EX-99.1 2 a12-18260_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

 

 

 

Dick’s Sporting Goods Reports Second Quarter Results; Exceeds Expectations

 

·                  Consolidated non-GAAP earnings per diluted share increased 25% to $0.65 per diluted share in the second quarter of 2012 from $0.52 per diluted share in the second quarter of 2011

 

·                  Consolidated same store sales increased 3.8% in the second quarter of 2012

 

·                  Company raises full year estimated consolidated non-GAAP earnings range from $2.45 to 2.48 per diluted share to $2.47 to 2.51 per diluted share

 

·                  Board authorizes quarterly dividend of $0.125 per share

 

PITTSBURGH, Pa., August 14, 2012 - 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 second quarter ended July 28, 2012.

 

Second Quarter Results

 

The Company reported consolidated non-GAAP net income for the second quarter ended July 28, 2012 of $81.3 million, or $0.65 per diluted share, excluding a $0.22 per diluted share impact of an impairment charge related to the Company’s investment in JJB Sports. The second quarter non-GAAP earnings per diluted share exceeded the Company’s earnings expectations provided on May 15, 2012 of $0.62 to 0.63 per diluted share. For the second quarter ended July 30, 2011, the Company reported consolidated non-GAAP net income of $65.1 million, or $0.52 per diluted share, excluding a $0.07 per diluted share impact from a gain on sale of investment.

 

On a GAAP basis, the Company reported consolidated net income for the second quarter ended July 28, 2012 of $53.7 million, or $0.43 per diluted share. For the second quarter ended July 30, 2011, the Company reported consolidated net income of $73.8 million, or $0.59 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 second quarter of 2012 increased by 10.0% to $1.4 billion due primarily to a 3.8% increase in consolidated same store sales and the opening of new stores. The 3.8% consolidated same store sales increase consisted of a 2.9% increase at Dick’s Sporting Goods stores, a 4.4% increase at Golf Galaxy and a 34.6% increase in the eCommerce business.

 

“We have delivered another exceptional quarter, and are on track to post strong full-year performance for 2012,” said Edward W. Stack, Chairman and CEO. “We plan to drive continued long-term profitable growth by investing in new stores, developing our omni-channel capabilities and increasing our margins through inventory management, an emphasis on private brands, and the continued shift of our product mix to higher margin merchandise categories.”

 

New Stores

 

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

 



 

As of July 28, 2012, the Company operated 490 Dick’s Sporting Goods stores in 44 states, with approximately 26.7 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.

 

Balance Sheet

 

The Company ended the second quarter of 2012 with $350 million in cash and cash equivalents and did not have any outstanding borrowings under its $500 million revolving credit facility. At the end of the second quarter of 2011, the Company had $626 million in cash and cash equivalents and did not have any outstanding borrowings under its credit facility. Over the course of the past twelve months, the Company has utilized capital to fund its share repurchase program, initiate a dividend program, purchase its store support center, invest in JJB Sports, acquire intellectual property rights to the Top-Flite brand, and build a distribution center.

 

The inventory per square foot was 4.2% higher at the end of the second quarter of 2012 as compared to the end of the second quarter of 2011.

 

Year-to-Date Results

 

The Company reported consolidated non-GAAP net income for the 26 weeks ended July 28, 2012 of $138.5 million, or $1.10 per diluted share.  For the 26 weeks ended July 30, 2011, the Company reported consolidated non-GAAP net income of $102.6 million, or $0.82 per diluted share.

 

On a GAAP basis, the Company reported consolidated net income for the 26 weeks ended July 28, 2012 of $110.8 million, or $0.88 per diluted share. For the 26 weeks ended July 30, 2011, the Company reported consolidated net income of $111.3 million, or $0.89 per diluted share.

 

Net sales for the first half of 2012 increased 12.3% from the first half of 2011 to $2.7 billion primarily due to a consolidated same store sales increase of 5.9% and the opening of new stores.

 

Dividend

 

On August 13, 2012, 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 September 28, 2012 to stockholders of record at the close of business on August 31, 2012.

 

Investment in JJB

 

In the second quarter, the Company recorded a pre-tax impairment charge of $32.4 million related to its investment in JJB Sports, which impacted earnings per diluted share by $0.22.

