Hibbett Sports 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Hibbett Sports annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 74

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74

2007
1997
HIBBETT Sports, Inc. Annual Report 2007
10 YEARS OF GROWTH

Table of contents

  • Page 1
    1 0 Y E A R S O F G R O W T H 1997 2007 HIBBETT Sports, Inc. Annual Report 2007

  • Page 2
    6 2 Y E A R S O F T E A M W O R K 1945 2007

  • Page 3
    ... 2005 2006 2007 NET SALES (In Millions) EARNINGS PER DILUTED SHARE(1) TOTAL STORES (1) Except for fiscal 2007 which includes 53 weeks, all fiscal years presented are comprised of 52 weeks. All share and per share information has been revised to reflect the effects of the 3-for-2 stock split...

  • Page 4
    Our accomplishment? Celebrating 10 years as a publicly traded company. Hibbett Senior Management Team: (l to r) Brian Priddy, Cathy Pryor, Mickey Newsome, Gary Smith and Jeff Rosenthal

  • Page 5
    ... a milestone such as the one Hibbett Sports reached in fiscal 2007. On October 11, 2006, we celebrated our tenth year as a public company by "ringing" the opening bell at the Nasdaq Stock Market. In fact, since our start 62 years ago as Dixie Supply Company in Florence, Alabama, there has never been...

  • Page 6
    ...sight of our roots as a neighborhood sporting goods store. We think of the customers' needs first in every significant merchandising, operating, financial and logistical decision we make. The end result has been a significant competitive advantage created by team members who have the genuine desire...

  • Page 7
    "We seek the most talented people available." "Equipment and accessories designed to increase performance." "Hibbett sells only the best brands." "The first place players think of." "Superior customer service is one of our hallmarks."

  • Page 8
    .... With access to these latest innovations and an attractive store format, we are able to showcase these brands with prominent in-store displays. Our customers demand the best, and we bring them a wide selection of sports equipment, footwear and apparel so they don't have to leave their hometown to...

  • Page 9
    Football Baseball/Softball Basketball Physical Fitness Soccer

  • Page 10
    ... to capitalize on as our growth expands into new markets. From website enhancements to the new JDA merchandise inventory management and planning systems, Hibbett Sports is committed to its investment in sophisticated information systems in order to take advantage of all technology has to offer.

  • Page 11
    "Inspired by sport." "Your sports apparel headquarters." "Bringing together the best footwear products in the industry." "A true understanding of the right equipment." "Each store is about the customer and their needs."

  • Page 12
    ... are generally the center of commerce within the area and which are usually anchored by a Wal-Mart store. Hibbett is the only sporting goods chain committed to serving small markets. With a low-cost operating philosophy and a commitment to providing a high level of customer service, Hibbett has...

  • Page 13
    ...number: 000-20969 HIBBETT SPORTS, INC. (Exact name of registrant as specified in its charter) DELAWARE State or other jurisdiction of incorporation or organization 20-8159608 (I.R.S. Employer Identification No.) 451 Industrial Lane, Birmingham, Alabama 35211 (Address of principal executive offices...

  • Page 14
    ...compensation plans called for in Item 5 of Part II and the information called for in Items 10, 11, 12, 13 and 14 of Part III are incorporated by reference from the Company's definitive Proxy Statement for the 2007 Annual Meeting of Stockholders, to be held June 5, 2007. Registrant's definitive Proxy...

  • Page 15
    .... Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships and Related Transactions, and Director Independence. Principal Accounting Fees and Services. Exhibits and Consolidated Financial Statement Schedules...

  • Page 16
    ... other operating expenses; our seasonal sales patterns and our expectations regarding competition; the future reliability of, and cost associated with, our sources of supply, particularly imported goods; the capacity of our distribution center and plans to open an additional facility; our estimates...

  • Page 17
    ..., Alabama, and hired Mickey Newsome, our current Chief Executive Officer and Chairman of the Board. The next year, we opened another sporting goods store in Birmingham and by the end of 1980, we had stores operating in 12 locations in central and northwest Alabama with a distribution center located...

  • Page 18
    ... any superstores in the future. Team Sales Hibbett Team Sales, Inc. ("Team Sales"), a wholly-owned subsidiary of the Company, is a leading supplier of customized athletic apparel, equipment and footwear to school, athletic and youth programs primarily in Alabama. Team Sales sells its merchandise...

  • Page 19
    ...stores weekly via Company-operated vehicles. Because of our continued expected growth, we plan to add another distribution center in or around Dallas, Texas within fiscal year 2008. This new facility will service primarily those stores west of the Mississippi River and enhance our expansion strategy...

