-----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, Wnmc/NKiHbzMIyR76MirwEsZ7Mh4F+/ANqdlI+yq3rFo6+Ja/Ulr7fGsRWBSsHEN lywIpdcU1Udcma6vtEEmtA== 0000914190-99-000341.txt : 19991018 0000914190-99-000341.hdr.sgml : 19991018 ACCESSION NUMBER: 0000914190-99-000341 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991012 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST TEAM SPORTS INC CENTRAL INDEX KEY: 0000820242 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 411545748 STATE OF INCORPORATION: MN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16442 FILM NUMBER: 99726918 BUSINESS ADDRESS: STREET 1: 1201 LUND BLVD CITY: ANOKA STATE: MN ZIP: 55303 BUSINESS PHONE: 6127804454 MAIL ADDRESS: STREET 1: 1201 LUND BLVD CITY: ANOKA STATE: MN ZIP: 55303-1092 10-Q 1 FORM 10-Q FOR SECOND QUARTER SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: Commission File No.: August 31, 1999 0-16442 FIRST TEAM SPORTS, INC. (Exact name of Registrant as specified in its charter) Minnesota 41-1545748 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1201 Lund Boulevard Anoka, Minnesota 55303 (Address of principal executive offices) Registrant's telephone number, including area code: (612) 576-3500 -------------------------------------- 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 5,852,188 shares of Common Stock, $.01 par value per share, outstanding as of October 12, 1999. PART I FINANCIAL INFORMATION Item 1. Financial Statements FIRST TEAM SPORTS, INC. CONSOLIDATED BALANCE SHEETS August 31, 1999 and February 28, 1999
August 31, February 28, ASSETS 1999 1999 ----------- ----------- (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 2,379,827 $ 723,574 Receivables: Trade, less allowance for doubtful accounts of $705,000 at August 31, 1999 and $642,000 at February 28, 1999 11,092,444 12,284,005 Refundable income taxes 1,291,071 1,136,858 Inventories 10,931,056 10,047,020 Prepaid expenses 793,080 839,777 Deferred income taxes 842,000 1,175,000 ----------- ----------- Total current assets 27,329,478 26,206,234 PROPERTY AND EQUIPMENT, Land 600,000 600,000 Building 4,988,680 4,988,680 Production equipment 2,331,612 2,278,231 Office furniture and equipment 1,892,805 1,825,257 Warehouse equipment 939,212 937,677 Vehicles 101,276 104,380 ----------- ----------- 10,853,585 10,734,225 Less accumulated depreciation 3,931,137 3,316,390 ----------- ----------- 6,922,448 7,417,835 DEFERRED INCOME TAXES 2,251,000 1,988,000 OTHER ASSETS License agreements, less accumulated amortization of $3,862,000 at August 31, 1999 and $3,687,000 at February 28, 1999 1,505,365 1,680,024 Goodwill, less accummulated amortization of $382,000 at August 31, 1999 and $329,000 at February 28, 1999 1,066,251 1,119,197 Other 677,428 723,104 ----------- ----------- 3,249,044 3,522,325 ----------- ----------- $39,751,970 $39,134,394 =========== ===========
See accompanying notes. FIRST TEAM SPORTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) August 31, 1999 and February 28, 1999
August 31, February 28, 1999 1999 ------------ ------------ (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable to bank $ 6,500,000 $ 2,525,000 Current maturities of long-term debt 1,234,461 1,305,763 Accounts payable, trade 1,940,252 3,692,759 Accrued expenses 839,218 1,311,043 ------------ ------------ Total current liabilities 10,513,931 8,834,565 LONG-TERM DEBT, less current maturities 4,989,916 5,576,967 DEFERRED INCOME TAXES 195,000 195,000 DEFERRED REVENUE 600,000 600,000 SHAREHOLDERS' EQUITY Common Stock, par value $.01 per share; authorized 10,000,000 shares; issued and outstanding 5,852,188 shares at August 31, 1999, and 5,803,848 at February 28, 1999 58,522 58,039 Additional paid-in capital 9,910,091 9,825,240 Retained earnings 14,304,110 14,647,756 Accumulated other comprehensive loss (819,600) (603,173) ------------ ------------ 23,453,123 23,927,862 ------------ ------------ $ 39,751,970 $ 39,134,394 ============ ============
