EX-99.1 2 dks-20131102xex99earnings.htm EXHIBIT 99.1 DKS-2013.11.02-Ex. 99 Earnings Release


Exhibit 99.1
FOR IMMEDIATE RELEASE 
 
DICK'S Sporting Goods Reports Third Quarter Results; Exceeds Expectations
 
•
Consolidated earnings per diluted share totaled $0.40 and consolidated same store sales increased 3.3% (adjusted for the shifted calendar), in both cases exceeding prior guidance
 
•
Company narrows full year non-GAAP guidance range to $2.62 to 2.65 per diluted share

•
Capital allocation strategy on track, with additional share repurchases totaling approximately $25.0 million and declaration of $0.125 per share quarterly dividend
 
 PITTSBURGH, November 19, 2013 - DICK'S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line sporting goods retailer, today reported sales and earnings results for the third quarter ended November 2, 2013.
 
Third Quarter Results
 
The Company reported consolidated net income for the third quarter ended November 2, 2013 of $50.0 million, or $0.40 per diluted share, compared to the Company's expectations provided on August 20, 2013 of $0.37 to 0.39 per diluted share. For the third quarter ended October 27, 2012, the Company reported consolidated net income of $50.1 million, or $0.40 per diluted share.

Net sales for the third quarter of 2013 increased 6.7% to $1.4 billion. Adjusted for the shifted calendar, due to the 53rd week in 2012, consolidated same store sales increased 3.3%, compared to the Company's guidance of approximately flat to an increase of 1%. Third quarter 2012 consolidated same store sales increased 5.1%. Shifted same store sales in the third quarter of 2013 for DICK'S Sporting Goods increased 3.4% while Golf Galaxy increased 2.2%.
 
Unshifted consolidated same store sales for the third quarter increased 0.3%, compared to the Company's guidance of an approximate 2 to 3% decrease. Unshifted same store sales in the third quarter of 2013 for DICK'S Sporting Goods increased 0.6% while Golf Galaxy decreased 4.7%. eCommerce penetration for the quarter was 6.5% of total sales.
 
"Despite the continued challenging consumer environment, we delivered better than expected results in the third quarter, exceeding both our sales and earnings expectations. The marketing efforts, improved customer experience and selective pricing initiatives we began in the third quarter were successful in driving traffic and sales, but at slightly lower than anticipated margins," said Edward W. Stack, Chairman and CEO. "We remain excited about the long-term opportunities in our business that we presented at our analyst day in September, and we will continue to drive towards those goals."

Store Development

In the third quarter, the Company opened 25 new DICK'S Sporting Goods stores, one new Golf Galaxy store and two new Field & Stream stores. The Company also relocated one DICK'S Sporting Goods store, repositioned one Golf Galaxy store and completed three full and 22 apparel remodels of DICK'S Sporting Goods stores. As of November 2, 2013, the Company operated 552 DICK'S Sporting Goods stores in 45 states, with approximately 29.9 million square feet and 82 Golf Galaxy stores in 30 states, with approximately 1.4 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."




In the beginning of the fourth quarter, the Company opened six new DICK'S Sporting Goods stores and remodeled one DICK'S Sporting Goods store. The Company also opened one new True Runner store.

The Company has now completed its 2013 store development program, opening a total of 40 new DICK'S Sporting Goods stores, one new Golf Galaxy store, two new Field & Stream stores and one new True Runner store. The Company also relocated one DICK'S Sporting Goods store, repositioned one Golf Galaxy store and completed four full and 75 apparel remodels of DICK'S Sporting Goods stores in 2013.

Balance Sheet
 
The Company ended the third quarter of 2013 with approximately $66 million in cash and cash equivalents as compared to $294 million at the end of the third quarter of 2012. Due to seasonality and capital utilization over the last 12 months, which included investments in omni-channel growth, store remodels, share repurchases, and special and quarterly dividends, the Company ended the quarter with approximately $116 million in outstanding borrowings under its $500 million line of credit. The Company expects to end fiscal 2013 with no outstanding borrowings under the revolving credit facility.
 
Inventory per square foot was 5.6% higher at the end of the third quarter of 2013 as compared to the end of the third quarter of 2012.
 
Year-to-Date Results

The Company reported consolidated non-GAAP net income for the 39 weeks ended November 2, 2013 of $199.3 million, or $1.59 per diluted share. For the 39 weeks ended October 27, 2012, the Company reported consolidated non-GAAP net income of $188.6 million, or $1.50 per diluted share.

