EX-99.1 2 l34618aexv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
     
(DICKS LOGO)
  PRESS RELEASE
Dick’s Sporting Goods Reports Third Quarter Results; In line With Expectations
PITTSBURGH, Pa., November 20, 2008 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended November 1, 2008. The results include the operating results of Golf Galaxy and Chick’s Sporting Goods from their respective acquisition dates of February 13, 2007 and November 30, 2007.
Third Quarter Results
The Company reported net income for the third quarter ended November 1, 2008 of $9.2 million, or $0.08 per diluted share, excluding the impact of costs related to the Golf Galaxy integration. These results include a benefit to the Company’s earnings of approximately $0.01 per diluted share from a tax settlement. The third quarter earnings per diluted share are in line with earnings guidance provided on August 21, 2008 of $0.04 — 0.08 per diluted share. For the third quarter ended November 3, 2007, net income and earnings per diluted share were $12.2 million and $0.10, respectively.
Including the pre-tax impact of costs related to the Golf Galaxy integration of $3.1 million, or $0.02 per diluted share, the Company reported net income for the third quarter ended November 1, 2008 of $7.4 million, or $0.06 per diluted share.
Net sales for the quarter increased 10.2% to $924.2 million due to the opening of new stores, the inclusion of Chick’s Sporting Goods in this year’s quarterly results and a 2.8% decrease in comparable store sales. The 2.8% consolidated same store sales decline consisted of a 2.5% decrease in Dick’s Sporting Goods stores and a 7.4% decline in the Golf Galaxy stores. Chick’s Sporting Goods was acquired on November 30, 2007 and is excluded from the comparable store sales calculation.
“We are pleased to generate results in line with our expectations, particularly in light of the current environment,” said Edward W. Stack, Chairman, CEO and President. “In these difficult times, we are carefully growing the business, successfully managing inventory and enforcing strict expense controls.”
Golf Galaxy Integration
By the end of this fiscal year, the Company expects to integrate Golf Galaxy’s operations. Costs related to the integration were $3.1 million in the third quarter. The Company estimates $4.0 million will be incurred in the fourth quarter of 2008. Merger and integration costs include the expense of severance, retention, office closure and related taxes. The Pro-forma to GAAP reconciliation is included in a table later in the release under the heading “Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation.”
New Stores
In the third quarter, the Company opened 26 Dick’s Sporting Goods stores and one Golf Galaxy store. The stores that opened in the third quarter are listed in a table later in the release under the heading “Store Count and Square Footage.” The Company also converted one Chick’s Sporting Goods store.

 

 

Year-to-Date Results
The Company reported net income for the 39 weeks ended November 1, 2008 of $75.5 million, or $0.64 per diluted share, excluding the costs associated with the integration of Golf Galaxy. For the 39 weeks ended November 3, 2007, net income and earnings per diluted share were $81.9 million and $0.71, respectively. The Pro-forma to GAAP reconciliation is included in a table later in the release under the heading “Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation.”
Including the integration costs related to Golf Galaxy, which totals $6.2 million, or $0.05 per diluted share, the Company reported net income for the 39 weeks ended November 1, 2008 of $69.3 million, or $0.59 per diluted share.
Net sales increased 9% to $2,922.6 million primarily due to the opening of new stores, the inclusion of Chick’s Sporting Goods in this year’s results and a comparable store sales decrease of 3.7%. Year-to-date comparable store sales exclude Golf Galaxy and Chick’s Sporting Goods.
Balance Sheet
At the end of the third quarter, inventory per square foot was 4.4% less than in 2007 on a pro-forma consolidated basis and 5.3% less per square foot for Dick’s Sporting Goods stores only. The Company ended the quarter with approximately $185 million in outstanding borrowings on its $350 million line of credit and expects to end fiscal 2008 with no outstanding borrowings on the revolving credit facility. The Company has also amended its credit agreement to exercise the accordion feature and increase the aggregate revolving loan commitments by $90 million to a total of $440 million, under the same terms and conditions.
Current 2008 Outlook
Considering current business trends, the uncertainty in the overall economic environment and the unpredictability of consumer behavior approaching the holiday season, the Company is lowering its guidance for the year and the fourth quarter.
The Company’s current outlook for 2008 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
  •   Full Year 2008
  •   Based on an estimated 117 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.13 - 1.20, excluding costs from the Golf Galaxy integration. The Company anticipates reporting earnings per diluted share of approximately $1.06 — 1.13, including the integration costs. Earnings per diluted share for the full year 2007 were $1.33.
 
