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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported):  November 14, 2011

 

DICK’S SPORTING GOODS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation)

 

001-31463

 

16-1241537

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

345 Court Street

Coraopolis, Pennsylvania

 

15108

(Address of Principal Executive Offices)

 

(Zip Code)

 

(724) 273-3400

(Registrant’s Telephone Number, Including Area Code)

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


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TABLE OF CONTENTS

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

3

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

 

3

ITEM 8.01. OTHER EVENTS

 

3

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

 

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SIGNATURE

 

6

 

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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On November 15, 2011, Dick’s Sporting Goods, Inc. (the “Company”) issued a press release announcing its results for the third fiscal quarter ended October 29, 2011 and certain other information that is furnished as Exhibit 99.1 hereto.

 

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

 

(d) On November 14, 2011, the Company’s Board of Directors (the “Board”) elected Allen “Al” R. Weiss to serve on the Board, effective immediately.  Mr. Weiss will serve as a Class B Director, with his current term expiring at the Company’s 2013 annual stockholders’ meeting.  The Board has determined that Mr. Weiss qualifies as an “independent director” under the New York Stock Exchange Corporate Governance Rules, and the Board has appointed him as a member of the Board’s Compensation Committee and Governance and Nominating Committee.

 

Mr. Weiss served as President of Worldwide Operations for the Walt Disney Parks and Resorts business of The Walt Disney Company (NYSE: DIS) from 2005 until his retirement in 2011.  Prior to that, Mr. Weiss served in a number of roles for The Walt Disney Company since 1972, including most recently as President of Walt Disney World Resort, Executive Vice President of Walt Disney World Resort and Vice President of Resort Operations Support.  Mr. Weiss also serves on the board or council of a number of community and civic organizations.

 

There were no arrangements or understandings between Mr. Weiss and any other person pursuant to his election as a director, and there are and have been no transactions since the beginning of the Company’s last fiscal year, or currently proposed, regarding Mr. Weiss that are required to be disclosed by Item 404(a) of Regulation S-K.

 

(e) On November 14, 2011, the Board’s Compensation Committee approved a new form of Restricted Stock Award Agreement (the “Agreement”) for the Company’s Amended and Restated 2002 Stock and Incentive Plan (the “Plan”), which replaces the prior form of Restricted Stock Award Agreement filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K filed March 18, 2011.  The Agreement sets forth the material terms of an award of shares of restricted stock, including the forfeiture restrictions implemented with respect to the grant of shares of restricted stock and any cash or in-kind dividends granted prior to vesting of the shares, the applicable vesting terms, the treatment of unvested shares of restricted stock upon termination of employment and potential tax consequences of the award.

 

The summary of the Agreement in this Current Report on Form 8-K is qualified in its entirety by reference to the full text of the Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

 

ITEM 8.01. OTHER EVENTS

 

On November 14, 2011, the Company’s Board authorized and declared a dividend for 2011 in the amount of $0.50 per share on the Company’s Common Stock and Class B Common Stock.  The dividend is payable in cash on December 28, 2011 to stockholders of record at the close of business on December 7, 2011.  The Company currently intends to begin payments of regular quarterly dividends beginning in 2012; however, the actual declaration of such future dividends

 

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and the establishment of the per share amount, record dates and payment dates for such future dividends are subject to the final determination of the Company’s Board, and will be dependent upon future earnings, cash flows, financial requirements and other factors.

 

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

 

Except for historical information contained herein, the statements in this Form 8-K or otherwise made by our management in connection with the subject matter of this Form 8-K are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Our future performance and financial results may differ materially from those included in any such forward-looking statements and such forward-looking statements should not be relied upon by investors as a prediction of actual results. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or other words with similar meanings. Forward-looking statements include, among other things, statements about our future expectations regarding growth, revenues, earnings, profitability, spending, margins, costs, liquidity, store openings and operations, inventory, private brand products, our actions, plans or strategies.

 

The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2011 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Form 8-K or otherwise made by our management: continuation of the recent economic and financial downturn and other changes in macroeconomic factors or market conditions that impact consumer spending; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; fluctuations in our quarterly operating results or same store sales; volatility in our stock price; our ability to access adequate capital; competition in the sporting goods industry; limitations on the availability of attractive store locations; inability to manage our growth, open new stores on a timely basis or expand successfully in new and existing markets; changes in consumer demand; unauthorized disclosure of sensitive, personal or confidential information; disruptions in our or our vendors’ supply chains; factors affecting our vendors, including potential increases in the costs of products, their ability to maintain their inventory and production levels and their ability or willingness to provide us with sufficient quantities of products at acceptable prices; factors that could negatively affect our private brand offerings; risks and costs relating to product liability claims, product recalls and the regulation of and other hazards associated with certain products we sell; the loss of our key executives; costs and risks associated with increased or changing laws and regulations affecting our business; our ability to secure and protect our intellectual property; risks relating to operating as a multi-channel retailer, including the impact of rapid technological change, internet security and privacy issues and the threat of systems failure or inadequacy; problems with our current management information systems or software; disruption at our distribution facilities; the seasonality of our business; regional risks because our stores are generally concentrated in the eastern half of the United States; costs and risks related to litigation or other claims against us; costs and uncertainties associated with pursuing strategic acquisitions; our ability to meet our labor needs; currency exchange rate fluctuations; risks associated with our Chief Executive Officer and his relatives’ controlling interest in the Company; the impact of foreign instability and conflict; our anti-takeover provisions, which could prevent or delay a change in control of the Company; and impairment in the carrying value of goodwill or other

 

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acquired intangibles.

 

Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended January 29, 2011 as filed with the Securities and Exchange Commission (“SEC”) on March 18, 2011 and in other reports filed with the SEC.  In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not assume any obligation and do not intend to update any forward-looking statements except as may be required by the securities laws.

