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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 24, 1999
Commission File No. 1-13426
THE SPORTS AUTHORITY, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3511120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3383 N. State Road 7 - Ft. Lauderdale, Florida 33319
(Address of principal executive offices) (Zip Code)
(954) 735-1701
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Each Exchange on which Registered
Common Stock, $.01 par value The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting and nonvoting common equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing: $249,262,408 at the close of
business on March 29, 1999.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 31,899,431 Shares of
Common Stock outstanding as of March 29, 1999.
Documents Incorporated by Reference: (1) the Company's 1998 Annual Report to
Stockholders incorporated partially in Parts I and II hereof and (2) the
Company's Proxy Statement dated April 23, 1999, incorporated partially in Part
II and III hereof.
PART I
ITEM 1. BUSINESS
GENERAL
The Company is the largest operator of large format sporting goods stores
in the United States in terms of both sales and number of stores and is also the
largest full-line sporting goods retailer in the United States in terms of
sales. At January 24, 1999, the Company operated 226 sporting goods stores,
substantially all in excess of 40,000 gross square feet, including 206 in the
United States, seven in Canada and 13 in Japan operated by a joint venture 51%
owned by the Company. Currently, the Company operates 195 such stores in the
United States and five in Canada, having shut down 15 stores in the United
States and Canada and having sold a substantial portion of its interest in its
joint venture in Japan in the first quarter of 1999. The Company's business
strategy is to offer customers extensive selections of quality, brand name
sporting equipment and athletic and active footwear and apparel, everyday low
prices and high levels of customer service. The Company had sales of $1,599.7
million in 1998, a 9.2% increase over 1997.
The Company was incorporated in Delaware in 1987. In 1990, the Company was
acquired by Kmart Corporation ("Kmart"). Following public offerings in November
1994 and October 1995, Kmart no longer owns any interest in the Company.
INDUSTRY OVERVIEW
According to the National Sporting Goods Association, total U.S. retail
sales of sporting goods (including sporting equipment, athletic footwear and
apparel) was approximately $43 billion in 1997. The retail sporting goods
industry is comprised of four principal categories of retailers: (i) traditional
sporting goods retailers, (ii) specialty sporting goods retailers, (iii) large
format sporting goods retailers and (iv) mass merchandisers. In addition, a
variety of other retailers sell various types of sporting goods, principally
athletic footwear and apparel. Sporting goods retailing in the United States is
characterized by intensive competition among retailers, increasing competition
from new channels of distribution such as catalogs and electronic commerce, and
consolidation among vendors.
BUSINESS STRATEGY
The Company's business strategy is to consistently offer the extensive
selection and competitive pricing associated with category dominant retailers
while, at the same time, offering quality brand names and high levels of
customer service. The key elements of this strategy are as follows:
MEGASTORE FORMAT. The Company operates large format stores, substantially
all of which are in excess of 40,000 gross square feet. This megastore format
enables the Company to provide under one roof an extensive selection of
merchandise for sports and leisure activities that ordinarily are associated
with specialty shops and pro shops, such as golf, tennis, snow skiing, cycling,
hunting, fishing, bowling, archery, boating and water sports, as well as for
activities ordinarily associated with traditional sporting goods retailers, such
as team sports, physical fitness, and men's, women's
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and children's athletic and active apparel and footwear. Each megastore offers
approximately 45,000 active SKUs (excluding discontinued items) across 18 major
departments.
QUALITY BRAND NAME SPORTING GOODS. The Company's merchandising strategy is
to offer strong assortments in quality brand name sporting goods in its
merchandise classifications. The Company's comprehensive merchandise assortment
includes over 900 brand names, including Adidas, Asics, Champion, Coleman,
Columbia, Easton, Fuji, Huffy, K2, Mongoose, New Balance, Nike, Prince, Proform,
Rawlings, Reebok, Rollerblade, Russell, Spalding, Taylor Made, Teva, Timberland
and Wilson. The Company utilizes a sophisticated inventory management system in
conjunction with strong store operating controls to achieve optimal in-stock
levels of brand name merchandise.
CUSTOMER SERVICE. The Company seeks to distinguish itself from other large
format sporting goods retailers, traditional sporting goods retailers and mass
merchandisers by emphasizing high levels of customer service. In addition, the
Company seeks to hire many sales associates who are sports enthusiasts skilled
in various disciplines and offers incentives that reward achievement of customer
service goals.
EVERYDAY LOW PRICES. The Company maintains a policy of consistent everyday
low pricing that focuses on depth and breadth of merchandise and customer
service relative to price and is designed to assure customers that they will
receive good value at the Company's stores. The Company's pricing policy is to
maintain prices that are generally below prices at specialty sporting goods
retailers and comparable with prices at traditional sporting goods retailers and
other sporting goods superstores. The Company also seeks to be a price leader on
certain highly identifiable items. The Company is in the process of implementing
variable pricing by market.
FOCUS ON MULTI-STORE MARKETS. The Company seeks to establish a significant
presence in each of its markets and pursues a store expansion strategy that
primarily focuses on opening multiple stores in its markets. This focus enables
the Company to obtain significant market penetration and to leverage management
and advertising expenses, thereby achieving greater economies of scale. In
addition, the Company believes its multi-store market strategy results in
greater name recognition and enhanced customer convenience in each market. The
Company believes that achieving greater market penetration will enable it to
compete more effectively and increase profitability and return on capital over
the long term. While the Company's expansion strategy is primarily focused on
multi-store markets, it will enter smaller markets where the anticipated returns
justify opening a single store.
