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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 25, 1998
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:
$498,609,041 at the close of business on March 30, 1998.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 31,649,576 Shares of
Common Stock outstanding as of March 30, 1998.
Documents Incorporated by Reference: (1) the Company's 1997 Annual Report to
Stockholders incorporated partially in Parts I and II hereof and (2) the
Company's Proxy Statement dated April 27, 1998, incorporated partially in Part
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 25, 1998, the Company operated 196 sporting goods megastores,
virtually all in excess of 40,000 gross square feet, and three stores under the
format "The Sports Authority, Ltd." These "Ltd." format stores range from 9,000
- - 30,000 square feet. 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 fair prices and premium customer service.
The Company has an international presence, with 186 stores in 30 states in the
United States, six stores in Canada and seven stores in Japan operated by a
joint venture 51% owned by the Company. The Company had sales of approximately
$1,464.6 million in 1997, a 15.2% increase over 1996.
The Company was founded by Jack A. Smith, its current Chairman and Chief
Executive Officer, who opened the first store in Fort Lauderdale, Florida in
1987. During the following two years, the Company added nine more stores. In
1990, the Company was acquired by Kmart Corporation ("Kmart"), which provided
additional capital to fund the Company's expansion program as well as its
continual investment in infrastructure and technology. 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 ("NSGA"), total U.S.
retail sales of sporting goods (including sporting equipment, athletic footwear
and apparel) exceeded $41 billion in 1996. 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.
Large format sporting goods retailers represent an increasing percentage of
the retail sporting goods market in the United States. In 1996, the top three
large format sporting goods retailers (including the Company) represented
approximately 6% of the retail sporting goods sales.
The sporting goods industry in the United States is characterized by
fragmented competition, limited assortments from traditional sporting goods
retailers, customer preference for one-stop shopping convenience, reduced mall
shopping and a growing importance of delivering value to the customer through
selection, service and price. Management believes that these characteristics of
the sporting goods industry make the large format operators particularly well
suited to grow and increase their market share relative to the traditional
sporting goods retailers, specialty sporting goods retailers and mass
merchandisers.
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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 the brand names and professional service
associated with smaller specialty shops and pro shops. The key elements of this
strategy are as follows:
MEGASTORE FORMAT. The Company operates large format stores, virtually 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 and children's athletic and
active apparel and footwear. Each megastore offers approximately 45,000 active
SKUs (excluding discontinued items) across 17 major departments. The Company's
megastores provide ease of shopping through pleasant and well-designed store
layouts, informative and easily identifiable signage, individual price ticketing
of each product, speedy and courteous check-out, easy store access and
convenient customer parking.
QUALITY BRAND NAME SPORTING GOODS. The Company's merchandising strategy is
to offer the largest breadth and depth of selection in quality brand name
sporting goods in each of its over 1,200 merchandise classifications. The
Company's comprehensive merchandise assortment includes over 900 brand names,
including Adidas, Asics, Champion, Coleman, Columbia, Ektelon, Huffy, K2,
Mongoose, Nike, Prince, Pro Player, Rawlings, Reebok, Rollerblade, Russell,
Spalding, Starter, 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.
PREMIUM CUSTOMER SERVICE. The Company seeks to distinguish itself from
other large format sporting goods retailers, traditional sporting goods
retailers and mass merchandisers by emphasizing the higher levels of customer
service generally associated with smaller specialty stores and pro shops. In
addition to hiring many sales associates who are sports enthusiasts skilled in
various disciplines, the Company provides extensive training for its sales
associates and offers incentives that reward achievement of customer service
goals.
EVERYDAY FAIR PRICES. The Company maintains a policy of consistent everyday
fair 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 everyday fair 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. Unlike many of its large
format competitors, the Company generally does not take temporary price
reductions to promote product sales. The Company also seeks to be a price leader
on certain highly identifiable items.
3
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 expansion 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
The Company has engaged in a rapid expansion program. The following table
sets forth certain information regarding the Company's expansion program during
the fiscal years indicated:
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
In 1997, the Company opened 31 stores for a total of 199 stores at the end
of the year, including six stores in Canada, seven stores in Japan operated by a
joint venture 51% owned by the Company and three smaller format stores in New
York City under the name "The Sports Authority, Ltd." The markets in which these
stores are located are listed in Item 2. The Company currently plans to open
between 60 and 70 new stores during the next two years. The rate of the
Company's expansion will depend, among other things, on general economic and
business conditions affecting consumer confidence and spending, the availability
of qualified management personnel, the availability of desirable locations, the
negotiation of acceptable lease or purchase terms, the availability of adequate
capital and its ability to manage the operational aspects of its growth. The
Company's ability to maintain an aggressive growth rate will be dependent upon
its ability to open new stores. There can be no assurance that the Company will
sustain the growth in the number of stores and the revenue growth achieved
historically or that it will maintain consistent levels of profitability,
particularly as it expands into markets now served by other large format
sporting goods retailers and mass merchandisers.