 

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

 

(d)  Exhibits. The following exhibits are being filed pursuant to Item 601 of Regulation S-K and General Instruction B2 to this Form 8-K:

 

Exhibit No.

 

Description

 

 

 

10.1

 

Form of Restricted Stock Award Agreement granted under the Dick’s Sporting Goods, Inc. Amended and Restated 2002 Stock and Incentive Plan

 

 

 

99.1

 

Press Release dated November 15, 2011 by Dick’s Sporting Goods, Inc. furnished herewith

 

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SIGNATURE

 

Pursuant to the requirements 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.

 

 

 

DICK’S SPORTING GOODS, INC.

 

 

 

 

 

Date: November 15, 2011

By:

/S/ TIMOTHY E. KULLMAN

 

Name:  Timothy E. Kullman

 

Title:    EVP – Finance, Administration and Chief Financial Officer

 

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Exhibit Index

 

Exhibit No.

 

Description

 

 

 

10.1

 

Form of Restricted Stock Award Agreement granted under the Dick’s Sporting Goods, Inc. Amended and Restated 2002 Stock and Incentive Plan

 

 

 

99.1

 

Press Release dated November 15, 2011 by Dick’s Sporting Goods, Inc. furnished herewith

 

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Exhibit 10.1

 

RESTRICTED STOCK AWARD AGREEMENT
Granted Under the
DICK’S SPORTING GOODS, INC.

AMENDED AND RESTATED 2002 STOCK AND INCENTIVE PLAN

 

Unless otherwise defined herein, each capitalized term used in this Restricted Stock Award Agreement (this “ Agreement ”) shall have the meaning given such term in the Dick’s Sporting Goods, Inc. Amended and Restated 2002 Stock and Incentive Plan, as amended (the “ Plan ”).

 

Grantee’s Name:

 

 

 

The undersigned Grantee has been granted a Restricted Stock Award, subject to the terms and conditions of the Plan and this Agreement, as follows:

 

Date of Grant:

 

 

 

 

 

 

Number of Shares of Common Stock (the “ Shares ”) Granted:

 

 

 

 

 

 

Type of Shares:

 

Common Stock, par value $0.01 per share

 

 

 

Forfeiture Restrictions:

 

Grantee shall have all of the rights and privileges of a stockholder of the Company with regard to the Shares, except that the following restrictions shall apply:

 

 

 

 

 

(a) The Shares may not be sold, assigned, pledged, exchanged, hypothecated, gifted or otherwise transferred, encumbered or disposed of to the extent then subject to these Forfeiture Restrictions. Grantee represents and warrants to Company that he/she shall not sell, assign, pledge, exchange, hypothecate, gift or otherwise transfer, encumber or dispose of the Shares, or subject the Shares to any adverse right, in violation of applicable securities laws or the provisions of this Agreement. The Company may refuse to register the transfer of the Shares on the stock transfer records of the Company if such transfer constitutes a violation of any applicable securities law or this Agreement, and the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Shares.

 

 

 

 

 

(b) Any cash or in-kind dividends paid or distributed with respect to shares of the Company’s Common Stock (“ Dividends ”) shall not be immediately payable by the Company with respect to the Shares, and any such Dividends shall be paid to Grantee, without interest, only when, and if, the Shares shall become vested.

 

 

 

 

 

(c) Any certificates representing the Shares shall bear such legend or legends as the Company deems appropriate in order to assure compliance with this Agreement, the Plan and applicable securities laws. During the period of time when the Shares are subject to the Forfeiture Restrictions, all certificates representing Shares shall be endorsed with the following legend (in addition to any other legend required by applicable securities laws or any agreement by which the Company is bound):

 

 

 

 

 

THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE RESTRICTED STOCK AWARD AGREEMENT UNDER THE COMPANY’S AMENDED AND RESTATED 2002 STOCK AND INCENTIVE PLAN BETWEEN THE REGISTERED OWNER AND THE COMPANY. A COPY OF THE PLAN AND THE RESTRICTED STOCK AWARD AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY.

 

 

 

 

 

(d) If all or any portion of the Shares are forfeited under this Agreement, Grantee shall take

 


 

 

 

all necessary actions to transfer the forfeited Shares to the Company, including, but not limited to, endorsing in blank or duly endorsing a stock power attached to any certificate representing forfeited Shares transferred, all in form suitable for the transfer of such forfeited Shares to the Company.  Further, any and all Dividends not paid or distributed with respect to such unvested Shares as provided for herein shall also be forfeited to the Company and will not be paid or distributed to Grantee.  Grantee agrees to take any and all actions that may be necessary in connection with the forfeiture of Dividends.

 

 

 

 

 

(e) If all or any portion of the Shares and Dividends are forfeited under this Agreement, all rights of a stockholder with respect to such Shares, including the right to vote and receive future dividends with respect thereto, shall cease immediately on the date of the forfeiture.

 

 

 

 

 

(f) These Forfeiture Restrictions shall be binding upon, and enforceable against, any transferee of the Shares.