  •   Comparable store sales, which include Dick’s Sporting Goods stores only, are expected to decrease approximately 5 to 4%. The comparable store sales calculation for the full year excludes the Golf Galaxy and Chick’s Sporting Goods stores.
 
  •   The Company has opened 43 new Dick’s Sporting Goods stores, relocated one Dick’s Sporting Goods store and converted one Chick’s Sporting Goods store to a Dick’s Sporting Goods store, completing the new store program for Dick’s Sporting Goods stores in 2008. The Company expects to open ten new Golf Galaxy stores in 2008.

 

 

  •   Fourth Quarter 2008
  •   Based on an estimated 117 million diluted shares outstanding, the Company anticipates reporting consolidated earnings per diluted share of approximately $0.49 — 0.56, excluding costs from the Golf Galaxy integration. The Company anticipates reporting earnings per diluted share of approximately $0.47 — 0.54, including the Golf Galaxy integration costs. Earnings per diluted share for the fourth quarter of 2007 were $0.62.
 
  •   Comparable store sales are expected to decrease approximately 10 to 6%, which compares to a 3.4% increase in the fourth quarter last year, as adjusted for the shifted retail calendar. The comparable store sales calculation for the fourth quarter includes Golf Galaxy stores and excludes the Chick’s Sporting Goods stores.
 
  •   The Company expects to open four new Golf Galaxy Stores.
Conference Call Info
The Company will be hosting a conference call today at 10:00 am eastern time to discuss the third quarter and year-to-date results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, the web cast will be archived on the Company’s web site for 30 days. In addition, a dial-in replay will be available shortly after the call. To listen to the replay, investors should dial 888-286-8010 (domestic callers) or 617-801-6888 (international callers) and enter confirmation code 39979255. 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 are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “guidance,” “estimate,” “intend,” “predict,” and “continue” or similar words. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, without limitation, changes in macroeconomic factors and market conditions, including the housing market and fuel costs, that impact the level of consumer spending for the types of merchandise sold by the Company, potential volatility in our stock price and the tightening of availability and higher costs associated with current and new sources of credit resulting from uncertainty in financial markets, changes in consumer demand, the retailing environment and customer preferences and spending habits, competitive pressures, currency exchange rate fluctuations, weather conditions, litigation, risks and costs associated with combining businesses and/or assimilating acquired companies and our ability to manage our operations and growth. Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended February 2, 2008 as filed with the Securities and Exchange Commission on March 27, 2008, and other reports filed with the Securities and Exchange Commission. The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws.
The prior period EPS numbers presented in this press release have been adjusted to give effect to the two-for-one stock split, in the form of a stock dividend, which became effective on October 19, 2007 to our stockholders of record on September 28, 2007.

 

 

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. As of November 1, 2008, the Company operated 384 Dick’s Sporting Goods stores in 39 states primarily throughout the eastern half of the U.S. The Company also owns Golf Galaxy, Inc., a multi-channel golf specialty retailer, with 85 stores in 30 states, ecommerce websites and catalog operations and Chick’s Sporting Goods, Inc., which operates 14 specialty sporting goods stores in Southern California.
Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page).
Contact:
Timothy E. Kullman, EVP — Finance, Administration & 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  
    November 1,     % of     November 3,     % of  
    2008     Sales (1)     2007     Sales (1)  
 
                                
Net sales
   $ 924,191       100.00 %   $ 838,831       100.00 %
Cost of goods sold, including occupancy and distribution costs
     671,091       72.61       600,168       71.55  
 
                        
 
                                
GROSS PROFIT
     253,100       27.39       238,663       28.45  
 
                                
Selling, general and administrative expenses
     228,861       24.76       209,303       24.95  
Pre-opening expenses
     7,541       0.82       7,678       0.92  
Merger and integration costs
     3,096       0.33       —       —  
 
                        
 
                                
INCOME FROM OPERATIONS
     13,602       1.47       21,682       2.58  
 
                                
Interest expense, net
     2,902       0.31       1,725       0.21  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     10,700       1.16       19,957       2.38  
 
                                
Provision for income taxes
     3,307       0.36       7,724       0.92  
 
                        
 
                                
NET INCOME
   $ 7,393       0.80 %   $ 12,233       1.46 %
 
                        
 
