Hibbett Sports 2007 Annual Report Download - page 25

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negatively for the Company. While we believed that these employees were and have been properly classified as
exempt employees under the FLSA and that the actions described above were not appropriate for collective action
treatment, and while we have vigorously defended these actions, there were no assurances that we would have been
successful in that defense on the merits or otherwise, and, if unsuccessful, the resolution(s) could have had a material
adverse effect on our results of operations and our financial statements as a whole in the period of resolution. As such,
the parties have negotiated a verbal settlement that has not yet been perfected. At 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 was not considered probable or estimable.
We are also a party to other legal actions and claims arising in the ordinary course of business. We believe,
based upon information currently available, that such other litigation and claims, both individually and in the aggregate,
will be resolved without a material effect on our results of operations and our financial statements as a whole in the
period of resolution. However, litigation involves an element of uncertainty and future developments could cause these
actions or claims to have a material adverse effect on our results of operations and our financial statements as a whole
in the period of resolution.
From time to time, we enter into certain types of agreements that require us to indemnify parties against third
party claims under certain circumstances. Generally these agreements relate to: (a) agreements with vendors and
suppliers under which we may provide customary indemnification to our vendors and suppliers in respect of actions they
take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and copyright
infringement claims concerning merchandise manufactured specifically for or on behalf of us; (c) real estate leases,
under which we may agree to indemnify the lessors from claims arising from our use of the property; and (d) agreements
with our directors, officers and employees, under which we may agree to indemnify such persons for liabilities arising out
of their relationship with us. We have directors and officer’s liability insurance, which, subject to the policy’s conditions,
provides coverage for indemnification amounts payable by us with respect to our directors and officers up to specified
limits and subject to certain deductibles.
If the Company believes that a loss is both probable and estimable for a particular matter, the loss is accrued in
accordance with the requirements of SFAS No. 5, “Accounting for Contingencies.” With respect to any matter, the
Company could change its belief as to whether a loss is probable or estimable, or its estimate of loss, at any time. Even
though the Company may not believe a loss is probable or estimable, it is reasonably possible that the Company could
suffer a loss with respect to that matter in the future.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of our stockholders during the fourth quarter of fiscal year 2007.