On a GAAP basis, the Company reported consolidated net income for the 39 weeks ended November 2, 2013 of $199.0 million, or $1.58 per diluted share. For the 39 weeks ended October 27, 2012, on a GAAP basis, the Company reported consolidated net income of $161.0 million, or $1.28 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 Reconciliations."

Net sales for the 39 weeks ended November 2, 2013 increased 5.8% from last year's period to $4.3 billion primarily due to the opening of new stores. Unshifted consolidated same store sales were flat year-to-date.

Dividend

On November 14, 2013, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 27, 2013 to stockholders of record at the close of business on December 6, 2013.

Share Repurchase Program

In the third quarter of 2013, the Company repurchased approximately 0.5 million shares of its common stock at an average cost of $52.09 per share, for a total cost of $25.0 million.

Current 2013 Outlook
 
The Company's current outlook for 2013 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. 
 
v
Fourth Quarter 2013
    
•
Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.04 to 1.07 in the fourth quarter



of 2013, compared to fourth quarter 2012 consolidated earnings per diluted share of $1.03. The 14th week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.

•
Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to increase 3 to 4% in the fourth quarter of 2013, or increase 2 to 3% on an unshifted basis, as compared to a 1.2% increase in the fourth quarter of 2012.

v
Full Year 2013 – (52 Week Year) Comparisons to Fiscal 2012 – (53 Week Year)
 
•
Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.62 to 2.65, excluding an asset impairment charge and the partial recovery of a previously impaired asset. For the 53 weeks ended February 2, 2013, the Company reported consolidated non-GAAP earnings per diluted share of $2.53, excluding an impairment charge. The 53rd week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.

•
Consolidated same store sales are currently expected to be approximately flat to an increase of 1% on a 52-week to 52-week comparative basis, compared to a 4.3% increase in fiscal 2012.

v
Capital Expenditures
 
•
In 2013, the Company anticipates capital expenditures to be approximately $299 million on a gross basis and approximately $258 million on a net basis.

Conference Call Info
 
The Company will host 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) 652-5200 (domestic callers) or (412) 317-6060 (international callers) and requesting the "DICK'S Sporting Goods Earnings Call."

For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10035658. The dial-in replay will be available for approximately 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 statements regarding, among other things, our expectations for future performance, long-term opportunities, the Company’s future goals, the amounts outstanding under the Company’s credit facility in future periods and expectations on capital expenditures.
 
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 2013 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: ongoing economic and financial uncertainties may cause a decline in consumer spending; changes in the general economic



and business conditions and in the specialty retail or sporting goods industry in particular; competition in the sporting goods industry; changes in consumer demand; limitations on the availability of attractive store locations; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; access to adequate capital; changing laws and regulations affecting our business including the regulation of firearms and ammunition; factors affecting our vendors; litigation risks; foreign trade issues and currency exchange rate fluctuations; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; protection of our intellectual property; disruptions with our eCommerce services provider or of our information systems; disruption at our distribution facilities; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; regional risks; risks associated with strategic investments or acquisitions; labor needs; risks associated with being a controlled company; our anti-takeover provisions; our current intention to issue quarterly cash dividends; and our share repurchase activity, if any.
 
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, 2013 as filed with the Securities and Exchange Commission ("SEC") on March 22, 2013 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 or assess the impact of all such risk factors. Forward-looking statements included in this release are made as of the date of this release. We do not assume any obligation and do not intend to update any forward-looking statements, whether as a result of new information, future developments or otherwise, 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 sports and fitness specialty omni-channel retailer offering a broad assortment of high quality, competitively-priced 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 November 19, 2013, the Company operated 558 DICK'S Sporting Goods stores in 46 states, 82 Golf Galaxy stores in 30 states and eCommerce websites and catalog operations for 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:
 
Anne-Marie Megela, VP – Treasury Services and Investor Relations or
Scott W. McKinney, Director of Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400


###



DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
 
 
 
13 Weeks Ended
 
 
November 2,
2013
 
% of
Sales
 
October 27,
2012
 
% of
Sales (1)
 
 
 
 
 
 
 
 
 
Net sales
 
$
1,400,623

 
100.00
%
 
$
1,312,072

 
100.00
%
Cost of goods sold, including occupancy and distribution costs
 
975,724

 
69.66

 
905,948

 
69.05

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
424,899

 
30.34

 
406,124

 
30.95

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
333,724

 
23.83

 
314,637

 
23.98

Pre-opening expenses
 
12,122

 
0.87

 
9,294

 
0.71

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
79,053

 
5.64

 
82,193

 
6.26

 
 