The Company's expansion program includes opening stores internationally.
The Company currently operates six stores in Canada and eight stores in Japan.
In addition, the Company periodically evaluates whether it should expand into
other countries. There can be no assurance that the retail formula for the
Company's stores that has worked successfully to date in the United States will
work successfully in foreign markets.
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Further, in addition to the risks associated with its expansion program
generally, the success of the Company's stores in foreign markets will depend on
the Company's ability to source and ship merchandise and to address particular
challenges in each country it enters, such as the availability of a suitable
workforce, the condition of the local real estate market, applicable regulatory
requirements, the stability of such country's currency and the overall economic
and political climate.
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. For example, more than two-thirds of those
stores that were opened or are planned to be opened in 1997 and 1998 are in the
Company's existing markets. 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.
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 regional
access, co-tenancy, available lease or purchase terms, visibility, parking,
demographics (such as income levels and distribution, age and family size),
population and proximity to competition. In general, the Company's site
selection strategy is intended to maximize profitability and market share.
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 consists 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 and stocking the store. Inventory for a new
store is estimated to cost approximately $1.6 million, with average vendor
payables equal to approximately 50% of the initial inventory, for a net initial
investment of approximately $0.8 million. The cost of furniture, fixtures and
equipment for a new store is approximately $1.0 million. Pre-opening expenses,
which are expensed in the month in which the store opens, typically average
approximately $0.3 million and include grand opening advertising expenses
averaging approximately $0.1 million per store. If the Company purchases the
land and building, there would be an additional capital expenditure of
approximately $4 million to $8 million to open each such store. If the site
requires a retrofit of an existing building, costs (excluding furniture,
fixtures and equipment) approximate $1.4 million. However, for projected higher
volume stores in densely populated urban areas (New York City and Chicago, for
example) retrofit costs tend to be significantly higher. The Company currently
plans to finance substantially all of its new stores with operating leases,
assuming availability and appropriate terms. Due to the additional store growth,
refurbishments of existing stores and the planned opening of a second regional
distribution center (see "Distribution" below), the Company expects that its
capital expenditures will be approximately $95 million in 1998.
5
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. Unlike warehouse
stores, the interior of each store creates a pleasant shopping environment, with
carpet and resilient tile floor coverings, high ceilings, bright lighting, wide
aisles, extensive category signage, high perimeter "H" frame type racks, "ladder
style" apparel fixtures and product statement shops, which promote technical
products of leading vendors. Beginning with stores opened in the fall of 1997,
the Company introduced its new flexible fixtures, which will facilitate seasonal
changes and reallocation of space in the stores. 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. For example, the
athletic and active footwear department is located at the front of the store.
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
prior to opening or shortly after closing.
The Company believes that its premium customer service, enhanced
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 at the Company. On average, for the last three
years, the Company's shrinkage, expressed as a percentage of sales, has been
approximately 0.7% at retail, or 0.5% at cost.
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 serious sports enthusiast to the weekend athlete. Each
megastore offers approximately 45,000 active SKUs (excluding discontinued items)
across more than 1,200 merchandise classifications.
6
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. The following table sets forth the approximate percentage of sales
attributable to hard lines and soft lines for the periods presented:
PERCENTAGE OF NET SALES
-----------------------
YEAR
-----------------------
MERCHANDISE GROUP 1997 1996 1995
- ----------------- ---- ---- ----
Hard lines.................................................... 50% 50% 53%
Soft lines:
Apparel................................................... 22 22 20
Footwear.................................................. 28 28 27
--- --- ---
Subtotal soft lines.................................. 50 50 47
--- --- ---
Total......................................................... 100% 100% 100%
=== === ===
The hard lines and soft lines sold by the Company include the following
merchandise categories:
ATHLETIC AND ACTIVE FOOTWEAR. Each of the Company's stores carries a
complete line of athletic footwear for a wide variety of activities and for a
broad range of experience levels. A typical store carries more than 500 styles
of footwear. This footwear selection includes athletic shoes for running,
football, basketball, baseball, tennis, wrestling, aerobics, walking, soccer,
cross-training, hiking, hunting, bowling, golf and lifestyle. An important
product category within the Company's footwear department is recreational,
street hockey and aggressive in-line skates as well as socks and accessories.