 

 

 

Vesting Schedule:

 

So long as Grantee maintains his/her status as an Employee, Non-Employee Director or consultant (as the case may be), the Forfeiture Restrictions shall lapse and the Shares shall be vested, and any Dividends with respect to such Shares shall be paid or distributed, in accordance with the following schedule:

 

 

 

 

 

[insert vesting schedule]

 

 

 

 

 

Upon the vesting of the Shares without a forfeiture of the applicable Shares, and upon the satisfaction of all other applicable conditions as to such Shares including, but not limited to, the payment by Grantee of all applicable income, employment and withholding taxes, if any, the Company shall deliver or cause to be delivered to Grantee shares of Common Stock, which may be in the form of a certificate(s) equal in number to the applicable Shares, which shall not be subject to the transfer restrictions set forth above and shall not bear the legend described above. The Company shall have the authority to withhold, or to require Grantee to remit to the Company, prior to issuance or delivery of any Shares or the removal of any stop order or transfer restrictions on the Shares or any restrictive legends on the certificates representing the Shares, an amount sufficient to satisfy federal, state and local income, employment and tax withholding requirements associated with this Award. Additionally, the Company, in its sole discretion, shall have the right to withhold from Grantee Shares with a Fair Market Value equal to the federal, state and local tax withholding requirements associated with this Award. Dividends are considered ordinary income and will be included on Grantee’s W-2 in the year of vesting. Additionally, taxes will be calculated and deducted from the total amount of dividend payment income. The Dividend payment less taxes will be included in Grantee’s paycheck as soon as administratively possible after the vesting of the Shares. To the extent required for compliance with Section 162(m) of the Code, if applicable to Grantee, the Committee shall have such authority and make such determination over the Award as necessary to comply with the terms of the Plan and Section 162(m) of the Code.

 

 

 

Termination of Employment:

 

Pursuant to the Administrator’s authority under Section 7 of the Plan, upon termination of Grantee’s Continuous Status as an Employee, or status as a Non-Employee Director or consultant (as the case may be), this Award shall be treated as follows:

 

 

 

 

 

·    If the Termination shall occur by reason of Grantee’s death or total and permanent disability (as set forth in Section 6(b) of the Plan), 100% of the Award shall immediately vest, and all Dividends not paid or distributed on the unvested Shares shall be paid or distributed;

 

·    If the Termination shall occur by any reason other than Grantee’s death or total permanent disability, any portion of the Award that has not vested and any Dividends not paid or distributed with respect to such portion of the Award shall, unless otherwise specified by the Committee, be automatically forfeited.

 


 

Taxes and Section 83(b) Election:

 

Grantee shall be solely responsible for any taxes payable on the transfer of the Shares. Grantee shall promptly pay to the Company, or make arrangements satisfactory to the Company regarding payment of any federal, state or local taxes of any kind required by law to be withheld with respect to the receipt of the Shares (including in cases where he or she has made an election in accordance with Section 83(b) of the Code (the “ Election ”)), and any tax obligation of Grantee arising in connection with the Election and Grantee shall indemnify and hold harmless the Company and its affiliates for any taxes payable on the transfer of the Shares hereunder. Grantee acknowledges that (a) Grantee has been informed of the availability of making an Election; (b) that the Election must be filed with the Internal Revenue Service within thirty (30) days of the Date of Grant; and (c) that Grantee is solely responsible for making the Election. If Grantee does not make the Election, Grantee acknowledges that Dividends, if any, on the Shares will be treated as compensation when paid in accordance with the terms of this Agreement, and will be subject to tax withholding in accordance with the Company’s practices and policies.  Dividends on Shares for which the Election has been made will be treated as dividend income rather than compensation when paid. Grantee shall send a copy of the Election to the Chief Financial Officer of the Company at the address below.

 

 

 

Notices:

 

Every notice or other communication relating to this Agreement shall be in writing and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided, however, that unless and until some other address be so designated and unless otherwise provided in this Agreement, all notices or communications by Grantee to the Company shall be mailed or delivered to the Corporate Secretary of the Company at its corporate headquarters located at 345 Court Street, Coraopolis, PA 15108 and all notices or communications by the Company to Grantee may be given to Grantee personally or may be mailed to him.

 

 

 

Entire Agreement; Amendment or Modification; Governing Law:

 

The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Grantee with respect to the subject matter hereof.

 

 

 

 

 

This Agreement may only be amended or terminated by a written agreement entered into by both of the parties hereto. Notwithstanding the foregoing, the Company may, in its sole discretion and without Grantee’s consent, modify or amend the terms of this Agreement, impose conditions on the timing and effectiveness of the issuance of the Shares, or take any other action it deems necessary or advisable, to cause this Award to be excepted from Section 409A of the Code (or to comply therewith to the extent the Company determines it is not excepted).

 

 

 

 

 

This Agreement is governed by the internal substantive laws but not the choice of law rules of the State of Delaware.

 

 

 

No Guarantee of Continued Service:

 

GRANTEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE SET FORTH HEREIN IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE, NON- EMPLOYEE DIRECTOR OR CONSULTANT, AS APPLICABLE (NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED OR ACQUIRING THE SHARES HEREUNDER). GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT OR ENGAGEMENT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO

 


 

 

 

TERMINATE GRANTEE’S RELATIONSHIP WITH THE COMPANY AT ANY TIME AND FOR ANY REASON.

 

 

 

Incorporation of Plan:

 

Grantee acknowledges receipt of a copy of one of the following: (i) the Company’s annual report for its last fiscal year, (ii) the Company’s Form 10- K for its last fiscal year, or (iii) the last prospectus filed by the Company, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all of the terms and provisions thereof. Grantee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator with respect to any questions arising under the Plan or this Agreement.

 

 

 

Interpretation and Construction:

 

Whenever possible, each provision in this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, then (a) such provision will be deemed amended to accomplish the objectives of the provision as originally written to the fullest extent permitted by law and (b) all other provisions of this Agreement will remain in full force and effect. This Award is intended to be excepted from coverage under Section 409A of the Code and the regulations promulgated thereunder and shall be interpreted and construed accordingly. If, however, any benefit provided under this Agreement is subject to the provisions of Section 409A of the Code and the regulations promulgated thereunder, the provisions of this Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A and the regulations promulgated thereunder (or disregarded to the extent such provision cannot be so administered, interpreted, or construed). Notwithstanding the foregoing, Grantee recognizes and acknowledges that Section 409A of the Code may impose upon Grantee certain taxes or interest charges for which Grantee is and shall remain solely responsible.

