Big 5 Sporting Goods(BGFV) - 2019 Q4 - Annual Report

PART I This section provides an overview of the Company's business operations, associated risk factors, property details, and legal disclosures ITEM 1. BUSINESS Big 5 Sporting Goods Corporation is a leading sporting goods retailer in the western United States, operating 434 stores and an e-commerce platform as of December 29, 2019 - As of December 29, 2019, the Company operated 434 stores and an e-commerce platform in the western United States, offering a full-line product mix in a traditional sporting goods store format averaging approximately 11,000 square feet[5] - The Company's business model is characterized by a value-based and execution-driven operating philosophy, a controlled growth strategy, and a proven business model, supported by over 65 years of experience[6][8] Store Activity (Fiscal Years 2015-2019) | Year | California | Other Markets | Total Stores Opened | Stores Relocated | Stores Closed | Number of Stores at Period End | |:-----|:-----------|:--------------|:--------------------|:-----------------|:--------------|:-------------------------------| | 2015 | 3 | 2 | 5 | (3) | (3) | 438 | | 2016 | 3 | 2 | 5 | (1) | (10) | 432 | | 2017 | 2 | 4 | 6 | (1) | (2) | 435 | | 2018 | 4 | — | 4 | (1) | (2) | 436 | | 2019 | 2 | 1 | 3 | (1) | (4) | 434 | ITEM 1A. RISK FACTORS The Company faces various risks including macroeconomic downturns, intense competition (especially from e-commerce), and the inability to adapt to changing consumer preferences - The retail industry is highly susceptible to macroeconomic factors, including changes in economic conditions, consumer confidence, and discretionary spending, which can adversely impact the Company's sales and profitability[47] - The sporting goods market is intensely competitive, with rivals including superstores, traditional chains, specialty shops, mass merchandisers, e-commerce retailers (like Amazon.com), and direct-to-consumer brands (like Nike and adidas)[48][49] - The Company relies on a single distribution center in Riverside, California, making it vulnerable to disruptions from natural disasters, labor issues, or reaching full capacity, which could impair inventory stocking and sales[60][61] ITEM 1B. UNRESOLVED STAFF COMMENTS There are no unresolved staff comments from the SEC - The Company has no unresolved staff comments[104] ITEM 2. PROPERTIES The Company's corporate headquarters and distribution facilities are primarily located in California, with a smaller distribution hub in Oregon - The primary corporate headquarters (55,000 sq ft) and a satellite office (11,500 sq ft) are leased in El Segundo, California, with leases expiring on February 28, 2021[105] - The main distribution facility in Riverside, California, spans 953,000 square feet, with an additional 172,000 square feet of adjacent distribution space, both leased until August 31, 2025[107] Store Locations by State (as of December 29, 2019) | State | Number of Stores | Percentage of Total Number of Stores | |:-------------|:-----------------|:-------------------------------------| | California | 226 | 52.1% | | Washington | 46 | 10.6 | | Arizona | 42 | 9.7 | | Oregon | 29 | 6.7 | | Colorado | 22 | 5.1 | | New Mexico | 19 | 4.4 | | Nevada | 18 | 4.1 | | Utah | 17 | 3.9 | | Idaho | 11 | 2.5 | | Texas | 3 | 0.7 | | Wyoming | 1 | 0.2 | | Total | 434 | 100.0% | ITEM 3. LEGAL PROCEEDINGS The Company is involved in various routine legal actions, but management does not anticipate these matters will have a material adverse effect on its financial condition or results of operations - Management believes the ultimate disposition of current claims and legal actions will not have a material adverse effect on the Company's results of operations or financial condition[112] ITEM 4. MINE SAFETY DISCLOSURES The Company has no disclosures regarding mine safety - There are no mine safety disclosures to report[113] PART II This section details the Company's common equity market, financial performance analysis, and internal control assessments ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company's common stock trades on NASDAQ under 'BGFV', with 21,664,076 shares outstanding as of February 18, 2020, and a declared quarterly cash dividend of $0.05 per share for Q1 fiscal 2020 - As of February 18, 2020, there were 21,664,076 shares of common stock outstanding, held by 445 holders of record, trading on NASDAQ under the symbol 'BGFV'[115] Annual Cash Dividends Per Share | Fiscal Year | Dividends Per Share | |:------------|:--------------------| | 2019 | $0.20 | | 2018 | $0.50 | - The Company repurchased no shares of common stock in fiscal 2019, but repurchased 75,748 shares for $400 