Hibbett Sports 2007 Annual Report Download - page 34

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Operating Activities.
Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to increase
inventory in advance of peak selling seasons, such as pre-Christmas and back-to-school. Inventory levels are reduced
in connection with higher sales during the peak selling seasons and this inventory reduction, combined with
proportionately higher net income, typically produces a positive cash flow.
Net cash provided by operating activities was $36.5 million for the 53 weeks ended February 3, 2007 compared
with net cash provided by operating activities of $38.1 million and $46.1 million in the 52 weeks ended January 28, 2006
and January 29, 2005, respectively. Inventory levels and inventory turns have continued to increase year over year as
store levels have increased.
The increase in inventory used cash of $16.4 million, $5.9 million and $8.2 million during fiscal years ended
2007, 2006 and 2005, respectively, while the accounts payable decrease used cash of $3.9 million and $4.3 million
during fiscal years ended 2007 and 2006, respectively. Accounts payable offset the use of cash by $12.2 million in fiscal
2005. Also offsetting these uses of cash were net income of $38.1 million, $33.6 million and $25.1 million during fiscal
years ended 2007, 2006 and 2005, respectively, and non-cash charges, including depreciation and amortization
expense of $10.9 million, $10.1 million and $9.9 million during fiscal years ended 2007, 2006 and 2005, respectively,
and stock-based compensation expense during fiscal 2007 of $2.8 million.
Investing Activities.
Cash provided by investing activities in the fiscal periods ended February 3, 2007, January 28, 2006 and
January 29, 2005 totaled $3.0 million, $28.5 million and $12.6 million, respectively. During fiscal period 2007, net
redemption of short-term investments was $13.2 million compared to net purchases of short-term investments of $13.2
million during fiscal period 2006. We did not have any short-term investment activity in fiscal 2005. Gross capital
expenditures used $16.3 million, $15.3 million and $12.7 million during fiscal periods ended 2007, 2006 and 2005,
respectively.
We use cash in investing activities to build new stores and remodel or relocate existing stores. Furthermore,
net cash used in investing 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 and/or remodeled 9 existing stores during the 52 weeks
ended January 28, 2006. We opened 63 new stores and relocated and/or remodeled 14 existing stores during the 52
weeks ended January 29, 2005.
We estimate the cash outlay for capital expenditures in fiscal year ended February 2, 2008 will be
approximately $24.0 million, which relates to the opening of approximately 92 new stores, remodeling of selected
existing stores, information system upgrades and various improvements at our headquarters and distribution center. Of
the total budgeted dollars for capital expenditures for fiscal 2008, we anticipate that approximately 66% will be related to
the opening of new stores and remodeling and or relocating existing stores. Approximately 18% will be related to the
opening of the new distribution facility and miscellaneous distribution center upgrades. Approximately 9% will be related
to information systems with the remaining 7% related primarily to automobiles and security equipment for our stores.
As of February 3, 2007, we had an approximate $0.2 million outlay remaining on our JDA merchandising
system implementation. We implemented this new merchandising system on February 4, 2007 and believe this system
will help us develop better efficiencies in the allocation and planning of inventory and better enable us to analyze and
generally improve sales across all markets and merchandise by allowing us to better analyze inventory at the store level.
Financing Activities.
Net cash used in financing activities was $29.0 million in the 53 weeks ended February 3, 2007 compared to
$41.9 million and $17.1 million in the 52 weeks ended January 28, 2006 and January 29, 2005, respectively. The cash
fluctuation as compared to prior fiscal years was primarily the result of the repurchase of our common stock. In fiscal
2007 we expended $33.0 million on repurchases of our common stock compared to $45.3 million and $19.1 million in
fiscal 2006 and fiscal 2005, respectively.
Financing activities also consisted of proceeds from transactions in our common stock and the excess tax
benefit from the exercise of incentive stock options. As stock options are exercised, we will continue to receive proceeds
and expect a tax deduction; however, the amounts and timing cannot be predicted.