EXPANSION
Until mid-1998, the Company engaged in a rapid expansion program. The
following table sets forth certain information regarding the Company's expansion
program during the fiscal years indicated:
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NEW STORES
---------------------------
MARKET NO. OF STORES GROSS SQUARE
--------------------------- AT PERIOD FEET
YEAR TOTAL NEW EXISTING END AT PERIOD END
- ---- ----- --- -------- -------------- -------------
1993............... 24 8 16 80 3,415,200
1994............... 27 5 22 107 4,618,400
1995............... 29 15 14 136 5,899,117
1996............... 32 7 25 168 7,290,549
1997............... 31 7 24 199 8,620,541
1998............... 27 10 17 226 9,703,622
In 1998, the Company opened 30 stores and closed three stores, for a total
of 226 stores at the end of the year, including seven stores in Canada, 13
stores in Japan operated by a joint venture 51% owned by the Company and five
smaller format stores in certain urban areas under the name "The Sports
Authority, Ltd." The markets in which these stores are located are listed in
Item 2.
In the third quarter of 1998, the Company announced its intention to close
18 underperforming stores (of which two are intended to be relocated) as part of
a comprehensive restructuring plan. These stores (except one for which closing
has been postponed due to a change in the local competitive environment and the
two relocations expected to be completed in 2000) were closed in the first
quarter of 1999. See Note 4 to the Consolidated Financial Statements on pages
25-26 of the Company's 1998 Annual Report to Stockholders, which pages are
incorporated herein by reference.
In mid-1998, the Company substantially reduced its store expansion program
and began a comprehensive review of its real estate processes. The Company
currently plans to open between three and seven new stores in 1999 and intends
to expand at a greater rate in the future. The rate of the Company's expansion
in 1999 and future years will depend, among other things, on general economic
and business conditions affecting consumer confidence and spending and, in
particular, the level of consumer demand for sporting goods, athletic footwear
and apparel, the availability of desirable locations on acceptable lease or
purchase terms, the availability of adequate capital, the availability of
qualified management personnel, and the Company's ability to manage the
operational aspects of its growth.
While the Company's expansion program in recent years has included opening
stores in Canada and Japan, the Company has reduced its ownership interest in
its joint venture in Japan. See "Restructuring of the Company's Joint Venture in
Japan" below. The Company has no current plans for expansion outside the United
States, but will continue to evaluate expansion opportunities.
The Company's expansion strategy focuses primarily on multi-store markets
where it can achieve significant market penetration and can leverage management
personnel and advertising expenses. This strategy has resulted in some
cannibalization of sales at existing stores. While management believes that
achieving greater market penetration will enable the Company to compete more
effectively and increase profitability and return on capital in the long term,
there can be no assurance that the level of cannibalization that results in the
future will not adversely affect the Company's sales and profitability.
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In analyzing a new market, the Company evaluates that market's potential in
terms of total number of store locations. Sites are selected based on
demographics (such as income levels and distribution, age and family size),
population, regional access, co-tenancy, available lease or purchase terms,
visibility, parking, and proximity to competition.
The Company traditionally has obtained new store locations through
long-term operating leases. On an operating lease basis, the cost of opening a
new store is approximately $2.2 million, consisting primarily of the investment
in inventory, the cost of furniture, fixtures and equipment and pre-opening
expenses, such as the costs associated with training employees, stocking the
store and grand opening advertising. If the site requires a retrofit of an
existing building, costs (excluding furniture, fixtures and equipment) can be
significantly higher. The Company currently plans to finance substantially all
of its new stores with operating leases, assuming availability and appropriate
terms.
The Company expects that its capital expenditures in 1999 will be
approximately $38 million, primarily related to refurbishments of existing
stores and upgrades of information systems.
STORES AND CUSTOMER SERVICE
The Company's megastores average in excess of 40,000 gross square feet. The
stores are located primarily in regional strip or power centers that generally
have tenants that are value-oriented large format retailers, and a small
percentage are located in malls and stand alone locations. Each store displays
merchandise in accordance with centrally developed presentation standards. These
standards are designed to provide logical department adjacencies to promote
convenience and multiple purchases of related items. The layouts for each
department are also centrally developed to ensure that each store utilizes
display techniques to highlight merchandise and present a consistent and
attractive shopping environment.
The Company believes customers want an easy shopping environment and
therefore seeks to make shopping at its stores as convenient as possible through
its extensive in-store signage and department placement. The Company continues
to refine its store layout and signage and, in particular, is increasing
point-of-purchase product information.
The Company divides selling and non-selling functions in order to allow its
sales associates to devote their full attention to assisting customers.
Non-selling duties, such as receiving and stocking, are performed immediately
before and after store operating hours.
The Company believes that its customer service, merchandise replenishment
and allocation systems, training of store-level management, continual investment
in technology and infrastructure and attentiveness to loss prevention practices
have contributed to a relatively low rate of inventory shrinkage. On average,
for the last three years, the Company's shrinkage, expressed as a percentage of
sales, has been approximately 0.6% at retail, or 0.4% at cost.
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MERCHANDISING
The Company's merchandising strategy focuses on offering a broader and
deeper selection of quality, brand name merchandise than is generally available
in traditional sporting goods retailers. The Company's comprehensive merchandise
assortment consists of a wide variety of sports equipment, apparel, footwear and
accessories and is designed to meet all of the sporting goods needs of its
customers, from the sports enthusiast to the weekend athlete. Each megastore
offers approximately 45,000 active SKUs (excluding discontinued items) across
more than 1,200 merchandise classifications.
The Company also tailors merchandise assortment and store space allocation
to reflect customer preferences at each store location. This is accomplished by
recognizing differences related to the region or market in which such store is
located, as well as by recognizing subtle differences related to the
demographics of the surrounding communities. This store-by-store merchandising
involves differences in brands, sizes, colors, fabrication and timing of the
assortment and the space allocated to present such merchandise.
The Company's stores offer an extensive selection of both hard lines, which
consist of equipment for team sports, fitness, hunting, fishing, camping, golf,
racquet sports, cycling, water sports, marine, snow sports and general
merchandise, and soft lines, which consist of athletic and active footwear and
apparel. In each of the past three years, hard lines constituted approximately
50% of the Company's sales, apparel constituted approximately 22%, and footwear
constituted approximately 28%.