MEN'S AND LADIES' ATHLETIC AND ACTIVE APPAREL. Each of the Company's stores
carries both general active and leisure apparel and apparel designed and
fabricated for specific sports. General active and leisure apparel includes
t-shirts, fleece, warm-ups, shorts and polo shirts from vendors such as Nike,
Reebok, Adidas, Russell, Starter and Champion. Apparel for specific sports
ranges from entry level to highly technical for golf, tennis, running, aerobics,
biking, swimming, weight lifting, baseball, football, soccer, lacrosse,
volleyball, hockey and skiing.
LICENSED APPAREL. This category includes hats, t-shirts, shorts, pants,
sweatshirts and outerwear from prominent colleges and the professional sports of
baseball, basketball, football and hockey. Additionally, both replica and
authentic jerseys are available for professional and college sports teams. This
category also includes children's athletic and active licensed apparel.
7
HUNTING, FISHING AND CAMPING. A vast assortment of merchandise is carried
in the Company's stores to satisfy the needs of outdoor sports enthusiasts of
all levels of experience. Camping and backpacking merchandise includes tents,
sleeping bags, lanterns, flashlights, grills, coolers and accessories. For
fishing and hunting, each of the Company's stores sells rods, reels, fishing
line, terminal tackle, tackle boxes, fishing nets, firearms, ammunition, scopes,
binoculars, archery equipment, paintball and accessories.
TEAM SPORTS. Each of the Company's stores carries a full range of
merchandise for basketball, football, soccer, baseball, ice and off-ice hockey,
volleyball, table tennis, billiards, bowling, darts and lawn games.
GOLF AND RACQUET SPORTS. The Company carries a broad selection of
merchandise for golf and racquet sport enthusiasts. For the golfer, each of the
Company's stores stocks golf clubs, golf bags, golf balls, golf accessories,
putting machines, teaching aids and instructional videos. Each store also
carries a variety of tennis, racquetball, squash and badminton rackets, as well
as tennis balls, racquet balls, squash balls, shuttlecocks, tennis nets,
badminton nets and replacement grips. The Company offers customers the option of
having their tennis racquets strung by stringers certified by the United States
Racket Stringers Association.
FITNESS. A wide range of fitness equipment is offered at each of the
Company's stores, including fitness riders, steppers, treadmills, rowing
machines, stationary bicycles, home gyms, weight benches, free weights,
dumbbells, boxing and martial arts equipment, and a broad selection of handheld
exercise equipment. Also carried in this category are food supplements.
WATER SPORTS AND MARINE. Water sports and marine merchandise includes an
array of merchandise for boating and for water sports such as swimming, water
skiing, jet skiing, SCUBA diving and snorkeling. This merchandise includes water
skis, boogie boards, wetsuits, SCUBA gear, fins, masks, snorkels, towable
inflatables and life vests. Also included in this category is personal
electronics such as the "Talkabout" - a personal communication radio, and hand
held GPS units.
CYCLING. Each of the Company's stores sells a wide variety of bicycles for
various types of cycling, including mountain bikes, hybrid bikes (for on and off
road) as well as extreme sports bikes (BMX and Trick) and a large variety of
skateboards. In addition, the Company carries accessories such as cycling
gloves, helmets and water bottles. The Company has added bike tech shops in 61
existing stores and all new stores to be opened in 1998. The bike tech shop is
designed to increase the overall service offered to customers in the cycling
area.
GENERAL MERCHANDISE. Each of the Company's stores carries a wide variety of
general merchandise to complement its comprehensive selection of sport specific
merchandise. This merchandise includes videos, magazines, books, sunglasses,
trading cards and watches and licensed team novelties such as mugs, clocks,
helmets, pennants, bumper stickers and key chains.
8
WINTER SPORTS. The winter sports department in the Company's North American
stores was previously operated by a group of regional licensees, all operating
under the overview of the principal licensee, Green Mountain Corporation. Under
its license agreement with Green Mountain Corporation, the Company received a
fee of approximately 10% of snow ski merchandise sales. Snow ski merchandise
sales were not included in the Company's sales. In January 1998, the Company
terminated its agreement with Green Mountain Corporation, effective August 1,
1998. As a result, the winter sports department will be operated directly by the
Company and winter sports merchandise sales will be 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.