 

 

 

 

 

No rule of strict construction will be implied against the Company or any other person in the interpretation of any of the terms of this Agreement or any rule or procedure established by the Administrator.

 

 

 

Power of Attorney:

 

Grantee hereby grants to the Company a power of attorney and declares that the Company shall be the attorney-in-fact to act for and on behalf of Grantee, to act in his/her name, place and stead, in connection with any and all transfers of Shares and associated rights hereunder, whether or not vested, to the Company pursuant to this Agreement, including in the event of Grantee’s termination.

 

 

 

Assurances:

 

Grantee agrees, upon demand of the Company, to do all acts and execute, deliver and perform all additional documents, instruments and agreements that may be required by the Company to implement the provisions and purposes of this Agreement.

 

All other terms and conditions applicable to this Award shall be as set forth in the Plan.

 

GRANTEE:

 

DICK’S SPORTING GOODS, INC. :

 

 

 

 

 

By:

 

Signature

 

 

Authorized Officer

 

 

 

 

 

 

Print Name

 

 

 

Exhibit 99.1

 

PRESS RELEASE

 

Dick’s Sporting Goods’ Third Quarter Results Exceed Expectations; Company Raises Guidance and Announces First Ever Dividend

 

·                   Consolidated non-GAAP earnings per diluted share increased 45% to $0.32 per diluted share in the third quarter of 2011 as compared to consolidated non-GAAP earnings per diluted share of $0.22 in the third quarter of 2010

 

·                   Consolidated same store sales increased 4.1% in the third quarter of 2011

 

·                   Company raises full-year estimated non-GAAP earnings range from $1.94 to 1.96 per diluted share to a range of $2.01 to 2.03 per diluted share

 

·                   Company declares an annual $0.50 per share dividend, payable on December 28, 2011

 

·                   Company ended the third quarter of 2011 with $483 million in cash, without any outstanding borrowings under its credit facility

 

PITTSBURGH, Pa., November 15, 2011 - Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended October 29, 2011.

 

Third Quarter Results

 

The Company reported consolidated non-GAAP net income for the third quarter ended October 29, 2011 of $40.2 million, or $0.32 per diluted share, exceeding previous expectations provided on August 16, 2011 of $0.24 to 0.26 per diluted share. The Company reported consolidated non-GAAP net income of $26.7 million, or $0.22 per diluted share for the third quarter ended October 30, 2010.

 

On a GAAP basis, the Company reported consolidated net income for the third quarter ended October 29, 2011 of $41.5 million, or $0.33 per diluted share. GAAP results include an after-tax increase to net income of $1.3 million, or $0.01 per diluted share, resulting from a partial reversal of litigation settlement costs previously accrued during the fourth quarter of fiscal 2010. For the third quarter ended October 30, 2010, the Company reported consolidated net income of $16.9 million, or $0.14 per diluted share, which included an $0.08 per diluted share impact from Golf Galaxy store closure costs. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading “Non-GAAP Net Income and Earnings Per Share Reconciliation.”

 

Net sales for the third quarter of 2011 increased by 9.3% to $1.2 billion due primarily to a 4.1% increase in consolidated same store sales and the opening of new stores. The 4.1% consolidated same store sales increase consisted of a 3.8% increase at Dick’s Sporting Goods stores, a 2.4% increase at Golf Galaxy stores and a 16.8% increase in its e-commerce business.

 

“In the third quarter, we generated sales and earnings meaningfully above our expectations while increasing our margins and further strengthening our balance sheet,” said Edward W. Stack, Chairman and CEO. “As a result of the solid third quarter performance and our expectations for the fourth quarter, we have raised our full-year guidance.”

 


 

New Stores

 

In the third quarter, the Company opened 19 Dick’s Sporting Goods stores. These stores are listed in a table later in the release under the heading “Store Count and Square Footage.”

 

As of October 29, 2011, the Company operated 474 Dick’s Sporting Goods stores in 42 states, with approximately 26.0 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.

 

Balance Sheet

 

The Company ended the third quarter of 2011 with $483 million in cash and cash equivalents and did not have any outstanding borrowings under its $440 million credit facility. At the end of the third quarter of 2010, the Company had $159 million in cash and cash equivalents and did not have any outstanding borrowings under its credit facility.

 

Inventory per square foot was 0.1% higher at the end of the third quarter 2011 as compared to the end of the third quarter of 2010.

 

Dividend

 

On November 14, 2011, the Company’s Board authorized and declared an annual dividend for 2011 in the amount of $0.50 per share on the Company’s Common Stock and Class B Common Stock.  The dividend is payable in cash on December 28, 2011 to stockholders of record at the close of business on December 7, 2011. The Company currently intends to begin payments of regular quarterly dividends beginning in 2012; however, the actual declaration of such future dividends and the establishment of the per share amount, record dates and payment dates for such future dividends are subject to the final determination of the Company’s Board, and will be dependent upon future earnings, cash flows, financial requirements and other factors.

 

“Our Board’s decision to initiate a dividend demonstrates its confidence in the Company’s financial strength and growth potential,” said Mr. Stack. “Our solid cash position and cash flow outlook enable us to continue to invest in future profitable growth opportunities, while also returning cash to our shareholders through the dividend.”

 

Year-to-Date Results

 

The Company reported consolidated non-GAAP net income for the 39 weeks ended October 29, 2011 of $142.8 million, or $1.14 per diluted share.  Non-GAAP earnings exclude a gain on sale of investment and the favorable impact of lower litigation settlement costs.  For the 39 weeks ended October 30, 2010, the Company reported consolidated non-GAAP net income of $104.4 million, or $0.86 per diluted share, which excluded the impact from Golf Galaxy store closure costs.