The hard lines and soft lines sold by the Company include the following
merchandise categories:
ATHLETIC AND ACTIVE APPAREL: The Company carries both casual and
leisure apparel, as well as apparel designed and fabricated for specific sports,
in men's, women's and children's assortments. Casual and leisure apparel
includes basic and seasonal T-shirts, shorts, sweats and warm ups. Performance
specific apparel includes offerings for sports such as golf, tennis, running,
fitness, soccer, baseball, football, hockey, and skiing. The apparel category
also includes NCAA and professional league licensed apparel.
ATHLETIC AND ACTIVE FOOTWEAR: The footwear selection includes casual
footwear intended for day to day streetwear, as well as athletic shoes for
running and walking, tennis, fitness and crosstraining, basketball and hiking.
In addition, the Company carries specialty footwear including a complete line of
cleated shoes for baseball, football, soccer and golf. Important categories
within the footwear department are recreational and hockey skates, and socks and
accessories.
OUTDOOR SPORTS: The stores carry a large assortment of merchandise
aimed at outdoor sports enthusiasts. Included are camping equipment, including
tents sleeping bags and cooking appliances; fishing gear, including rods, reels,
terminal tackle and accessories; hunting equipment, including selected firearms
and ammunition; optics, including binoculars and scopes; knives and cutlery;
archery equipment and accessories; and, marine and water sports equipment
including navigational electronics, diving and snorkeling equipment, water
skis, inflatable boats and rafts and accessories.
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RECREATIONAL SPORTS: Team sports include a full range of equipment and
accessories for such sports as basketball, baseball, soccer, football, hockey
and lacrosse. The golf department includes a complete assortment of golf clubs
and club sets, bags, balls, teaching aids and accessories. The racquet sports
department covers the needs of participants in tennis, racquetball, badminton
and platform or paddle ball. The Company offers services such as racquet
stringing and trial demo periods.
FITNESS SPORTS: The fitness department is comprised of complete
assortments for aerobic and anaerobic workouts, including treadmills, stationary
bicycles and rowing machines for aerobic and home gyms, weight benches,
dumbbells and free weights for anaerobic. In addition, the department carries a
selection of boxing and martial arts equipment and accessories. Finally, the
department features items designed for wellness and relaxation, such as
massagers and magna-therapy; and nutritional supplements. An extension of the
fitness category is the cycling department, which focuses on the all terrain
bicycle category and the touring bicycles. In addition, the Company carries
accessories such as gloves, helmets, water bottles.
WINTER SPORTS: The Company offers a complete line of ski apparel,
including technical outerwear, bib pants, thermal underwear, sweaters and
accessories. The Company also offers a complete line of skis and ski equipment
including Alpine and cross country skis, snowboards, boots, bindings, goggles
and accessories, as well as technical services to support new sales and tune-ups
on customer owned product. The winter sports department in the Company's North
American stores was previously operated by a licensee and its sublicensees.
Under its license agreement, the Company received a fee of approximately 10% of
snow ski merchandise sales, and these sales were not included in the Company's
sales. In January 1998, the Company terminated its license agreement, effective
August 1, 1998. Since that date, the winter sports department has been operated
directly by the Company and winter sports merchandise sales have been included
in the Company's sales.
PURCHASING
The Company maintains its own central buying staff and a central
replenishment and allocation staff. This staff manages the planning system,
allocates fashion and seasonal merchandise, replenishes basic merchandise and
coordinates the distribution of all merchandise.
Under the Company's merchandise planning system, the merchandise mix for
each store is selected by the central buying staff in consultation with field
management. The system allows the Company to manage its sales and inventory
levels by store at the subclass level. The Company also uses an automated
allocation system to allocate non-reorderable merchandise to stores based on
planned sales and inventory at the SKU level, as well as recent sales trends and
inventory position. The Company also utilizes an automated replenishment system
for approximately 40% of its active assortment based upon specific in-stock
requirements utilizing statistically based sales forecasting. This automatic
replenishment system balances the need to provide high in-stock positions to
satisfy customer demand with the costs associated with carrying such inventory.
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The Company currently purchases merchandise from over 900 vendors and, in
fiscal 1998, the Company's largest vendor, Nike, Inc., accounted for
approximately 14% of its total merchandise purchased. The Company does not
maintain any material long-term or exclusive commitments or arrangements to
purchase from any vendor. The Company is either the largest or one of the
largest customers for many of its vendors. The Company believes it will continue
to obtain sufficient merchandise for all of its stores on a timely basis.
DISTRIBUTION
In late 1997, the Company opened its first regional distribution center
("RDC") outside of Atlanta, Georgia. The RDC serves as a flow-through facility
to receive and allocate merchandise to the Company's stores. Merchandise is
received at the RDC, made "floor ready" as necessary, and subsequently allocated
and distributed to Company stores. At year-end, the RDC serviced approximately
100 stores and the Company is in the process of increasing the number of stores
serviced by the RDC to 140. In addition, the Company maintains an off-site
receiving facility ("OSR") in Chino, California. The Company currently plans to
expand the scope of operation of the OSR and to establish flow-through
cross-dock facilities in certain areas. Additionally, depending on future
geographic expansion and evaluation of its overall distribution network, the
Company may consider opening an additional RDC. Merchandise not processed by the
centralized distribution network is shipped directly to each store by vendors.
MANAGEMENT INFORMATION SYSTEMS
Since its inception, the Company has implemented sophisticated management
information systems that integrate purchasing, receiving, sales and perpetual
inventory data on a daily basis. These systems have enabled the Company to
maintain financial controls and to manage its inventory. The inventory
management systems manage all aspects of inventory control from order placement
through elimination of aged inventory. These systems include the functions of
automated replenishment, automated merchandising planning and allocation,
electronic data interchange, daily tracking of in-stock levels by item and
location and a "data warehouse" which gives corporate buying staff easy access
to sales information on a class and sub-class level. Management believes that
these systems also have sufficient capacity and flexibility to enable the
Company to systematically manage the implementation of its expansion strategy.
