Hibbett Sports 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 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 66

  • 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

ANOTHER YEAR OF GROWTH
HIBBETT
HIBBETT SPORTS 2011 ANNUAL REPORT

Table of contents

  • Page 1
    HIBBETT H I B B E T T S P O R T S 2 0 1 1 A N N U A L R E P O R T A N OT H E R Y E A R O F G R OW T H

  • Page 2
    ... per share amounts) Fiscal 2011 For the Year Net sales Operating income Earnings per basic share (1) Fiscal 2010 Percent Change $ 664,954 $ 073,547 $ 0001.63 $ 0001.60 $ 593,492 $ 052,407 $ 0001.14 $ 0001.12 12% 40% 43% 43% Earnings per diluted share(1) At Year End Working capital Total...

  • Page 3
    ... share increased 42.8% to $1.60; and we exceeded our store opening goal with 45 new stores and 14 expansions of high performing stores. Over the last several years, Hibbett has made significant investments in our merchandising systems, including replenishment, allocation and assortment planning...

  • Page 4
    ... destination for performance footwear, apparel and equipment in our communities. We exceeded our expectations for growing the store base in Fiscal 2011, as well as new store performance. We opened 45 new stores, closed 14, and expanded 14 of our high performing stores. Hibbett Sports is now in 26...

  • Page 5
    ... 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, including zip...

  • Page 6
    ... closing sale price of $26.47 at July 30, 2010 for the common stock on such date on the NASDAQ Global Select Market. The number of shares outstanding of the Registrant's common stock, as of March 18, 2011 was 27,344,943. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Annual Report...

  • Page 7
    .... Directors, Executive Officers and Corporate Governance. 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. 51 51...

  • Page 8
    ...; our target market presence and its expected impact on our sales growth; our expectations concerning vendor level purchases and related discounts; our estimates and assumptions related to income tax liabilities and uncertain tax positions; the future reliability of, and cost associated with...

  • Page 9
    ..., and hired Mickey Newsome, our current Executive Chairman of the Board. The next year, we opened another sporting goods store in Birmingham and by the end of 1980, we had 12 stores in central and northwest Alabama with a distribution center located in Birmingham and our central accounting office in...

  • Page 10
    ... no plans to open 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 primarily to school athletic programs in Alabama and parts of Georgia, Florida and...

  • Page 11
    ... or special events, such as college or professional championships. Our merchandising staff, operations staff and management analyze current sporting goods trends primarily through the gathering and analyzing of daily sales activity available through point-of-sale terminals located in the stores...

  • Page 12
    ... footwear, local sporting goods stores, department and discount stores, traditional shoe stores and mass merchandisers. On a limited basis, we have competition from national sporting goods chains in some of our larger markets. Although we face competition from a variety of competitors, including on...

  • Page 13
    ... and operating income and we may be unable to achieve our expansion plans for future growth. The opening of new retail stores has contributed significantly to our growth in net sales. In light of the challenging economic environment that has faced real estate developers over the past three years, we...

  • Page 14
    ..., our expansion strategy may be subject to rising real estate and construction costs, available credit to landlords and developers and landlord bankruptcies that could inhibit our ability to sustain our rate of growth. We may also face new competitive, distribution and merchandising challenges...

  • Page 15
    ... incentives, such as return privileges, volume purchasing allowances and cooperative advertising. The loss of key vendor support or decline or discontinuation of vendor incentives could have a material adverse effect on our business, financial condition and results of operations. We cannot guarantee...

  • Page 16
    ... store openings, the amount and timing of net sales contributed by new stores, merchandise mix, demand for apparel and accessories driven by local interest in sporting events, the demise of sports superstars key to certain product promotions or strikes or lockouts involving professional sports teams...

  • Page 17
    ...higher costs and longer lead times associated with distributing our products to our stores during the time it takes for us to reopen or replace the center. We depend on key personnel, the loss of which may adversely affect our ability to run our business effectively and our results of operations. We...

  • Page 18
    ... to adequately service our customers or to open suitable locations and could result in increasing labor costs. We cannot be assured that we will not experience pressure from labor unions or become the target of labor union campaigns. While we believe we maintain good relations with our employees, we...

  • Page 19
    ... for suitable locations for new stores. However, we experienced difficulty in securing leases for new stores related to new construction in Fiscal 2011 and Fiscal 2010 due to the economic issues facing the commercial real estate market and landlords, thus reducing our ability to open stores at our...

  • Page 20
    ... 29, 2011: Alabama Arizona Arkansas Colorado Florida Georgia Iowa Illinois Indiana 82 6 41 3 37 87 6 18 19 Kansas Kentucky Louisiana Missouri Mississippi Nebraska New Mexico North Carolina Ohio 19 40 44 25 56 5 10 46 19 Oklahoma South Carolina South Dakota Tennessee Texas Virginia West Virginia...

  • Page 21
    ..., Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the NASDAQ Global Select Market (NASDAQ/GS) 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...

