Net cash (used in) investing activities (8,698) (8,531) (8,304)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving loan borrowings and repayments, net (5,845) 5,357 4,391
Proceeds from options exercised and purchase of shares
under the employee stock purchase plan, including tax
benefit 1,844 1,652 194
-------- -------- --------
Net cash provided by (used in) financing activities (4,001) 7,009 4,585
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 88 1,024 (85)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,884 860 945
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,972 $ 1,884 $ 860
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $ 580 $ 762 $ 401
======== ======== ========
Income taxes, net of refunds $ 6,403 $ 5,233 $ 6,942
======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
6
HIBBETT SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 2, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Hibbett Sporting Goods, Inc. (the "Company") is an operator of full-line
sporting goods retail stores in small to mid-sized markets predominately in the
southeastern United States. The Company's fiscal year ends on the Saturday
closest to January 31 of each year. The consolidated statements of operations
for fiscal years ended February 2, 2002, and January 29, 2000, include 52 weeks
of operations, while the fiscal year ended February 3, 2001, includes 53 weeks
of operations. The Company's merchandise assortment features a core 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.
Principles of Consolidation
The consolidated financial statements of the Company include its accounts
and the accounts of all wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect (1) the reported amounts of certain assets
and liabilities and disclosure of certain contingent assets and liabilities at
the date of the financial statements, and (2) the reported amounts of certain
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Stock Split
On January 10, 2002, the Board of Directors declared a 3-for-2 Stock Split
on the Company's Common Stock to holders of record on February 1, 2002. All
share and per share data presented reflect the 3-for-2 stock split.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all short-term, highly liquid investments with original maturities of
three months or less to be cash equivalents.
Recent Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets ".
Business combinations initiated after June 30, 2001, must be accounted for under
the provisions of these two statements. We must also apply these provisions to
previously recorded business combinations as of January 1, 2002. The principal
provisions of SFAS No. 141 and SFAS No. 142 are as follows:
7
. All business combinations initiated after June 30, 2001, will be
accounted for using the "purchase" method, under which the identifiable
assets and liabilities of the acquired business are recorded at their
respective fair market values with the residual amount being recorded
as goodwill. The "pooling-of-interests" method, under which the
financial statements of the acquirer and the acquiree were combined as
if the two businesses had always been one, will no longer be used.
. Goodwill and identifiable intangible assets will no longer be
amortized over a maximum period of forty years. Goodwill will not be
amortized but will instead be tested for impairment annually or upon
the occurrence of certain "triggering events." Identifiable intangible
assets will be amortized over their expected useful lives; those with
indefinite expected useful lives will not be amortized. Identifiable
intangible assets will continue to be tested for impairment under
previously existing accounting standards.
Additionally, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations" and SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" during 2001. SFAS No. 143 relates to obligations
which generally are incurred in connection with the ownership of real property.
We currently lease the substantial majority of our real property and, therefore,
do not believe that the provisions of SFAS No. 143 apply to our current
operations.
SFAS No. 144 superseded SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and the
accounting and reporting provisions of Accounting Principles Board Opinion No.
30, "Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a business. SFAS No.
144 also amended Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," to eliminate the exception to consolidation for a subsidiary for
which control is likely to be temporary.
We adopted SFAS No. 142, SFAS No. 143 and SFAS No. 144 on February 3, 2002,
and expect the adoption of these standards to have no material impact on our
financial condition, results of operations or cash flows.
Inventories
Inventories are valued at the lower of cost or market using the retail
inventory method of accounting, with cost determined on a first-in, first-out
basis and market based on the lower of replacement cost or estimated realizable
value. The Company's business is dependent to a significant degree upon close
relationships with its vendors. The Company's largest vendor, Nike, represented
approximately 27%, 26% and 30% of its purchases in fiscal 2002, 2001 and 2000,
respectively.
Property and Equipment
Property and equipment are recorded at cost. It is the Company's policy to
depreciate assets acquired prior to January 28, 1995 using accelerated and
straight-line methods over their estimated service lives (3 to 10 years for
equipment, 5 to 10 years for furniture and fixtures, and 10 to 31.5 years for
buildings) and to amortize leasehold improvements using the straight-line method
over the periods of the applicable leases. Depreciation on assets acquired
subsequent to January 28, 1995 is provided using the straight-line method over
their estimated service lives (3 to 5 years for equipment, 7 years for furniture
and fixtures, and 39 years for buildings) or, in the case of leasehold
improvements, 10 years or over the lives of the respective leases, if shorter.
8
Maintenance and repairs are charged to expense as incurred. Costs of
renewals and improvements are capitalized by charges to property accounts and
are depreciated using applicable annual rates. The cost and accumulated
depreciation of assets sold, retired, or otherwise disposed of are removed from
the accounts, and the related gain or loss is credited or charged to income.