The Company currently employs point-of-sale ("POS") terminals in all of its
stores, which provide price look-up capabilities and SKU-level sales data,
capture customer zip code data and initiate requests for authorization of the
different credit and check tenders accepted by the Company. The Company also
utilizes IBM AS/400 computers and hand held radio frequency terminals at store
level as in-store processors to record merchandise receipts, produce price
tickets, maintain SKU-level perpetual inventories, provide time keeping
information and for general data inquiry. These in-store processors communicate
interactively with central AS/400 computers to exchange data created at store
level and the Company's corporate offices. These processors are intended to
provide local management with the ability to more closely manage inventory
productivity and merchandise space planning, as well as reduce the amount of
employee time spent on non-selling functions. The Company uses hand held radio
frequency terminals for purposes of streamlining the merchandise receiving and
ticketing processes.
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YEAR 2000
Many information and business systems utilize programming code in which
calendar years are abbreviated as two digits. The Year 2000 issue relates to the
potential for systems to interpret the year 2000 as the year 1900, causing
system failure or unreliability.
The Company began its Year 2000 compliance project in 1997. Analysis of
internal compliance consists of the following phases: assessment of information
and non-information systems; remediation; testing; implementation; and,
contingency planning. The Company is also determining compliance of key vendors
and suppliers, and will incorporate alternate sources of goods and services, as
necessary, in its contingency plan.
The assessment of internal information systems is 100% complete. The
assessment indicated areas of non-compliance primarily in the Company's
inventory management system and certain retail applications. Remediation is 100%
complete. Remediation efforts consist principally of software programming
modifications and, to a lesser extent, hardware replacement. The Company
utilized a team of outside consultants and programmers for programming
modifications, and will continue to utilize outside consultants through testing
and implementation. Testing is 85% complete, and is expected to be completed by
the end of the second quarter of 1999. Implementation of programming
modifications is 75% complete, and is expected to be completed by the end of the
third quarter of 1999. Contingency planning is 70% complete, and is expected to
be completed by the fourth quarter of 1999.
The Company has expensed as incurred approximately $2.1 million in Year
2000 compliance costs in fiscal 1998, primarily related to assessment and
reprogramming fees by outside labor. This expense excludes the cost of internal
staff hours dedicated to the project. The Company expects to incur an additional
$800,000 through fiscal 1999. Total project costs are not anticipated to have a
material adverse affect on the Company's operations.
The Company has completed its assessment of non-information technology
such as signage, time clocks, office equipment and alarm systems and has
determined these systems to be materially compliant. Such determinations were
made from written and verbal communication with vendors as well as internal
review and testing.
The Company has sent surveys to all key vendors and suppliers to
determine Year 2000 compliance. The Company has received responses from 83% of
vendors surveyed, of which 98% have indicated that they are or will be compliant
by the end of 1999. The Company is continuing to evaluate the scope of
contingency and disaster recovery plans to establish alternate sources of
merchandise, supplies and services.
Management believes that conversion of internal business and operating
systems will be completed in a timely manner; however, failure to do so could
have a material impact on the Company's operations. Additionally, there can be
no assurances that the Company's key suppliers or vendors will complete their
conversions in a timely manner. In the event this issue prevents third parties
from timely delivery of inventory or services required by the Company, the
Company's results of operations could be materially adversely affected.
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ADVERTISING AND PROMOTION
The Company advertises its products and seeks to build name recognition and
market share through broadcast media, newspaper advertising, billboards and
sports sponsorships. Upon entering a new market, the Company uses extensive
billboard, radio, and newspaper advertising to establish name recognition in
that market. The focus on multi-store markets enables the Company to leverage a
substantial portion of advertising costs. In addition, the Company has recently
moved toward variable levels of advertising among different markets.
COMPETITION
The retail sporting goods industry is comprised of the following four
principal categories of retailers:
TRADITIONAL SPORTING GOODS RETAILERS. Traditional sporting goods retailers
tend to have relatively small stores, generally ranging in size from 5,000 to
20,000 square feet, frequently located in malls or strip centers (e.g., Modell's
Sporting Goods, Champs, Dunham's, MVP Sports and Hibbett Sporting Goods). These
stores typically carry limited quantities of each item in their assortment and
generally offer a more limited selection at higher prices than large format
stores.
SPECIALTY SPORTING GOODS RETAILERS. Specialty sporting goods retailers
include specialty shops, ranging in size from 1,000 to 10,000 square feet,
frequently located in malls or strip centers (e.g., Bike USA, Busy Body Fitness,
Edwin Watts, Foot Locker, Foot Action, The Athlete's Foot, The Finish Line and
West Marine), and also include pro shops that often are single store operations.
These stores typically carry a wide assortment of one specific product category,
such as athletic shoes or golf or tennis equipment, and generally have higher
prices than large format stores.
LARGE FORMAT SPORTING GOODS RETAILERS. Large format stores such as the
Company's stores generally range in size from 30,000 to 70,000 square feet,
offer a broad selection of brand name sporting goods merchandise and tend to be
either anchor stores in strip malls or free-standing locations (e.g., Galyan's,
Gart Sports, Jumbo Sports, Oshman's and Dick's Clothing and Sporting Goods). In
addition, other large format sporting goods retailers compete with certain
product categories sold by the Company (e.g., Just For Feet in footwear and REI
in outdoor sporting products).
MASS MERCHANDISERS. Mass merchandisers are large stores, generally ranging
in size from 50,000 to 200,000 square feet, that feature sporting equipment as
only a small portion of all merchandise carried, and are located primarily in
strip centers or free-standing locations (e.g., Wal*Mart, Target and Kmart).
These stores have limited selection and fewer brand names and also typically do
not offer the customer service offered by sporting goods retailers.
In addition, a variety of other retailers sell various types of sporting
goods, principally athletic footwear and apparel. Sporting goods retailing in
the United States is characterized by intensive competition, increasing
competition from new channels of distribution such as catalogs and electronic
commerce, and consolidation among vendors.
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The Company believes that the principal strengths with which it competes
are customer service, a broad assortment of brand name merchandise, ease of
shopping and everyday low pricing.
