Hibbett Sports 2013 Annual Report Download

Download and view the complete annual report

Please find the complete 2013 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 78

  • 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
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78

H I B B E T T S P O R T S
2 0 1 3 A N N U A L R E P O R T T O S T O C K H O L D E R S
Keeping our eye on the ball.

Table of contents

  • Page 1
    Keeping our eye on the ball. H I B B E T T 2 0 1 3 A N N U A L R E P O R T S P O R T S T O S T O C K H O L D E R S

  • Page 2
    ... share amounts) Fiscal 2013 (53 Weeks) For the Year Net sales Operating income Earnings per basic share (1) (1) Fiscal 2012 (52 Weeks) Percent Change $ 818,700 $ 115,981 $ 0002.78 $ 0002.72 $ 732,645 $ 093,531 $ 0002.19 $ 0002.15 12% 24% 27% 27% Earnings per diluted share At Year End Working...

  • Page 3
    ... Alabaster (suburban Birmingham), Alabama, to replace our existing 180,000-square-foot facility. We began construction subsequent to year-end and are on schedule for it to be operational by June 2014. In conjunction with the new facility, we are moving our store support headquarters to a new office...

  • Page 4
    ... to our business, the face of the Hibbett Sports brand is in our stores, logistics facility and store support center every day with the exceptional commitment to customer service from our more than 7,400 associates. We have successfully extended that brand with our MVP loyalty program, which has...

  • 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
    ... that all executive officers and directors are "affiliates") was $1,621,397,062 on July 28, 2012, based on the closing sale price of $62.24 at July 27, 2012 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...

  • Page 7
    ... and Financial Disclosure. Controls and Procedures. Other Information. 21 23 25 36 37 60 60 61 PART III Item 10. Item 11. Item 12. Item Item 13. 14. Directors, Executive Officers and Corporate Governance. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and...

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

  • Page 9
    ... solely in the sporting goods business. In 1965, we opened our second store, Dyess & Hibbett Sporting Goods, in Huntsville, Alabama, and hired Mickey Newsome, who is now our current Executive Chairman of the Board. The following year, we opened another sporting goods store in Birmingham and by the...

  • Page 10
    ...Wal-Mart store. In considering locations for our Hibbett Sports stores, we take into account the size, demographics, quality of real estate and competitive conditions of each market. Of these stores, 670 Hibbett Sports stores are located in strip centers, which include free-standing stores, with the...

  • Page 11
    ... no plans to open any Superstores in the future. Team Hibbett Team Sales, Inc. (Team), 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 Mississippi...

  • Page 12
    ... 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 13
    ... the most efficient, timely and targeted segment of our marketing program. Digital marketing, including mobile, social networks, website and MVP program marketing, will become a more significant portion of our advertising budget over the next several years. Our Competition The business in which we...

  • Page 14
    ... new operational and customer service techniques. Because we primarily promote or relocate current employees to serve as managers for new stores, training and assessment of our employees is essential to our sustained growth. One of the most significant training programs we have is Hibbett University...

  • Page 15
    ...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 several years, our new store openings have slowed compared...

  • Page 16
    ... our operating income. The lease on our corporate headquarters and distribution facility expires in December 2014. Currently, our distribution center is centrally managed from our corporate headquarters, which is located in the same building. In July 2012, we purchased land in Alabaster, Alabama and...

  • Page 17
    ... to deal with such events in the future. If such events occur in areas in which we have our distribution center or a concentration of retail stores, or if they occur during peak shopping seasons, it could have a material adverse effect on our business, financial condition and results of operations...

  • Page 18
    ... which could have a material adverse effect on our business, financial condition and results of operations. A disruption in the flow of imported merchandise or an increase in the cost of those goods may significantly decrease our net sales and operating income. We believe many of our largest vendors...

  • Page 19
    ... 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 disgrace of sports superstars key to certain product promotions or strikes or lockouts involving professional sports teams...