Store Opening Costs
Non-capital expenditures incurred in preparation for opening new retail
stores are expensed as incurred.
Stock-Based Compensation
Compensation cost is measured under the intrinsic value method in
accordance with Accounting Principles Bulletin No. 25. Pro forma disclosures of
net income and earnings per share are presented in Note 7 as if the fair value
method had been applied, as required under Statement of Financial Accounting
Standards ("SFAS") No. 123.
Fair Value of Financial Instruments
In preparing disclosures about the fair value of financial instruments,
management believes that the carrying amount approximates fair value for cash
and cash equivalents, receivables, short-term borrowings, long-term debt and
accounts payable, because of the short maturities of those instruments.
Advertising Costs
Costs incurred for producing and communicating advertising are expensed
when incurred.
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 year.
A reconciliation of the weighted average shares for basic and diluted EPS is as
follows:
Fiscal Year Ended
------------------------------------------------------------------
February 2, 2002 February 3, 2001 January 29, 2000
------------------- ------------------- --------------------
Weighted average shares outstanding:
Basic 9,875,182 9,699,419 9,641,618
Dilutive effect of stock options 203,858 240,158 153,353
------------------- ------------------- --------------------
Diluted 10,079,040 9,939,577 9,794,971
=================== =================== ====================
For the 52 week period ended February 2, 2002, 139,650 anti-dilutive
options were appropriately excluded from the computation. For the 53 week period
ended February 3, 2001, 18,150 anti-dilutive options were appropriately excluded
from the computation. For the 52-week
9
period ended January 29, 2000, 141,900 anti-dilutive options were appropriately
excluded from the computation.
Accounting for the Impairment of Long-Lived Assets
The Company continually evaluates whether events and circumstances have
occurred that indicate the remaining balance of long-lived assets and
intangibles may be impaired and not recoverable. The Company's policy is to
recognize any impairment loss on long-lived assets as a charge to current income
when certain events or changes in circumstances indicate that the carrying value
of the assets may not be recoverable.
Prior Year Reclassification
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. LONG-TERM DEBT
The Company maintains an unsecured revolving credit facility, which will
expire November 5, 2003 and allows borrowings up to $35 million. The Company
also maintains an unsecured working capital line of credit for $7 million, which
is subject to annual renewal (collectively, the "Debt Agreements"). As of
February 2, 2002, the Company had an aggregate of $3,903,000 outstanding under
these facilities. The average amount of borrowings outstanding under the Debt
Agreements during fiscal 2002 was $10,304,000, the maximum outstanding was
$18,860,000, and the weighted average interest rate was 5.21%. The average
amount of borrowings outstanding under the Debt Agreements during fiscal 2001
was $9,387,000, the maximum amount outstanding was $22,406,000, and the weighted
average interest rate was 7.68%. The average amount of borrowings outstanding
under the Debt Agreements during fiscal 2000 was $5,391,000, the maximum amount
outstanding was $14,155,000, and the weighted average interest rate was 6.48%.
The Company's Debt Agreements contain certain restrictive covenants common
to such agreements. The Company was in compliance with respect to its covenants
at February 2, 2002.
3. LEASES
The Company leases the premises for its retail sporting goods stores under
operating leases which expire in various years through the year 2009. Many of
these leases contain renewal options and require the Company to pay executory
costs (such as property taxes, maintenance, and insurance). Rental payments
typically include minimum rentals plus contingent rentals based on sales.
In February 1996, the Company entered into a sale-leaseback transaction to
finance its warehouse and office facilities. In December 1999, the related
operating lease was amended to include the fiscal 2000 expansion of these
facilities. The amended lease rate is $784,000 per year, and the lease will
expire in December 2014.
10
Future minimum rental payments under noncancelable operating leases having
remaining terms in excess of one year as of February 2, 2002 are as follows:
Fiscal Year Ending
------------------
2003 $ 17,782,000
2004 15,949,000
2005 13,638,000
2006 9,932,000
2007 5,615,000
Thereafter 10,396,000
------------
$ 73,312,000
============
Rental expense for all operating leases consisted of the following:
Fiscal Year Ended
---------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
------------ ----------- -----------
Minimum rentals $15,906,000 $12,969,000 $10,145,000
Contingent rentals 1,011,000 1,043,000 833,000
----------- ----------- -----------
$16,917,000 $14,012,000 $10,978,000
=========== =========== ===========
4. PROFIT-SHARING PLAN
The Company maintains a 401(k) profit sharing plan (the "Plan") which
permits participants to make pretax contributions to the Plan. The Plan covers
all employees who have completed one year of service and who are at least 21
years of age. Participants of the Plan may voluntarily contribute from 2% to 15%
of their compensation within certain dollar limits as allowed by law. These
elective contributions are made under the provisions of Section 401(k) of the
Internal Revenue Code which allows deferral of income taxes on the amount
contributed to the Plan. The Company's contribution to the Plan equals (1) an
amount determined at the discretion of the Board of Directors plus (2) a
matching contribution equal to a discretionary percentage of up to 6% of a
participant's compensation. Contribution expense amounts for fiscal years 2002,
2001, and 2000 were $242,000, $344,000, and $436,000, respectively.