RESTRUCTURING OF THE COMPANY'S JOINT VENTURE IN JAPAN
In March 1999, the Company and JUSCO Co., Ltd. ("JUSCO") agreed to a
comprehensive restructuring of the ownership of Mega Sports Co., Ltd. ("Mega
Sports"), which was 51% owned by the Company and 49% owned by JUSCO, as well as
their license and services agreements with Mega Sports. JUSCO paid the Company
$1.1 million for 32% of its shares in Mega Sports, reducing the Company's
ownership to 19%. The Company entered into a new license agreement which permits
Mega Sports to use certain trademarks, technology and know-how of the Company in
exchange for royalty fees of 1.0% of Mega Sports' gross sales in 1999, 1.1% in
2000 and 1.2% in 2001 through 2005. Mega Sports has the option of extending the
new license agreement for three ten-year periods expiring in 2035. The Company
also entered into a new services agreement under which the Company will furnish
certain purchasing, merchandising and information system services, and Mega
Sports will reimburse the Company for costs incurred. As a result of the
reduction in ownership, the Company will discontinue consolidation of the
results of operations of Mega Sports beginning in fiscal 1999.
TRADEMARKS AND SERVICE MARKS
The Company uses "The Sports Authority" as its trade name and applies to
qualify to do business as such in each jurisdiction where it operates stores.
The Company's retail identity is comprised of the trade name, as well as a
family of trademarks and service marks featuring the word AUTHORITY, many of
which are registered (or the subject of pending applications) in the U.S. Patent
and Trademark Office, the Canadian Trade-Marks Office, the Japanese Patent
Office and other applicable offices around the world. Marks registered in the
U.S. Patent and Trademark Office include AUTHORITY(R), THE SPORTS AUTHORITY(R),
THE SPORTS AUTHORITY & Design(R), THE SKI AUTHORITY(R), GOLF AUTHORITY(R),
TENNIS AUTHORITY(R) and TEAM SPORTS AUTHORITY(R), among others. The Company
vigorously protects its trademarks, service marks and trade name from
infringement throughout the world by strategic registration and enforcement
efforts. Use of these marks in the U.S. and Canada is under license from The
Sports Authority Michigan, Inc., a wholly-owned subsidiary of the Company.
ASSOCIATES
As of January 24, 1999, the Company had a total of approximately 6,700
full-time and approximately 7,200 part-time associates. Of these, approximately
13,000 were employed in the Company's stores and approximately 900 were employed
in corporate office positions, regional and district positions, and the RDC.
None of the Company's associates is covered by a collective bargaining
agreement. The Company endeavors to promote new store management from its
existing personnel. The Company believes that its relationships with its
associates are good.
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SEASONALITY
The Company's business is highly seasonal, with its highest sales occurring
in the fourth quarter, which includes the holiday selling season. In fiscal 1997
and 1998, 28.7% of the Company's sales occurred in the fourth quarter. In the
past, the Company's expansion program has been weighted toward store openings in
the second half of the fiscal year. In the future, changes in the number and
timing of store openings and consumer buying habits, particularly in the holiday
selling season, may change seasonality trends.
FORWARD LOOKING STATEMENTS
Certain statements contained in or incorporated by reference in this Form
10-K constitute "forward looking statements" made in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. As such,
they involve risks and uncertainties that could cause actual results to differ
materially from those set forth in such forward looking statements. The
Company's forward looking statements are based on assumptions about, or include
statements concerning, many important factors, including without limitation
changes in discretionary consumer spending and consumer preferences,
particularly as they relate to sporting goods, athletic footwear and apparel;
seasonal patterns in consumer spending and, in particular, the level of consumer
spending during the fourth quarter; the Company's ability to effectively
implement its strategies, including its merchandising, distribution and store
expansion strategies; competitive trends and consolidation within the sporting
goods retailing industry; the growing impact of electronic commerce; the effect
of economic changes in other countries in which the Company does business; and
other factors described herein. While the Company believes that its assumptions
are reasonable, it cautions that it is impossible to predict the impact of
certain factors which could cause actual results to differ materially from
expected results.
12
ITEM 2. PROPERTIES
The following table sets forth certain information regarding the markets in
which the Company had stores as of January 24, 1999 and has stores as of the
date of this report, after giving effect to additional store openings and the
closure in the first quarter of 1999 of underperforming stores. See Note 4 to
the Consolidated Financial Statements on pages 25-26 of the Company's 1998
Annual Report to Stockholders, which pages are incorporated herein by reference.