  • Page 20
    .... Newsome which secures his continued employment as an advisor following his eventual retirement. The Compensation Committee of our Board of Directors reviews a succession plan prepared by senior management in consideration of the loss of other key personnel positions on a bi-annual basis. The goal...

  • Page 21
    ... wage rates, as well as rising employee benefit costs. Changes in any of these factors, including a shortage of available workforce in areas in which we operate, could interfere with our ability to adequately service our customers or to open suitable locations and could result in increasing labor...

  • Page 22
    ... on our business and results of operations. Our corporate legal department monitors regulatory activity and is active in notifying and updating applicable departments and personnel on pertinent matters and legislation. Our Human Resources (HR) Department leads HR compliance training programs to...

  • Page 23
    ... to our business, financial condition or results of operations. Our corporate offices and our distribution center are leased under an operating lease. We own the Team facility located in Birmingham, Alabama that warehouses inventory for educational institutions and youth associations. We believe...

  • Page 24
    ... 2, 2013: Alabama Arizona Arkansas Colorado Florida Georgia Iowa Illinois Indiana Kansas Kentucky Louisiana Maryland Missouri Minnesota 84 5 42 7 44 91 9 23 21 22 48 43 1 30 1 Mississippi Nebraska New Mexico North Carolina Ohio Oklahoma South Carolina South Dakota Tennessee Texas Utah Virginia West...

  • Page 25
    ..., 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 26
    ... factors as our Board of Directors deems relevant. Equity Compensation Plans. For information on securities authorized for issuance under our equity compensation plans, see "Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters." Issuer...

  • Page 27
    ...) Fiscal Year Ended February 2, January 28, January 29, January 30, 2013 2012 2011 2010 (53 weeks) (52 weeks) (52 weeks) (52 weeks) S tatement of Operations Data: Net sales $ 818,700 $ 732,645 $ 664,954 $ 593,492 Cost of goods sold, including distribution center and store occupancy costs 519,818...

  • Page 28
    ... for income taxes (as a % to net sales) Net income (as a % to net sales) Balance S heet Data: Cash and cash equivalents Average inventory per store Working capital Total assets Long-term capital lease obligations Stockholders' investment Treasury shares repurchased Cost of treasury shares purchased...

  • Page 29
    ...All other Fiscal 2013 financial information includes the full 53week period. Hibbett Sports, Inc. operates sporting goods stores in small to mid-sized markets, predominantly in the South, Southwest, Mid-Atlantic and Midwest regions of the United States. We believe Hibbett Sports stores are typically...

  • Page 30
    ... store operating, selling and administrative expenses. Based on projected net sales, we expect operating, selling and administrative rates to increase slightly in Fiscal 2014, primarily due to the 53rd week benefit in Fiscal 2013 and one-time expenses associated with our new corporate headquarters...

  • Page 31
    ...this Annual Report on Form 10-K for the fiscal year ended February 2, 2013, 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 32
    ... average forfeiture of restricted stock units compared to prior year. Expenses associated with preparing our new corporate headquarters contributed an increase of 2 basis points as a percentage of net sales. We expect these costs will increase in Fiscal 2014 as we finalize the move from our current...

  • Page 33
    ... store locations. Gross profit. Cost of goods sold includes the cost of inventory, occupancy costs for stores and occupancy and operating costs for the distribution center. Gross profit was $262.4 million, or 35.8% of net sales, in Fiscal 2012, compared with $230.4 million, or 34.7% of net sales...

  • Page 34
    ...in employment-related income tax credits and the resolution of an income tax matter with a state taxing authority. Liquidity and Capital Resources Our capital requirements relate primarily to new store openings, stock repurchases and working capital requirements. Our working capital requirements are...

  • Page 35
    ..., transportation equipment and automobiles and security equipment for our stores. The lease for our existing distribution center, which also currently serves as our corporate headquarters, expires in December 2014. We expect to relocate our corporate headquarters by June 2013 at a total cost of...