 

On a GAAP basis, the Company reported consolidated net income for the 39 weeks ended October 29, 2011 of $152.8 million, or $1.22 per diluted share compared to net income for the 39 weeks ended October 30, 2010 of $94.6 million, or $0.78 per diluted share. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading “Non-GAAP Net Income and Earnings Per Share Reconciliation.”

 

Net sales for the 39 weeks ended October 29, 2011 increased 7.4% from last year’s period to $3.6 billion primarily due to a consolidated same store sales increase of 2.9% and the opening of new stores.

 


 

Current 2011 Outlook

 

The Company’s current outlook for 2011 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as described later in this release.  Although the Company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct.

 

·                   Full Year 2011

 

·                   Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.01 to 2.03, excluding a gain on sale of investments and the favorable impact of lower litigation settlement costs. This is an increase from previous expectations of non-GAAP earnings per diluted share of $1.94 to 1.96, excluding a gain on sale of investments. For the full year 2010, the Company reported consolidated non-GAAP earnings per diluted share of $1.63, excluding Golf Galaxy store closing costs and litigation settlement costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $1.50 in 2010.

 

·                   Consolidated same store sales are currently expected to increase approximately 2% compared to a 7.2% increase last year and at the high end of the Company’s previous expectation of consolidated same store sales increase of 1 to 2%.

 

·                   The Company has completed its 2011 store development program by opening 36 new Dick’s Sporting Goods stores, remodeling 14 Dick’s Sporting Goods stores and relocating one Golf Galaxy store this year.

 

·                   Fourth Quarter 2011

 

·                   Based on an estimated 127 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.87 to 0.89 in the fourth quarter of 2011. In the fourth quarter of 2010, the Company reported consolidated non-GAAP earnings per diluted share of $0.76, excluding litigation settlement costs.  On a GAAP basis, the Company reported consolidated earnings per diluted share of $0.71 in the fourth quarter of 2010.

 

·                   Consolidated same store sales are currently expected to be flat to an increase of 1% compared to a 9.3% increase in the fourth quarter last year.

 

·                   The Company opened six new Dick’s Sporting Goods stores at the beginning of the fourth quarter of 2011, completing its 2011 store development program.

 

·                   Capital Expenditures

 

·                   In 2011, the Company anticipates capital expenditures to be approximately $252 million on a gross basis and approximately $197 million on a net basis.

 


 

Conference Call Info

 

The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the third quarter results.  Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s website located at http://www.dickssportinggoods.com/investors . To listen to the live call, please go to the website at least fifteen minutes early to register and download and install any necessary audio software.

 

In addition to the webcast, the call can be accessed by dialing (866) 362-4829 (domestic callers) or (617) 597-5346 (international callers) and entering confirmation code 84609203.

 

For those who cannot listen to the live web cast, it will be archived on the Company’s website for 30 days.  In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 83030736. The dial-in replay will be available for 30 days following the live call.

 

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

 

Except for historical information contained herein, the statements in this release or otherwise made by our management in connection with the subject matter of this release are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Our future performance and financial results may differ materially from those included in any such forward-looking statements and such forward-looking statements should not be relied upon by investors as a prediction of actual results. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or other words with similar meanings . Forward-looking statements include, among other things, statements about our future expectations regarding growth, revenues, earnings, profitability, spending, margins, costs, liquidity, store openings and operations, inventory, private brand products, our actions, plans or strategies.

 

The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2011 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by our management: continuation of the ongoing economic and financial downturn and other changes in macroeconomic factors or market conditions that impact consumer spending; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; fluctuations in our quarterly operating results or same store sales; volatility in our stock price; our ability to access adequate capital; competition in the sporting goods industry; limitations on the availability of attractive store locations; inability to manage our growth, open new stores on a timely basis or expand successfully in new and existing markets; changes in consumer demand; unauthorized disclosure of sensitive, personal or confidential information; disruptions in our or our vendors’ supply chains; factors affecting our vendors, including potential increases in the costs of products, their ability to maintain their inventory and production levels and their ability or willingness to provide us with sufficient quantities of products at acceptable prices; factors that could negatively affect our private brand offerings; risks and costs relating to product liability claims, product recalls and the regulation of and other hazards associated with certain products we sell; the loss of our key executives; costs and risks associated with increased or changing laws and regulations affecting our business; our ability to secure and protect our intellectual property; risks relating to operating as a multi-channel retailer, including the impact of rapid technological change, internet security and privacy issues and the threat of systems failure or inadequacy;

 


 

problems with our current management information systems or software; disruption at our distribution facilities; the seasonality of our business; regional risks because our stores are generally concentrated in the eastern half of the United States; costs and risks related to litigation or other claims against us; costs and uncertainties associated with pursuing strategic acquisitions; our ability to meet our labor needs; currency exchange rate fluctuations; risks associated with our Chief Executive Officer and his relatives’ controlling interest in the Company; the impact of foreign instability and conflict; our anti-takeover provisions, which could prevent or delay a change in control of the Company; and impairment in the carrying value of goodwill or other acquired intangibles.

 

Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended January 29, 2011 as filed with the Securities and Exchange Commission (“SEC”) on March 18, 2011 and in other reports filed with the SEC.  In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not assume any obligation and do not intend to update any forward-looking statements except as may be required by the securities laws.

 

About Dick’s Sporting Goods, Inc.

 

Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer. As of October 29, 2011, the Company operated 474 Dick’s Sporting Goods stores in 42 states, 81 Golf Galaxy stores in 30 states and e-commerce website and catalog operations for both Dick’s Sporting Goods and Golf Galaxy. Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/investors . The Company’s website is not part of this release.