NUMBER OF STORES
-----------------------------------
UNITED STATES REGIONS/METROPOLITAN AREA JANUARY 24, 1999 APRIL 23, 1999
--------------------------------------- ----------------- --------------
NORTHEAST
Baltimore......................................... 4 4
Boston ........................................... 6 6
Hartford/North Haven.............................. 4 4
New York ......................................... 28 29
Portland, ME ..................................... 1 1
Philadelphia ..................................... 9 9
Providence........................................ 2 2
Washington, D.C. ................................. 14 14
----- ----
SUBTOTAL NORTHEAST........................... 68 69
SOUTHEAST
Augusta, GA....................................... 1 1
Atlanta........................................... 12 11
Charleston........................................ 1 1
Charlotte......................................... 3 3
Chattanooga....................................... 1 1
Fayetteville...................................... 1 1
Ft. Myers......................................... 1 1
Gainesville, FL................................... 1 1
Greensboro........................................ 1 1
Greenville, SC.................................... 1 1
Jacksonville...................................... 2 2
Memphis........................................... 1 1
Montgomery........................................ 1 1
Myrtle Beach...................................... 1 1
Naples............................................ 1 1
Nashville......................................... 2 2
New Orleans....................................... 3 1
Norfolk/Hampton................................... 3 3
Orlando........................................... 6 6
Pensacola......................................... 1 1
Southeast Florida................................. 16 16
Tampa/St. Petersburg.............................. 10 10
Winston-Salem..................................... 1 1
--- ----
SUBTOTAL SOUTHEAST........................... 71 68
MIDWEST
Chicago........................................... 17 14
Detroit........................................... 8 7
Madison, WI....................................... 1 1
Omaha............................................. 1 1
St. Louis......................................... 6 6
---- -----
SUBTOTAL MIDWEST............................. 33 29
13
SOUTHWEST
Dallas............................................ 1 1
El Paso........................................... 1 1
Las Vegas......................................... 2 2
Little Rock....................................... 1 1
Phoenix........................................... 7 7
San Antonio....................................... 2 -
Tucson............................................ 1 1
---- ----
SUBTOTAL SOUTHWEST........................... 15 13
NORTHWEST
Anchorage......................................... 1 1
Seattle/Tacoma.................................... 4 3
---- -----
SUBTOTAL NORTHWEST........................... 5 4
WEST
Honolulu.......................................... 3 3
Fresno............................................ 1 1
Los Angeles....................................... 2 1
Sacramento........................................ 2 2
San Diego......................................... 6 5
---- -----
SUBTOTAL WEST................................ 14 12
---- -----
SUBTOTAL UNITED STATES................................ 206 195
--- --
- ---
CANADA/METROPOLITAN AREA
------------------------
Toronto........................................... 7 5
---- ----
SUBTOTAL CANADA....................................... 7 5
---- ----
JAPAN/METROPOLITAN AREA
-----------------------
Hiroshima......................................... 1 -
Nagoya............................................ 4 -
Osaka............................................. 2 -
Kyushu............................................ 2 -
North Honsu....................................... 2 -
Tokyo............................................. 2 -
---- ----
SUBTOTAL JAPAN........................................ 13 *
---- ----
TOTAL ALL COUNTRIES................................... 226 200
=== ====
- ------------
* See "Restructuring of the Company's Joint Venture in Japan" above.
As of January 24, 1999, the Company occupied 199 stores pursuant to
long-term leases. The leases typically provide for an initial 10 to 25 year term
with multiple five-year renewal options. In most cases, the Company's leases
provide for minimum annual rent subject to periodic adjustments, plus other
charges, including a proportionate share of taxes, insurance and common area
maintenance. Fifty-nine of the Company's store leases are guaranteed by Kmart.
In addition, the Company owns 27 of its stores.
14
The Company leases a building at 3383 N. State Road 7, Fort Lauderdale,
Florida, containing approximately 98,000 square feet, which houses its corporate
offices. The lease has a remaining primary term of 9 years with two 10-year
renewal options.
The Company is engaged in an effort to assign, sublease or terminate the
leases for those stores which were closed in the first quarter of 1999.
ITEM 3. LEGAL PROCEEDINGS
On or about May 11 and May 12, 1998, four class action lawsuits were
commenced against the Company and its Directors by certain purported Company
stockholders in the Court of Chancery of the State of Delaware in New Castle
County. On July 24, 1998, at plaintiffs' request the Court granted an order
consolidating these cases into one case, IN RE THE SPORTS AUTHORITY, INC.
SHAREHOLDERS LITIGATION, C.A. No. 16373NC. The consolidated complaint relates to
the merger agreement dated May 7, 1998 between the Company and Venator Group,
Inc., which was terminated by mutual agreement in September 1998. The complaint
alleged that the Directors of the Company breached their fiduciary duties to
Company stockholders by entering into the merger agreement without maximizing
stockholder value, and that the merger agreement's exchange ratio between
Company shares and Venator shares offered inadequate value to the Company's
stockholders. The complaint sought an injunction against the merger, rescission
of the merger if it had been effected, monetary damages and attorneys' fees.
While this suit remains filed, the plaintiffs have not pursued it.
The Company is from time to time involved in routine litigation incidental
to the conduct of its business. The Company believes that no currently pending
litigation to which it is a party will have a material adverse effect on its
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
15
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
PRICE RANGE OF COMMON STOCK
The Common Stock of the Company is traded on the New York Stock Exchange
(the "NYSE") under the symbol "TSA". The following table sets forth, for the
fiscal quarters indicated, the high and low market prices for the Common Stock
as reported on the NYSE.
HIGH LOW
Fiscal 1997
1st Quarter .......................... $20.25 $16.75
2nd Quarter .......................... 21.75 16.63
3rd Quarter .......................... 21.88 17.63
4th Quarter .......................... 20.75 11.06
Fiscal 1998
1st Quarter .......................... 17.06 10.75
2nd Quarter .......................... 18.75 13.44
3rd Quarter .......................... 14.31 4.06
4th Quarter .......................... 8.13 3.81
As of March 29, 1999, the Company had approximately 1,523 shareholders of
record.
DIVIDEND POLICY
The Company did not declare any dividends in 1997 or 1998 and intends to
retain its earnings to finance future growth. Therefore, the Company does not
anticipate paying any cash dividends in the foreseeable future. The declaration
and payment of dividends, if any, is subject to the discretion of the Board of
Directors of the Company and to certain limitations under the General
Corporation Law of the State of Delaware. In addition, certain agreements
contain restrictions on the Company's ability to pay dividends. The timing,
amount and form of dividends, if any, will depend, among other things, on the
Company's results of operations, financial condition, cash requirements and
other factors deemed relevant by the Board of Directors.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item 6 is incorporated herein by reference
to the information under the caption "Selected Consolidated Financial Data" on
page 10 of the Company's 1998 Annual Report to Stockholders.
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this Item 7 is incorporated herein by reference
to the information under the caption "Management's Discussion and Analysis" on
pages 11-16 of the Company's 1998 Annual Report to Stockholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no material exposure to the market risks covered by this
Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is incorporated herein by reference
to the information on pages 19-34 of the Company's 1998 Annual Report to
Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Information concerning a change in the Company's independent public
accountants is incorporated herein by reference to the information contained in
the Company's Proxy Statement dated April 23, 1999 under the caption
"Ratification of Appointment of Independent Public Accountants" on page 24, and
in Item 4 of the Company's Form 8-K and Form 8-K/A dated April 8, 1999.