thousand in fiscal 2018. As of December 29, 2019, $15.3 million remained available for share repurchases under the current program[148] ITEM 6. SELECTED FINANCIAL DATA As a smaller reporting company, Big 5 Sporting Goods Corporation is not required to provide selected financial data under this item - The Company is not required to provide selected financial data under this item as it qualifies as a smaller reporting company[118] ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For fiscal 2019, Big 5 Sporting Goods Corporation reported net income of $8.4 million, a significant improvement from a net loss of $3.5 million in fiscal 2018, driven by increased net sales and improved merchandise margins Key Financial Highlights (Fiscal Years 2019 vs. 2018, in thousands) | Metric | Fiscal Year 2019 (in thousands) | Fiscal Year 2018 (in thousands) | Change (YoY) | |:----------------------------------------|:--------------------------------|:--------------------------------|:-------------| | Net sales | $996,495 | $987,581 | +0.9% | | Gross profit | $312,022 (31.3% of net sales) | $300,849 (30.5% of net sales) | +11.2M | | Selling and administrative expense | $297,193 (29.8% of net sales) | $302,076 (30.6% of net sales) | -1.6% | | Operating income (loss) | $14,829 | $(1,227) | N/A | | Net income (loss) | $8,445 | $(3,531) | N/A | | Basic EPS | $0.40 | $(0.17) | N/A | | Diluted EPS | $0.40 | $(0.17) | N/A | | Operating cash flow | $14,280 | $24,519 | -41.8% | | Capital expenditures | $9,363 | $15,460 | -39.4% | | Revolving credit borrowings (period end) | $66,559 | $65,000 | +2.4% | | Dividends paid | $4,398 | $10,660 | -58.7% | - Same store sales increased by 1.2% in fiscal 2019, a significant improvement from a 2.7% decrease in fiscal 2018, primarily driven by higher sales of winter-related products due to favorable weather conditions[128][132] - Merchandise margins increased by 66 basis points in fiscal 2019 compared to the prior year, mainly due to reduced promotional activities and a shift in sales mix towards higher-margin products[128][133] ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Big 5 Sporting Goods Corporation is not required to provide quantitative and qualitative disclosures about market risk - The Company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[179] ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This section refers to the consolidated financial statements and supplementary financial information, which are listed in the 'Index to Consolidated Financial Statements' starting on page F-1 of the report - The financial statements and supplementary financial information are listed in the 'Index to Consolidated Financial Statements' beginning on page F-1[180] ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There are no reported changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in or disagreements with accountants on accounting and financial disclosure[180] ITEM 9A. CONTROLS AND PROCEDURES The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 29, 2019, and management assessed internal control over financial reporting as effective, with modifications for ASC 842 adoption - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of December 29, 2019[181] - Management concluded that the Company maintained effective internal control over financial reporting as of December 29, 2019, based on the COSO framework[185] - Modifications and additions to internal control over financial reporting were implemented due to the adoption of the new lease standard, ASC 842, including a new lease administration and accounting software system[187] ITEM 9B. OTHER INFORMATION There is no other information to report under this item - There is no other information to report[188] PART III This section incorporates by reference information on the Company's governance, executive compensation, and related party disclosures ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information regarding directors, executive officers, and corporate governance is incorporated by reference from the Company's definitive proxy statement, which will be filed within 120 days after the fiscal year-end - Information for this item is incorporated by reference from the Company's 2020 definitive proxy statement[190] ITEM 11. EXECUTIVE COMPENSATION Information regarding executive compensation is incorporated by reference from the Company's definitive proxy statement, which will be filed within 120 days after the fiscal year-end - Information for this item is incorporated by reference from the Company's 2020 definitive proxy statement[191] ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the Company's definitive proxy statement, which will be