 
 
 
 
 
 
 
Interest expense
 
696

 
0.05

 
860

 
0.07

Other income
 
(2,735
)
 
(0.20
)
 
(1,113
)
 
(0.08
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
81,092

 
5.79

 
82,446

 
6.28

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
31,115

 
2.22

 
32,307

 
2.46

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
49,977

 
3.57
%
 
$
50,139

 
3.82
%
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
0.41

 
 
 
$
0.41

 
 

Diluted
 
$
0.40

 
 
 
$
0.40

 
 

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 
 
 

 
 

Basic
 
123,221

 
 
 
122,103

 
 

Diluted
 
125,842

 
 
 
125,938

 
 

 
 
 
 
 
 
 
 
 
Cash dividend declared per share
 
$
0.125

 
 
 
$
0.125

 
 

 
 
 
 
 
 
 
 
 
(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 2,
2013
 
% of
Sales (1)
 
October 27,
2012
 
% of
Sales
 
 
 
 
 
 
 
 
 
Net sales
 
$
4,265,755

 
100.00
%
 
$
4,030,818

 
100.00
%
Cost of goods sold, including occupancy and distribution costs
 
2,949,872

 
69.15

 
2,782,306

 
69.03

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
1,315,883

 
30.85

 
1,248,512

 
30.97

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
983,382

 
23.05

 
921,631

 
22.86

Pre-opening expenses
 
18,736

 
0.44

 
14,311

 
0.36

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
313,765

 
7.36

 
312,570

 
7.75

 
 
 
 
 
 
 
 
 
Impairment of available-for-sale investments
 
—

 
—

 
32,370

 
0.80

Interest expense
 
2,081

 
0.05

 
5,309

 
0.13

Other income
 
(10,675
)
 
(0.25
)
 
(2,923
)
 
(0.07
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
322,359

 
7.56

 
277,814

 
6.89

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
123,398

 
2.89

 
116,855

 
2.90

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
198,961

 
4.66
%
 
$
160,959

 
3.99
%
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
1.62

 
 
 
$
1.33

 
 

Diluted
 
$
1.58

 
 
 
$
1.28

 
 

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 
 
 

 
 

Basic
 
122,942

 
 
 
121,181

 
 

Diluted
 
125,766

 
 
 
125,825

 
 

 
 
 
 
 
 
 
 
 
Cash dividends declared per share
 
$
0.375

 
 
 
$
0.375

 
 

 
 
 
 
 
 
 
 
 
(1) Column does not add due to rounding





DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
 
 
November 2,
2013
 
October 27,
2012
 
February 2,
2013
ASSETS
 
 

 
 

 
 

CURRENT ASSETS:
 
 

 
 

 
 

Cash and cash equivalents
 
$
65,647

 
$
294,493

 
$
345,214

Accounts receivable, net
 
81,389

 
57,212

 
34,625

Income taxes receivable
 
34,635

 
2,779

 
15,737

Inventories, net
 
1,570,034

 
1,382,684

 
1,096,186

Prepaid expenses and other current assets
 
104,806

 
35,367

 
73,838

Deferred income taxes
 
48,414

 
26,755

 
30,289

Total current assets
 
1,904,925

 
1,799,290

 
1,595,889

 
 
 
 
 
 
 
Property and equipment, net
 
1,059,865

 
851,302

 
840,135

Intangible assets, net
 
98,792

 
99,033

 
98,903

Goodwill
 
200,594

 
200,594

 
200,594

Other assets:
 
 

 
 
 
 

Deferred income taxes
 
3,286

 
8,269

 
4,382

Other
 
80,433

 
111,093

 
147,904

Total other assets
 
83,719

 
119,362

 
152,286

TOTAL ASSETS
 
$
3,347,895

 
$
3,069,581

 
$
2,887,807

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
 

CURRENT LIABILITIES:
 
 

 
 

 
 

Accounts payable
 
$
738,196

 
$
665,608

 
$
507,247

Accrued expenses
 
316,421

 
296,232

 
269,900

Deferred revenue and other liabilities
 
106,847

 
96,233

 
146,362

Income taxes payable
 
—

 
—

 
68,746

Current portion of other long-term debt and leasing obligations
 
7,540

 
8,584

 
8,513

Total current liabilities
 
1,169,004

 
1,066,657

 
1,000,768

LONG-TERM LIABILITIES:
 