 

Contact:

 

Timothy E. Kullman, EVP – Finance, Administration, and Chief Financial Officer or

Anne-Marie Megela, Director, Investor Relations

(724) 273-3400

investors@dcsg.com

 


 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

 

 

13 Weeks Ended

 

 

 

October 29,

 

% of

 

October 30,

 

% of

 

 

 

2011

 

Sales  (1)

 

2010

 

Sales  (1)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,179,702

 

100.00

%

$

1,078,984

 

100.00

%

Cost of goods sold, including occupancy and distribution costs

 

829,111

 

70.28

 

771,913

 

71.54

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

350,591

 

29.72

 

307,071

 

28.46

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

272,233

 

23.08

 

272,467

 

25.25

 

Pre-opening expenses

 

6,796

 

0.58

 

6,396

 

0.59

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

71,562

 

6.07

 

28,208

 

2.61

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

3,540

 

0.30

 

3,518

 

0.33

 

Other expense (income)

 

1,568

 

0.13

 

(1,177

)

(0.11

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

66,454

 

5.63

 

25,867

 

2.40

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

24,970

 

2.12

 

9,004

 

0.83

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

41,484

 

3.52

%

$

16,863

 

1.56

%

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

 

$

0.15

 

 

 

Diluted

 

$

0.33

 

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

 

120,432

 

 

 

116,024

 

 

 

Diluted

 

125,552

 

 

 

121,408

 

 

 

 

(1)  Column does not add due to rounding

 


 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

 

 

 

39 Weeks Ended

 

 

 

October 29,

 

% of

 

October 30,

 

% of

 

 

 

2011

 

Sales  (1)

 

2010

 

Sales  (1)

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,600,246

 

100.00

%

$

3,352,579

 

100.00

%

Cost of goods sold, including occupancy and distribution costs

 

2,518,137

 

69.94

 

2,383,142

 

71.08

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

1,082,109

 

30.06

 

969,437

 

28.92

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

821,698

 

22.82

 

796,988

 

23.77

 

Pre-opening expenses

 

12,717

 

0.35

 

9,191

 

0.27

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

247,694

 

6.88

 

163,258

 

4.87

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

(13,900

)

(0.39

)

—

 

—

 

Interest expense

 

10,504

 

0.29

 

10,528

 

0.31

 

Other expense (income)

 

977

 

0.03

 

(1,220

)

(0.04

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

250,113

 

6.95

 

153,950

 

4.59

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

97,283

 

2.70

 

59,362

 

1.77

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

152,830

 

4.24

%

$

94,588

 

2.82

%

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.27

 

 

 

$

0.82

 

 

 

Diluted

 

$

1.22

 

 

 

$

0.78

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

 

120,000

 

 

 

115,665

 

 

 

Diluted

 

125,585

 

 

 

120,945

 

 

 

 

(1)  Column does not add due to rounding

 


 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands)

 

 

 

October 29,

 

October 30,

 

January 29,

 

 

 

2011

 

2010

 

2011

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

483,372

 

$

159,446

 

$

546,052

 

Accounts receivable, net

 

63,568

 

66,321

 

34,978

 

Income taxes receivable

 

35,180

 

26,263

 

9,050

 

Inventories, net

 

1,243,152

 

1,162,152

 

896,895

 

Prepaid expenses and other current assets

 

63,542

 

59,687

 

58,394

 

Deferred income taxes

 

14,028

 

14,611

 

18,961

 

Total current assets

 

1,902,842

 

1,488,480

 

1,564,330

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

745,129

 

693,003

 

684,886

 

Intangible assets, net

 

50,755

 

47,308

 

51,070

 

Goodwill

 

200,594

 

200,594

 

200,594

 

Other assets:

 

 

 

 

 

 

 

Deferred income taxes

 

8,225

 

52,375

 

27,157

 

Investments

 

1,000

 

11,673

 

10,789

 

Other

 

66,087

 

58,423

 

58,710

 

Total other assets

 

75,312

 

122,471

 

96,656

 

TOTAL ASSETS

 

$

2,974,632

 

$

2,551,856

 

$

2,597,536

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

Accounts payable

 

$

663,091

 

$

609,099

 

$

446,511

 

Accrued expenses

 

266,162

 

252,203

 

279,284

 

Deferred revenue and other liabilities

 

86,286

 

79,174

 

121,753

 

Current portion of other long-term debt and leasing obligations

 

995

 

978

 

995

 

Total current liabilities

 

1,016,534

 

941,454

 

848,543

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

Other long-term debt and leasing obligations

 

139,108

 

145,949

 

139,846

 

Deferred revenue and other liabilities

 

256,644

 

242,232

 

245,566

 

Total long-term liabilities

 

395,752

 

388,181

 

385,412

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

Common stock

 

957

 

915

 

938

 

Class B common stock

 

250

 

250

 

250

 

Additional paid-in capital

 

677,716

 

570,774

 

625,184

 

Retained earnings

 

883,298

 

642,979

 

730,468

 

Accumulated other comprehensive income

 

125

 

7,303

 

6,741

 

Total stockholders’ equity

 

1,562,346

 

1,222,221

 

1,363,581

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

2,974,632

 

$

2,551,856

 

$

2,597,536

 

 


 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

 

 

 

39 Weeks Ended

 

 

 

October 29,

 

October 30,

 

 

 

2011

 

2010

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

152,830

 

$

94,588

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation and amortization

 

83,616

 

80,311

 

Deferred income taxes

 

27,795

 

(1,313

)

Stock-based compensation

 

19,075

 

17,933

 

Excess tax benefit from exercise of stock options

 

(15,320

)

(7,676

)

Tax benefit from exercise of stock options

 

421

 

693

 

Other non-cash items

 

1,154

 

1,162

 

Gain on sale of investment

 

(13,900

)

—

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(17,908

)

(10,454

)

Inventories

 

(346,257

)

(266,376

)

Prepaid expenses and other assets

 

(5,858

)

(22,404

)

Accounts payable

 