See accompanying notes. FIRST TEAM SPORTS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended Six months ended August 31, August 31, 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net sales $ 7,264,628 $ 9,239,152 $ 21,325,080 $ 24,354,248 Cost of goods sold 5,567,840 14,126,388 15,051,607 24,906,992 ------------ ------------ ------------ ------------ Gross profit 1,696,788 (4,887,236) 6,273,473 (552,744) ------------ ------------ ------------ ------------ Operating expenses: Selling 923,848 1,379,795 2,249,307 2,780,156 General and administrative 2,000,503 2,223,080 3,994,021 3,972,650 ------------ ------------ ------------ ------------ 2,924,351 3,602,875 6,243,328 6,752,806 ------------ ------------ ------------ ------------ Operating income/(loss) (1,227,563) (8,490,111) 30,145 (7,305,550) Interest expense (259,974) (321,769) (438,743) (680,950) ------------ ------------ ------------ ------------ Loss before income taxes (1,487,537) (8,811,880) (408,598) (7,986,500) Income taxes 447,163 2,966,856 64,952 2,684,303 ------------ ------------ ------------ ------------ Net loss for the period ($ 1,040,374) ($ 5,845,024) ($ 343,646) ($ 5,302,197) ============ ============ ============ ============ Net loss per share: Basic ($ 0.18) ($ 1.01) ($ 0.06) ($ 0.92) Diluted ($ 0.18) ($ 1.01) ($ 0.06) ($ 0.92) Shares used in computation of net loss per share: Basic 5,840,342 5,792,253 5,822,102 5,792,253 Diluted 5,840,342 5,792,253 5,822,102 5,792,253
See accompanying notes. FIRST TEAM SPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For Six Months Ended August 31, 1999 and 1998 (Unaudited)
August 31, August 31, 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (343,646) $ (5,302,197) Adjustments required to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 614,747 627,722 Amortization 287,763 580,844 Deferred income taxes 70,000 -- Change in assets and liabilities: Receivables 976,251 (304,290) Inventories (892,571) 11,839,982 Prepaid expenses 46,509 128,997 Accounts payable (1,747,853) (774,523) Accrued expenses (468,382) (118,734) Income taxes (148,421) (2,152,891) ------------ ------------ Net cash provided by (used in) operating activities (1,605,603) 4,524,910 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (124,091) (141,739) Other -- (261,673) ------------ ------------ Net cash used in investing activities (124,091) (403,412) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds (payments) on short-term borrowings 3,975,000 (3,630,000) Proceeds on long-term borrowings -- 262,760 Principal payments on long-term borrowings (657,780) (540,276) Net proceeds from exercise of stock options 85,332 -- ------------ ------------ Net cash provided by (used in) financing activities 3,402,552 (3,907,516) Increase in cash and cash equvalents 1,672,858 213,982 Effect of foreign currency translation (16,605) (7,200) Cash and cash equivalents: Beginning 723,574 1,869,545 ------------ ------------ Ending $ 2,379,827 $ 2,076,327 ============ ============
See accompanying notes. FIRST TEAM SPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation have been included. The operating results for the period ended August 31, 1999 are not necessarily indicative of the operating results to be expected for the full fiscal year. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report or Form 10-K for the year ended February 28, 1999. NOTE 2. As of March 1, 1998, the Company adopted Financial Accounting Standards Board Statement No. 130 Report Comprehensive Income ("Statement 130"). Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this statement had no impact on the Company's net income or shareholders' equity. Statement 130 requires the Company's foreign currency translation, which prior to adoption was reported separately in shareholders' equity, to be included in other comprehensive income. During the quarters ended August 31, 1999 and 1998, total comprehensive loss amounted to $($1,257,635) and ($6,239,933) respectively. During the six-month period ended August 31, 1999 and 1998, total comprehensive loss amounted to ($560,073) and ($5,903,447) respectively. NOTE 3.
