Hibbett Sports 2005 Annual Report Download - page 38

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Trade and Other Accounts Receivable
Trade accounts receivable at fiscal year-end consist primarily of amounts due to the Company from sales
to educational institutions and youth associations as related to Team Sales. The Company does not
require collateral and maintains reserves for potential uncollectible accounts based on historical losses
and existing economic conditions, when relevant. The allowance for doubtful accounts at January 29,
2005 and January 31, 2004 was $59,000 and $107,000, respectively.
Other accounts receivable consists primarily of tenant allowances due from landlords.
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 39%,
34% and 36% of its purchases in fiscal 2005, 2004 and 2003, respectively. The Company’s next
largest vendor in fiscal 2005 represented approximately 10%, 9% and 11% of its purchases in fiscal
2005, 2004 and 2003, respectively. The Company’s third largest vendor in fiscal 2005 represented
approximately 8%, 11% and 9% of its purchases in fiscal 2005, 2004 and 2003, 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 shorter of the initial
term of the underlying leases or the estimated economic lives of the improvements. 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, the shorter of the initial term of the underlying
leases or the estimated economic lives of the improvements.
Construction in progress is primarily comprised of property and equipment related to unopened stores at
period end.
Maintenance and repairs are charged to expense as incurred. 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.
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