EX-99.1 2 j1699501exv99w1.htm EX-99.1 EX-99.1
 

Exhibit 99.1
     (DICKS SPORTING GOODS LOGO)
PRESS RELEASE
Dick’s Sporting Goods Reports Third Quarter Results: EPS Increases 60%, 2.9% Comp Sales Increase
PITTSBURGH, Pa., November 15, 2005 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended October 29, 2005.
Third Quarter Results
For the third quarter ended October 29, 2005, net income increased 56% to $4.2 million and diluted earnings per share increased 60% to $0.08, as compared to prior year net income of $2.7 million and earnings per share of $0.05, excluding merger integration and store closing costs. Net income increased $6.2 million, to $4.2 million and diluted earnings per share increased $0.12, to $0.08, as compared to the prior year net loss of $2.0 million, and loss per share of $(0.04), including merger integration and store closing costs.
Net sales for the quarter increased 8%, to $582.7 million. Comparable store sales increased 2.9%. The former Galyan’s stores will be included in the comparable store base beginning in the second quarter of fiscal 2006.
During the third quarter, the Company opened 16 stores, relocated three stores and remodeled one store, which completes the new store openings for the year. The stores that opened in the third quarter include: Natick, MA; Plymouth, MA; Taunton, MA; Leominster, MA; Concord, NH; Keene, NH; Rutland, VT; Webster, NY; Butler, PA; Columbus, OH; Lexington, KY; Morgantown, WV; Charlotte, NC; Charleston, SC; Loveland, CO and Larkridge, CO. Three of the 16 new stores were the two-level prototype (Lexington, KY; Charlotte, NC and Natick, MA). The relocated stores were in Cleveland, OH; Clarksville, IN and Plainfield, IN.
As of October 29, 2005, the Company operated 255 stores, with approximately 14.7 million square feet, in 34 states.
“We are pleased to report a solid third quarter as measured by a 2.9% comparable store sales increase and earnings improvement at the high end of our guidance. This was all accomplished during a busy quarter when we opened 16 stores and relocated three stores,” said Edward W. Stack, Chairman and CEO.
Year-to-Date Results
For the 39 weeks ended October 29, 2005, net income, excluding merger integration and store closing costs and gain on sale of investment, increased 115% to $40.5 million, and diluted earnings per share increased 108% to $0.75, as compared to prior year proforma, combined company net income of $18.8 million, and diluted earnings per share of $0.36, excluding merger integration and store closing costs.
For the 39 weeks ended October 29, 2005, net income, including merger integration and store closing costs and gain on sale of investment, increased 35% to $19.0 million, and diluted earnings per share increased 30% to $0.35 as compared to prior year proforma, combined company net income of $14.1 million, and diluted earnings per share of $0.27, including merger integration and store closing costs.

 

 

Net sales for the 39 weeks ended October 29, 2005 increased 34% to $1,775.5 as compared to prior year GAAP net sales of $1,321.4. Comparable store sales increased 2.1%.
2005 Outlook
The Company’s current outlook for 2005 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 2005
  •   We continue to anticipate reporting diluted earnings per share of $1.70-1.75. This represents an approximate 48% increase over proforma, combined company earnings per share for the full year 2004 of $1.17, excluding merger integration and store closing costs and gain on sale of investment. Including merger integration and store closing costs, earnings guidance is $1.27-1.32 per share. Guidance is based on an estimated 54 million shares outstanding.
 
  •   Comparable store sales are expected to increase approximately 2%. The converted Galyan’s stores will be included in the comparable store base in the second quarter of fiscal 2006.
 
  •   Our 2005 full-year EPS guidance excludes the impact of expensing stock options as the SEC has amended the compliance date for SFAS 123R. We are planning to implement the provisions of SFAS 123R beginning in fiscal 2006, the estimated impact of which is an after-tax expense of $0.27 per share.
Fourth Quarter 2005
  •   Based on an estimated 54 million shares outstanding, the Company anticipates reporting an approximate 20% increase in earnings per diluted share to $0.95-$1.00 per share, from fourth quarter 2004 earnings per diluted share of $0.81, excluding merger integration and store closing costs and gain on sale of investment.
 
