-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KdsqYhUqkv7XOqMAeqCeNfUBM0mz+k2NaEvue2NXiF0LZuTUsXtgxnSh5SgsZmxH GSDhueG0ks9htUn/2TZSug== 0000950134-03-010664.txt : 20030729 0000950134-03-010664.hdr.sgml : 20030729 20030729152357 ACCESSION NUMBER: 0000950134-03-010664 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030131 FILED AS OF DATE: 20030729 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HASTINGS ENTERTAINMENT INC CENTRAL INDEX KEY: 0001054579 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL- COMPUTER & PRERECORDED TAPE STORES [5735] IRS NUMBER: 751386375 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24381 FILM NUMBER: 03808555 BUSINESS ADDRESS: STREET 1: 3601 PLANS BLVD STREET 2: SUITE 1 CITY: AMARILLO STATE: TX ZIP: 79102 BUSINESS PHONE: 8063512300 MAIL ADDRESS: STREET 1: P O BOX 35350 CITY: AMARILLO STATE: TX ZIP: 79120-5350 11-K 1 d07783e11vk.txt FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2003 or [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____________ to ______________ COMMISSION FILE NUMBER 24381 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: HASTINGS ENTERTAINMENT, INC. ASSOCIATES' 401(k) PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: HASTINGS ENTERTAINMENT, INC. 3601 PLAINS BLVD., SUITE #1 AMARILLO, TEXAS 79102 FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE Hastings Entertainment, Inc. Associates' 401(k) Plan As of January 31, 2003 and 2002, and for the Year ended January 31, 2003 Hastings Entertainment, Inc. Associates' 401(k) Plan Financial Statements and Supplemental Schedule As of January 31, 2003 and 2002, and for the Year ended January 31, 2003 CONTENTS Report of Independent Auditors...........................................................................1 Audited Financial Statements Statements of Net Assets Available for Benefits..........................................................2 Statement of Changes in Net Assets Available for Benefits................................................3 Notes to Financial Statements............................................................................4 Supplemental Schedule Schedule H; Line 4i - Schedule of Assets (Held At End of Year)...........................................9
Report of Independent Auditors The Benefits Administrative Committee Hastings Entertainment, Inc. Associates' 401(k) Plan We have audited the accompanying statements of net assets available for benefits of the Hastings Entertainment, Inc. Associates 401(k) Plan as of January 31, 2003 and 2002, and the related statement of changes in net assets available for benefits for the year ended January 31, 2003. These financial statements and schedule are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at January 31, 2003 and 2002, and the changes in its net assets available for benefits for the year ended January 31, 2003, in conformity with accounting principles generally accepted in the United States. Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of January 31, 2003, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Fort Worth, Texas July 18, 2003 1 Hastings Entertainment, Inc. Associates' 401(k) Plan Statements of Net Assets Available for Benefits
JANUARY 31 2003 2002 ------------- ------------- ASSETS Cash $ -- $ 20,154 Investments 8,078,254 9,072,284 Receivables: Employee contributions 35,265 41,336 Employer contributions 206,991 126,919 ------------- ------------- 242,256 168,255 LIABILITIES Excess contribution refundable 111,698 37,033 ------------- ------------- Net assets available for benefits $ 8,208,812 $ 9,223,660 ============= =============
See accompanying notes. 2 Hastings Entertainment, Inc. Associates' 401(k) Plan Statement of Changes in Net Assets Available for Benefits Year ended January 31, 2003 Investment income (loss): Net depreciation in fair value of investments $ (1,273,113) Interest and dividends 81,514 ------------- (1,191,599) Contributions: Employee 952,711 Employer 254,661 ------------- 1,207,372 ------------- Net additions 15,773 Deductions: Benefit payments 992,063 Administrative expenses 38,558 ------------- Total deductions 1,030,621 ------------- Net decrease 1,014,848 Net assets available for benefits at beginning of year 9,223,660 ------------- Net assets available for benefits at end of year $ 8,208,812 =============