Using a detailed merchandise planning system, the merchandise mix for each
store is selected by the central buying staff in consultation with district and
store managers. 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.
The Company currently purchases merchandise from over 800 vendors and, in
fiscal 1997, the Company's largest vendor, Nike, Inc., accounted for
approximately 18% of its total merchandise purchased. The Company does not
maintain any 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. For most vendors, the Company is the largest per store
seller of that vendor's merchandise. As the number of stores increases pursuant
to its store expansion plan, the Company believes it will continue to obtain
sufficient merchandise for all of its stores on a timely basis.
DISTRIBUTION
In November 1997, the Company opened its first regional distribution center
("RDC") outside of Atlanta. The RDC serves as a flow-through facility to receive
and allocate merchandise to the Company's stores. Merchandise is received at the
Atlanta RDC, made "floor ready", and subsequently allocated and distributed to
90 of the Company's stores. The Company believes that the establishment of RDC's
will result in transportation, payroll and merchandise cost savings. The Company
currently plans to open two additional facilities over the next one to two years
(one in the Northeast and one in the West). Additionally, dependinng on future
geographic expansion, the Company may consider opening a fourth facility
thereafter (potentially in the Midwest). Merchandise not
9
processed by the RDC in Atlanta is shipped directly to each store by vendors. In
addition, the Company uses a small contract break bulk operation located in New
Jersey to distribute certain orders, primarily for athletic and active footwear.
The Company also operates an offsite receiving location in Southern California
to service stores in Hawaii and Japan.
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 strong 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 and daily tracking of in-stock levels by item and
location. 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 small IBM AS/400 computers 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.
In 1997, the Company completed the implementation of hand held, radio
frequency terminals for purposes of streamlining the merchandise receiving and
ticketing processes. The Company also completed the first phase implementation
of a "data warehouse", giving corporate buying staff easy access to sales
information on a class and sub-class level.
YEAR 2000
The Company has conducted a review to identify which computer and other
business systems will be affected by the "Year 2000" problem and has developed a
project plan and schedule designed to solve this issue. The Company is currently
planning to implement substantially all of its Year 2000 conversion project by
the second quarter of 1999, and is using both internal staff and outside
consultants for this effort. Based upon information currently known about its
computer and other business systems, the Company estimates it will expense
approximately $3 million over the next two years in this effort. The Company
believes the cost associated with becoming Year 2000 compliant will not
materially affect its future operating results or financial condition. While the
Company currently believes that it will be able to
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implement its Year 2000 conversion project in a timely manner, failure to do so
could have a material impact on the Company's operations. In addition, there can
be no assurance that the systems of other companies with which the Company does
business will also be converted in a timely manner or that failure to convert by
other companies would not have a material impact on the Company's operations.
ADVERTISING AND PROMOTION
The Company seeks to build name recognition and market share through
broadcast media, newspaper advertising, billboards and sports sponsorships.
Because of the heavy brand name orientation of the Company's merchandise
assortment, the Company's advertising impact is supplemented by advertising of
manufacturers and distributors of brand name products. 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. The
"Prepare Yourself" advertising campaign, introduced in August 1997, will be used
throughout the Company's advertising and marketing. The advertising campaign
sends a message that before you participate in any sports activity, you "Prepare
Yourself" first at The Sports Authority.
COMPETITION
The retail sporting goods industry is highly competitive and 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 (e.g., Foot Locker, Foot Action, The Finish Line and
The Athlete's Foot), 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., 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 and Sneaker Stadium
in footwear and Gander Mountain in outdoor sporting products).
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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 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.
The Company believes that the principal strengths with which it competes
are premium customer service, a broad assortment of brand name merchandise, ease
of shopping and everyday fair pricing.