                                
EARNINGS PER COMMON SHARE:
                                
Basic
   $ 0.07             $ 0.11          
Diluted
   $ 0.06             $ 0.10          
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
     111,906               110,804          
Diluted
     116,774               118,305          
 
(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  
    November 1,     % of     November 3,     % of  
    2008     Sales     2007     Sales (1)  
 
                                
Net sales
   $ 2,922,596       100.00 %   $ 2,675,806       100.00 %
Cost of goods sold, including occupancy and distribution costs
     2,090,731       71.54       1,894,063       70.78  
 
                        
 
                                
GROSS PROFIT
     831,865       28.46       781,743       29.22  
 
                                
Selling, general and administrative expenses
     686,495       23.49       620,059       23.17  
Pre-opening expenses
     16,146       0.55       17,518       0.65  
Merger and integration costs
     5,975       0.20       —       —  
 
                        
 
                                
INCOME FROM OPERATIONS
     123,249       4.22       144,166       5.39  
 
                                
Gain on sale of asset
     (2,356 )     (0.08 )     —       —  
Interest expense, net
     6,989       0.24       8,560       0.32  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     118,616       4.06       135,606       5.07  
 
                                
Provision for income taxes
     49,334       1.69       53,741       2.01  
 
                        
 
                                
NET INCOME
   $ 69,282       2.37 %   $ 81,865       3.06 %
 
                        
 
                                
EARNINGS PER COMMON SHARE:
                                
Basic
   $ 0.62             $ 0.75          
Diluted
   $ 0.59             $ 0.71          
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
     111,556               108,827          
Diluted
     116,979               116,092          
 
(1)   Column does not add due to rounding

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                         
    November 1,     November 3,     February 2,  
    2008     2007     2008  
    (unaudited)     (unaudited)          
ASSETS
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 41,646     $ 39,657     $ 50,307  
Accounts receivable, net
     85,872       68,841       62,035  
Income taxes receivable
     31,521       294       —  
Inventories, net
     1,142,233       1,024,817       887,364  
Prepaid expenses and other current assets
     45,579       42,711       50,274  
Deferred income taxes
     18,360       3,888       19,714  
 
                  
Total current assets
     1,365,211       1,180,208       1,069,694  
 
                        
Property and equipment, net
     550,070       504,114       531,779  
Construction in progress — leased facilities
     1,627       13,179       23,744  
Intangible assets, net
     99,000       80,778       80,038  
Goodwill
     303,736       266,912       304,366  
Other assets:
                        
Deferred income taxes
     25,908       —       6,366  
Investments
     1,905       5,174       3,225  
Other
     22,726       20,240       16,423  
 
                  
Total other assets
     50,539       25,414       26,014  
 
                  
TOTAL ASSETS
   $ 2,370,183     $ 2,070,605     $ 2,035,635  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accounts payable
   $ 509,214     $ 466,679     $ 365,750  
Accrued expenses
     210,780       216,537       228,816  
Deferred revenue and other liabilities
     77,719       71,296       104,549  
Income taxes payable
     —       —       62,583  
Current portion of other long-term debt and capital leases
     219       152       250  
 
                  
Total current liabilities
     797,932       754,664       761,948  
 
                  
LONG-TERM LIABILITIES:
                        
Senior convertible notes
     172,500       172,500       172,500  
Revolving credit borrowings
     184,827       140,313       —  
Other long-term debt and capital leases
     8,441       8,278       8,685  
Non-cash obligations for construction in progress — leased facilities
     1,627       13,179       23,744  
Deferred revenue and other liabilities
     213,937       175,644       180,238  
 
                  
Total long-term liabilities
     581,332       509,914       385,167  
 
                  
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
                        
Common stock
     857       848       848  
Class B common stock
     262       264       263  
Additional paid-in capital
     450,510       405,732       416,423  
Retained earnings
     538,256       395,803       468,974  
Accumulated other comprehensive income
     1,034       3,380       2,012  
 
                  
Total stockholders’ equity
     990,919       806,027       888,520  
 
                  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 2,370,183     $ 2,070,605     $ 2,035,635  
 
                  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
                 
    39 Weeks Ended  
    November 1,     November 3,  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 69,282     $ 81,865  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
                