 

“Since making our investment in JJB, and as publicly announced, JJB’s performance has materially deteriorated from its expectations, partly due to a worsening macro environment in Europe, adverse weather conditions in the first quarter and lackluster sales associated with the recent Euro Championships,” said Mr. Stack. “While we continue to believe in the underlying opportunity within the UK sporting goods market, in light of these developments and our own assessments, we have determined to fully impair the value of our investment. As we indicated at the outset, this is a high risk investment that was structured to provide us with meaningful upside and capped downside. We have no further funding obligations to JJB at this time and will continue to monitor the situation.”

 

Field & Stream

 

On August 1, 2012 the Company entered into an agreement to purchase the intellectual property rights to the Field & Stream mark in the hunting, fishing, camping and paddle categories for approximately $25

 



 

million. The Company had been licensing these rights since 2007. Upon completion, this acquisition is expected to provide the Company with the control and flexibility necessary to maximize and leverage the value of this popular brand.

 

Current 2012 Outlook

 

The Company’s current outlook for 2012 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            Full Year 2012 – (53 Week Year) Comparisons to Fiscal 2011 – (52 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 $2.47 to 2.51, excluding an impairment charge and including approximately $0.03 per diluted share for the 53rd week.  For the 52 weeks ended January 28, 2012, the Company reported consolidated non-GAAP earnings per diluted share of $2.02, excluding a gain on sale of investment and the favorable impact of lower litigation settlement costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $2.10 in 2011.

 

·                  Consolidated same store sales are currently expected to increase approximately 4 to 5% on a 52-week to 52-week comparative basis, compared to a 2.0% increase in fiscal 2011.

 

·                  The Company currently expects to open approximately 38 new Dick’s Sporting Goods stores and relocate five Dick’s Sporting Goods stores in 2012. The Company also expects to reposition one Golf Galaxy store in 2012.

 

v            Third Quarter 2012

 

·                  Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.36 in the third quarter of 2012. In the third quarter of 2011, the Company reported consolidated non-GAAP earnings per diluted share of $0.32, excluding the favorable impact of lower litigation settlement costs.

 

·                  Consolidated same store sales are currently expected to increase approximately 4% compared to a 4.1% increase in the third quarter last year.

 

·                  The Company expects to open approximately 21 new Dick’s Sporting Goods stores and relocate three Dick’s Sporting Goods stores in the third quarter of 2012.

 

v            Capital Expenditures

 

·                  In 2012, the Company anticipates capital expenditures to be approximately $241 million on a gross basis and approximately $190 million on a net basis.

 

Conference Call Info

 

The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the second 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 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 10016648. The dial-in replay will be available for 30 days following the live call.

 

 

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

 

Except for historical information contained herein, the statements in this release or otherwise made by our management in connection with the subject matter of this release are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Our future performance and financial results may differ materially from those included in any such forward-looking statements and such forward-looking statements should not be relied upon by investors as a prediction of actual results. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or other words with similar meanings. Forward-looking statements includes statements regarding, among other things, our expectations regarding full year performance, profitable growth, investing in new stores, developing omni-channel capabilities and increasing margins, the benefits of the Field & Stream acquisition, and expectations on earnings and 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 2012 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by our management: continuation of the ongoing economic and financial downturn that may cause a continued decline in consumer spending and other changes in macroeconomic factors or market conditions that impact consumer spending or shopping patterns, particularly for the types of merchandise that we sell; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; fluctuations in our quarterly operating results or same store sales; volatility in our stock price; our ability to access adequate capital; competition in the sporting goods industry; limitations on the availability of attractive store locations; inability to manage our growth, open new stores on a timely basis or expand successfully in new and existing markets; changes in consumer demand; unauthorized disclosure of sensitive, personal or confidential information; disruptions in our or our vendors’ supply chains; our relationships with our vendors; factors affecting our vendors, including potential increases in the costs of products, their ability to maintain their inventory and production levels and their ability or willingness to provide us with sufficient quantities of products at acceptable prices; factors that could negatively affect our private brand offerings; risks and costs relating to the products we sell, including product liability claims, and the availability of recourse to third parties, including our insurance policies, product recalls and the regulation of and other hazards associated with certain products we sell, such as hunting rifles and ammunition; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; costs and risks associated with increased or changing laws and regulations affecting our business; our ability to secure and protect our trademarks, patents and other intellectual property; risks relating to operating as an omni-channel retailer, including the impact of rapid technological change, internet security and privacy issues and the threat of systems failure or inadequacy; problems with our current management information systems or software; disruption at our distribution facilities; the seasonality of our business; regional

 



 

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

 

Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended January 28, 2012 as filed with the Securities and Exchange Commission (“SEC”) on March 16, 2012 and in other reports filed with the SEC.  In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not assume any obligation and do not intend to update any forward-looking statements except as may be required by the securities laws.