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 trademarks and service marks registered in the U.S. Patent and Trademark
Office include THE SPORTS AUTHORITY(R), THE SPORTS AUTHORITY & Design(R), THE
SKI AUTHORITY(R), AUTHORITY(R), THE BICYCLE AUTHORITY(R), FITNESS AUTHORITY(R),
GOLF AUTHORITY(R), FISHING AUTHORITY(R), MARINE AUTHORITY(R), TENNIS
AUTHORITY(R), RUNNING AUTHORITY(R), TEAM SPORTS AUTHORITY(R) and THE CLUB
AUTHORITY(R). The Company uses a family of marks which feature the word
AUTHORITY. Many of these marks are the subject of pending applications for
registration in the U.S., Canada, Japan and elsewhere. The Company has continued
the process of registering its principal trademarks and service marks throughout
the world on a strategic basis. The Company vigorously protects its trademarks,
service marks and trade name from infringement throughout the world. 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 25, 1998, the Company had a total of approximately 6,100
full-time and approximately 5,800 part-time associates. Of these, approximately
11,000 were employed in the Company's stores and approximately 900 were employed
in corporate office positions, regional and district positions, and the
Company's Atlanta regional distribution center. 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.
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, 28.7% of the Company's sales occurred in the fourth quarter compared to
29.6% in 1996. The Company's expansion program generally is 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.
12
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; 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 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.
ITEM 2. PROPERTIES
The following table sets forth certain information as of January 25, 1998
regarding the markets in which the Company currently has stores.
UNITED STATES REGIONS/METROPOLITAN AREA NUMBER OF STORES
--------------------------------------- ----------------
NORTHEAST
Baltimore....................................................................................... 3
Boston ......................................................................................... 6
Hartford/North Haven............................................................................ 3
New York ....................................................................................... 25
Portland, ME ................................................................................... 1
Philadelphia ................................................................................... 8
Providence...................................................................................... 2
Washington, D.C. ............................................................................... 13
-----
SUBTOTAL NORTHEAST......................................................................... 61
SOUTHEAST
Augusta, GA..................................................................................... 1
Atlanta......................................................................................... 13
Charleston...................................................................................... 1
Charlotte....................................................................................... 2
Chattanooga..................................................................................... 1
Ft. Myers....................................................................................... 1
Gainesville, FL................................................................................. 1
Greensboro...................................................................................... 1
Greenville, SC.................................................................................. 1
Jacksonville.................................................................................... 2
Montgomery...................................................................................... 1
Naples.......................................................................................... 1
New Orleans..................................................................................... 3
Norfolk/Hampton................................................................................. 3
13
Orlando......................................................................................... 6
Southeast Florida............................................................................... 15
Tampa/St. Petersburg............................................................................ 9
Winston-Salem................................................................................... 1
---
SUBTOTAL SOUTHEAST......................................................................... 63
MIDWEST
Chicago......................................................................................... 15
Detroit......................................................................................... 8
St. Louis....................................................................................... 4
----
SUBTOTAL MIDWEST........................................................................... 27
SOUTHWEST
Dallas.......................................................................................... 1
El Paso......................................................................................... 1
Las Vegas....................................................................................... 3
Little Rock..................................................................................... 1
Phoenix......................................................................................... 7
San Antonio..................................................................................... 2
Tucson.......................................................................................... 1
----
SUBTOTAL SOUTHWEST......................................................................... 16
NORTHWEST
Anchorage....................................................................................... 1
Seattle/Tacoma.................................................................................. 4
----
SUBTOTAL NORTHWEST......................................................................... 5
WEST
Honolulu........................................................................................ 3
Fresno.......................................................................................... 1
Los Angeles..................................................................................... 2
Sacramento...................................................................................... 2
San Diego....................................................................................... 6
----
SUBTOTAL WEST.............................................................................. 14
----
SUBTOTAL UNITED STATES.............................................................................. 186
---
CANADA/METROPOLITAN AREA
------------------------
Toronto......................................................................................... 6
----
SUBTOTAL CANADA..................................................................................... 6
----
JAPAN/METROPOLITAN AREA
-----------------------
Nagoya.......................................................................................... 3
Osaka........................................................................................... 2
Kyushu.......................................................................................... 1
Tokyo........................................................................................... 1
----
SUBTOTAL JAPAN...................................................................................... 7
----
TOTAL ALL COUNTRIES................................................................................. 199
===
14
As of January 25, 1998, the Company occupied 174 stores pursuant to
long-term leases. The leases typically provide for an initial 15 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. Seventy of the Company's store leases are guaranteed by Kmart. In
addition, the Company owns 25 of its stores.
In February 1998, the Company closed three stores in Atlanta, Miami and Las
Vegas. See Note 4 to the Financial Statements on page 29 of the Company's 1997
Annual Report to Stockholders, which pages are incorporated herein by reference.