Depreciation and amortization
     65,826       55,567  
Deferred income taxes
     (17,901 )     (12,920 )
Stock-based compensation
     20,199       22,490  
Excess tax benefit from stock-based compensation
     (1,537 )     (34,606 )
Tax benefit from exercise of stock options
     333       4,902  
Tax benefit from convertible bond hedge
     2,248       2,084  
Gain on sale of asset
     (2,356 )     —  
Changes in assets and liabilities:
                
Accounts receivable
     (1,685 )     (24,857 )
Income taxes payable/receivable
     (91,695 )     45,220  
Inventories
     (254,869 )     (312,379 )
Prepaid expenses and other assets
     (9,135 )     2,875  
Accounts payable
     137,360       150,745  
Accrued expenses
     (16,045 )     17,068  
Deferred construction allowances
     17,452       28,388  
Deferred revenue and other liabilities
     (5,303 )     (8,813 )
 
            
Net cash (used in) provided by operating activities
     (87,826 )     17,629  
 
            
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Capital expenditures
     (159,928 )     (119,959 )
Purchase of corporate aircraft
     (25,107 )     —  
Proceeds from sale of corporate aircraft
     27,463       —  
Proceeds from sale-leaseback transactions
     24,278       17,568  
Payment for purchase of Golf Galaxy, net of $4,859 cash acquired
     —       (222,095 )
 
            
Net cash used in investing activities
     (133,294 )     (324,486 )
 
            
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Revolving credit borrowings, net
     184,827       140,313  
Payments on other long-term debt and capital leases
     (273 )     (140 )
Construction allowance receipts
     10,424       8,324  
Proceeds from sale of common stock under employee stock purchase plan
     2,986       2,466  
Proceeds from exercise of stock options
     6,976       29,568  
Excess tax benefit from stock-based compensation
     1,537       34,606  
Increase (decrease) in bank overdraft
     6,104       (4,739 )
 
            
Net cash provided by financing activities
     212,581       210,398  
 
            
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
     (122 )     174  
 
            
NET DECREASE IN CASH AND CASH EQUIVALENTS
     (8,661 )     (96,285 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     50,307       135,942  
 
            
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 41,646     $ 39,657  
 
            
Supplemental disclosure of cash flow information:
                
Construction in progress — leased facilities
   $ (22,117 )   $ 92  
Accrued property and equipment
   $ (7,966 )   $ (4,835 )
Cash paid for interest
   $ 6,511     $ 9,239  
Cash paid for income taxes
   $ 160,850     $ 10,346  
Stock options issued for acquisition
   $ 7,123     $ 9,117  

 

 

Store Count and Square Footage
The stores that opened during the third quarter of 2008 are as follows:
             
DICK’S SPORTING GOODS
Store   Market   Store   Market
 
            
Manahawkin, NJ
  NJ North   Irving, TX   Dallas
S.W. Orlando, FL
  Orlando   Knightdale, NC   Raleigh/Durham
Baton Rouge, LA
  Baton Rouge   Alcoa, TN   Knoxville
Austin (Bee Caves), TX
  Austin   Anderson, SC   Spartanburg
Harker Heights, TX
  Killeen/Waco   Yorkville, IL   Chicago
Danville, VA
  Roanoke/Lynchburg   Oro Valley, AZ   Tuscon
Highland, IN
  Indianapolis   Memphis, TN   Memphis
Southglenn, CO
  Denver   Fort Myers, FL   Fort Myers
S. Aurora, CO
  Denver   Allen, TX   Dallas
Grafton, WI
  Milwaukee   Bradley, IL   Chicago
Kenosha, WI
  Milwaukee   Dale City, VA   Washington, DC
Glendale, AZ
  Phoenix   Sangertown, NY   Utica
Horseheads, NY (relo)
  Elmira   Selinsgrove, PA   Scranton/Wilkes Barre
Roseville, MN
  Minneapolis        
 
            
GOLF GALAXY        
         
Store
  Market        
             
 
            
Jacksonville, FL
  Jacksonville        
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
                                                         
    Fiscal 2008     Fiscal 2007  
    Dick’s             Chick’s             Dick’s              
    Sporting     Golf     Sporting             Sporting     Golf        
    Goods     Galaxy     Goods     Total     Goods     Galaxy     Total  
Beginning stores
     340       79       15       434       294       65       359  
Q1 New
     8       4       —       12       15       10       25  
Q2 New
     9       1       —       10       6       2       8  
Q3 New
     26       1       —       27       25       —       25  
Q3 Converted
     1       —       (1 )     —       —       —       —  
 