  • Page 36
    ... unrecognized tax benefits. Off-Balance Sheet Arrangements We have not provided any financial guarantees as of February 2, 2013. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business...

  • Page 37
    ... the merchandise. Retail sales are recorded net of returns and discounts and exclude sales taxes. We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities...

  • Page 38
    ... basis, and the distribution center's counts are performed quarterly. As of February 2, 2013 and January 28, 2012, the accrual was $1.5 million and $1.6 million, respectively. Inventory Purchase Concentration: Our business is dependent to a significant degree upon close relationships with our...

  • Page 39
    ...-Scholes valuation model to estimate the fair value at the date of grant for options granted under our equity incentive plans and stock purchase rights associated with the Employee Stock Purchase Plan. Stock-based compensation is expensed over the service period of the awards, with the exception...

  • Page 40
    ...of a variety 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...

  • Page 41
    ...data of our Company are included in response to this item Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 2, 2013 and January 28, 2012 Consolidated Statements of Operations for the fiscal year ended February 2, 2013, January 28, 2012 and January 29...

  • Page 42
    ... 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 February 2, 2013 and January 28, 2012, and the related consolidated statements of operations...

  • Page 43
    HIBBETT SPORTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share information) ASSETS Current Assets: Cash and cash equivalents T rade receivables, net Accounts receivable, other Inventories, net Prepaid expenses and other Deferred income taxes, net T otal ...

  • Page 44
    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 45
    ... for stock repurchases Net payments on 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 financing activities Net increase...

  • Page 46
    ... 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-January 28, 2012 Net income Issuance of shares from the employee stock purchase plan...

  • Page 47
    ... AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Hibbett Sports, Inc. is an operator of sporting goods retail stores in small to mid-sized markets predominately in the South, Southwest, Mid-Atlantic and...

  • Page 48
    ... distribution costs related to our retail business in cost of goods sold. Costs associated with moving merchandise to and between stores are included in store operating, selling and administrative expenses. Stock Repurchase Program In November 2012, the Board of Directors (Board) authorized a Stock...

  • Page 49
    ... business days. Cash equivalents related to credit and debit card transactions at February 2, 2013 and January 28, 2012 were $3.6 million and $3.0 million, respectively. Investments We hold investments in trust for the Hibbett Sports, Inc. Supplemental 401(k) Plan (Supplemental Plan) and the Hibbett...

  • Page 50
    .... At February 2, 2013, approximately 66% of the construction in progress balance was comprised of costs associated with our new corporate headquarters and wholesaling and logistics facility. Information technology costs accounted for approximately 32% and unopened stores accounted for approximately...

  • Page 51
    ... the merchandise. Retail sales are recorded net of returns and discounts and exclude sales taxes. We offer a customer loyalty program, the MVP Rewards program, whereby customers, upon registration, can earn points in a variety of ways, including store purchases, website surveys and other activities...

  • Page 52
    ... the consolidated financial statements at this time. NOTE 3. STOCK-BASED COMPENSATION At February 2, 2013, 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...

  • Page 53
    ... vesting schedules for stock-based awards vary by type of grant and generally vest upon time-based conditions. Under the DEP, Directors have the option with certain equity forms to set vest dates. Upon exercise, stock-based compensation awards are settled with authorized but unissued company stock...

  • Page 54
    Stock Options Stock options are granted with an exercise price equal to the closing market price of our common stock on the date of grant. Vesting and expiration provisions vary between equity plans, but options granted awarded to employees under the EIP typically vest over a four or five-year ...

  • Page 55
    ... Excess income tax proceeds from stock option exercises are included in cash flows from financing activities as required by ASC Topic 230, Statement of Cash Flows. As of February 2, 2013, there was no unrecognized compensation cost related to nonvested stock options. Restricted Stock and Performance...

  • Page 56
    ... relates to accounting for certain employee stock purchase plans with a look-back option. The compensation expense included in store operating, selling and administrative expenses and recognized during each of Fiscal 2013, Fiscal 2012 and Fiscal 2011 was $0.1 million. Director Deferred Compensation...