The Company leases a building at 3383 N. State Road 7, Fort Lauderdale,
Florida, containing approximately 98,000 square feet, that houses its corporate
offices, with a remaining primary term of 10 years with two 10-year renewal
options.
ITEM 3. LEGAL PROCEEDINGS
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 1996
1st Quarter .................................. 20.25 12.50
2nd Quarter .................................. 24.17 19.17
3rd Quarter .................................. 29.00 18.50
4th Quarter .................................. 26.38 16.50
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
As of March 30, 1998, the Company had approximately 1,243 shareholders of
record.
DIVIDEND POLICY
The Company did not declare any dividends in 1996 or 1997 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 and to certain limitations under the General Corporation Law of the
State of Delaware. In addition, the Company's Revolving Credit Facility and
Lease Guaranty Agreement contain restrictions on the Company's ability to pay
dividends. See Note 9 to the Financial Statements on page 30 of the Company's
1997 Annual Report to Stockholders, which pages are incorporated herein by
reference. 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.
16
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 14 of the Company's 1997 Annual Report to Stockholders.
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 15-19 of the Company's 1997 Annual Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is incorporated herein by reference
to the information on pages 22-35 of the Company's 1997 Annual Report to
Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Jack A. Smith, age 62. Mr. Smith founded the Company and has served as
Chairman of the Board since the Initial Public Offering on November 23, 1994,
and as Chief Executive Officer and a Director since its inception in 1987. He
also served as President of the Company from its inception to February 1996.
Previously Mr. Smith served in various senior management positions, including
Chief Operations Officer, with Herman's Sporting Goods, Inc., a retail sporting
goods chain, from 1981 to 1987.
Martin E. Hanaka, age 48. Mr. Hanaka was elected as Vice Chairman and as a
Director of the Company on February 2, 1998. From August 1994 until October
1997, Mr. Hanaka served as President and Chief Operating Officer 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.
Richard J. Lynch, Jr., age 46. Mr. Lynch has served as President and Chief
Operating Officer of the Company since February 1996 and as a Director since
June 1990. He previously served as Senior Vice President and Chief Financial
Officer of the Company from January 1991 to February 1996. Mr. Lynch joined the
Company as Vice President and Chief Financial Officer in June 1988 after serving
as Chief Financial Officer for The Sports Club, Inc., a retail sporting goods
chain, from 1986 to 1987, and as Chief Financial Officer at various retail
divisions of W. R. Grace and Co. from 1978 to 1986.
Robert J. Timinski, age 50. Mr. Timinski was promoted to Executive Vice
President and Chief Merchandising Officer in January 1998. He previously served
as Senior Vice President and General Merchandise Manager beginning in January
1993. Prior to joining the Company, he served as Executive Vice President of
Odyssey USA, Inc., a manufacturer of outerwear and outdoor products, from 1990
to 1992 and in various senior level positions at Herman's Sporting Goods, Inc.
from 1978 to 1990, including Executive Vice President and Chief Merchandise
Officer from 1987 to 1990 and Senior Vice President and General Merchandise
Manager from 1986 to 1987.
Arnold D. Sedel, age 60. Mr. Sedel has served as Senior Vice President,
Stores since January 1991. He joined the Company as Vice President of Operations
in August 1988 after having served as Senior Vice President, Operations for
Herman's Sporting Goods, Inc. from 1982 to 1987 and as President of The Sporting
Goods Warehouse, a retail sporting goods chain, from 1975 to 1981.
Samuel G. Allen, age 48. 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.
18
Anthony F. Crudele, age 41. 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.
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 14, respectively, of
the Company's Proxy Statement dated April 27, 1998.
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
6-12 of the Company's Proxy Statement dated April 27, 1998.
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 13-14 of the Company's Proxy Statement dated April 27, 1998.
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 page 15
of the Company's Proxy Statement dated April 27, 1998.
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 21-35 of the Company's 1997 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 Income
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. EXHIBITS.
See Exhibit Index on Page 23
(b) Reports on Form 8-K.
A Report on Form 8-K, which contained information under Item 5, was
filed on December 29, 1997.
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 24, 1998 By: /S/ JACK A. SMITH
-----------------
Jack A. Smith, Chairman of the Board
and 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/ JACK A. SMITH
------------------------- Chairman of the Board, APRIL 24, 1998
Jack A. Smith Chief Executive Officer
and Director
(Principal Executive Officer)
/S/ MARTIN E. HANAKA
------------------------- Vice Chairman and APRIL 24, 1998
Martin E. Hanaka Director
/S/ RICHARD J. LYNCH, JR.