                                          
Ending stores
     384       85       14       483       340       77       417  
 
                                          
 
                                                        
Relocated stores
     1       —       —       1       1       —       1  
 
                                          
Square Footage:
(in millions)
                                                         
    Dick’s             Chick’s        
    Sporting     Golf     Sporting        
    Goods     Galaxy     Goods     Total  
Q1 2007
     17.4       1.1       —       18.5  
Q2 2007
     17.8       1.1       —       18.9  
Q3 2007
     19.0       1.2       —       20.2  
Q4 2007
     19.0       1.3       0.8       21.1  
                         
Q1 2008
     19.5       1.3       0.8       21.6  
Q2 2008
     20.0       1.3       0.8       22.1  
Q3 2008
     21.4       1.4       0.7       23.5  

 

 

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 merger and integration costs and pro-forma comparable store sales, earnings before interest, taxes and depreciation (“EBITDA”) as well as a reconciliation from the Company’s gross capital expenditures, net of tenant allowances. The following 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/ (click on the Investor Relations link at the top of the home page). The Company’s website is not part of this press release.
Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation
(in thousands, except per share data):
                         
    Fiscal 2008  
    13 Weeks Ended November 1, 2008  
       
            Merger and     Non-GAAP  
    As     Integration     Pro-forma  
    Reported     Costs     Total  
 
                        
Net sales
   $ 924,191     $ —     $ 924,191  
Cost of goods sold, including occupancy and distribution costs
     671,091       —       671,091  
 
                  
 
                        
GROSS PROFIT
     253,100       —       253,100  
 
                        
Selling, general and administrative expenses
     228,861       —       228,861  
Pre-opening expenses
     7,541       —       7,541  
Merger and integration costs
     3,096       (3,096 )     —  
 
                  
 
                        
INCOME FROM OPERATIONS
     13,602       3,096       16,698  
 
                        
Interest expense, net
     2,902       —       2,902  
 
                  
 
                        
INCOME BEFORE INCOME TAXES
     10,700       3,096       13,796  
 
                        
Provision for income taxes
     3,307       (1,240 )     4,547  
 
                  
 
                        
NET INCOME
   $ 7,393     $ 1,856     $ 9,249  
 
                  
 
                        
EARNINGS PER COMMON SHARE:
                        
Basic
   $ 0.07                  
Diluted
   $ 0.06     $ 0.02     $ 0.08  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                        
Basic
     111,906               111,906  
Diluted
     116,774               116,774  

 

 

                         
    Fiscal 2008  
    39 Weeks Ended November 1, 2008  
       
            Merger and     Non-GAAP  
    As     Integration     Pro-forma  
    Reported     Costs     Total  
 
                        
Net sales
   $ 2,922,596     $ —     $ 2,922,596  
Cost of goods sold, including occupancy and distribution costs
     2,090,732       —       2,090,732  
 
                  
 
                        
GROSS PROFIT
     831,864       —       831,864  
 
                        
Selling, general and administrative expenses
     686,492       —       686,492  
Pre-opening expenses
     16,145       —       16,145  
Merger and integration costs
     5,975       (5,975 )     —  
 
                  
 
                        
INCOME FROM OPERATIONS
     123,252       5,975       129,227  
 
                        
Gain on sale of asset
     (2,356 )     —       (2,356 )
Interest expense, net
     6,990       —       6,990  
 
                  
 
                        
INCOME BEFORE INCOME TAXES
     118,618       5,975       124,593  
 
                        
Provision for income taxes, excluding tax impact of non deductible executive separation costs
     46,720       (2,359 )     49,079  
Tax impact of non deductible executive separation costs
     2,615       2,615       —  
 
                  
Provision for income taxes
     49,335       256       49,079  
 
                  
 
                        
NET INCOME
   $ 69,283     $ 6,231     $ 75,514  
 
                  
 
                        
EARNINGS PER COMMON SHARE:
                        
Basic
   $ 0.62                  
Diluted
   $ 0.59     $ 0.05     $ 0.64  
 
                        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                        
Basic
     111,556               111,556  
Diluted
     116,979               116,979  
Note: Costs related to the Golf Galaxy integration total $8.6 million, which includes $6.0 million of pre tax “merger and integration costs” and $2.6 million included in the Company’s provision for income taxes reflecting the “tax impact of non deductible executive separation costs”. The net income impact of costs related to the Golf Galaxy integration equals $6.2 million, which includes $3.6 million for the after tax amount of “merger and integration costs” and the $2.6 million included in the Company’s provision for income taxes reflecting the “tax impact of non deductible executive separation costs.”