  •   Comparable store sales are expected to increase approximately 1-2%.
Conference Call Info
The Company will be hosting a conference call today at 10:00 am 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 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 webcast will be archived on the Company’s web site for approximately 30 days. In addition, a dial-in replay will be available shortly after the call. To listen, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 22300087. The dial-in replay will be available for 30 days following the live call.
Forward Looking Statements and Merger Integration and Store Closing Cost Estimates
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 are more fully described in the Company’s Annual Report on Form 10-K for the year ended January 29, 2005 as filed with the Securities and Exchange Commission on March 31, 2005, ones associated with

 

 

combining businesses and/or with assimilating acquired companies, and the fact that lease liabilities associated with store closures due to the Galyan’s acquisition are difficult to predict with a level of certainty and may be greater than expected. The Company disclaims any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
About Dick’s Sporting Goods, Inc.
Pittsburgh-based 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 October 29, 2005 the Company operated 255 stores in 34 states primarily throughout the Eastern half of the U.S.
Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).
Contact:
Michael F. Hines, EVP — Chief Financial Officer or
Dennis Magulick, Director, Investor Relations
724-273-3400
investors@dcsg.com

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
(Amounts in thousands, except per share data)
                                 
    13 Weeks Ended     39 Weeks Ended  
    October 29,     October 30,     October 29,     October 30,  
    2005     2004     2005     2004  
Net sales
   $ 582,665     $ 541,009     $ 1,775,480     $ 1,321,351  
Cost of goods sold, including occupancy and distribution costs
     429,211       402,758       1,295,638       961,178  
 
                        
 
                                
GROSS PROFIT
     153,454       138,251       479,842       360,173  
 
                                
Selling, general and administrative expenses
     136,564       124,832       392,282       292,863  
Pre-opening expenses
     6,022       5,483       10,259       11,195  
Merger integration and store closing costs
     —       7,742       37,790       7,793  
 
                        
INCOME FROM OPERATIONS
     10,868       194       39,511       48,322  
 
                                
Gain on sale of investment
     —       —       (1,844 )     —  
Interest expense, net
     3,896       3,455       9,771       5,057  
Other income
     —       —       —       (1,000 )
 
                        
INCOME (LOSS) BEFORE INCOME TAXES
     6,972       (3,261 )     31,584       44,265  
 
                                
Provision (benefit) for income taxes
     2,789       (1,305 )     12,634       17,705  
 
                        
 
                                
NET INCOME (LOSS)
   $ 4,183     $ (1,956 )   $ 18,950     $ 26,560  
 
                        
 
                                
EARNINGS (LOSS) PER COMMON SHARE:
                                
Basic
   $ 0.08     $ (0.04 )   $ 0.38     $ 0.56  
Diluted
   $ 0.08     $ (0.04 )   $ 0.35     $ 0.50  
 
                                
WEIGHTED AVERAGE COMMON SHARES
                                
OUTSTANDING:
                                
Basic
     50,120       48,251       49,652       47,755  
Diluted
     53,947       48,251       53,917       52,731  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — UNAUDITED
(Dollars in thousands)
                         
    October 29,     October 30,     January 29,  
    2005     2004     2005  
ASSETS
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 32,009     $ 28,810     $ 18,886  
Accounts receivable, net
     55,366       47,940       30,611  
Income taxes receivable
     5,637       16,606       7,202  
Inventories, net
     674,877       625,043       457,618  
Prepaid expenses and other current assets
     14,236       15,085       8,772  
Deferred income taxes
     12,411       95       7,966  
 