5. RELATED-PARTY TRANSACTIONS
The Company's majority stockholder provides financial advisory services to
the Company. Such services include, but are not necessarily limited to, advice
and assistance concerning any and all aspects of the operation, planning, and
financing of the Company. Management fee expense under this arrangement was
$200,000 in fiscal 2002, fiscal 2001 and fiscal 2000. During fiscal 2002, the
Company filed a S-3 on behalf of this stockholder. Approximately $200,000 will
be reimbursed to the Company for expenses incurred with the filing.
The Company maintains a sublease for one store with an entity that is
controlled by a minority stockholder which expires in June 2008. Minimum lease
payments were $191,000 in fiscal 2002, fiscal 2001 and fiscal 2000. Future
minimum lease payments under this noncancelable sublease aggregate approximately
$1.2 million.
11
6. INCOME TAXES
A summary of the components of the provision for income taxes is as
follows:
Fiscal Year Ended
---------------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
----------- ----------- -----------
Federal:
Current $6,439,000 $6,108,000 $4,648,000
Deferred (384,000) (423,000) (95,000)
---------- ---------- ----------
6,055,000 5,685,000 4,553,000
---------- ---------- ----------
State:
Current 816,000 1,008,000 801,000
Deferred (85,000) (100,000) 10,000
---------- ---------- ----------
731,000 908,000 811,000
---------- ---------- ----------
Provision for income taxes $6,786,000 $6,593,000 $5,364,000
========== ========== ==========
The provision for income taxes differs from the amounts computed by
applying federal statutory rates due to the following:
Fiscal Year Ended
--------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
----------- ----------- -----------
Tax provision computed at the federal
statutory rate $6,235,000 $5,918,000 $4,768,000
Effect of state income taxes, net of
benefits 520,000 574,000 592,000
Other 31,000 101,000 4,000
---------- ---------- ----------
$6,786,000 $6,593,000 $5,364,000
========== ========== ==========
Temporary differences that create deferred tax assets are detailed below:
February 2, 2002 February 3, 2001
------------------------------ ---------------------------
Current Noncurrent Current Noncurrent
----------- ---------- ----------- ----------
Depreciation $ --- $ 945,000 $ --- $ 741,000
Inventory 762,000 --- 399,000 ---
Accruals 743,000 --- 766,000 ---
Other (130,000) --- (55,000) ---
----------- ---------- ----------- ----------
Deferred tax asset $ 1,375,000 $ 945,000 $ 1,110,000 $ 741,000
=========== =========== =========== ==========
The Company has not recorded a valuation allowance for deferred tax assets
as realization is considered more likely than not.
12
7. STOCK OPTION AND STOCK PURCHASE PLANS
Stock Option Plans
The Company utilizes the intrinsic value method of accounting for stock
option grants. As the option exercise price is generally equal to the fair value
of the shares of common stock at the date of the option grant, no compensation
cost is recognized.
The Hibbett Sporting Goods, Inc. Employee Stock Option Plan, as amended
(the "Original Option Plan") authorized the granting of stock options for the
purchase of up to 99,528 shares of common stock. Options granted pursuant to the
Original Option Plan vested over a three-year period for 38,053 shares and a
five-year period for 61,475 shares and will expire on the tenth anniversary of
the date of grant. All of the 99,528 options available under the Original Option
Plan have been granted and all such options have been exercised.
In fiscal 1997, the Company adopted the Hibbett Sporting Goods, Inc. 1996
Stock Option Plan, as amended (the "1996 Option Plan"). The 1996 Option Plan
authorizes the granting of stock options for the purchase of up to 1,332,849
shares of common stock, including an amendment to the plan in fiscal 2002, which
authorized the granting of an additional 525,000 stock options. Options granted
vest over a five-year period and expire on the tenth anniversary of the date of
grant.