  • Page 20
    ... team sports and fitness merchandise complemented by a selection of localized apparel and accessories. Our competitors may carry similar product lines and national brands and a broader assortment, but we believe the principal competitive factors for all of our stores, including our four superstores...

  • Page 21
    ... to ensure that we hire and promote the most qualified employees in a non-discriminatory way. One of the most significant programs we have is Hibbett University or "Hibbett U" which is an intensive, four day training session held at our corporate offices for new store managers. Item 1A. Risk Factors...

  • Page 22
    ... market share by utilizing a variety of store formats and merchandising strategies. Hibbett Sports stores compete with national chains that focus on athletic footwear, local sporting goods stores, department and discount stores, traditional shoe stores and mass merchandisers. Many of our competitors...

  • Page 23
    ...attract and retain qualified personnel in the future. As we continue to grow, we will continue to hire, appoint or otherwise change senior managers and other key executives. We do not maintain key man life insurance on any of our executive officers. The loss of services of Mr. Newsome for any reason...

  • Page 24
    ... of locations by state as of March 30, 2007: Alabama Arizona Arkansas Florida Georgia Iowa Illinois Indiana Item 3. 76 2 30 26 79 5 14 16 Kansas Kentucky Louisiana Missouri Mississippi Nebraska New Mexico North Carolina 15 30 28 21 48 3 4 43 Ohio Oklahoma South Carolina Tennessee Texas Virginia West...

  • Page 25
    ... year ended February 3, 2007, we estimated that the liability related to this matter is within the range of $750,000 and $960,000. Accordingly, we have accrued $750,000 as a current liability on our Consolidated Balance Sheet. At year ended January 28, 2006, no loss amount was accrued because a loss...

  • Page 26
    ... Issuer Purchases of Equity Securities. Our common stock is traded on the NASDAQ Global Select Market (NASDAQ) under the symbol HIBB. The following table sets forth, for the periods indicated, the high and low sales prices of shares of our Common Stock as reported by NASDAQ. High Fiscal 2007: First...

  • Page 27
    ... beginning on January 31, 2002 to January 31, 2007. We have not paid any dividends. Total stockholder return for prior periods is not necessarily an indication of future performance. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Hibbett Sports, Inc., The NASDAQ Composite Index And The NASDAQ...

  • Page 28
    ...,000 4,306,413 Average Price per Share $ 22.46 $ 29.10 --$ 29.10 $ 22.60 Total Number of Shares Purchased as Part of Publicly Announced Programs 4,213,413 93,000 --93,000 4,306,413 $52,668,000 (1) In August 2004, the Board of Directors authorized a plan to repurchase our common stock. The Board...

  • Page 29
    ... taxes Net income Earnings per common shares: Basic Diluted Weighted average shares outstanding: Basic Diluted Balance Sheet Data: Working capital Total assets Long-term debt Stockholders' investment Selected Operating Data: Number of stores open at end of period: Hibbett Sports Sports & Co. Sports...

  • Page 30
    ...as the centers are more prominent in the markets we target. We believe Hibbett Sports stores are typically the primary sporting goods retailers in their markets due to the extensive selection of traditional team merchandise and a high level of customer service. We do not expect that the average size...

  • Page 31
    ... sales from the prior year. We also experienced strong seasonal sales in the last quarter of fiscal 2007 related to the Christmas holidays. • • Nike and Under Armour brands experienced solid performance in youth and cleats, performance apparel and team equipment. Pro and college licensed apparel...

  • Page 32
    ... do we plan to open additional superstores in the future. 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 $173.1 million, or 33.8% of net sales, in the 53 weeks ended February...

  • Page 33
    ... do we plan to open additional superstores in the future. 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 $146.9 million, or 33.4% of net sales, in the 52 weeks ended January...

  • Page 34
    ... activities includes purchases of information technology assets and expenditures for our distribution facility and corporate headquarters. We opened 74 new stores and relocated and/or remodeled 7 existing stores during the 53 weeks ended February 3, 2007. We opened 74 new stores and relocated...

  • Page 35
    .... Based on our current operating and store opening plans and plans for the repurchase of our common stock, we believe we can fund our cash needs for the foreseeable future through cash generated from operations and, if necessary, through periodic future borrowings against our credit facility. The...

  • Page 36
    ...to raise the minimum wage beginning in calendar year 2007; some with automatic provision for future increase based on the Consumer Price Index. Insurance Costs. In fiscal 2006, we experienced an increase in general business insurance costs due to raised limits on Directors and Officers insurance and...

  • Page 37
    ... including gift card and layaway sales, in accordance with the SEC SAB No. 101, "Revenue Recognition in Financial Statements," as amended by SAB No. 104, "Revenue Recognition." Retail merchandise sales occur on-site in our retail stores. Customers have the option of paying the full purchase price of...