17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, and their business experience during
at least the past five years, are as follows:
Martin E. Hanaka, age 49. Mr. Hanaka was elected as Vice Chairman and
as a Director of the Company in February 1998, and was elected Chief Executive
Officer on September 15, 1998. From August 1994 until October 1997, Mr. Hanaka
served as President and Chief Operating Officer and as a director of Staples,
Inc., an office supply superstore retailer. Mr. Hanaka's extensive retail career
has included serving as Executive Vice President of Marketing and as President
and Chief Operating Officer of Lechmere, Inc. from September 1992 through July
1994, and serving in various capacities for 20 years at Sears Roebuck & Co.,
most recently as Vice President in charge of Sears Brand Central.
William D. Cappiello, age 55. Mr. Cappiello joined the Company in
December 1998 as President and Chief Merchandising Officer. Until January 1998,
he served as President & Chief Executive Officer for Parisian, a division of
Saks Incorporated, and prior to that, served in a variety of senior management
positions for R. H. Macy & Co., including President of Merchandising and
President of stores for Macy's West.
Henry Flieck, age 51. Mr. Flieck joined the Company in October 1998 as
Executive Vice President, Growth & Development. Mr. Flieck previously served as
Senior Vice President of Real Estate for Staples, Inc. from 1989 to 1998.
Samuel G. Allen, age 49. Mr. Allen joined the Company in April 1995 as
International President. Prior thereto, Mr. Allen served as President and Chief
Executive Officer of Sport Chalet, Inc., a retail sporting goods chain, since
1984.
Kelly Conway, age 38. Ms. Conway has been with the Company since its
inception in 1987 and has held various positions, including Director of
Management Information Systems from July 1986 to February 1990, Vice President,
Store Operations from February 1990 to August 1995, Vice President, Marketing
and Advertising from August 1995 to April 1998, and Vice President, Field
Operations from April 1998 to February 1999. She was promoted to Senior Vice
President, Sales and Services in February 1999.
Anthony F. Crudele, age 42. Mr. Crudele has served as Senior Vice
President and Chief Financial Officer since February 1996. He previously served
as Vice President and Controller of the Company from January 1991 to February
1996. Mr. Crudele joined the Company as Controller in April 1989 after serving
in various positions at Price Waterhouse from 1981 to 1989.
Arthur Quintana, age 49. Mr. Quintana joined the Company in October
1998 as Senior Vice President, Supply Chain. He previously served as Vice
President, Inventory Management and Logistics at Sunglass Hut from July 1997 to
October 1998, and prior to that as Vice President of Replenishment at Office
Depot from 1990 to 1997.
18
Alexander L. Stanton, age 33. Mr. Stanton started with the Company as a
financial planner in 1992 and has served in various positions, including Manager
of Treasury from January 1994 to January 1996, Director of Financial Planning
and Investor Relations from January 1996 to January 1998, and as Vice President,
Strategic Planning and Treasurer from January 1998 to February 1999. Mr. Stanton
was promoted to Senior Vice President, Business Development in February 1999.
There is no family relationship between any of these executive officers or
between any such officer and any Director of the Company. The remaining
information required by this Item 10 is incorporated herein by reference to the
information under the captions "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" on pages 2 and 15, respectively, of
the Company's Proxy Statement dated April 23, 1999.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated herein by
reference to the information under the caption "Executive Compensation" on pages
6-13 of the Company's Proxy Statement dated April 23, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is incorporated herein by
reference to the information under the caption "Ownership of Common Stock" on
pages 14-15 of the Company's Proxy Statement dated April 23, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 is incorporated herein by
reference to the information under the caption "Certain Transactions" on pages
15-16 of the Company's Proxy Statement dated April 23, 1999.
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed with, and as a part of, this Annual
Report on Form 10-K.
1. FINANCIAL STATEMENTS.
The financial statements incorporated herein by reference to the
information found on pages 19-34 of the Company's 1998 Annual Report to
Stockholders to be furnished to the Securities and Exchange Commission
are as follows:
Report of Independent Certified Public Accountants
Consolidated Statements of Operations
Consolidated Balance Sheets
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. EXHIBITS.
See Exhibit Index on Page 22
(b) Reports on Form 8-K.
A Report on Form 8-K and Form 8-K/A, which contained information under
Item 4, was filed on April 8, 1999.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE SPORTS AUTHORITY, INC.
Date: APRIL 23, 1999 By: /s/ MARTIN E. HANAKA
--------------------
Martin E. Hanaka,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ MARTIN E. HANAKA Chief Executive Officer and APRIL 23, 1999
------------------------------------ Director (Principal Executive
Martin E. Hanaka Officer)
/s/ ANTHONY F. CRUDELE Senior Vice President and APRIL 23, 1999
------------------------------------ Chief Financial Officer
Anthony F. Crudele (Principal Financial Officer)
/s/ EVA L. CLAWSON Vice President and APRIL 23, 1999
------------------------------------ Controller
Eva L. Clawson (Principal Accounting Officer)
/s/ A. DAVID BROWN Director APRIL 23, 1999
------------------------------------
A. David Brown
/s/ NICHOLAS A. BUONICONTI Director APRIL 23, 1999
------------------------------------
Nicholas A. Buoniconti
/s/ CYNTHIA R. COHEN Director APRIL 23, 1999
------------------------------------
Cynthia R. Cohen
Director
------------------------------------
Steve Dougherty
/s/ JULIUS W. ERVING Director APRIL 23, 1999
------------------------------------
Julius W. Erving
21
/s/ CAROL FARMER Director APRIL 23, 1999
------------------------------------
Carol Farmer
Director
------------------------------------
Jack F. Kemp
22
INDEX TO EXHIBITS
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
3.1 Restated Certificate of Incorporation of the Company, incorporated
herein by reference to Exhibit 3.1 to the Form 10-K for 1994.
3.2 Certificate of Designation of Series A Junior Participating Preferred
Stock of the Company, incorporated herein by reference to Exhibit 3.1
to the Form 10-Q for the third quarter of 1998.
