Hastings Entertainment Inc. (HAST, Financial) filed Quarterly Report for the period ended 2009-04-30.
Hastings Entertainment Inc. is the leading multimedia entertainment retailer that combines the sale of books music software periodicals DVDs videos and video games with the rental of videos DVDs and video games in a superstore format. The company currently operates superstores primarily in small to medium-sized markets throughout the United States. Hastings also operates www.gohastings.com an e-commerce Internet Web site that makes available to its customers new and used entertainment products and unique contemporary gifts and toys. (PRESS RELEASE) Hastings Entertainment Inc. has a market cap of $41.9 million; its shares were traded at around $4.3 with a P/E ratio of 15.3 and P/S ratio of 0.1. Hastings Entertainment Inc. had an annual average earning growth of 18.7% over the past 5 years.
At April 30, 2009, total outstanding debt was approximately $35.3 million. We project our outstanding debt level will be in the range of $49.5 million to $52.5 million by the end of fiscal 2009. At April 30, 2009, we had approximately $49.1 million in excess availability, after the $10 million availability reserve, under the Facility (as defined below).
Operating Activities. Net cash provided by operating activities totaled approximately $13.4 million for the three months ended April 30, 2009, compared to $4.1 million for the three months ended April 30, 2008. Net earnings for the quarter were approximately $1.7 million compared to net earnings of $3.0 million for the same period in fiscal 2008. Merchandise inventories increased $0.1 million for the quarter, compared to a decrease of $11.0 million during the same period in fiscal 2008, primarily due to the timing of merchandise returns resulting from lower inventory levels at the beginning of the quarter as compared to
the prior year. Trade accounts payable increased approximately $12.8 million for the quarter compared to a decrease of $10.6 million in the same period of fiscal 2008 resulting from increased large deal purchases during the first quarter of fiscal 2009. Merchandise inventories, net of trade payables, decreased approximately $5.1 million for the quarter, compared to an increase of $4.7 million during the same period in the prior year. Accrued expenses and other liabilities decreased approximately $6.1 million during the quarter compared to a decrease of $1.0 million during the same period in fiscal 2008, primarily driven by the timing of payments of federal income taxes.
Financing Activities. Cash provided by or used in financing activities is primarily associated with borrowings and payments made under our revolving credit facility (described below under Capital Structure). For the three months ended April 30, 2009, cash used in financing activities was approximately $14.0 million compared to $0.6 million for the three months ended April 30, 2008, primarily resulting from net repayments to our credit facility during the quarter of approximately $9.2 million compared to net borrowings of $2.1 million for same period in the prior year. Changes in our cash overdraft position increased from a use of $1.5 million for the three months ended April 30, 2008 to a use of $4.7 million for the three months ended April 30, 2009, due to the timing of payments issued to vendors during the period. The Company purchased approximately $0.1 million of treasury stock during the three months ended April 30, 2009 compared to $1.3 million during the three months ended April 30, 2008.
Capital Structure. We have a syndicated secured Loan and Security Agreement with Bank of America (the Facility). The amount outstanding under the Facility is limited by a borrowing base predicated on (i) eligible inventory, as defined in the Facility, and (ii) certain rental assets, net of accumulated depreciation less specifically defined reserves and is limited to a ceiling of $100 million, less a $10 million availability reserve. We can borrow at various interest-rate options based on the prime rate or London Interbank Offered Rate (LIBOR), plus applicable margin depending upon the level of our minimum availability. The borrowing base under the Facility is limited to an advance rate of 65% of eligible inventory and certain rental assets, which can be adjusted to reduce availability under the Facility. The lender may increase specifically defined reserves to reduce availability in the event of adverse changes in our industry or our financial condition, that are projected to impact the value of our assets pledged as collateral. The lender must exercise reasonable judgment and act in good faith with respect to any changes in the specifically defined reserves. The Facility contains no financial covenants, prohibits the payment of dividends and includes certain other debt and acquisition limitations, allows for the repurchase of up to $27.3 million of our common stock and requires a minimum availability of $10 million at all times. The Facility is secured by substantially all of the assets of the Company and our subsidiary and is guaranteed by our subsidiary. Unless the Facility is amended and the maturity extended, the Facility matures on August 29, 2011. At April 30, 2009, we had $49.1 million in excess availability, after the $10 million availability reserve, under the Facility. We expect to have $24.0 to $27.0 million in excess availability, after the $10 million availability reserve and outstanding letters of credit, at January 31, 2010. However, excess availability may be reduced in the future as changes in the borrowing base occur or the lenders increase availability reserves. The average rates of interest being charged under the Facility for the three months ended April 30, 2009, and the fiscal year ended January 31, 2009 were 3.0% and 4.0%, respectively.