  • Page 38
    ... any costs of disposition. Stock-Based Compensation. We use the Black-Scholes option pricing model to estimate the fair value at the date of grant of stock options granted under our stock option plans and stock purchase rights associated with the Employee Stock Purchase Plan. Volatility is estimated...

  • Page 39
    ... 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 our three store concepts and demand for apparel and accessories driven...

  • Page 40
    ...supplementary data of our Company are included in response to this item Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 3, 2007 and January 28, 2006 Consolidated Statements of Operations for the fiscal years ended February 3, 2007, January 28, 2006...

  • Page 41
    ... balance sheets of Hibbett Sports, Inc. (formerly Hibbett Sporting Goods, Inc.) and subsidiaries (the Company) as of February 3, 2007 and January 28, 2006, and the related consolidated statements of operations, stockholders' investment, and cash flows for each of the years in the three-year...

  • Page 42
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) February 3, 2007 ASSETS Current Assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other Deferred income taxes ...

  • Page 43
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share information) Fiscal Year Ended February 3, 2007 (53 Weeks) Net sales Cost of goods sold, including distribution center and store occupancy costs Gross profit Store operating, selling...

  • Page 44
    ... Proceeds from sale of property and equipment Net cash used in investing activities: Cash Flows From Financing Activities: Cash used for stock repurchases Excess tax benefit from stock option exercises Proceeds from options exercised and purchase of shares under the employee stock purchase plan Net...

  • Page 45
    ... Issuance of shares from the employee stock purchase plan and the exercise of stock options, net of tax benefit $2,539 Adjustment to income tax benefit from exercises of employee stock options Purchase of shares under the stock repurchase program Stock-based compensation Balance-February 3, 2007 38...

  • Page 46
    ... offered for sale, the types of customers, the methods of distribution and how the Company is managed, the operations of Hibbett constitute only one reportable segment. Customers No customer accounted for more than 5.0% of the Company's sales during the 53-week period ended February 3, 2007 and the...

  • Page 47
    ... table presents the components of the Company's advertising expense (in thousands): Fiscal Year Ended February 3, 2007 Gross advertising costs Advertising reimbursements Net advertising costs Stock Repurchase Program In August 2004, the Board of Directors authorized a plan to repurchase up to $30...

  • Page 48
    .... Our third largest vendor in fiscal 2007 represented approximately 4.7%, 3.2% and 2.6% of its purchases in fiscal 2007, 2006 and 2005, respectively. Beginning in fiscal year 2008, inventory will be valued using the lower of weighted average cost or market. The Company believes the cost method is...

  • Page 49
    ... Company as short-term deferred revenue until the customer pays the entire purchase price for the merchandise. We recognize revenue at the time the customer takes possession of the merchandise. Retail sales are recorded net of returns and discounts and exclude sales taxes. The cost of coupon sales...

  • Page 50
    ...the time of grant. The Company incurred an incremental expense of $2.8 million, or approximately $0.07 per diluted share, during the 53 weeks ended February 3, 2007 as a result of the adoption of SFAS No. 123R. See "Stock-Based Compensation" in Note 3 to the Consolidated Financial Statements in Item...

  • Page 51
    ... 3, 2007, there were 177,628 shares available for purchase under the ESPP. (c) The 2005 Director Deferred Compensation Plan ("Deferred Plan") allows non-employee directors an election to defer all or a portion of their fees into stock units, stock options or cash. The Deferred Plan authorizes grants...

  • Page 52
    ... form of restricted stock units and all the five named executive officers will be granted performance-based awards. We expect the Compensation Committee of the Board will continue to grant more performance-based awards to key employees in the future. The terms and vesting schedules for stock-based...

  • Page 53
    ... Stock options are granted with an exercise price equal to the closing market price of our common stock on the last trading day preceding the date of grant. Vesting and expiration provisions vary between equity plans. Grants awarded to employees under the 1996 Plan, as amended, vest over a 5 year...

  • Page 54
    ... straight-line over the vesting period. Restricted stock awards generally cliff vest four to five years from the date of grant. The following table summarizes the restricted stock awards activity under all of our plans during the fiftythree weeks ended February 3, 2007: Weighted Average Grant Date...

  • Page 55
    ... unamortized unrecognized compensation cost related to restricted stock awards. This cost is expected to be recognized over a weighted average period of 3.2 years. Employee Stock Purchase Plan The Company's ESPP allows eligible employees the right to purchase shares of our common stock, subject to...

