Hibbett Sports 2012 Annual Report Download - page 50

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We lease the majority of our retail sporting goods stores under non-cancelable operating leases. The leases typically
provide for terms of five to ten years with options to extend at our discretion. Many of our leases contain scheduled increases in
annual rent payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes. Additionally,
many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent escalation clauses (contingent
rentals) based on net sales for the location. For purposes of recognizing incentives and minimum rental expenses on a straight-line
basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the
space and begin to make improvements in preparation of our intended use.
Most of our retail store leases contain provisions that allow for early termination of the lease if certain pre-determined
annual sales levels are not met. Generally, these provisions allow the lease to be terminated between the third and fifth year of the
lease. Should the lease be terminated under these provisions, in some cases, the unamortized portion of any landlord allowances
related to that property would be payable to the landlord.
We also lease certain office equipment and transportation equipment under non-cancelable operating leases having initial
terms of more than one year.
In February 1996, we 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 Consumer Price Index. This lease will expire in December 2014.
Future minimum lease payments under this non-cancelable lease aggregate approximately $2.6 million. The transaction is also
subject to quarterly financial covenants based on certain ratios.
During Fiscal 2012, we increased our lease commitments by a net of 34 retail stores, each having initial lease
termination dates between September 2015 and April 2022 as well as various office and transportation equipment. At January
28, 2012, the future minimum lease payments under capital leases and the present value of such payments, and the future
minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes, including the net 34
operating leases added during Fiscal 2012, were as follows (in thousands):
Capital Operating Total
Fiscal 2013 366$ 43,374$ 43,740$
Fiscal 2014 366 36,393 36,759
Fiscal 2015 366 26,563 26,929
Fiscal 2016 369 17,865 18,234
Fiscal 2017 379 11,711 12,090
Thereafter 1,444 16,828 18,272
Total minimum lease payments 3,290 152,734 156,024
Less amount representing interest 1,045 - 1,045
Present value of total minimum lease payments 2,245$ 152,734$ 154,979$
Rental expense for all operating leases consisted of the following (in thousands):
January 28, January 29, January 30,
2012 2011 2010
Minimum rentals 37,971$ 36,294$ 35,455$
Contingent rentals 5,767 5,220 4,165
43,738$ 41,514$ 39,620$
Fiscal Year Ended
NOTE 7. DEFINED 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 18 years of age.
Participants of the 401(k) Plan may voluntarily contribute from 1% to 100% of their compensation subject to certain yearly dollar
limitations as allowed by law. These elective contributions are made under the provisions of Section 401(k) of the Internal
Revenue Code which allows deferral of income taxes on the amount contributed to the 401(k) Plan. The Company’s contribution
to the 401(k) Plan equals (1) an amount determined at the discretion of the Board of Directors plus (2) a matching contribution
equal to a discretionary percentage of up to 6.0% of a participant’s compensation. For each of Fiscal 2012, Fiscal 2011 and
Fiscal 2010, we matched $0.75 for each dollar of compensation deferred by the employees up to 6.0% of compensation.
Contribution expense incurred under the 401(k) Plan for Fiscal 2012, Fiscal 2011 and Fiscal 2010 was $0.8 million, $0.6 million
and $0.4 million, respectively.