 

 
 

 
 

Revolving credit borrowings
 
116,400

 
—

 
—

Other long-term debt and leasing obligations
 
6,596

 
14,157

 
7,762

Deferred income taxes
 
29,160

 
—

 
7,413

Deferred revenue and other liabilities
 
328,712

 
283,835

 
284,540

Total long-term liabilities
 
480,868

 
297,992

 
299,715

COMMITMENTS AND CONTINGENCIES
 
 

 
 

 
 

STOCKHOLDERS' EQUITY:
 
 

 
 

 
 

Common stock
 
982

 
977

 
981

Class B common stock
 
249

 
250

 
249

Additional paid-in capital
 
937,742

 
855,881

 
874,236

Retained earnings
 
1,064,511

 
1,047,668

 
911,704

Accumulated other comprehensive income
 
78

 
114

 
112

Treasury stock
 
(305,539
)
 
(199,958
)
 
(199,958
)
Total stockholders' equity
 
1,698,023

 
1,704,932

 
1,587,324

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
3,347,895

 
$
3,069,581

 
$
2,887,807

 
 
 
 
 
 
 




DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
 
 
39 Weeks Ended
 
 
November 2,
2013
 
October 27,
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
198,961

 
$
160,959

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

 
 

Depreciation and amortization
 
113,437

 
88,627

Impairment of available-for-sale investments
 
—

 
32,370

Deferred income taxes
 
4,718

 
(10,128
)
Stock-based compensation
 
20,610

 
23,643

Excess tax benefit from exercise of stock options
 
(20,966
)
 
(61,461
)
Tax benefit from exercise of stock options
 
125

 
4,761

Other non-cash items
 
435

 
227

Changes in assets and liabilities:
 
 

 
 

Accounts receivable
 
(28,850
)
 
(17,374
)
Inventories
 
(473,848
)
 
(367,687
)
Prepaid expenses and other assets
 
(9,752
)
 
31,599

Accounts payable
 
209,346

 
178,700

Accrued expenses
 
3,440

 
18

Income taxes payable / receivable
 
(66,680
)
 
33,260

Deferred construction allowances
 
37,125

 
21,744

Deferred revenue and other liabilities
 
(45,804
)
 
(35,922
)
Net cash (used in) provided by operating activities
 
(57,703
)
 
83,336

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 

 
 

Capital expenditures
 
(196,862
)
 
(157,448
)
Purchase of JJB Sports convertible notes and equity securities
 
—

 
(31,986
)
Proceeds from sale of other assets
 
11,000

 
—

Deposits and purchases of other assets
 
(60,048
)
 
(54,819
)
Net cash used in investing activities
 
(245,910
)
 
(244,253
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 

 
 
Revolving credit borrowings, net
 
116,400

 
—

Payments on other long-term debt and leasing obligations
 
(2,139
)
 
(138,856
)
Construction allowance receipts
 
—

 
—

Proceeds from exercise of stock options
 
34,920

 
71,683

Excess tax benefit from exercise of stock options
 
20,966

 
61,461

Minimum tax withholding requirements
 
(13,090
)
 
(5,329
)
Cash paid for treasury stock
 
(105,603
)
 
(198,774
)
Cash dividends paid to stockholders
 
(48,977
)
 
(45,668
)
Increase (decrease) in bank overdraft
 
21,603

 
(23,505
)
Net cash provided by (used in) financing activities
 
24,080

 
(278,988
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
 
(34
)
 
(4
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
 
(279,567
)
 