  • Page 22
    ... 28, 2010 to January 1, 2011 January 2, 2011 to January 29, 2011 Total Total Number of Shares Purchased 51,600 173,800 225,400 Average Price per Share $ $ 37.55 $ 33.71 $ 34.59 (1) In November 2009, the Board of Directors authorized a new Stock Repurchase Program (Program) of $250.0 million to...

  • Page 23
    ... share: Basic Diluted Weighted average shares outstanding: Basic Diluted Balance Sheet Data: Working capital Total assets Long-term debt and obligations under capital leases Stockholders' investment Selected Operating Data: Number of stores open at end of period: Hibbett Sports Sports & Co. Sports...

  • Page 24
    ... assortment of quality footwear, apparel and athletic equipment with a high level of customer service. As of January 29, 2011, we operated a total of 798 retail stores composed of 779 Hibbett Sports stores, 16 Sports Additions athletic shoe stores and 3 Sports & Co. superstores in 26 states. Our...

  • Page 25
    ...this Annual Report on Form 10-K for the fiscal year ended January 29, 2011, for information regarding recent accounting pronouncements. Results of Operations The following table sets forth the percentage relationship to net sales of certain items included in our consolidated statements of operations...

  • Page 26
    ... fees were lower as we continue to closely monitor and carefully manage these costs. Credit and debit card fees increased as a percent to net sales due to higher exchange rates. Medical insurance costs increased as a result of increased enrollment coupled with a slight increase in actual claims...

  • Page 27
    ... openings in Fiscal 2010 compared to Fiscal 2009, new store costs decreased 14 basis points and store training costs, associated primarily with the training of new store managers, decreased 5 basis points. Credit and debit card fees increased as a percent to net sales due to higher exchange rates...

  • Page 28
    ... related to the opening of new stores and remodeling and/or relocating existing stores. Approximately 34% will be related to information systems with the remaining 10% related primarily to office expansion, distribution center improvement and security equipment for our stores. As of January 29, 2011...

  • Page 29
    ... accrued for various deferred compensation arrangements and the current portion of unrecognized tax benefits. See "Part II, Item 8, Consolidated Financial Statements Note 7 - Defined Contribution Benefit Plans" for a discussion regarding our employee benefit plans. Non-current liabilities, primarily...

  • Page 30
    ...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. In Fiscal 2009, we began a customer loyalty program, the MVP Rewards program...

  • Page 31
    The cost of coupon sales incentives is recognized at the time the related revenue is recognized by us. Proceeds received from the issuance of gift cards are initially recorded as deferred revenue. Revenue is subsequently recognized at the time the customer redeems the gift cards and takes possession...

  • Page 32
    ... applicable. Insurance Accruals. We use a combination of insurance and self-insurance for a number of risks including workers' compensation, general liability and employee-related health benefits, a portion of which is paid by our employees. The estimates and accruals for the liabilities associated...

  • Page 33
    ... of factors, including the timing of new store openings, the amount and timing of net sales contributed by new stores, merchandise mix and demand for apparel and accessories driven by local interest in sporting events. Although our operations are influenced by general economic conditions, we do...

  • Page 34
    ... consolidated financial statements and supplementary data of our Company are included in response to this item Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of January 29, 2011 and January 30, 2010 Consolidated Statements of Operations for the fiscal years...

  • Page 35
    ... Registered Public Accounting Firm The Board of Directors and Stockholders Hibbett Sports, Inc.: We have audited the accompanying consolidated balance sheets of Hibbett Sports, Inc. and subsidiaries as of January 29, 2011 and January 30, 2010, and the related consolidated statements of operations...

  • Page 36
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) ASSETS Current Assets: Cash and cash equivalents Trade receivables, net Accounts receivable, other Inventories, net Prepaid expenses and other Deferred income taxes, net Total ...

  • Page 37
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) Net sales Cost of goods sold, including distribution center and store occupancy costs Gross profit Store operating, selling and administrative expenses Depreciation and ...

  • Page 38
    ... repurchases Net payments on revolving credit facility and capital lease obligations Excess tax benefit from stock option exercises Cash used to settle net share equity awards Proceeds from options exercised and purchase of shares under the employee stock purchase plan Net cash (used in) provided...

  • Page 39
    ... plan and the exercise of stock options, including tax benefit of $3,435 Tax shortfall on release of restricted stock and option exercises Adjustment to income tax benefit from exercises of employee stock options Purchase of shares under the stock repurchase program Stock-based compensation Balance...

  • Page 40
    ... statements of operations for fiscal years ended January 29, 2011, January 30, 2010 and January 31, 2009, include 52 weeks of operations. Our merchandise assortment features a core selection of brand name merchandise emphasizing athletic footwear, team sports equipment, athletic and fashion apparel...

  • Page 41
    ...are generally collected within three business days. Cash equivalents related to credit and debit card transactions at January 29, 2011 and January 30, 2010 were $3.6 million and $2.8 million, respectively. Investments We hold investments in trust for the Hibbett Sports, Inc. Supplemental 401(k) Plan...

  • Page 42
    ...store closing plans. Construction in progress has historically been comprised primarily of property and equipment related to unopened stores and costs associated with technology upgrades at period end. At fiscal year ended January 29, 2011, approximately 82.5% of the construction in progress balance...