                  
Total current assets
     794,536       733,579       531,055  
 
                        
Property and equipment, net
     363,113       333,229       349,098  
Construction in progress - leased facilities
     5,524       12,113       15,233  
Goodwill
     157,500       181,314       157,245  
Other assets
     42,863       36,074       32,417  
 
                  
TOTAL ASSETS
   $ 1,363,536     $ 1,296,309     $ 1,085,048  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accounts payable
   $ 332,446     $ 319,623     $ 211,685  
Accrued expenses
     138,744       137,977       141,465  
Deferred revenue and other liabilities
     39,556       32,257       48,882  
Current portion of other long-term debt and capital leases
     560       1,824       635  
 
                  
Total current liabilities
     511,306       491,681       402,667  
 
                  
LONG-TERM LIABILITIES:
                        
Senior convertible notes
     172,500       172,500       172,500  
Revolving credit borrowings
     202,570       260,216       76,094  
Other long-term debt and capital leases
     8,356       8,125       8,775  
Non-cash obligations for construction in progress - leased facilities
     5,524       12,113       15,233  
Deferred revenue and other liabilities
     105,957       85,102       96,112  
 
                  
Total long-term liabilities
     494,907       538,056       368,714  
 
                  
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
                        
Preferred stock
     —       —       —  
Common stock
     364       344       348  
Class B common stock
     138       140       140  
Additional paid-in capital
     206,280       174,042       181,321  
Retained earnings
     148,812       87,517       129,862  
Accumulated other comprehensive income
     1,729       4,529       1,996  
 
                  
Total stockholders’ equity
     357,323       266,572       313,667  
 
                  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 1,363,536     $ 1,296,309     $ 1,085,048  
 
                  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
                 
    39 Weeks Ended  
    October 29,     October 30,  
    2005     2004  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 18,950     $ 26,560  
Adjustments to reconcile net income to net cash used in operating activities:
                
Depreciation and amortization
     36,542       24,280  
Deferred income taxes
     (13,983 )     (337 )
Tax benefit from exercise of stock options
     14,193       12,098  
Gain on sale of non-cash investment
     (1,844 )     —  
Other non-cash items
     1,841       —  
Changes in assets and liabilities:
                
Accounts receivable
     (17,449 )     (28,381 )
Inventories
     (217,051 )     (214,339 )
Prepaid expenses and other assets
     (4,940 )     (11,830 )
Accounts payable
     96,778       94,268  
Accrued expenses
     7,348       (2,338 )
Income taxes payable
     —       2,014  
Deferred construction allowances
     3,623       25,407  
Deferred revenue and other liabilities
     3,608       (12,187 )
 
            
Net cash provided by operating activities
     (72,384 )     (84,785 )
 
            
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Capital expenditures
     (93,716 )     (75,515 )
Proceeds from sale-leaseback transactions
     18,070       30,031  
Payment for the purchase of Galyan’s, net of $17,931 cash acquired
     —       (351,382 )
Purchase of held-to-maturity securities
     —       (57,942 )
Proceeds from sale of held-to-maturity securities
     —       57,942  
Proceeds from sale of available-for-sale investment
     1,922       —  
Increase in recoverable costs from developed properties
     (662 )     (7,102 )
 
            
Net cash used in investing activities
     (74,386 )     (403,968 )
 
            
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from issuance of convertible notes
     —       172,500  
Revolving credit borrowings, net
     126,476       260,216  
Payments on other long-term debt and capital leases
     (345 )     (396 )
Payment for purchase of bond hedge
     —       (33,120 )
Proceeds from issuance of warrant
     —       12,420  
Transaction costs for convertible notes
     —       (5,786 )
Proceeds from sale of common stock under employee stock purchase plan
     2,135       1,763  
Proceeds from exercise of stock options
     6,804       3,545  
Increase in bank overdraft
     24,823       12,747  
 
            
Net cash provided by financing activities
     159,893       423,889  
 
            
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     13,123       (64,864 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     18,886       93,674  
 
