Hibbett Sports 2012 Annual Report Download - page 29

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a percentage of net sales. The combined federal, state and local effective income tax rate as a percentage of pre-tax income was
36.8% for Fiscal 2011 and 37.8% for Fiscal 2010. This decrease was primarily due to increased stock option exercise activity.
Liquidity and Capital Resources
Our capital requirements relate primarily to new store openings, stock repurchases and working capital requirements. Our
working capital requirements are somewhat seasonal in nature and typically reach their peak near the end of the third and the
beginning of the fourth quarters of our fiscal year. Historically, we have funded our cash requirements primarily through our cash
flow from operations and occasionally from borrowings under our revolving credit facilities. Due to the low interest rates currently
available, we are using excess cash on deposit to offset bank fees versus investing such funds in an equity market or in interest-
bearing deposits.
Our consolidated statements of cash flows are summarized as follows (in thousands):
January 28, January 29, January 30,
2012 2011 2010
Net cash provided by operating activities 54,921$ 61,918$ 36,914$
Net cash used in investing activities (13,375) (10,883) (9,603)
Net cash (used in) provided by financing activities (61,925) (25,209) 1,730
Net (decrease) increase in cash and cash equivalents (20,379)$ 25,826$ 29,041$
Fiscal Year Ended
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 winter holidays 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. In recent years, we have experienced a trend of increasing free rent provisions in lieu of cash
construction allowances in our leases. We believe this is primarily the result of the tightening of commercial credit on our
landlords. Because of this, the non-cash portion of landlord allowances has also experienced increases.
Net cash provided by operating activities was $54.9 million for Fiscal 2012 compared with net cash provided by operating
activities of $61.9 million and $36.9 million in Fiscal 2011 and Fiscal 2010, respectively. The reduction in net cash provided by
operating activities for Fiscal 2012 compared to Fiscal 2011 was primarily due to inventory levels, which have continued to increase
year over year as the number of stores have increased, although the inventory per store has historically trended slightly down to flat.
 Ending inventory at January 28, 2012 was up 7.0% on a per store level compared to January 29, 2011 due primarily
to a shift in product mix in advance of our strong spring selling season this year versus last year and, to a lesser
degree, merchandise cost increases. The increase in inventory used cash of $20.2 million, $5.5 million and $17.6
million during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively. Although our inventory levels have increased
at the store level over the last few years, our aged inventory is down.
 The change in accounts payable used cash of $2.3 million during Fiscal 2012 and provided cash of $11.0 million and
$0.5 million during Fiscal 2011 and Fiscal 2010, respectively. Beginning in Fiscal 2011, we started paying some of
our vendors using corporate purchasing cards, which effectively extended our payment terms by one month. The
fluctuation in cash provided by accounts payable between Fiscal 2011 and Fiscal 2012 resulted from the anniversary
of the payment term extensions.
 Net income provided cash of $59.1 million, $46.4 million and $32.5 million during Fiscal 2012, Fiscal 2011 and
Fiscal 2010, respectively.
 Non-cash charges included depreciation and amortization expense of $13.2 million, $13.6 million and $13.9 million
during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively, and stock-based compensation expense of $5.5 million,
$4.8 million and $4.2 million during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively. The stock-based
compensation increase resulted from the achievement of PSUs at greater than their granted level.
Investing Activities.
Cash used in investing activities in the fiscal periods ended January 28, 2012, January 29, 2011 and January 30, 2010
totaled $13.4 million, $10.9 million and $9.6 million, respectively. Gross capital expenditures used $13.0 million, $10.5 million and
$9.6 million during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.