Hibbett Sports 2012 Annual Report Download - page 45

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Insurance Accrual
We are self-insured for a significant portion of our health insurance. Liabilities associated with the risks that are
retained by us are estimated, in part, by considering our historical claims experience. The estimated accruals for these liabilities
could be affected if future occurrences and claims differ from our assumptions. To minimize our potential exposure, we carry
stop-loss insurance that reimburses us for losses over $0.2 million per covered person per year, limited to a lifetime maximum
reimbursement of $1.9 million per covered person. As of January 28, 2012 and January 29, 2011, the accrual for these liabilities
was $0.8 million and $0.9 million, respectively, and was included in accrued expenses in the consolidated balance sheets.
We are also self-insured for our workers’ compensation, property and general liability insurance up to an established
deductible with a cumulative stop-loss on workers’ compensation. As of January 28, 2012 and January 29, 2011, the accrual for
these liabilities (which is not discounted) was $0.4 million and was included in accrued expenses in the consolidated balance
sheets.
Sales Returns
Net sales returns were $25.7 million for Fiscal 2012, $23.2 million for Fiscal 2011 and $20.3 million for Fiscal 2010.
The accrual for the effect of estimated returns on pre-tax income was $0.4 million as of January 28, 2012 and January 29, 2011,
and was included in accrued expenses in the consolidated balance sheets. Determination of the accrual for estimated returns
requires significant judgment and estimates.
NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS
We continuously monitor and review all current accounting pronouncements and standards from the Financial
Accounting Standards Board (FASB) and other authoritative sources of U.S. GAAP for applicability to our operations.
Proposed Amendments to Current Accounting Standards. The FASB is currently working on amendments to existing
accounting standards governing a number of areas including, but not limited to, accounting for leases. In August 2010, the FASB
issued an exposure draft, Leases, which would replace the existing guidance in ASC Topic 840, Leases. When and if effective,
this proposed standard will likely have a significant impact on our consolidated financial statements. However, as the standard-
setting process is still ongoing, we are unable to determine the impact this proposed change in accounting will have on the
consolidated financial statements at this time.
NOTE 3. STOCK-BASED COMPENSATION
At January 28, 2012, we had four stock-based compensation plans:
(a) The Amended 2005 Equity Incentive Plan (EIP) provides that the Board of Directors may grant equity awards to
certain employees of the Company at its discretion. The EIP was adopted effective July 1, 2005 and authorizes
grants of equity awards of up to 1,983,159 authorized but unissued shares of common stock. At January 28, 2012,
there were 911,626 shares available for grant under the EIP.
(b) The Amended 2005 Employee Stock Purchase Plan (ESPP) allows for qualified employees to participate in the
purchase of up to 204,794 shares of our common stock at a price equal to 85% of the lower of the closing price at
the beginning or end of each quarterly stock purchase period. The ESPP was adopted effective July 1, 2005. At
January 28, 2012, there were 92,915 shares available for purchase under the ESPP.
(c) The Amended 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 or stock options. The Deferred Plan was adopted
effective July 1, 2005 and authorizes grants of stock up to 112,500 authorized but unissued shares of common
stock. At January 28, 2012, there were 61,147 shares available for grant under the Deferred Plan.
(d) The Amended 2006 Non-Employee Director Equity Plan (NEDEP) provides for grants of equity awards to non-
employee directors. The NEDEP was adopted effective June 1, 2006 and authorizes grants of equity awards of up
to 679,891 authorized but unissued shares of common stock. At January 28, 2012, there were 510,165 shares
available for grant under the NEDEP.
Our plans allow for a variety of equity awards including stock options, restricted stock awards, stock appreciation
rights and performance awards. As of January 28, 2012, we had only granted awards in the form of stock options, restricted
stock units (RSUs) and performance-based units (PSUs) to our employees and in the form of stock options to our Board
members. The annual grant made for Fiscal 2012, Fiscal 2011 and Fiscal 2010 to employees consisted solely of RSUs. We have
also awarded PSUs to our Named Executive Officers (NEOs) and expect the Compensation Committee of the 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. All of our awards are classified as equity awards.