            
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 32,009     $ 28,810  
 
            
Supplemental non-cash investing and financing activities:
                
Construction in progress-leased facilities
   $ (9,709 )   $ 1,186  
Accrued property and equipment
   $ (10,286 )   $ —  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
(In thousands, except per share data)
                                                 
                            Proforma (1)
    39 Weeks Ended     39 Weeks Ended  
    October 29, 2005     October 30, 2004  
            Merger     Results excluding                    
            Integration and     Merger                    
            Store Closing     Integration and     Dick’s     Galyan’s        
    GAAP     Costs and     Store Closing Costs     Sporting     Trading        
    Results     Investment Gain     and Investment Gain     Goods, Inc.     Company, Inc.     Consolidated  
Net sales
   $ 1,775,480     $ —     $ 1,775,480     $ 1,321,351     $ 339,244     $ 1,660,595  
 
                                                
Cost of goods sold, including occupancy and distribution costs
     1,295,638       —       1,295,638       961,178       260,357       1,221,535  
 
                                    
 
                                                
GROSS PROFIT
     479,842       —       479,842       360,173       78,887       439,060  
% to sales
                     27.03 %                     26.44 %
Selling, general and administrative expenses
     392,282       —       392,282       292,863       91,602       384,465  
 
                                                
Pre-opening expenses
     10,259       —       10,259       11,195       2,277       13,472  
Merger integration and store closing costs
     37,790       (37,790 )     —       7,793       —       7,793  
 
                                    
INCOME (LOSS) FROM OPERATIONS
     39,511       37,790       77,301       48,322       (14,992 )     33,330  
 
                                                
% to sales
                     4.35 %                     2.01 %
Gain on sale of investment
     (1,844 )     1,844       —       —       —       —  
Interest expense, net
     9,771       —       9,771       5,057       5,764       10,821  
Other income
     —       —       —       (1,000 )     —       (1,000 )
 
                                    
INCOME (LOSS) BEFORE INCOME TAXES
     31,584       35,946       67,530       44,265       (20,756 )     23,509  
Provision (benefit) for income taxes
     12,634       14,378       27,012       17,705       (8,303 )     9,402  
 
                                    
NET INCOME
   $ 18,950     $ 21,568     $ 40,518     $ 26,560     $ (12,453 )   $ 14,107  
 
                                    
EARNINGS PER COMMON SHARE:
                                                
Basic
   $ 0.38             $ 0.82     $ 0.56             $ 0.30  
Diluted
   $ 0.35             $ 0.75     $ 0.50             $ 0.27  
 
                                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                                
Basic
     49,652               49,652       47,755               47,755  
Diluted
     53,917               53,917       52,731               52,731  
 
(1)   The unaudited proforma results present information as if Galyan’s had been acquired at the beginning of each period presented. The proforma amounts include certain reclassifications to Galyan’s amounts to conform them to the Company’s presentation, and an increase in pre-tax interest expense of $3.9 million, to reflect the increase in borrowings under the amended credit facility to finance the acquisition as if it had occurred at the beginning of each period presented. The proforma amounts did not reflect any benefits from economies achieved from combining the operations. The proforma information does not necessarily reflect the actual results that would have occurred had the companies been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies.

 

 

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated.
                                                         
    Fiscal 2005     YTD Q3 Fiscal 2004  
    Q1     Q2     Q3     Total     Dick's     Galyan's     Total  
Beginning stores
     234       236       239       234       163       43       206  
New
     7       3       16       26       24       5       29  
Closed
     (5 )     —       —       (5 )     (2 )     —       (2 )
 
                                          
Ending stores
     236       239       255       255       185       48       233  
 
                                          
Relocated stores
     —       1       3       4       3       —       3  
 
                                          
Square Footage:
                                                        
(in millions)
                                                        
                         
    Dick’s     Galyan’s     Total  
Q2 2003
     7.3       3.3       10.6  
Q3 2003
     7.9       3.8       11.7  
Q4 2003
     7.9       3.8       11.7  
 