204,999

 

145,891

 

Accrued expenses

 

(22,821

)

(12,975

)

Income taxes payable/receivable

 

(10,944

)

(20,519

)

Deferred construction allowances

 

21,203

 

4,973

 

Deferred revenue and other liabilities

 

(41,921

)

(21,349

)

Net cash provided by (used in) operating activities

 

36,164

 

(17,515

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Capital expenditures

 

(148,038

)

(117,452

)

Proceeds from sale of investment

 

14,140

 

—

 

Proceeds from sale-leaseback transactions

 

9,071

 

10,731

 

Deposits and purchases of other assets

 

(18,052

)

—

 

Net cash used in investing activities

 

(142,879

)

(106,721

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Payments on other long-term debt and leasing obligations

 

(738

)

(697

)

Construction allowance receipts

 

—

 

—

 

Proceeds from exercise of stock options

 

21,428

 

19,244

 

Excess tax benefit from exercise of stock options

 

15,320

 

7,676

 

Repurchase of common stock

 

(3,559

)

—

 

Increase in bank overdraft

 

11,581

 

31,842

 

Net cash provided by financing activities

 

44,032

 

58,065

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

3

 

6

 

 

 

 

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(62,680

)

(66,165

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

546,052

 

225,611

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

483,372

 

$

159,446

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Accrued property and equipment

 

$

9,699

 

$

18,764

 

Cash paid for interest

 

$

9,351

 

$

9,287

 

Cash paid for income taxes

 

$

79,204

 

$

80,597

 

 


 

Store Count and Square Footage

 

The stores that opened during the third quarter of 2011 are as follows:

 

DICK’S

Store

 

Market

Clearwater, FL

 

Tampa, FL

Layton, UT

 

Salt Lake City, UT

Yonkers, NY

 

New York Metro

Norcross, GA

 

Atlanta, GA

Burlington, NC

 

Burlington, NC

Lexington Park, MD

 

Lexington Park, MD

Suffolk, VA

 

Norfolk, VA

El Cajon, CA

 

San Diego, CA

Liberty, MO

 

Kansas City, MO

West Chesterfield, VA

 

Richmond, VA

Conway, AR

 

Conway, AR

Brunswick, GA

 

Brunswick, GA

Ann Arbor, MI

 

Detroit, MI

Hattiesburg, MS

 

Hattiesburg, MS

Fort Smith, AR

 

Fort Smith, AR

Naperville, IL

 

Chicago, IL

Lisbon, CT

 

Lisbon, CT

Heath, OH

 

Heath, OH

Gainesville, VA

 

Washington, DC

 

 

 

 

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

 

 

 

Fiscal 2011

 

Fiscal 2010

 

 

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

Beginning stores

 

444

 

81

 

525

 

419

 

91

 

510

 

Q1 New stores

 

3

 

—

 

3

 

5

 

—

 

5

 

Q2 New stores

 

8

 

—

 

8

 

1

 

—

 

1

 

Q3 New stores

 

19

 

—

 

19

 

12

 

—

 

12

 

Closed stores

 

—

 

—

 

—

 

—

 

(12

)

(12

)

Ending stores

 

474

 

81

 

555

 

437

 

79

 

516

 

Remodeled stores

 

14

 

—

 

14

 

11

 

—

 

11

 

Relocated stores

 

—

 

1

 

1

 

1

 

—

 

1

 

 

Square Footage:

(in millions)

 

 

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

 

 

 

 

 

 

Q1 2010

 

23.6

 

1.5

 

25.1

 

 

 

 

 

 

 

Q2 2010

 

23.7

 

1.5

 

25.2

 

 

 

 

 

 

 

Q3 2010

 

24.3

 

1.3

 

25.6

 

 

 

 

 

 

 

Q4 2010

 

24.6

 

1.3

 

25.9

 

 

 

 

 

 

 

Q1 2011

 

24.7

 

1.3

 

26.0

 

 

 

 

 

 

 

Q2 2011

 

25.1

 

1.3

 

26.4

 

 

 

 

 

 

 

Q3 2011

 

26.0

 

1.3

 

27.3

 

 

 

 

 

 

 

 


 

Non-GAAP Financial Measures

 

In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company provides information regarding net income and earnings per diluted share adjusted for gain on sale of investment and litigation settlement costs; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses (“Adjusted EBITDA”); a reconciliation from the Company’s gross capital expenditures, net of tenant allowances; and calculations of consolidated and Dick’s Sporting Goods new store productivity.  These measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company’s management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company’s website at http://www.dickssportinggoods.com/investors .

 

Non-GAAP Net Income and Earnings Per Share Reconciliation

(in thousands, except per share data):

 

 

 

13 Weeks Ended October 29, 2011

 

 

 

As

 

Litigation

 

Non-GAAP

 

 

 

Reported

 

Settlement

 

Total

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,179,702

 

$

—

 

$

1,179,702

 

Cost of goods sold, including occupancy and distribution costs

 

829,111

 

—

 

829,111

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

350,591

 

—

 

350,591

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

272,233

 

2,148

 

274,381

 

Pre-opening expenses

 

6,796

 

—

 

6,796

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

71,562

 

(2,148

)

69,414

 

 

 

 

 

 

 

 

 

Interest expense

 

3,540

 

—

 

3,540

 

Other expense

 

1,568

 

—

 

1,568

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

66,454

 

(2,148

)

64,306

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

24,970

 

(859

)

24,111

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

41,484

 

$

(1,289

)

$

40,195

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

 

$

0.33

 

Diluted

 

$

0.33

 

 

 

$

0.32

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

120,432

 

 

 

120,432

 

Diluted

 

125,552

 

 

 

125,552

 

 

During the third quarter of 2011, the Company funded claims submitted by class members of wage and hour class action lawsuits as part of a court approved settlement.  The settlement funding was $2.1 million lower than the previous estimate of $10.8 million, recognized in the fourth quarter of 2010.  The provision for income taxes was calculated at 40%, which approximates the Company’s blended tax rate.