  • Page 57
    ...-dilutive effect. We excluded 42,700 nonvested 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...

  • Page 58
    ...various office and transportation equipment. At February 2, 2013, 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...

  • Page 59
    ... 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...

  • Page 60
    ... an executive officer and stockholder of BAMM and another Director, Albert C. Johnson, is a Director and stockholder of BAMM. Minimum annual lease payments are $0.1 million, if not in co-tenancy and the lease termination date is June 2013. In Fiscal 2012, there were no minimum annual lease payments...

  • Page 61
    ... as a tax deduction or credit in future tax returns or are items of income that 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 62
    ... Compensation Committee (Committee) of the Board of Directors places performance criteria on awards of PSUs made in the form of RSUs to our NEOs under the EIP. The performance criteria are tied to performance targets with respect to future sales and operating income over a specified period of time...

  • Page 63
    ...infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c) real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property; and (d) agreements with our directors, officers and employees, under which...

  • Page 64
    ... such information is accumulated and communicated to our management, including the Chief Executive Officer and President (principal executive officer) and Senior Vice President and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding the required...

  • Page 65
    ... 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. We have 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 2013 Annual Meeting of...

  • Page 66
    ...the Board of Directors of KPMG LLP as the Company's Independent Registered Public Accounting Firm" in the Proxy Statement. PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules. (a) Documents filed as part of this report: 1. Financial Statements. The following Financial Statements...

  • Page 67
    ... and Exchange Commission on August 17, 2012. Hibbett Sports, Inc. Non-Employee Director Restricted Stock Unit Award Agreement (Initial Grant, Service Requirement); incorporated by reference as Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange...

  • Page 68
    ... Fiscal 2013 Annual Report to Stockholders. Subsidiaries of the Registrant List of Company's Subsidiaries: 1) Hibbett Sporting Goods, Inc., a Delaware Corporation 2) Hibbett Team Sales, Inc., an Alabama Corporation 3) Sports Wholesale, Inc., an Alabama Corporation 4) Hibbett Capital Management, Inc...

  • Page 69
    ...the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HIBBETT SPORTS, INC. Date: April 1, 2013 By: /s/ Scott J. Bowman Scott J. Bowman Senior Vice President and Chief Financial...

  • Page 70
    ... J. Newsome Title Chief Executive Officer and President (Principal Executive Officer) Date April 1, 2013 Senior Vice President and Chief Financial Officer (Principal Financial Officer) Executive Chairman of the Board April 1, 2013 April 1, 2013 /s/ Alton E. Yother Alton E. Yother Lead Director...

  • Page 71
    ... in the three-year period ended February 2, 2013 and (ii) the effectiveness of internal control over financial reporting as of February 2, 2013, which report appears in the February 2, 2013, Annual Report on Form 10-K of Hibbett Sports, Inc. /s/ KPMG LLP Birmingham, Alabama April 1, 2013 End of...

  • Page 72
    ... 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: April 1, 2013 /s/ Jeffry O. Rosenthal Jeffry O. Rosenthal President and Chief Executive...

  • Page 73
    ... 31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer I, Scott J. Bowman, 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...

  • Page 74
    ... with the Annual Report on Form 10-K of Hibbett Sports, Inc. and Subsidiaries (the "Company") for the period ended February 2, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Jeffry O. Rosenthal, President and Chief Executive Officer, and Scott...

  • Page 75

  • Page 76

  • Page 77
    ...to the Company's Investor Relations department. Annual Meeting The 2013 Annual Meeting of Stockholders will be held at the principal executive offices of Hibbett Sports, Inc., 451 Industrial Lane, Birmingham, Alabama, on Thursday, May 30, 2013, at 11:00 A.M., local time. Stock Market Information The...

  • Page 78
    H I B B E T T S P O R T S 451 Industrial Lane Birmingham, Alabama 35211 205.942.4292 w w w. h i b b e t t . c o m