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Hastings Entertainment Inc. is the leading multimedia entertainment retailer that combines the sale of books music software periodicals DVDs videos and video games with the rental of videos DVDs and video games in a superstore format. The company currently operates superstores primarily in small to medium-sized markets throughout the United States. Hastings also operates www.gohastings.com an e-commerce Internet Web site that makes available to its customers new and used entertainment products and unique contemporary gifts and toys. (PRESS RELEASE) Hastings Entertainment Inc. has a market cap of $41.9 million; its shares were traded at around $4.3 with a P/E ratio of 15.3 and P/S ratio of 0.1. Hastings Entertainment Inc. had an annual average earning growth of 18.7% over the past 5 years.
Highlight of Business Operations:
Revenues. Total revenues for the first quarter decreased approximately $6.2 million, or 4.7%, to $125.7 million compared to $131.9 million for the first quarter of fiscal 2008. Included in fiscal 2008 was approximately $2.0 million in revenues resulting from an additional day of sales due to leap year. Excluding this extra day of sales, total revenues for the first quarter decreased approximately $4.2 million, or 3.2%. The following is a summary of our revenues results (dollars in thousands):At April 30, 2009, total outstanding debt was approximately $35.3 million. We project our outstanding debt level will be in the range of $49.5 million to $52.5 million by the end of fiscal 2009. At April 30, 2009, we had approximately $49.1 million in excess availability, after the $10 million availability reserve, under the Facility (as defined below).
Operating Activities. Net cash provided by operating activities totaled approximately $13.4 million for the three months ended April 30, 2009, compared to $4.1 million for the three months ended April 30, 2008. Net earnings for the quarter were approximately $1.7 million compared to net earnings of $3.0 million for the same period in fiscal 2008. Merchandise inventories increased $0.1 million for the quarter, compared to a decrease of $11.0 million during the same period in fiscal 2008, primarily due to the timing of merchandise returns resulting from lower inventory levels at the beginning of the quarter as compared to
the prior year. Trade accounts payable increased approximately $12.8 million for the quarter compared to a decrease of $10.6 million in the same period of fiscal 2008 resulting from increased large deal purchases during the first quarter of fiscal 2009. Merchandise inventories, net of trade payables, decreased approximately $5.1 million for the quarter, compared to an increase of $4.7 million during the same period in the prior year. Accrued expenses and other liabilities decreased approximately $6.1 million during the quarter compared to a decrease of $1.0 million during the same period in fiscal 2008, primarily driven by the timing of payments of federal income taxes.
Financing Activities. Cash provided by or used in financing activities is primarily associated with borrowings and payments made under our revolving credit facility (described below under Capital Structure). For the three months ended April 30, 2009, cash used in financing activities was approximately $14.0 million compared to $0.6 million for the three months ended April 30, 2008, primarily resulting from net repayments to our credit facility during the quarter of approximately $9.2 million compared to net borrowings of $2.1 million for same period in the prior year. Changes in our cash overdraft position increased from a use of $1.5 million for the three months ended April 30, 2008 to a use of $4.7 million for the three months ended April 30, 2009, due to the timing of payments issued to vendors during the period. The Company purchased approximately $0.1 million of treasury stock during the three months ended April 30, 2009 compared to $1.3 million during the three months ended April 30, 2008.
Capital Structure. We have a syndicated secured Loan and Security Agreement with Bank of America (the Facility). The amount outstanding under the Facility is limited by a borrowing base predicated on (i) eligible inventory, as defined in the Facility, and (ii) certain rental assets, net of accumulated depreciation less specifically defined reserves and is limited to a ceiling of $100 million, less a $10 million availability reserve. We can borrow at various interest-rate options based on the prime rate or London Interbank Offered Rate (LIBOR), plus applicable margin depending upon the level of our minimum availability. The borrowing base under the Facility is limited to an advance rate of 65% of eligible inventory and certain rental assets, which can be adjusted to reduce availability under the Facility. The lender may increase specifically defined reserves to reduce availability in the event of adverse changes in our industry or our financial condition, that are projected to impact the value of our assets pledged as collateral. The lender must exercise reasonable judgment and act in good faith with respect to any changes in the specifically defined reserves. The Facility contains no financial covenants, prohibits the payment of dividends and includes certain other debt and acquisition limitations, allows for the repurchase of up to $27.3 million of our common stock and requires a minimum availability of $10 million at all times. The Facility is secured by substantially all of the assets of the Company and our subsidiary and is guaranteed by our subsidiary. Unless the Facility is amended and the maturity extended, the Facility matures on August 29, 2011. At April 30, 2009, we had $49.1 million in excess availability, after the $10 million availability reserve, under the Facility. We expect to have $24.0 to $27.0 million in excess availability, after the $10 million availability reserve and outstanding letters of credit, at January 31, 2010. However, excess availability may be reduced in the future as changes in the borrowing base occur or the lenders increase availability reserves. The average rates of interest being charged under the Facility for the three months ended April 30, 2009, and the fiscal year ended January 31, 2009 were 3.0% and 4.0%, respectively.
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