(439,909
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
345,214

 
734,402

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
65,647

 
$
294,493






Store Count and Square Footage
 
The stores that opened during the third quarter of 2013 are as follows:
Store
 
Market
 
Concept
Tallahassee, FL
 
Tallahassee
 
DICK'S Sporting Goods
Duluth, MN
 
Duluth
 
DICK'S Sporting Goods
Gretna, LA
 
New Orleans
 
DICK'S Sporting Goods
South Plainfield, NJ
 
New Jersey North
 
DICK'S Sporting Goods
El Paso, TX
 
El Paso
 
DICK'S Sporting Goods
Gainesville, GA
 
Gainesville
 
DICK'S Sporting Goods
Athens, GA
 
Athens
 
DICK'S Sporting Goods
Lake Charles, LA
 
Lake Charles
 
DICK'S Sporting Goods
Albuquerque, NM
 
Albuquerque
 
DICK'S Sporting Goods
Prescott Valley, AZ
 
Prescott
 
DICK'S Sporting Goods
Issaquah, WA
 
Seattle
 
DICK'S Sporting Goods
Salina, KS
 
Salina
 
DICK'S Sporting Goods
Redding, CA
 
Redding
 
DICK'S Sporting Goods
Victorville, CA
 
Victorville
 
DICK'S Sporting Goods
Ashland, KY
 
Huntington
 
DICK'S Sporting Goods
Kendall, FL
 
Miami
 
DICK'S Sporting Goods
Bowling Green, KY
 
Bowling Green
 
DICK'S Sporting Goods
Riverhead, NY
 
Long Island
 
DICK'S Sporting Goods
Morganton, NC
 
Charlotte
 
DICK'S Sporting Goods
Casper, WY
 
Casper
 
DICK'S Sporting Goods
Batavia, NY
 
Rochester
 
DICK'S Sporting Goods
Corpus Christi, TX
 
Corpus Christi
 
DICK'S Sporting Goods
Newport, KY
 
Cincinnati
 
DICK'S Sporting Goods
Osage Beach, MO
 
Osage Beach
 
DICK'S Sporting Goods
Dover, DE
 
Dover
 
DICK'S Sporting Goods
Henderson, NV
 
Las Vegas
 
Golf Galaxy
Cranberry, PA
 
Pittsburgh
 
Field & Stream
Crescent Springs, KY
 
Cincinnati
 
Field & Stream
 




















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

Store Count:
 
 
Fiscal 2013
 
Fiscal 2012
 
 
DICK'S Sporting Goods
 
Golf Galaxy / Specialty Store Concepts (1)
 
Total
 
DICK'S Sporting Goods
 
Golf Galaxy / Specialty Store Concepts (1)
 
Total
Beginning stores
 
518

 
83

 
601

 
480

 
81

 
561

Q1 New stores
 
2

 
—

 
2

 
6

 
—

 
6

Q2 New stores
 
7

 
—

 
7

 
4

 
—

 
4

Q3 New stores
 
25

 
3

 
28

 
21

 
2

 
23

Ending stores
 
552

 
86

 
638

 
511

 
83

 
594

 
 
 
 
 
 
 
 
 
 
 
 
 
Remodeled stores
 
3

 
—

 
3

 
—

 
—

 
—

Relocated stores
 
1

 
1

 
2

 
4

 
—

 
4

 
 
 
 
 
 
 
 
 
 
 
 
 

Square Footage:
(in millions)
 
 
 
DICK'S Sporting
Goods
 
Golf Galaxy / Specialty Store Concepts (1)
 
Total (2)
Q1 2012
 
26.5

 
1.3

 
27.8

Q2 2012
 
26.7

 
1.3

 
28.0

Q3 2012
 
27.9

 
1.3

 
29.2

Q4 2012
 
28.2

 
1.4

 
29.6

Q1 2013
 
28.3

 
1.4

 
29.7

Q2 2013
 
28.7

 
1.4

 
30.0

Q3 2013
 
29.9

 
1.5

 
31.4


(1) 
Includes the Company's Field & Stream and True Runner stores.
(2) 
Column may not add due to rounding.





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 certain non-recurring, infrequent or unusual items; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses (“adjusted EBITDA”) and a reconciliation from the Company's gross capital expenditures, net of tenant allowances. 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 Reconciliations:
(in thousands, except per share data):
 
 
 
Fiscal 2013
 
 
 
39 Weeks Ended November 2, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
As
Reported
 
Recovery of Previously Impaired Asset
 
Asset Impairment Charge
 
Non-GAAP
Total
Net sales
 
 
$
4,265,755

 
$
—

 
$
—

 
$
4,265,755

Cost of goods sold, including occupancy and distribution costs
 
 
2,949,872

 
—

 
—

 
2,949,872

 
 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
1,315,883

 
—

 
—

 
1,315,883

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
 
983,382

 
—

 
(7,881
)
 
975,501

Pre-opening expenses
 
 
18,736

 
—

 
—

 
18,736

 
 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
 
313,765

 
—

 
7,881

 
321,646

 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
2,081

 
—

 
—

 
2,081

Other income
 
 
(10,675
)
 
4,342

 
—

 
(6,333
)
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
 
322,359

 
(4,342
)
 
7,881

 
325,898

 
 