Basic EPS Diluted EPS 1999 1998 1999 1998 ------- ------- ------- ------- (in thousands, except per share data) Three Months Ended August 31 Net Loss ($1,040) ($5,845) ($1,040) ($5,845) ======= ======= ======= ======= Weighted average common Shares outstanding 5,840 5,792 5,840 5,792 Stock options -- -- -- -- ------- ------- ------- ------- Total common equivalent Shares outstanding 5,840 5,792 5,840 5,792 ======= ======= ======= ======= Net Loss per share ($ .18) ($ 1.01) ($ .18) ($ 1.01) Six Months Ended August 31 Net Loss ($ 344) ($5,302) ($ 344) ($5,302) ======= ======= ======= ======= Weighted average common Shares outstanding 5,822 5,792 5,822 5,792 Stock options -- -- -- -- ------- ------- ------- ------- Total common equivalent Shares outstanding 5,822 5,792 5,822 5,792 ======= ======= ======= ======= Net Loss per share ($ .06) ($ .92) ($ .06) ($ .92)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net Sales. Net sales were $7.3 million in the second quarter of fiscal 2000, a decrease of 21% over the comparable quarter of fiscal 1999 when sales were $9.2 million. Net sales for the first six months of fiscal 2000 were $21.3 million, compared to $24.4 million for the first six months of fiscal 1999, a decrease of 13%. In-line skate sales volume decreases, combined with a decrease in the average selling price of the Company's Skate Attack brand, were the principal factors in the Company's net sales decline in both the second quarter and six-month period of fiscal 2000. The Company's product groups consist of in-line skates, in-line accessories and parts (primarily protective wear and replacement wheels and bearings), roller hockey products, ice hockey sticks and ice hockey protective wear and accessories. Within the product groups, the Company maintains Ultra Wheels, Skate Attack, Heavy and Third World in-line product lines and a Hespeler ice hockey line. The Ultra Wheels, Heavy and Third World lines consist of higher quality and higher priced products that are targeted for the specialty and sporting goods chain store customers. The Skate Attack line consists of lower priced products for the mass merchant customers. The Hespeler ice hockey line consists of high quality products that are targeted primarily at the specialty and sporting goods chain stores. A breakdown and analysis for the Company's main product lines is as follows:
Second Quarter ----------------------------------------------------------- (amount in millions) Fiscal 2000 Fiscal 1999 ----------- ----------- Amount % Amount % Change ------------ ----------- ----------- ------------ ----------- In-line Skates $3.2 43.8% $5.7 62.0% (43.9%) In-line Accessories and Parts 1.1 15.1 1.4 15.2 (21.4) Ice Hockey Sticks 1.1 15.1 .8 8.7 37.5 Ice Hockey Protective and Access. 1.9 26.0 1.3 14.1 46.2 ------------ ----------- ----------- ------------ ----------- Total Net Sales $7.3 100.0% $9.2 100.0% (20.7%) ============ =========== =========== ============ =========== First Six Months ----------------------------------------------------------- (amount in millions) Fiscal 2000 Fiscal 1999 ----------- ----------- Amount % Amount % Change ------------ ----------- ----------- ------------ ----------- In-line Skates $14.3 67.1% $18.0 73.8% (20.6%) In-line Accessories and Parts 2.6 12.2 3.3 13.5 (21.2) Ice Hockey Sticks 1.6 7.5 1.4 5.7 14.3 Ice Hockey Protective and Access. 2.8 13.2 1.7 7.0 64.7 ------------ ----------- ----------- ------------ ----------- Total Net Sales $21.3 100.0% $24.4 100.0% (12.7%) ============ =========== =========== ============ ===========
The Company distributes products to numerous countries worldwide. A geographic breakdown is as follows:
Second Quarter ----------------------------------------------------------- (amount in millions) Fiscal 2000 Fiscal 1999 ----------- ----------- Amount % Amount % Change ------------ ----------- ----------- ------------ ----------- Domestic $4.0 54.8% $4.8 52.2% (16.7%) Canada 2.7 37.0 3.4 37.0 (20.6) Europe 0.1 1.4 0.5 5.4 (80.0) Other International 0.5 6.8 0.5 5.4 -- ------------ ----------- ----------- ------------ ----------- Total Net Sales $7.3 100.0% $9.2 100.0% (20.7%) ============ =========== =========== ============ =========== First Six Months ----------------------------------------------------------- (amount in millions) Fiscal 2000 Fiscal 1999 ----------- ----------- Amount % Amount % Change ------------ ----------- ----------- ------------ ----------- Domestic $11.5 54.0% $13.7 56.1% (16.1%) Canada 7.5 35.2 7.6 31.1 (1.3) Europe 1.6 7.5 2.6 10.7 (38.5) Other International 0.7 3.3 0.5 2.1 40.0 ------------ ----------- ----------- ------------ ----------- Total Net Sales $21.3 100.0% $24.4 100.0% (12.7%) ============ =========== =========== ============ ===========