filed within 120 days after the fiscal year-end - Information for this item is incorporated by reference from the Company's 2020 definitive proxy statement[192] ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the Company's definitive proxy statement, which will be filed within 120 days after the fiscal year-end - Information for this item is incorporated by reference from the Company's 2020 definitive proxy statement[193] ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information regarding principal accounting fees and services is incorporated by reference from the Company's definitive proxy statement, which will be filed within 120 days after the fiscal year-end - Information for this item is incorporated by reference from the Company's 2020 definitive proxy statement[194] PART IV This section lists all exhibits and financial statement schedules filed as part of the annual report ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES This section lists all documents filed as part of the annual report, including financial statements, financial statement schedules, and a comprehensive exhibit index - This item includes the financial statements, financial statement schedules, and an exhibit index, with many exhibits incorporated by reference from prior SEC filings[196][197] SIGNATURES The Annual Report on Form 10-K was duly signed on February 26, 2020, by Steven G. Miller, Chairman of the Board, President, Chief Executive Officer, and Director, and Barry D. Emerson, Senior Vice President, Chief Financial Officer, and Treasurer, along with other directors - The report was signed on February 26, 2020, by Steven G. Miller (Chairman, President, CEO) and Barry D. Emerson (SVP, CFO, Treasurer), among others[201][202] INDEX TO CONSOLIDATED FINANCIAL STATEMENTS This index provides a list of the consolidated financial statements and related notes included in the report, starting with the Report of Independent Registered Public Accounting Firm - The index lists the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[204] Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP issued an unqualified opinion on the Company's consolidated financial statements for fiscal years ended December 29, 2019, and December 30, 2018, noting the adoption of FASB ASC Topic 842, Leases - Deloitte & Touche LLP provided an unqualified opinion, stating the financial statements for fiscal years 2019 and 2018 present fairly the Company's financial position and results of operations[206] - The report highlights the Company's adoption of FASB ASC Topic 842, Leases, effective December 31, 2018, using the modified retrospective approach[207] CONSOLIDATED BALANCE SHEETS The consolidated balance sheets present the Company's financial position as of December 29, 2019, and December 30, 2018, showing assets, liabilities, and stockholders' equity, with key changes from ASC 842 adoption Consolidated Balance Sheet Highlights (in thousands) | Metric | December 29, 2019 | December 30, 2018 | |:----------------------------------------|:------------------|:------------------| | Total current assets | $340,864 | $325,073 | | Operating lease right-of-use assets, net | $262,588 | — | | Property and equipment, net | $68,414 | $76,488 | | Total assets | $688,800 | $419,561 | | Total current liabilities | $222,810 | $150,594 | | Operating lease liabilities, less current portion | $206,806 | — | | Long-term debt | $66,559 | $65,000 | | Total liabilities | $508,428 | $244,700 | | Total stockholders' equity | $180,372 | $174,861 | CONSOLIDATED STATEMENTS OF OPERATIONS The consolidated statements of operations detail the Company's financial performance for fiscal years 2019 and 2018, showing a return to net income in 2019 after a net loss in 2018, driven by increased net sales and improved margins Consolidated Statements of Operations (in thousands, except per share data) | Metric | Fiscal Year Ended December 29, 2019 | Fiscal Year Ended December 30, 2018 | |:-------------------------------------|:------------------------------------|:------------------------------------| | Net sales | $996,495 | $987,581 | | Cost of sales | $684,473 | $686,732 | | Gross profit | $312,022 | $300,849 | | Selling and administrative expense | $297,193 | $302,076 | | Operating income (loss) | $14,829 | $(1,227) | | Interest expense | $3,046 | $3,374 | | Income (loss) before income taxes | $11,783 | $(4,601) | | Income tax expense (benefit) | $3,338 | $(1,070) | | Net income (loss) | $8,445 | $(3,531) | | Earnings (loss) per share: Basic | $0.40 | $(0.17) | | Earnings (loss) per share: Diluted | $0.40 | $(0.17) | | Dividends per share | $0.20 | $0.50 | | Weighted-average shares outstanding: Basic | 21,103 | 