------------------------- President, Chief APRIL 24, 1998
Richard J. Lynch, Jr. Operating Officer and
Director
/S/ ANTHONY F. CRUDELE
------------------------- Senior Vice President and APRIL 24, 1998
Anthony F. Crudele Chief Financial Officer
(Principal Financial and
Accounting Officer)
/S/ NICHOLAS A. BUONICONTI Director APRIL 24, 1998
--------------------------
Nicholas A. Buoniconti
/S/ STEVE DOUGHERTY Director APRIL 24, 1998
--------------------------
Steve Dougherty
/S/ JULIUS W. ERVING
-------------------------- Director APRIL 24, 1998
Julius W. Erving
21
SIGNATURES
----------
/S/ CAROL FARMER Director APRIL 24, 1998
------------------
Carol Farmer
/S/ JACK F. KEMP Director APRIL 24, 1998
------------------
Jack F. Kemp
/S/ W. MITT ROMNEY Director APRIL 24, 1998
------------------
W. Mitt Romney
/S/ HAROLD TOPPEL Director APRIL 24, 1998
------------------
Harold Toppel
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 Amended and Restated Bylaws of the Company, incorporated herein by
reference to Exhibit 3.1 to the Form 10-Q for the second quarter of
1997.
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.
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., Robert J. Timinski and Arnold D. Sedel, 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 Stock Option Plan, incorporated herein by reference to Exhibit 99.2 to
Registration Statement No. 33-86522 on Form S-8.
23
INDEX TO EXHIBITS - CONTINUED
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
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 10.6 to the Form 10-K for 1996.
10.7 Amended and Restated Director Stock Plan, incorporated herein by
reference to Exhibit A of the Company's Proxy Statement dated April 23,
1997.
10.8 Joint Venture Agreement, dated as of January 19, 1995, between the
Company and JUSCO Co., Ltd., incorporated herein by reference to
Exhibit 10.14 to the Form 10-K for 1994.
10.9 Credit Agreement, dated as of April 26, 1995, among the Company, the
financial institutions named therein, First Union National Bank of
Florida, as Administrative Agent, Pearl Street, L.P., as Syndication
Agent, and Bank of Montreal, as Co-Agent, incorporated herein by
reference to Exhibit 10.15 to the Form 10-Q for the second quarter of
1995.
10.10 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.
10.11 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.
24
INDEX TO EXHIBITS - CONTINUED
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
10.12 First Amendment to Joint Venture Agreement, entered into on September
6, 1996 effective as of January 19, 1995, between the Company and JUSCO
Co., Ltd., amending the Joint Venture Agreement referenced above as
Exhibit 10.8, incorporated herein by reference to Exhibit 10.1 to the
Form 10-Q for the third quarter of 1996.
10.13 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.
10.14 JUSCO Services Agreement, dated as of August 1, 1995, between JUSCO
Co., Ltd. and Mega Sports Co., Ltd., incorporated herein by reference
to Exhibit 10.17 to the Form 10-K for 1996.
10.15 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.
10.16 Supplemental 401(k) Savings and Profit Sharing Plan, incorporated
herein by reference to Exhibit 10.19 to the Form 10-K for 1996.
10.17 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.
10.18 Amended and Restated Credit Agreement dated as of December 22, 1997
among the Company, the financial institutions named therein, First
Union National bank, as administrative agent for such financial
institutions, and Fleet National Bank, as co-agent, amending and
restating the Credit Agreement referenced above as Exhibit 10.9,
incorporated herein by reference to Exhibit 10.1 to the Form 8-K filed
on December 29, 1997.
10.19* Deferred Compensation Plan. 27
10.20* Employment Agreement, dated as of February 2, 1998, between the Company 31
and Martin E. Hanaka (confidential treatment requested for portions of
this document).
25
INDEX TO EXHIBITS - CONTINUED
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
11.1* Computation of Earnings Per Share. 38
13.1* Financial information from pages 14-35 of the Annual Report to 39
Stockholders for the fiscal year ended January 25, 1998.
21.1* Subsidiaries of the Company. 61
23.1* Consent of Independent Certified Public Accountants 62
27* Financial Data Schedule. 63
- ----------
* Filed as part of this Annual Report on Form 10-K.
26