See accompanying notes. 3 Hastings Entertainment, Inc. Associates' 401(k) Plan Notes to Financial Statements January 31, 2003 1. DESCRIPTION OF THE PLAN The following description of the Hastings Entertainment, Inc. Associates 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering substantially all employees of Hastings Entertainment, Inc. (the Employer). Full-time employees and part-time employees who have completed one year of service, as defined by the Plan Document, are eligible for participation in the Plan once age 21 has been attained. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Effective February 1, 2002, participants may elect to contribute up to 25% of their pretax compensation, as provided by the Plan and Internal Revenue Service (IRS) regulations. Such contributions are withheld by the Employer from each participant's compensation and deposited in the appropriate investment fund as directed by the participant. The Employer makes a guaranteed matching contribution of 25% of a participant's contributions, to the extent that participant contributions do not exceed 6% of compensation. The guaranteed match is made quarterly and the participant must be employed on the last day of the quarter to receive the guaranteed match for that quarter. Participants who became disabled, died, or retired during the quarter will also receive the match. Effective February 1, 2002, participants who have attained age 50 or older are allowed to make additional participant contributions. The Employer may make a discretionary matching contribution in an amount determined by the Board of Directors. For the Plan year ended January 31, 2003, the Board of Directors approved for payment one discretionary match of 15% of participant deferrals, limited to the first 6% of compensation. The discretionary matching contribution was made to participants employed as of July 31, 2002, and was for the period February 1, 2002 through July 31, 2002. A second discretionary match was not made for the plan year ended January 31, 2003. The financial objectives set by the Board of Directors for the second half of the year were not met, which resulted in no discretionary match for that period. 4 Hastings Entertainment, Inc. Associates' 401(k) Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions, rollovers, Company contributions, and plan earnings, and is charged with an allocation of administrative expenses, as defined by the Plan. VESTING Participants are immediately vested in their contributions and related earnings or losses thereon. Vesting in the Company's contributions and related earnings and losses thereon is based on the following vesting schedule:
FULL YEARS OF CREDIT SERVICE VESTING PERCENTAGE ---------------------------- ------------------ Less than 2 years 0% 2-3 years 25% 3-4 years 50% 4-5 years 75% 5 or more years 100%
BENEFITS In accordance with the Plan document, distribution of a participant's vested account is available upon the participant's death, termination, or retirement. Participants may elect to receive installment payments or a lump-sum distribution. Benefit payments are recorded upon distribution. FORFEITURES The amounts forfeited by participants who terminate prior to becoming fully vested are used to reduce employer contributions. 5 Hastings Entertainment, Inc. Associates' 401(k) Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $500 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms range from 1 to 5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate of 1% over the prime rate published in The Wall Street Journal. ADMINISTRATIVE EXPENSES Administrative expenses which are not paid by the Plan Sponsor are paid by the Plan. PLAN TERMINATION Although it has not expressed any intent to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The financial statements of the Plan are prepared on the accrual basis of accounting. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect certain amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. VALUATION OF INVESTMENTS Investments in common stock and registered investment companies are stated at fair value. Shares of registered investment companies are valued based on published market prices, which represent the net asset values of shares held by the Plan. The Company's stock is valued at the quoted market price. Participant loans are valued at their outstanding balances, which approximate fair value. 6 Hastings Entertainment, Inc. Associates' 401(k) Plan Notes to Financial Statements (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. The Plan provides for investments in various investment securities, which, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Further, due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits. 3. INVESTMENTS The Plan's investments were held by First National Bank of Amarillo (the Custodian) from February 1, 2002 through March 25, 2002 and by Herring National Bank (the Custodian) from March 26, 2002 through January 31, 2003. The fair value of individual investments that represent 5% or more of the Plan's net assets is as follows:
JANUARY 31, 2003 2002 ---------------- ---------- Federated US Government Securities 2-5 Years Fund $ 438,894 * American Century Strategy Allocation Moderate Fund 655,469 * Federated Kaufmann Fund 1,064,307 677,834 Federated Max-Cap Index Fund 508,494 823,146 Janus Fund 950,163 1,483,062 Janus Worldwide Fund 842,007 1,266,976 Federated Prime Obligation Fund 2,601,399 2,004,849 Hastings Entertainment, Inc. Common Stock 418,809 593,224 Participant loans 406,014 * Baron Growth Fund -- 583,496 Alliance Balanced Shared Fund -- 744,830