 
 
 
 
 
 
 
 
Provision for income taxes
 
 
123,398

 
—

 
3,152

 
126,550

 
 
 
 
 
 
 
 
 
 
NET INCOME
 
 
$
198,961

 
$
(4,342
)
 
$
4,729

 
$
199,348

 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
Basic
 
 
$
1.62

 
 
 
 
 
$
1.62

Diluted
 
 
$
1.58

 
 
 
 
 
$
1.59

 
 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
Basic
 
 
122,942

 
 
 
 
 
122,942

Diluted
 
 
125,766

 
 
 
 
 
125,766

 
During the first quarter of 2013, the Company determined that it would recover $4.3 million of its investment in JJB Sports, which it had previously fully impaired.  There is no related tax expense as the Company reversed a portion of the deferred tax valuation allowance it had previously recorded for net capital loss carryforwards it did not expect to realize at the time its investment in JJB Sports was fully impaired. During the second quarter of 2013, the Company recorded a pre-tax $7.9 million non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to fair market value. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.





 
 
 
Fiscal 2012
 
 
 
39 Weeks Ended October 27, 2012
 
 
 
 
 
 
 
 
 
 
 
As Reported
 
Impairment of Investments
 
Non-GAAP Total
Net sales
 
 
$
4,030,818

 
$
—

 
$
4,030,818

Cost of goods sold, including occupancy and distribution costs
 
 
2,782,306

 
—

 
2,782,306

 
 
 
 
 
 
 
 
GROSS PROFIT
 
 
1,248,512

 
—

 
1,248,512

 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
 
921,631

 
—

 
921,631

Pre-opening expenses
 
 
14,311

 
—

 
14,311

 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
 
312,570

 
—

 
312,570

 
 
 
 
 
 
 
 
Impairment of available-for-sale investments
 
 
32,370

 
(32,370
)
 
—

Interest expense
 
 
5,309

 
—

 
5,309

Other income
 
 
(2,923
)
 
—

 
(2,923
)
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
 
277,814

 
32,370

 
310,184

 
 
 
 
 
 
 
 
Provision for income taxes
 
 
116,855

 
4,734

 
121,589

 
 
 
 
 
 
 
 
NET INCOME
 
 
$
160,959

 
$
27,636

 
$
188,595

 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
Basic
 
 
$
1.33

 
 
 
$
1.56

Diluted
 
 
$
1.28

 
 
 
$
1.50

 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
 
 
121,181

 
 
 
121,181

Diluted
 
 
125,825

 
 
 
125,825


During the second quarter of 2012, the Company fully impaired its investment in JJB Sports and recorded a pre-tax charge of $32.4 million. The Company recorded a deferred tax asset valuation allowance of approximately $7.9 million for a portion of the $32.4 million net capital loss carryforward that it expects not to realize as a result of the impairment of its investment in JJB Sports.

























Adjusted EBITDA
 
Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles 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
 
 
November 2,
2013
 
October 27,
2012
 
 
(dollars in thousands)
Net income
 
$
49,977

 
$
50,139

Provision for income taxes
 
31,115

 
32,307

Interest expense
 
696

 
860

Depreciation and amortization
 
37,123

 
30,527

EBITDA
 
$
118,911

 
$
113,833

 
 
 
 
 
% increase in EBITDA
 
4
%
 
 

 
 
 
39 Weeks Ended
 
 
November 2,
2013
 
October 27,
2012
 
 
(dollars in thousands)
Net income
 
$
198,961

 
$
160,959

Provision for income taxes
 
123,398

 
116,855

Interest expense
 
2,081

 
5,309

Depreciation and amortization
 
113,437

 
88,627

EBITDA
 
$
437,877

 
$
371,750

Add: Impairment of available-for-sale investments
 
—

 
32,370

Less: Recovery of previously impaired asset
 
(4,342
)
 
—

Adjusted EBITDA, as defined
 
$
433,535

 
$
404,120

 
 
 
 
 
% increase in adjusted EBITDA
 
7
%
 
 

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
 
 
November 2,
2013
 
October 27,
2012
 
 
(dollars in thousands)
Gross capital expenditures
 
$
(196,862
)
 
$
(157,448
)
Proceeds from sale-leaseback transactions
 
—

 
—

Deferred construction allowances
 
37,125

 
21,744

Construction allowance receipts
 
—

 
—

Net capital expenditures
 
$
(159,737
)
 
$
(135,704
)