 

About Dick’s Sporting Goods, Inc.

 

Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer.

 

As of July 28, 2012, the Company operated 490 Dick’s Sporting Goods stores in 44 states, 81 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:

 

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

Anne-Marie Megela, Director, Investor Relations

Dick’s Sporting Goods

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

 

 

July 28,

 

 

% of

 

July 30,

 

 

% of

 

 

 

 

 

 

 

 

 

 

 

2012

 

Sales(1)

 

2011

 

Sales(1)

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,437,041

 

100.00%

 

$

1,306,695

 

100.00%

Cost of goods sold, including occupancy and distribution costs

 

989,261

 

68.84

 

905,620

 

69.31

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

447,780

 

31.16

 

401,075

 

30.69

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

310,864

 

21.63

 

285,729

 

21.87

Pre-opening expenses

 

2,276

 

0.16

 

3,655

 

0.28

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

134,640

 

9.37

 

111,691

 

8.55

 

 

 

 

 

 

 

 

 

Impairment of available-for-sale investments

 

32,370

 

2.25

 

-

 

-

Gain on sale of investment

 

-

 

-

 

(13,900)

 

(1.06)

Interest expense

 

1,000

 

0.07

 

3,480

 

0.27

Other expense

 

54

 

0.00

 

517

 

0.04

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

101,216

 

7.04

 

121,594

 

9.31

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

47,553

 

3.31

 

47,746

 

3.65

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

53,663

 

3.73%

 

$

73,848

 

5.65%

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

 

 

$

0.61

 

 

Diluted

 

$

0.43

 

 

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

Basic

 

119,928

 

 

 

120,207

 

 

Diluted

 

124,533

 

 

 

125,836

 

 

 

 

 

 

 

 

 

 

 

Cash dividend declared per share

 

$

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)

 

 

 

26 Weeks Ended

 

 

July 28,

 

 

 

% of

 

July 30,

 

 

 

 

% of

 

 

 

2012

 

Sales

 

2011

 

Sales (1)

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,718,745

 

100.00%

 

$

2,420,544

 

100.00%

Cost of goods sold, including occupancy and distribution costs

 

1,876,358

 

69.02

 

1,689,026

 

69.78

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

842,387

 

30.98

 

731,518

 

30.22

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

606,995

 

22.33

 

549,465

 

22.70

Pre-opening expenses

 

5,017

 

0.18

 

5,921

 

0.24

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

230,375

 

8.47

 

176,132

 

7.28

 

 

 

 

 

 

 

 

 

Impairment of available-for-sale investments

 

32,370

 

1.19

 

-

 

-

Gain on sale of investment

 

-

 

-

 

(13,900)

 

(0.57)

Interest expense

 

4,449

 

0.16

 

6,964

 

0.29

Other income

 

(1,811)

 

(0.07)

 

(591)

 

(0.02)

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

195,367

 

7.19

 

183,659

 

7.59

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

84,547

 

3.11

 

72,313

 

2.99

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

110,820

 

4.08%

 

$

111,346

 

4.60%

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

 

Basic

 

$

0.92

 

 

 

$

0.93

 

 

Diluted

 

$

0.88

 

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

 

Basic

 

120,721

 

 

 

119,784

 

 

Diluted

 

125,768

 

 

 

125,602

 

 

 

 

 

 

 

 

 

 

 

Cash dividend declared per share

 

$

0.250

 

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

(1) Column does not add due to rounding

 

 

 

 

 

 

 

 

 



 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands)

 

 

 

July 28,

 

July 30,

 

January 28,

 

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

350,404

 

$

626,415

 

$

734,402

Accounts receivable, net

 

53,704

 

55,587

 

38,338

Income taxes receivable

 