* Investment did not represent 5% or more of the Plan's net assets as of January 31, 2002. 7 Hastings Entertainment, Inc. Associates' 401(k) Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) During the year ended January 31, 2003, the Plan's investments (including investments purchased, sold, as well as held during the year) depreciated as follows: Shares of registered investment companies $ (1,179,107) Hastings Entertainment, Inc. common stock (94,006) ----------------- $ (1,273,113) =================
4. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated April 8, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt. The plan administrator has indicated that it will take the necessary steps, if any, to maintain the Plan's qualified status. 5. SUBSEQUENT EVENT On June 23, 2003, the Benefits Advisory Committee approved the removal of Hastings Common Stock as an investment option of the plan, however participants that currently have an investment in Hastings Common Stock will be grandfathered. 8 Supplemental Schedule Hastings Entertainment, Inc. Associates' 401(k) Plan Schedule H; Line 4i - Schedule of Assets (Held At End of Year) EIN: 75-1386375 Plan #: 001 January 31, 2003
(c) (b) DESCRIPTION OF INVESTMENT INCLUDING MATURITY IDENTITY OF ISSUE, BORROWER, LESSOR, DATE, RATE OF INTEREST, COLLATERAL, PAR OR (e) (a) OR SIMILAR PARTY MATURITY VALUE CURRENT VALUE ---- --------------------------------------- -------------------------------------------- -------------- * Federated Investors, Inc. Federated Total Return Bond (A) $ 603 Turner Turner Small Cap Value 3 Alliance Capital Management LP Alliance Growth and Income Fund 66,186 American Century Investments American Century Strategy Allocation Aggressive Fund 37,277 American Century Investments American Century Strategy Allocation Moderate Fund 655,469 American Century Investments American Century Strategy Allocation Conservative Fund 7,682 * Federated Investors, Inc. Federated Kaufmann Fund 1,064,307 * Federated Investors, Inc. Federated Income Trust 80,947 * Federated Investors, Inc. Federated Max-Cap Index Fund 508,494 * Federated Investors, Inc. Federated US Government Securities 2-5 Years Fund 438,894 Janus Janus Fund 950,163 Janus Janus Worldwide Fund 842,007 * Federated Investors, Inc. Federated Prime Obligation Fund 2,601,399 * Hastings Entertainment, Inc. Hastings Entertainment, Inc. Common Stock 418,809 * Participants Loans with interest rates ranging from 5.75% to 10.75% 406,014 -------------- $ 8,078,254 ==============
*Indicates party-in-interest to the Plan. Investments are participant-directed, thus cost column (d) is not applicable. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Hastings Entertainment, Inc. Associates' 401(k) Plan Date: July 29, 2003 /s/ Dan Crow, Vice President/CFO 10 EXHIBIT INDEX
EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------- ----------- -------- 23 Consent of Ernst & Young LLP 12 99.1 Certification pursuant to 18 U.S.C. 13 Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
11 EX-23 3 d07783exv23.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-60997) pertaining to the Hastings Entertainment, Inc. Associates' 401(k) Plan of Hastings Entertainment, Inc. of our report dated July 18, 2003, with respect to the financial statements and schedule of the Hastings Entertainment, Inc. Associates' 401(k) Plan included in this Annual Report (Form 11-K) for the year ended January 31, 2003. /s/ Ernst & Young LLP Fort Worth, Texas July 29, 2003 12 EX-99.1 4 d07783exv99w1.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 July 29, 2003 In connection with the filing of the annual report on Form 11-K of the Hastings Entertainment, Inc. Associates 401(k) Plan (the "Plan"), for the annual period ended January 31, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned officers of the Company certifies that, to such officer's knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the net assets available for benefits and the changes in net assets available for benefits of the Plan as of the dates and for the periods expressed in the Report. /s/ John H. Marmaduke - -------------------------------------------- John H. Marmaduke President and Chief Executive Officer (Principal Executive Officer) /s/ Dan Crow - -------------------------------------------- Dan Crow Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 HAS BEEN PROVIDED TO HASTINGS ENTERTAINMENT, INC. AND WILL BE RETAINED BY HASTINGS ENTERTAINMENT, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION, OR ITS STAFF, UPON REQUEST. 13 -----END PRIVACY-ENHANCED MESSAGE-----