3.3 Amended and Restated Bylaws of the Company, incorporated herein by
reference to Exhibit 3.2 to the Form 10-Q for the third quarter of
1998.
4.1 Indenture, dated as of September 20, 1996, between the Company and The
Bank of New York, as Trustee, relating to the Company's $149,500,000
5.25% Convertible Subordinated notes due September 15, 2001 (including
forms of note), incorporated herein by reference to Exhibit 4.1 to
Registration Statement No. 333-16877 on Form S-3.
4.2 Registration Rights Agreement, dated as of September 20, 1996,
between the Company and Goldman, Sachs & Co., relating to the
Company's $149,500,000 5.25% Convertible Subordinated Notes due
September 15, 2001, incorporated herein by reference to Exhibit 4.2
to Registration Statement No. 333-16877 on Form S-3.
4.3 Rights Agreement dated as of October 5, 1998 between the Company and
First Union National Bank, as Rights Agent, incorporated herein by
reference to Exhibit 1 to the Form 8-A filed on September 22, 1998.
10.1 Lease Guaranty, Indemnification and Reimbursement Agreement, dated
November 23, 1994, as amended, between the Company and Kmart
Corporation, incorporated herein by reference to Exhibit 10.3 to the
Form 10-K for 1994.
10.2 Form of Severance and Change in Control Agreement applicable to
Richard J. Lynch, Jr. and Robert J. Timinski, incorporated herein by
reference to Exhibit 10.6 to Registration Statement No. 33-83554 on
Form S-1.
10.3 Management Stock Purchase Plan, as amended, incorporated herein by
reference to Exhibit 10.1 to the Form 10-Q for the third quarter of
1997.
10.4 1994 Stock Option Plan, incorporated herein by reference to Exhibit
99.2 to Registration Statement No. 33-86522 on Form S-8.
23
10.5 Employee Stock Purchase Plan, as amended, incorporated herein by
reference to Exhibit 10.9 to the Form 10-Q for the second quarter of
1995.
10.6 Annual Incentive Bonus Plan, as amended, incorporated herein by
reference to Exhibit A to the Company's Proxy Statement dated April 27,
1998.
10.7 Severance and Change in Control Agreement, dated as of April 17, 1995,
between the Company and Samuel G. Allen, incorporated herein by
reference to Exhibit 10.18 to Registration Statement No. 33-96166, on
Form S-1.
10.8 1996 Stock Option and Restricted Stock Plan, incorporated herein by
reference to Exhibit 10.2 to the Form 10-Q for the second quarter of
1997.
10.9 Employment Agreement, dated as of August 29, 1996, between the Company
and Jack A. Smith, incorporated herein by reference to Exhibit 10.2 to
the Form 10-Q for the third quarter of 1996.
10.10 Supplemental Executive Retirement Plan, as amended, incorporated herein
by reference to Exhibit 10.3 to the Form 10-Q for the second quarter of
1997.
10.11 Supplemental 401(k) Savings and Profit Sharing Plan, incorporated
herein by reference to Exhibit 10.19 to the Form 10-K for 1996.
10.12 Form of Change of Control Agreement between the Company and Anthony F.
Crudele dated May 30, 1997, incorporated herein by reference to Exhibit
10.1 to the Form 10-Q for the second quarter of 1997.
10.13 Deferred Compensation Plan, incorporated herein by reference to Exhibit
10.19 to the Form 10-K for 1997.
10.14 Employment Agreement, dated as of February 2, 1998, between the Company
and Martin E. Hanaka, incorporated by reference to Exhibit 10.20 to the
Form 10-K for 1997.
10.15 Agreement dated October 19, 1998 between the Company and Jack A. Smith
concerning the termination of Mr. Smith's employment, incorporated by
reference to Exhibit 10.2 to the Form 10-Q for the third quarter of
1998.
10.16 Agreement dated September 28, 1998 between the Company and Richard J.
Lynch, Jr. concerning the termination of Mr. Lynch's employment,
incorporated by reference to Exhibit 10.3 to the Form 10-Q for the
third quarter of 1998.
24
10.17 Agreement dated November 1, 1998 between the Company and Robert J.
Timinski concerning the termination of Mr. Timinski's employment,
incorporated by reference to Exhibit 10.4 to the Form 10-Q for the
third quarter of 1998.
10.18* Form of Severance Agreement between the Company and each of William D.
Cappiello, Henry Flieck, Arthur Quintana and Alexander L. Stanton.
10.19* Amended and Restated Joint Venture Agreement dated as of March 12, 1999
between the Company and JUSCO Co., Ltd.
10.20* Amended and Restated License Agreement dated as of March 26, 1999
between the Company and Mega Sports Co., Ltd.
10.21* Amended and Restated Services Agreement dated as of March 26, 1999
between the Company and Mega Sports Co., Ltd.
10.22* Guaranty dated as of March 12, 1999 from JUSCO Co., Ltd. to the
Company.
10.23* Agreement dated as of March 12, 1999 between the Company and JUSCO Co.,
Ltd.
10.24* Loan and Security Agreement dated as of April 13, 1999 between
BankBoston Retail Finance Inc., as Agent for the Lenders referenced
therein, and the Company and its wholly-owned United States
subsidiaries.
10.25* Agreement dated April 16, 1999 between the Company and Jack A. Smith
relating to the resignation of Mr. Smith as Chairman and as a Director
of the Company.
10.26* Director Stock Plan, as amended February 1, 1999.
13.1* Financial information from pages 10-35 of the Annual Report to
Stockholders for the fiscal year ended January 24, 1999.
16.1 Letter from PricewaterhouseCoopers LLP re change in certifying
accountant, incorporated by reference to Exhibit 16.1 to the Form 8-K/A
dated April 8, 1999.
21.1* Subsidiaries of the Company.
23.1* Consent of Independent Certified Public Accountants.
27.1* Financial Data Schedule
- ----------
* Filed as part of this Annual Report on Form 10-K.
25