  • Page 56
    ... 2007, $15.0 million was available to the Company from its facility. NOTE 6. PROFIT-SHARING PLAN The Company maintains a 401(k) profit-sharing plan (the "Plan") which permits participants to make pre-tax contributions to the Plan. The Plan covers all employees who have completed one year of service...

  • Page 57
    ... and liabilities recognized for financial reporting and tax purposes. The components of the deferred taxes assets (liabilities) are as follows (in thousands): February 3, 2007 Current Non-current Rent Depreciation Inventory Accruals Stock-based compensation Other Deferred taxes $ 1,536 285 582 40...

  • Page 58
    ... as various office and transportation equipment. At February 3, 2007, the future minimum lease payments, excluding maintenance, insurance and real estate taxes, for our current operating leases and including the net 64 operating leases added during the fifty-three weeks ended February 3, 2007, were...

  • Page 59
    ...000 and $960,000. Accordingly, we have accrued $750,000 as a current liability on our Consolidated Balance Sheet. At year ended January 28, 2006, no loss amount was accrued because a loss was not considered probable or estimable. The Company is also party to other legal proceedings incidental to its...

  • Page 60
    ...4, 2007, we reported on the consolidated balance sheets of Hibbett Sports, Inc., (formerly Hibbett Sporting Goods, Inc.) and subsidiaries as of February 3, 2007 and January 28, 2006, and the related consolidated statements of operations, stockholders' investment, and cash flows for each of the years...

  • Page 61
    HIBBETT SPORTS, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS February 3, 2007 Balance of allowance for doubtful accounts at beginning of period Charged to costs and expenses Write-offs, net of recoveries Balance of allowance for doubtful accounts at end of period $ 45,000 (11,000) 34,000 ...

  • Page 62
    ...on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of February 3, 2007. (b) Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and...

  • Page 63
    ... balance sheets of Hibbett Sports, Inc. and subsidiaries as of February 3, 2007 and January 28, 2006, and the related consolidated statements of operations, stockholders' investment, and cash flows for each of the years in the three-year period ended February 3, 2007, and our report dated...

  • Page 64
    ... "Annual Compensation of Executive Officers", "Compensation Committee Report" and "Compensation Committee Interlocks and Insider Participation" in the Proxy Statement. Item 12. Matters. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder The information required...

  • Page 65
    ... Named Executive Officers, dated as of March 24, 2006; incorporated by reference as Exhibit 10.4 to the Registrant's Form 8-K filed with the Securities and Exchange Commission on March 29, 2006. Adoption by Company's Stockholders of Hibbett Sporting Goods, Inc. 2006 Non-Employee Director Equity Plan...

  • Page 66
    ... Holders Fiscal 2007 Annual Report to Stockholders. Subsidiaries of the Registrant List of Company's Subsidiaries: 1) Hibbett Sporting Goods, Inc. 2) Hibbett Team Sales, Inc. 3) Sports Wholesale, Inc. 4) Hibbett Capital Management, Inc. 5) Sports Holding, Inc. Consents of Experts and Counsel Consent...

  • Page 67
    ... 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HIBBETT SPORTS, INC. Date: April 4, 2007 By: /s/ Gary A. Smith Gary A. Smith Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Pursuant to...

  • Page 68
    ... 3, 2007, which reports appear in the February 3, 2007, Annual Report on Form 10-K of Hibbett Sports, Inc. and subsidiaries. Our report refers to the Company's change in its method of accounting for share-based payments effective January 29, 2006. /s/ KPMG LLP Birmingham, Alabama April 4, 2007...

  • Page 69
    ... 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer I, Michael J. Newsome, certify that: 1. I have reviewed this annual report on Form 10-K of Hibbett Sports, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 70
    ....2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer I, Gary A. Smith, certify that: 1. I have reviewed this annual report on Form 10-K of Hibbett Sports, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material...

  • Page 71
    ...Certification of Chief Executive Officer In connection with the Annual Report on Form 10-K of Hibbett Sports, Inc. (the "Company") for the fiscal year ended February 3, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer certifies, to...

  • Page 72
    ... of Chief Financial Officer In connection with the Annual Report on Form 10-K of Hibbett Sports, Inc. (the "Company") for the fiscal year ended February 3, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer certifies, to the...

  • Page 73
    ... Relations department. Annual Meeting The 2007 Annual Meeting of Stockholders will be held at the principal executive offices of Hibbett Sports, Inc., 451 Industrial Lane, Birmingham, Alabama, on Tuesday, June 5, 2007, at 10:00 A.M., local time. Stock Market Information The Company's common stock is...

  • Page 74
    HIBBETT Sports, Inc. 451 Industrial Lane Birmingham, Alabama 35211 205.942.4292 w w w. h i b b e t t . c o m