 


 

 

 

39 Weeks Ended October 29, 2011

 

 

 

As

 

Gain on Sale

 

Litigation

 

Non-GAAP

 

 

 

Reported

 

of Investment

 

Settlement

 

Total

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

3,600,246

 

$

—

 

$

—

 

$

3,600,246

 

Cost of goods sold, including occupancy and distribution costs

 

2,518,137

 

—

 

—

 

2,518,137

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

1,082,109

 

—

 

—

 

1,082,109

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

821,698

 

—

 

2,148

 

823,846

 

Pre-opening expenses

 

12,717

 

—

 

—

 

12,717

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

247,694

 

—

 

(2,148

)

245,546

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

(13,900

)

13,900

 

—

 

—

 

Interest expense

 

10,504

 

—

 

—

 

10,504

 

Other expense

 

977

 

—

 

—

 

977

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

250,113

 

(13,900

)

(2,148

)

234,065

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

97,283

 

(5,162

)

(859

)

91,262

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

152,830

 

$

(8,738

)

$

(1,289

)

$

142,803

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.27

 

 

 

 

 

$

1.19

 

Diluted

 

$

1.22

 

 

 

 

 

$

1.14

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

 

Basic

 

120,000

 

 

 

 

 

120,000

 

Diluted

 

125,585

 

 

 

 

 

125,585

 

 

During the second quarter of 2011, the Company recorded a pre-tax gain of $13.9 million relating to the sale of available-for-sale securities.  During the third quarter of 2011, the Company funded claims submitted by class members of wage and hour class action lawsuits as part of a court approved settlement.  The settlement funding was $2.1 million lower than the previous estimate of $10.8 million, recognized in the fourth quarter of 2010.  The provision for income taxes for the litigation settlement was calculated at 40%, which approximates the Company’s blended tax rate.

 


 

Adjusted EBITDA

 

Adjusted EBITDA should not be considered as an alternative to net income or any other GAAP measure of performance or liquidity.  Adjusted EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies.  Adjusted EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, and capital investments.

 

 

 

13 Weeks Ended

 

 

 

October 29,

 

October 30,

 

 

 

2011

 

2010

 

 

 

(dollars in thousands)

 

Net income

 

$

41,484

 

$

16,863

 

Provision for income taxes

 

24,970

 

9,004

 

Interest expense

 

3,540

 

3,518

 

Depreciation and amortization

 

28,300

 

28,158

 

EBITDA

 

$

98,294

 

$

57,543

 

Add: Golf Galaxy store closing costs

 

—

 

16,376

 

Less: Litigation settlement

 

(2,148

)

—

 

Adjusted EBITDA, as defined

 

$

96,146

 

$

73,919

 

 

 

 

 

 

 

% increase in Adjusted EBITDA

 

30

%

 

 

 

 

 

39 Weeks Ended

 

 

 

October 29,

 

October 30,

 

 

 

2011

 

2010

 

 

 

(dollars in thousands)

 

Net income

 

$

152,830

 

$

94,588

 

Provision for income taxes

 

97,283

 

59,362

 

Interest expense

 

10,504

 

10,528

 

Depreciation and amortization

 

83,616

 

80,311

 

EBITDA

 

$

344,233

 

$

244,789

 

Add: Golf Galaxy store closing costs

 

—

 

16,376

 

Less: Gain on sale of investment

 

(13,900

)

—

 

Less: Litigation settlement

 

(2,148

)

—

 

Adjusted EBITDA, as defined

 

$

328,185

 

$

261,165

 

 

 

 

 

 

 

% increase in Adjusted EBITDA

 

26

%

 

 

 

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

 

The following table represents a reconciliation of the Company’s gross capital expenditures to its capital expenditures, net of tenant allowances.

 

 

 

39 Weeks Ended

 

 

 

October 29,

 

October 30,

 

 

 

2011

 

2010

 

 

 

(dollars in thousands)

 

Gross capital expenditures

 

$

(148,038

)

$

(117,452

)

Proceeds from sale-leaseback transactions

 

9,071

 

10,731

 

Changes in deferred construction allowances

 

21,203

 

4,973

 

Construction allowance receipts

 

—

 

—

 

Net capital expenditures

 

$

(117,764

)

$

(101,748

)

 


 

New Store Productivity Calculation

 

The following calculations represent: (1) the new store productivity calculation on a consolidated basis; and (2) the new store productivity calculation for Dick’s Sporting Goods only, in each case for the periods shown.  Golf Galaxy stores and the Company’s e-commerce business are excluded from the Dick’s Sporting Goods only calculation.  New store productivity compares the sales increase for all stores not included in the same store sales calculation with the increase in store square footage.

 

 

 

Consolidated

 

Dick’s Sporting Goods Only

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

October 29,

 

October 30,

 

October 29,

 

October 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Sales % increase for the period

 

9.3

%

 

 

10.5

%

 

 

Same store sales % increase for the period

 

4.1

%

 

 

3.8

%

 

 

New store sales % increase (A)

 

5.3

%

 

 

6.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Store square footage (000’s):

 

 

 

 

 

 

 

 

 

Beginning of period

 

26,462

 

25,168

 

25,122

 

23,689

 

End of period

 

27,315

 

25,556

 

25,975

 

24,262

 

Average for the period

 

26,889

 

25,362

 

25,549

 

23,976

 

Average square footage % increase for the period (B)

 

6.0

%

 

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

New store productivity (A)/(B)  (1)

 

87.7

%

 

 

101.9

%

 

 

 

(1)   Amounts do not recalculate due to rounding.