Several factors contributed to the Company's sales performance in the second quarter of fiscal 2000. The decrease in domestic and Canadian sales was the result of a loss in product placements with the mass merchant distribution channels. This was a continued result of the mass merchants' reduction in branded selections as well as a continued decline in the average price of in-line skates at the mass merchant level. Sales of the Company's Skate Attack brand (sold primarily to the mass merchants) decreased approximately 70% both in the second quarter and for the six-month period. In addition, there was a decrease in the number of close out product sales in the second quarter of fiscal 2000 due to improved Company inventory levels and a decrease in excess inventory levels in the market place. The decrease in European sales was primarily the result of continued competitive pressures in the European in-line skate market and the continued number of in-line skate customers buying direct from Pacific Rim manufacturers. The increase in Other International sales was primarily the result of the Company's continued efforts to open new accounts in the international arena. While the Company believes there are some positive signs that the market conditions in the in-line industry are improving, the national and international markets continue to be very competitive and under extreme price competition. Gross Margin As a percentage of net sales, the gross margin was 23.4% in the second quarter of fiscal 2000 compared to (52.9%) in the second quarter of fiscal 1999. The gross margin as a percentage of net sales for the six-month period of fiscal 2000 was 29.4% compared to (2.3 %) for fiscal 1999. The improvement in the gross margin in the second quarter and for the six month period is primarily due to an increase in the percentage of Ultra Wheels skate sales, which normally carry higher margins, versus Skate Attack skates sales and an increase in the percentage of total sales related to Hespeler products. In addition the Company's decision to restructure its production philosophy, which was implemented in the latter half of fiscal 1999, has resulted in better inventory control and improved margins. During the second quarter of fiscal 1999, the Company conducted a thorough review of its in-line business and as a result the Company wrote down certain inventories. The total amount of the writedown was approximately $6 million, which was recorded in the cost of goods sold section of the fiscal 1999 second quarter Statement of Operations. The major inventory reduction was in the Company's unfinished/component parts inventory. As a result of the Company's restructured production philosophy, the Company shifted the majority of its in-line skate production to offshore sources in an effort to reduce product costs. The Company's UltraWheels brand of in-line skates accounted for approximately 77% and 86%, respectively, of total in-line skate sales in the second quarter and for the six month period of fiscal 2000 compared to 57% and 62%, respectively in fiscal 1999, while the Company's Skate Attack brand accounted for 23% and 14%, respectively, of total in-line skate sales in the second quarter and for the six month period of fiscal 2000 compared to 43% and 38%, respectively in fiscal 1999. The Hespeler brand accounted for approximately 41% and 21% of total net sales in the second quarter and for the six-month period of fiscal 2000 compared to 23% and 13%, respectively in fiscal 1999. Operating Expenses. Selling expenses were $900,000 or 12.7% of total net sales in the second quarter and $2.2 million or 10.5% of total net sales for the six month period of fiscal 2000 compared to $1.4 million or 14.9% in the second quarter and $2.8 million or 11.4% for the six month period of fiscal 1999. The decrease in selling expenses in fiscal 2000 is primarily the result of a reduction in royalties and co-op advertising costs associated with the decreased sales volume, reduced convention and show expenses and management's efforts to closely monitor and control its expenditures. General and administrative expenses were $2.0 million or 27.5% of total net sales in the second quarter and $4.0 million or 18.7% of total net sales for the six month period of fiscal 2000 compared to $2.2 million or 24.1 % in the second quarter and $4.0 million or 16.3% for the six month period of fiscal 1999. The decrease in the absolute dollar amount of the general and administrative expenses in the second quarter and in the six month period of fiscal 2000 was primarily due to the elimination of the administrative costs associated with the Company's Mothership subsidiary which was closed in the early part of fiscal 2000. In fiscal 1997, the Company purchased a new software system and appropriate computer hardware. As part of the Company's selection process, the ability to recognize the year 2000 was a major requirement and thus the Company is prepared for the change. The Company is currently working to resolve the potential