20,977 | | Weighted-average shares outstanding: Diluted | 21,149 | 20,977 | CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The consolidated statements of stockholders' equity show the changes in common stock, additional paid-in capital, retained earnings, and treasury stock for fiscal years 2019 and 2018, reflecting net income, dividend payments, and share-based compensation Consolidated Statements of Stockholders' Equity Highlights (in thousands, except share amounts) | Metric | December 29, 2019 | December 30, 2018 | |:----------------------------------------|:------------------|:------------------| | Common Stock Shares | 21,664,076 | 21,424,094 | | Common Stock Amount | $252 | $250 | | Additional Paid-In Capital | $120,054 | $118,351 | | Retained Earnings | $102,593 | $98,787 | | Treasury Stock, At Cost | $(42,527) | $(42,527) |\ | Total Stockholders' Equity | $180,372 | $174,861 | | Net income (loss) | $8,445 | $(3,531) | | Dividends on common stock | $(4,300) | $(10,681) | | Share-based compensation | $1,926 | $2,192 | CONSOLIDATED STATEMENTS OF CASH FLOWS The consolidated statements of cash flows present the cash generated from or used in operating, investing, and financing activities for fiscal years 2019 and 2018, showing a decrease in operating cash flow in 2019 Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Fiscal Year Ended December 29, 2019 | Fiscal Year Ended December 30, 2018 | |:------------------------------------|:------------------------------------|:------------------------------------| | Net cash provided by operating activities | $14,280 | $24,519 | | Net cash used in investing activities | $(9,196) | $(15,460) | | Net cash used in financing activities | $(3,626) | $(9,464) | | Net increase (decrease) in cash | $1,458 | $(405) | | Cash at end of year | $8,223 | $6,765 | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed disclosures on the Company's significant accounting policies, financial statement components, and other commitments (1) Description of Business Big 5 Sporting Goods Corporation operates as a single reportable segment, a sporting goods retailer in the western United States, with 434 stores and an e-commerce platform as of December 29, 2019 - The Company operates as one reportable segment, a sporting goods retailer in the western United States, with 434 stores and an e-commerce platform as of December 29, 2019[221] (2) Summary of Significant Accounting Policies This section outlines the Company's significant accounting policies, including consolidation principles, the 52-53 week fiscal year, and the adoption of new accounting standards like ASC 842 Leases and ASC 606 Revenue from Contracts with Customers - The adoption of ASC 842, Leases, using the modified retrospective approach effective December 31, 2018, resulted in the initial recognition of operating lease ROU assets of $262.9 million and operating lease liabilities of $279.7 million[225][226] - The Company adopted ASC 606, Revenue from Contracts with Customers, on January 1, 2018, which led to an increase in retained earnings of $600 thousand, net of tax, related to stored-value card breakage[235] Net Sales by Major Merchandise Categories (in thousands) | Category | December 29, 2019 | December 30, 2018 | |:--------------------------|:------------------|:------------------| | Hardgoods | $493,749 | $495,846 | | Athletic and sport footwear | $279,733 | $281,004 | | Athletic and sport apparel | $219,066 | $206,934 | | Other sales | $3,947 | $3,797 | | Net sales | $996,495 | $987,581 | (3) Property and Equipment, Net The Company's property and equipment, net, totaled $68.4 million as of December 29, 2019, down from $76.5 million in 2018, including furniture, leasehold improvements, internal-use software, land, and buildings Property and Equipment, Net (in thousands) | Category | December 29, 2019 | December 30, 2018 | |:----------------------------|:------------------|:------------------| | Furniture and equipment | $138,241 | $137,881 | | Leasehold improvements | $167,965 | $165,979 | | Internal-use software | $36,332 | $35,810 | | Land | $2,750 | $2,750 | | Building | $1,775 | $1,775 | | Total gross | $347,063 | $344,195 | | Accumulated depreciation and amortization | $(279,796) | $(268,544) | | Property and equipment, net | $68,414 | $76,488 | - Depreciation expense for property and equipment was $6.8 million in fiscal 2019 (vs. $7.6 million in 2018), and amortization expense for leasehold improvements was $9.7 million in both fiscal years[285] - In fiscal 2018, the Company purchased a parcel of land with an existing building adjacent to its corporate headquarters for $4.5 million[286] (4) Impairment of Assets The Company recognized