Q1 2004
     8.3       4.1       12.4  
Q2 2004
     8.5       4.2       12.7  
Q3 2004
     9.2       4.2       13.4  
Q4 2004
     9.4       4.1       13.5  
 
Q1 2005
                     13.6  
Q2 2005
                     13.8  
Q3 2005
                     14.7  

 

 

Regulation G Reconciliations
The following table sets forth the calculation of EBITDA, which is non-GAAP financial information, and reconciles EBITDA to the most directly comparable GAAP information.
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.
EBITDA 1
(in thousands)
                                 
    13 Weeks Ended     39 Weeks Ended  
    October 29, 2005     October 30, 2004 /1     October 29, 2005 /1     October 30, 2004 /1  
Net income (loss)
   $ 4,183     $ (1,956 )     18,950     $ 26,560  
Provision (benefit) for income taxes
     2,789       (1,305 )     12,634       17,705  
Interest expense, net
     3,896       3,455       9,771       5,057  
Depreciation and amortization
     12,218       15,787       36,542       24,280  
Depreciation and amortization (merger integration)
     —       (2,714 )     (869 )     (2,714 )
Total merger integration and store closing costs
     —       7,742       37,790       7,793  
 
                          
EBITDA
   $ 23,086     $ 21,009     $ 114,818     $ 78,681  
 
                        
 
/ 1 Presents EBITDA adjusted for merger integration and store closing costs.   
Adjusted net income and earnings per share reconciliation
The Company believes the use of adjusted net income, and adjusted earnings per share for the periods below
provides a further understanding due to the merger integration and store closing costs incurred during
the current year related to the acquisition of Galyan’s on July 29, 2004 and the gain on sale of investment.
The reconciliation of adjusted net income, and adjusted earnings per share to the most directly
comparable GAAP financial information is presented below.
(in thousands, except per share data):
                                                                 
                    Proforma/2                     Proforma/2  
    13 Weeks Ended     39 Weeks Ended     52 Weeks Ended     52 Weeks Ended  
    October 30, 2004     October 30, 2004     January 29, 2005     January 29, 2005  
            Per             Per             Per             Per  
    Amounts     Share     Amounts     Share/3     Amounts     Share     Amounts     Share  
Reported net income (loss) (GAAP)
   $ (1,956 )   $ (0.04 )   $ 26,560     $ 0.50     $ 68,905     $ 1.30     $ 68,905     $ 1.30  
Add: Merger integration and store closing costs, after tax
     4,645       0.10       4,675       0.09       12,202       0.23       12,202       0.23  
Less: Gain on sale of investment, after tax
     —       —       —       —       (6,589 )     (0.12 )     (6,589 )     (0.12 )
Less: Galyan’s net loss
     —       —       (12,453 )     (0.24 )     —       —       (12,453 )     (0.24 )
Add: Impact of share differential due to net loss (use of basic vs. fully-diluted shares)
     —       (0.01 )     —       —       —       —       —       —  
 
                                                
Adjusted net income
   $ 2,689     $ 0.05     $ 18,782     $ 0.36     $ 74,518     $ 1.41     $ 62,065     $ 1.17  
 
                                                
 
/2   Proforma includes the operations of Galyan’s as if it had been acquired at the beginning of fiscal 2004.
 
/3   Column does not add due to rounding

 

 

EPS Guidance
The EPS guidance for fiscal 2005 excludes merger integration and store closing costs. The following table sets forth a reconciliation of guidance net income per share to adjusted net income per share excluding merger integration and store closing costs, after tax:
         
    52 Weeks Ended  
    January 28, 2006  
Guidance net income per share
   $ 1.27 - 1.32  
Guidance merger integration and store closing costs per share
     0.43  
 
      
Guidance adjusted net income per share excluding merger integration and store closing costs
   $ 1.70 - 1.75