impact of the year 2000 on the processing of date sensitive information by the Company's computerized information systems, which might occur due to vendors and/or customers not being ready. Based on preliminary information, costs of addressing potential problems are currently not expected to have a material adverse impact on the Company's financial position, results of operations or cash flows in future periods. Other Income and Expense. Interest expense was $260,000 in the second quarter and $439,000 for the six-month period of fiscal 2000 compared to $322,000 in the second quarter and $681,000 for the six-month period of fiscal 1999. The decrease in interest expense for the both the second quarter and the six month period was primarily due to a decrease in the interest expense related to the Company's line of credit facility. The Company has continued to strongly manage its cash flows, which has resulted in a decrease in the average outstanding balance on the Company's line of credit facility during the second quarter and for the six-month period of fiscal 2000 as compared to the same periods of fiscal 1999. Provision for Income Taxes. The Company's effective tax rate was 30.1% and 15.9%, respectively, in the second quarter and the six month period of fiscal 2000 compared to 33.7% and 33.6%, respectively, in the second quarter and six month period of fiscal 1999. The decrease in fiscal 2000 is primarily due to the effect of state and foreign tax rates, the percentage of state and foreign revenues, deferred tax items and the level of pre-tax losses. Net Loss. The Company had a net loss of ($1.0) million or ($.18) per share in the second quarter of fiscal 2000 compared to a net loss of ($5.8) million or ($1.01) per share in fiscal 1999. The Company had a net loss of ($344,000) or ($.06) per share for the six month period of fiscal 2000 compared to a net loss of ($5.3) million or ($.92) per share in fiscal 1999. The decrease in the net loss for both the second quarter and the six month period can be attributed to the improved gross margins, strong inventory controls by management which reduced the number of close out sales and eliminated the need for any large inventory write downs as was the case in fiscal 1999 and the reduction of operating expenses as discussed above. LIQUIDITY AND CAPITAL RESOURCES In the six-month period of fiscal 2000, the Company's operations used $1.6 million of cash compared to providing $4.5 million of cash in the six-month period of fiscal 1999. The decrease in the net cash provided by operations is primarily the result of the Company reducing its vendor payable balances. The large amount of cash provided by operations in the prior year was the result of the Company making a significant reduction of its old inventory. Management believes that its inventories need to be aggressively managed and controlled and has programs for effectively reducing unneeded inventory. Net cash used in investing activities was $124,000 in the six-month period of fiscal 2000 compared to $403,000 in the six-month period of fiscal 1999. In fiscal 2000, this cash was used to fund equipment purchases. Net cash provided by financing activities was $3.4 million in the six-month period of fiscal 1999 compared to cash used in financing activities of $3.9 million in the six-month period of fiscal 1999. The cash provided by this activity in fiscal 2000 was primarily due to the change in the Company's credit facility. The Company's debt to worth ratio was .7 to 1 as of August 31, 1999, compared to .6 to 1 as of February 28, 1999 and .7 to 1 as of August 31, 1998. The Company's long-term debt, which consists primarily of a mortgage note on the Company's facility and obligations under endorsement license agreements, less current maturities, was $5.0 million as of August 31, 1999. The Company, effective September 8, 1999, entered into a new financing package with Norwest Bank Minnesota N.A. This package included a new operating credit line and a refinancing of the Company's mortgage note. The primary financing facility is a $10 million revolving credit line, which is subject to a borrowing base calculated monthly and updated periodically during each month. The borrowing base is based on a percentage of eligible receivables and inventories. As of August 31, 1999, the borrowing base limitation was $9.1 million, of which $6.5 million was outstanding. In connection with this credit facility, the Company agreed, among other things, to maintain certain minimum financial ratio and income levels. The Company's cash and cash equivalents were $2.4 million as of August 31, 1999, compared to $700,000 as of February 28, 1999 and $2.1 million as of August 31, 1998. The Company believes its current cash position, funds available under existing bank arrangements and cash generated from operations will be sufficient to finance the Company's operating