 

 

Pro-forma Comparable Store Sales
The following pro-forma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented. The sales have been adjusted to conform to the Company’s reporting calendar and method of reporting comparable sales. Golf Galaxy is included in the quarterly comparable store base beginning in Q2 2008, which is the first full quarter following the anniversary of the date of acquisition.
                         
    Dick’s        
    Sporting   Golf    
    Goods   Galaxy   Consolidated
13 weeks ended November 3, 2007
     -2.5 %     -2.7 %     -2.5 %
 
                        
13 weeks ended November 3, 2007 — shifted (1)
     -1.0 %     4.7 %     -0.6 %
 
                        
39 weeks ended November 3, 2007
     2.3 %     2.2 %     2.3 %
 
                        
39 weeks ended November 3, 2007 — shifted (1)
     1.7 %     2.8 %     1.8 %
 
                        
39 weeks ended November 1, 2008
     -3.4 %     -6.7 %     -3.7 %
 
(1)   Adjusted for the shifted retail calendar
Pro-forma Inventory Per Square Foot
The following pro-forma inventory per square foot calculations present the change in consolidated inventory per square foot, adjusting last year’s inventory to include Chick’s Sporting Goods as well as the change in inventory per square foot for Dick’s Sporting Goods only.
                                 
    November 1,           November 3,        
    2008           2007        
 
                                
Consolidated inventory
   $ 1,142,233             $ 1,024,817          
Add: Chick’s Sporting Goods inventory
     —               44,418          
 
                            
Pro-forma consolidated inventory
     1,142,233     A     1,069,235     A
Less: Chick’s Sporting Goods and Golf Galaxy inventory
     (130,510 )             (120,736 )        
 
                            
Dick’s Sporting Goods inventory
     1,011,723     C     948,499     C
 
                                
Consolidated square feet
     23,531               20,287          
Add: Chick’s Sporting Goods square feet
     —               768          
 
                            
Pro-forma consolidated square feet
     23,531     B     21,055     B
Less: Chick’s Sporting Goods and Golf Galaxy square feet
     (2,089 )             (2,013 )        
 
                            
Dick’s Sporting Goods square feet
     21,442     D     19,042     D
 
                                
Pro-forma consolidated inventory per square foot (A/B)
     48.54               50.78          
% decrease 2008 compared to 2007
     -4.4 %                        
 
                                
Dick’s Sporting Goods inventory per square foot (C/D)
     47.18               49.81          
% decrease 2008 compared to 2007
     -5.3 %                        

 

 

EBITDA
EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. 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  
    November 1,     November 3,  
EBITDA   2008     2007  
    (dollars in thousands)  
Net income
   $ 7,393     $ 12,233  
Provision for income taxes
     3,307       7,724  
Interest expense, net
     2,902       1,725  
Depreciation and amortization
     23,614       17,531  
Less: Depreciation and amortization (merger integration)
     (351 )     —  
Add: Merger and integration costs
     3,096       —  
 
            
EBITDA
   $ 39,961     $ 39,213  
 
            
 
                
% increase in EBITDA
     2 %        
                 
    39 Weeks Ended  
    November 1,     November 3,  
EBITDA   2008     2007  
    (dollars in thousands)  
Net income
   $ 69,282     $ 81,865  
Provision for income taxes
     49,334       53,741  
Interest expense, net
     6,989       8,560  
Depreciation and amortization
     65,826       55,567  
Less: Depreciation and amortization (merger integration)
     (451 )     —  
Add: Merger and integration costs
     5,975       —  
Less: Gain on sale of asset
     (2,356 )     —  
 
            
EBITDA
   $ 194,599     $ 199,733  
 
            
 
                
% decrease in EBITDA
     -3 %        
Reconciliation of Gross Capital Expenditures to 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  
    November 1,     November 3,  
    2008     2007  
    (dollars in thousands)  
Gross capital expenditures
   $ (159,928 )   $ (119,959 )
Proceeds from sale-leaseback transactions
     24,278       17,568  
Changes in deferred construction allowances
     17,452       28,388  
Construction allowance receipts
     10,424       8,324  
 
            
Net capital expenditures
   $ (107,774 )   $ (65,679 )