  • Page 43
    ...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. In Fiscal 2009, we began a customer loyalty program, the MVP Rewards program...

  • Page 44
    ... July 1, 2005 and authorizes grants of equity awards of up to 1,983,159 authorized but unissued shares of common stock. At January 29, 2011, there were 1,101,974 shares available for grant under the Incentive Plan. (b) The Amended 2005 Employee Stock Purchase Plan (ESPP) allows for qualified...

  • Page 45
    ... Board will continue to grant PSUs to our NEOs in the future. The terms and vesting schedules for stock-based awards vary by type of grant and generally vest upon time-based conditions. Upon exercise, stock-based compensation awards are settled with authorized but unissued company stock. On March 17...

  • Page 46
    ... compensation cost related to nonvested stock options. Restricted Stock and Performance-Based Units RSUs and PSUs are granted with a fair value equal to the closing market price of our common stock on the date of grant. All PSUs have been awarded in the form of restricted stock units. Compensation...

  • Page 47
    ... unamortized unrecognized compensation cost related to restricted stock unit awards. This cost is expected to be recognized over a weighted average period of 2.5 years. Employee Stock Purchase Plan The Company's ESPP allows eligible employees the right to purchase shares of our common stock, subject...

  • Page 48
    ... stock awards granted to certain employees from the computation of diluted weighted average common shares and common share equivalents outstanding, because they are subject to performance-based annual vesting conditions which had not been achieved by the end of the 52 weeks ended January 29, 2011...

  • Page 49
    ... entered into a sale-leaseback transaction to finance our distribution center and office facilities. In December 1999, the related operating lease was amended to include the Fiscal 2000 expansion of these facilities. The amended lease rate is $0.9 million per year and can increase annually with the...

  • Page 50
    ... CONTRIBUTION BENEFIT PLANS We maintain the Hibbett Sports, Inc. 401(k) Plan (401(k) Plan) for the benefit of our employees. The 401(k) Plan covers all employees who have completed one year of service, worked 1,000 hours and who are at least 21 years of age. Participants of the 401(k) Plan may...

  • Page 51
    ...as a tax deduction or credit in future tax returns or are items of income which have not been recognized for financial statement purposes but were included in the current or prior tax returns for which we have already properly recorded the tax benefit in the consolidated statements of operations. At...

  • Page 52
    ... appropriate by management. We file income tax returns in the U.S. federal and various state jurisdictions. A number of years may elapse before a particular matter for which we have recorded a liability related to an unrecognized tax benefit is audited and finally resolved. Generally, we are...

  • Page 53
    ...its estimate of loss, at any time. NOTE 11. QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables set forth certain unaudited consolidated financial data for the thirteen-week quarters indicated (dollar amounts in thousands, except per share amounts): Net sales Gross profit Operating income Net...

  • Page 54
    ...the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 29, 2011, based on the Internal Control - Integrated...

  • Page 55
    ... adopted a Code of Business Conduct and Ethics (Code) for all Company employees, including our Named Executive Officers as determined for our Proxy Statement for the 2011 Annual Meeting of Stockholders (Proxy Statement) to be held on May 26, 2011. We have also adopted a set of Corporate Governance...

  • Page 56
    ... Company's Independent Registered Public Accounting Firm" in the Proxy Statement. PART IV Item 15. (a) Exhibits and Consolidated Financial Statement Schedules. Documents filed as part of this report: 1. Financial Statements. The following Financial Statements and Supplementary Data of the Registrant...

  • Page 57
    ....1 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 14, 2011. Hibbett Sports, Inc. Amended and Restated 2006 Non-Employee Director Equity Plan; incorporated by reference as Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed with...

  • Page 58
    ... 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 Holdings, Inc. 6) Gift Card Services, LLC 7) Hibbett.com, Inc. Consents of Experts and Counsel Consent of Independent Registered...

  • Page 59
    ..., the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HIBBETT SPORTS, INC. Date: March 29, 2011 By: /s/ Gary A. Smith Gary A. Smith Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting...

  • Page 60
    ...report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 28, 2011 /s/ Jeffry O. Rosenthal Jeffry O. Rosenthal Chief Executive Officer...

  • Page 61
    ...Rule 13a-14(a)/15d-14(a) Certification of Principal 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 62
    ... the Annual Report on Form 10-K of Hibbett Sports, Inc. and Subsidiaries (the "Company") for the period ended January 29, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Jeffry O. Rosenthal, Chief Executive Officer, and Gary A. Smith, Chief Financial...

  • Page 63
    (THIS PAGE INTENTIONALLY BLANK)

  • Page 64

  • Page 65
    ...to the Company's Investor Relations department. Annual Meeting The 2011 Annual Meeting of Stockholders will be held at the principal executive offices of Hibbett Sports, Inc., 451 Industrial Lane, Birmingham, Alabama, on Thursday, May 26, 2011, at 11:00 A.M., local time. Stock Market Information The...

  • Page 66
    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