requirements through fiscal 2000. Certain statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations are forward looking, based on current expectations, and actual results may differ materially. These forward looking statements, in particular the statements regarding market conditions in the in-line skate industry and the sufficiency of the Company's capital resources, involve a number of risks and uncertainties which are described in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1999, including (1) the size and strength of competing manufacturers of in-line skates, (2) the level of excess inventories and degree of price competition in the in-line skate market, (3) the Company's dependence on certain key customers, and (4) the effect of adverse weather conditions and overall economic conditions on the in-line skate market. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market Risk. The Company's sales and results of operations are subject to foreign currency fluctuations. The Company's foreign operations are in countries with fairly stable currencies, therefore, the effect of foreign currencies has not been significant. The Company hedges its exposure to translation gains and losses by maintaining and controlling its foreign cash flows when possible, thus reducing such exposure. PART II OTHER INFORMATION Item 4. Submissions of Matters to a Vote of Security Holders. (a) The Company held its Annual Meeting on June 8, 1999. (b) Proxies for the Annual Meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934. There was no solicitation in opposition to management's nominees as listed in the proxy statement, and all of such nominees were elected. The shareholders set the number of directors at six (6) by a vote of 5,034,027 shares in favor, 61,238 shares against and 41,173 shares abstaining. The following persons were elected to serve as directors of the Company until the next annual meeting of shareholders with the following votes: Number of Number of Nominee Votes For Votes Withheld ------- --------- -------------- John J. Egart 5,058,465 77,973 David G. Soderquist 5,061,815 74,623 Joe Mendelsohn 5,061,565 74,873 Timothy G. Rath 5,061,515 74,923 Stanley E. Hubbard 5,061,812 74,626 William J. McMahon 5,057,915 78,523 The shareholders approved an increase in the number of shares reserved under the Company's 1994 stock option and incentive compensation from 1,325,000 to 1,725,000 by a vote of 1,822,845 shares in favor, 317,424 shares against and 43,633 shares abstaining, which votes excluded 2,952,486 shares ("broker non-votes"). Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index immediately following the signature page of this Form 10-Q. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the quarter to which this Form 10-Q relates. 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. FIRST TEAM SPORTS, INC. By: /s/ John J. Egart John J. Egart President and CEO By: /s/ Kent A. Brunner Kent A. Brunner Vice President and CFO Dated: October 12, 1999 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBIT INDEX TO FORM 10-Q For Quarter Ended: Commission File No.: 0-16422 August 31, 1999 - -------------------------------------------------------------------------------- FIRST TEAM SPORTS, INC. - -------------------------------------------------------------------------------- Exhibit Number Description 3.1 Restated Articles of Incorporation -- incorporated by reference to Exhibit 3.1 to the Company's Form 10-K for the year ended February 28, 1997 3.2 Bylaws -- incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-18 Reg. No. 33-16345C 4.1 Specimen of Common Stock Certificate--incorporated by reference to 4.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 28, 1991 4.2 Certificate of Designations of Series A Preferred Stock (included in Restated Articles of Incorporation -- see Exhibit 3.1) 4.3 Rights Agreement dated as of March 15, 1996 between the Company and Norwest Bank Minnesota, N.A. as Rights Agent -- incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form 8-A, Reg. No. 0-16422 4.4 Form of Right Certificate -- incorporated by reference to Exhibit 2.2 to the Company's Registration Statement on Form 8-A, Reg. No. 0-16422 4.5 Summary of Rights to Purchase Share of Series A Preferred Stock- incorporated by reference to Exhibit 2.3 to the Company's Registration Statement of Form 8-A, Reg. No. 0-16422 27* Financial Data Schedule (included in electronic version only) - ------------- *Filed herewith EX-27 2 ART 5 FDS FOR 2ND QUARTER 10-Q
5 1 U.S. Dollars 6-MOS FEB-29-2000 MAR-01-1999 AUG-31-1999 1 2,379,827 0 11,797,444 705,000 10,931,080 27,329,478 10,853,585 3,931,137 39,751,970 10,513,931 4,989,916 58,522 0 0 23,394,601 39,751,970 21,325,080 21,325,080 15,051,607 15,051,607 0 0 438,743 (408,598) (64,952) (343,646) 0 0 0 (343,646) (.06) (.06)
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