A summary of the status of the Company's stock option plans is as follows:
Fiscal Year Ended
-------------------------------------------------------------------------------
February 2, 2002 February 3, 2001 January 29, 2000
---------------------- ----------------------- ------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- -------- -------- -------- -------- --------
Outstanding at beginning of year 591,982 $11.98 597,915 $11.03 453,857 $10.31
Granted 123,900 19.92 142,650 10.50 177,975 12.06
Exercised (103,233) 10.28 (137,120) 6.30 (24,929) 4.61
Forfeited (37,678) 12.37 (11,463) 11.74 (8,988) 12.89
-------- ------ -------- ------ ------- ------
Outstanding at end of year 574,971 $14.12 591,982 $11.98 597,915 $11.03
======== ====== ======== ====== ======= ======
Exercisable at end of year 209,946 $13.14 184,508 $11.74 202,065 $8.52
======== ====== ======== ====== ======= =====
Weighted average fair value
of options granted $10.96 $ 8.43 $7.13
====== ====== =====
The following table summarizes information about stock options outstanding
at February 2, 2002:
Options Outstanding Options Exercisable
---------------------------------------------------- ------------------------------
Weighted
Number Average Number Weighted
Outstanding at Remaining Weighted Exercisable at Average
Range of February 2, Contractual Average February 2, Exercise
Exercise Prices 2002 Life (Years) Exercise Price 2002 Price
----------------- -------------- ------------ -------------- -------------- --------
$4.07 10,519 4.2 $ 4.07 10,519 $ 4.07
$10.00 to $13.54 349,502 6.9 $ 11.01 146,237 $ 10.87
$16.67 to $20.57 214,950 7.8 $ 19.21 53,190 $ 18.42
13
Compensation costs of $50,000 were accrued in fiscal 2001 and 2000, related
to the difference in the estimated market value of the stock and the
nonqualified option exercise price, including the related tax benefit. As these
options are exercised, the excess of the proceeds and accruals over the par
value is credited to paid-in capital. Additionally, the tax benefit associated
with 1) the exercise of nonqualified stock options and 2) disqualifying
dispositions of shares acquired in the Company's option plans, is also credited
to paid-in capital and amounted to $402,000 in fiscal 2002, $570,000 in fiscal
2001, and $87,000 in fiscal 2000.
If the Company had recorded compensation costs in accordance with SFAS No.
123 under the fair value based method (using the Black-Scholes option pricing
model), the Company's net income and earnings per share would have been reduced
to the pro forma amounts indicated below:
Fiscal Year Ended
------------------------------------------
February 2, February 3, January 29,
2002 2001 2000
---------- ---------- -------------
Net income--as reported $ 11,553 $ 10,812 $ 8,660
Net income--pro forma 10,956 10,206 8,293
Diluted earnings per share--as reported 1.15 1.09 .88
Diluted earnings per share--pro forma 1.08 1.02 .84
The weighted average assumptions for determining compensation costs under
the fair value method include (i) a risk-free interest rate based on zero-coupon
governmental issues on each grant date with the maturity equal to the expected
term of the options (5.0%, 6.6%, and 5.2% for fiscal 2002, 2001 and 2000,
respectively), (ii) an expected forfeiture rate of 6.0%, (iii) an expected stock
volatility of 58%, and (iv) no expected dividend yield.
Other Plans
On September 13, 1996, the Company adopted an Employee Stock Purchase Plan
and Outside Director Stock Plan reserving 112,500 shares and 75,000 shares of
the Company's common stock, respectively, for purchase by the employees and
directors at 85% and 100% of the fair value of the common stock, respectively.
On February 1, 2002, February 2, 2001, and January 28, 2000, the Company granted
11,250 options at exercise prices of $20.42, $23.15, and $12.21 (market value on
the date of grant) respectively, under the Outside Director Stock Plan. These
options vest immediately and expire on the earlier of the tenth anniversary of
the grant or one year from the date on which an optionee ceases to be an
Eligible Director. The Employee Stock Purchase Plan became effective on April 1,
1997, and as of February 2, 2002, 31,389 shares have been issued and 81,111
shares are reserved for future purchase.
8. COMMITMENTS AND 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.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HIBBETT SPORTING GOODS, INC.
By: /s/ Michael J. Newsome
----------------------------------
Michael J. Newsome, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Michael J. Newsome Principal Executive Officer and May 3, 2002
----------------------------------------------------- Director -----------
Michael J. Newsome
/s/ Gary A. Smith Principal Financial Officer and May 3, 2002
---------------------------------------------------- Principal Accounting Officer -----------
Gary A. Smith
/s/ Clyde B. Anderson Director May 3, 2002
----------------------------------------------------- -----------
Clyde B. Anderson
/s/ H. Ray Compton Director May 3, 2002
----------------------------------------------------- -----------
H. Ray Compton
/s/ F. Barron Fletcher, III Director May 3, 2002
----------------------------------------------------- -----------
F. Barron Fletcher, III
/s/ Carl Kirkland Director May 3, 2002
----------------------------------------------------- -----------
Carl Kirkland
/s/ John F. Megrue Director May 3, 2002
----------------------------------------------------- -----------
John F. Megrue
/s/ Thomas A. Saunders, III Director May 3, 2002
----------------------------------------------------- -----------
Thomas A. Saunders, III
15