non-cash impairment charges of $0.5 million in fiscal 2019 and $0.2 million in fiscal 2018 related to underperforming stores, and a $0.6 million impairment charge in fiscal 2018 for discontinued SaaS implementation costs, which led to a $1.1 million settlement gain in fiscal 2019 - Non-cash impairment charges of $500 thousand (fiscal 2019) and $200 thousand (fiscal 2018) were recognized for property and equipment and leasehold improvements of certain underperforming stores[288] - In fiscal 2018, a $600 thousand impairment charge was recognized for discontinued SaaS implementation costs, leading to a $1.1 million favorable settlement gain in fiscal 2019[289] (5) Fair Value Measurements The carrying values of most short-term financial instruments and revolving credit facility borrowings approximate their fair values, with long-lived asset impairment fair values estimated using Level 3 discounted cash flow techniques - The carrying values of cash, accounts receivable, accounts payable, accrued expenses, and revolving credit facility borrowings approximate their fair values[290] - Fair value measurements for long-lived assets subject to impairment are based on discounted cash flow valuation techniques, using Level 3 unobservable inputs[291] (6) Accrued Expenses Accrued expenses totaled $64.9 million as of December 29, 2019, a decrease from $67.7 million in 2018, with major components including payroll, sales tax, and occupancy expenses Major Components of Accrued Expenses (in thousands) | Component | December 29, 2019 | December 30, 2018 | |:--------------------------|:------------------|:------------------| | Payroll and related expense | $23,433 | $22,348 | | Sales tax | $9,607 | $10,198 | | Occupancy expense | $9,503 | $11,220 | | Other | $22,392 | $23,893 | | Total Accrued Expenses | $64,935 | $67,659 | (7) Lease Commitments The Company adopted ASC 842 on December 31, 2018, recognizing $262.9 million in ROU assets and $279.7 million in operating lease liabilities, with total lease expense for fiscal 2019 at $97.9 million - The adoption of ASC 842 resulted in a non-cash transitional adjustment, recognizing $262.9 million in ROU assets and $279.7 million in operating lease liabilities as of December 31, 2018[295] Lease Expense Components (Fiscal Year Ended December 29, 2019, in thousands) | Lease Expense Component | Amount (in thousands) | |:----------------------------------|:----------------------| | Amortization of right-of-use assets | $2,673 | | Interest on lease liabilities | $378 | | Finance lease expense | $3,051 | | Operating lease expense | $80,470 | | Variable lease expense | $15,515 | | Sublease income | $(1,158) | | Total lease expense | $97,878 | Maturities of Lease Liabilities (as of December 29, 2019, in thousands) | Year Ending | Finance Leases (in thousands) | Operating Leases (in thousands) | |:------------|:------------------------------|:--------------------------------| | 2020 | $3,164 | $87,001 | | 2021 | $2,193 | $66,849 | | 2022 | $1,745 | $54,137 | | 2023 | $942 | $40,740 | | 2024 | — | $31,415 | | Thereafter | — | $47,881 | | Undiscounted cash flows | $8,044 | $328,023 | | Weighted-average remaining lease term | 3.1 years | 5.2 years | | Weighted-average discount rate | 4.7% | 6.3% | | Present values | $7,465 | $278,348 | (8) Long-Term Debt The Company operates under a revolving credit facility with an aggregate committed availability of up to $140.0 million, maturing in September 2022, with $66.6 million outstanding at an average interest rate of 3.8% as of December 29, 2019 - The Company has a revolving credit facility with an aggregate committed availability of up to $140.0 million, which can be increased to $200.0 million, and matures on September 29, 2022[307] Revolving Credit Borrowings (in thousands) | Metric | December 29, 2019 | December 30, 2018 | |:----------------------------|:------------------|:------------------| | LIBO rate borrowings | $60,000 | $65,000 | | Prime rate borrowings | $6,559 | — | | Total borrowings | $66,559 | $65,000 | | Average interest rate | 3.8% | 3.4% | | Year-end interest rate | 3.6% | 4.0% | - As of December 29, 2019, total remaining borrowing availability under the $140.0 million Credit Facility was $72.7 million, after subtracting letters of credit[313] (9) Income Taxes The Company recorded an income tax expense of $3.3 million in fiscal 2019, a shift from a $1.1 million benefit in fiscal 2018, with an effective tax rate of 28.3% (2019) versus 23.3% (2018) Total Income Tax (Benefit) Expense (in thousands) | Category | Fiscal 2019 (in thousands) | Fiscal 2018 (in thousands) | |:---------|:---------------------------|:---------------------------| | Federal | $2,287 | $(1,238) | | State | $1,051 | $168 | | Total | $3,338 | $(1,070) | - The effective tax rate was 28.3% for fiscal 2019, compared to 23.3% for fiscal 2018[136] - As of December 29, 2019, the Company maintained a valuation allowance of $1.2 million related to unused California Enterprise Zone Tax Credits[317] (10) Earnings Per Share The Company calculates basic and diluted earnings per share in accordance with ASC 260, reporting $0.40 for fiscal 2019, a significant improvement from a loss of $(0.17) in fiscal 2018 Earnings (Loss) Per Share Computation (in thousands, except per share data) | Metric | December 29, 2019 | December 30, 2018 | |:-------------------------------------|:------------------|:------------------| | Net income (loss) | $8,445 | $(3,531) | | Weighted-average shares outstanding: Basic | 21,103 | 20,977 | | Dilutive effect of common stock equivalents | 46 | — | | Diluted shares outstanding | 21,149 | 20,977 | | Basic earnings (loss) per share | $0.40 | $(0.17) | | Diluted earnings (loss) per share | $0.40 | $(0.17) | (11) Employee Benefit Plans The Company's 401(k) plan includes employer matching and profit-sharing contributions, which amounted to $2.2 million in fiscal 2019, an increase from $1.5 million in fiscal 2018 Employer Contributions to 401(k) Plan (in thousands) | Fiscal Year | Employer Contributions (in thousands) | |:------------|:--------------------------------------| | 2019 | $2,200 | | 2018 | $1,500 | (12) Related Party Transactions The Company continues to make annual payments of $350,000 to the surviving wife of co-founder Robert W. Miller, with a recorded liability of $1.0 million as of December 29, 2019 - The Company made annual payments of $350,000 to Robert W. Miller's wife in both fiscal 2019 and 2018, with a recorded liability of $1.0 million as of December 29, 2019 (vs. $1.1 million in 2018)[326] (13) Commitments and Contingencies The Company is involved in various claims and legal actions in the ordinary course of business, but management believes their ultimate disposition will not have a material adverse effect on the Company's financial results - Management does not expect the ultimate disposition of various claims and legal actions to have a material adverse effect on the Company's results of operations or financial condition[327] (14) Share-Based Compensation Plans The Company adopted the 2019 Equity Incentive Plan in April 2019, replacing the Prior Plan, with a maximum of 3,848,803 shares available for various awards, and reported $1.9 million in share-based compensation expense for fiscal 2019 - The 2019 Equity Incentive Plan, adopted in April 2019, permits the issuance of a maximum of 3,848,803 shares of common stock[329] - Share-based compensation expense was $1.9 million in fiscal 2019, compared to $2.2 million in fiscal 2018[332] Outstanding Share-Based Awards (as of December 29, 2019) | Award Type | Number Outstanding | |:---------------------------|:-------------------| | Share option awards | 523,150 | | Nonvested share awards | 532,524 | | Nonvested share unit awards | 75,413 | (15) Subsequent Event In the first quarter of fiscal 2020, the Board of Directors declared a quarterly cash dividend of $0.05 per share of outstanding common stock - The Board of Directors declared a quarterly cash dividend of $0.05 per share of outstanding common stock for the first quarter of fiscal 2020, payable on March 20, 2020[346] SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS This schedule provides details on the Company's valuation and qualifying accounts, including allowances for doubtful receivables, sales returns, and inventory reserves for fiscal years 2019 and 2018 Valuation and Qualifying Accounts (in thousands) | Account | Balance at Beginning of Period (2019) (in thousands) | Charged to Costs and Expenses (2019) (in thousands) | Deductions (2019) (in thousands) | Balance at End of Period (2019) (in thousands) | |:------------------------------|:-----------------------------------------------------|:----------------------------------------------------|:---------------------------------|:-----------------------------------------------| | Allowance for doubtful receivables | $28 | $48 | $(18) | $58 | | Allowance for sales returns | $2,576 | $126 | — | $2,702 | | Inventory reserves | $6,432 | $5,019 | $(4,655) | $6,796 | | | Balance at Beginning of Period (2018) (in thousands) | Charged to Costs and Expenses (2018) (in thousands) | Deductions (2018) (in thousands) | Balance at End of Period (2018) (in thousands) | | Allowance for doubtful receivables | $79 | $20 | $(71) | $28 | | Allowance for sales returns | $2,368 | $208 | — | $2,576 | | Inventory reserves | $5,850 | $5,102 | $(4,520) | $6,432 |