7,845

 

1,652

 

4,113

Inventories, net

 

1,134,594

 

1,026,861

 

1,014,997

Prepaid expenses and other current assets

 

67,071

 

63,159

 

64,213

Deferred income taxes

 

27,689

 

13,651

 

12,330

Total current assets

 

1,641,307

 

1,787,325

 

1,868,393

 

 

 

 

 

 

 

Property and equipment, net

 

817,427

 

737,484

 

775,896

Construction in progress - leased facilities

 

10,207

 

-

 

2,138

Intangible assets, net

 

75,061

 

51,098

 

50,490

Goodwill

 

200,594

 

200,594

 

200,594

Other assets:

 

 

 

 

 

 

Deferred income taxes

 

8,196

 

28,004

 

12,566

Other

 

110,148

 

58,878

 

86,375

Total other assets

 

118,344

 

86,882

 

98,941

TOTAL ASSETS

 

$

2,862,940

 

$

2,863,383

 

$

2,996,452

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

561,161

 

$

553,108

 

$

510,398

Accrued expenses

 

275,158

 

284,457

 

264,073

Deferred revenue and other liabilities

 

101,437

 

92,595

 

128,765

Income taxes payable

 

-

 

23,915

 

29,484

Current portion of other long-term debt and

 

 

 

 

 

 

leasing obligations

 

8,579

 

995

 

7,426

Total current liabilities

 

946,335

 

955,070

 

940,146

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Other long-term debt and leasing obligations

 

14,407

 

139,359

 

151,596

Non-cash obligations for construction in progress - leased facilities

 

10,207

 

-

 

2,138

Deferred revenue and other liabilities

 

279,927

 

258,804

 

269,827

Total long-term liabilities

 

304,541

 

398,163

 

423,561

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

Common stock

 

959

 

954

 

964

Class B common stock

 

250

 

250

 

250

Additional paid-in capital

 

797,620

 

666,981

 

699,766

Retained earnings

 

1,013,087

 

841,814

 

932,871

Accumulated other comprehensive income

 

106

 

151

 

118

Treasury stock

 

(199,958)

 

-

 

(1,224)

Total stockholders’ equity

 

1,612,064

 

1,510,150

 

1,632,745

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

2,862,940

 

$

2,863,383

 

$

2,996,452

 



 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)

 

 

 

26 Weeks Ended

 

 

July 28,

 

July 30,

 

 

2012

 

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

Net income

 

$

110,820

 

$

111,346

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

58,100

 

55,316

Impairment of available-for-sale investments

 

32,370

 

-

Deferred income taxes

 

(10,989)

 

8,393

Stock-based compensation

 

15,207

 

13,326

Excess tax benefit from exercise of stock options

 

(39,863)

 

(12,795)

Tax benefit from exercise of stock options

 

3,141

 

231

Other non-cash items

 

(84)

 

761

Gain on sale of investment

 

-

 

(13,900)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

(13,228)

 

(13,180)

Inventories

 

(119,597)

 

(129,966)

Prepaid expenses and other assets

 

(688)

 

(5,415)

Accounts payable

 

41,925

 

103,656

Accrued expenses

 

1,369

 

(16,363)

Income taxes payable/receivable

 

6,623

 

44,030

Deferred construction allowances

 

12,191

 

12,687

Deferred revenue and other liabilities

 

(30,317)

 

(32,149)

Net cash provided by operating activities

 

66,980

 

125,978

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

Capital expenditures

 

(95,158)

 

(85,600)

Purchase of JJB convertible notes and equity securities

 

(31,986)

 

-

Proceeds from sale of investment

 

-

 

14,140

Proceeds from sale-leaseback transactions

 

-

 

3,073

Deposits and purchases of other assets

 

(44,408)

 

(8,045)

Net cash used in investing activities

 

(171,552)

 

(76,432)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

Payments on other long-term debt and leasing obligations

 

(138,611)

 

(487)

Construction allowance receipts

 

-

 

-

Proceeds from exercise of stock options

 

44,939

 

18,994

Excess tax benefit from exercise of stock options

 

39,863

 

12,795

Minimum tax witholding requirements

 

(5,237)

 

(3,455)

Cash paid for treasury stock

 

(198,774)

 

-

Cash dividend paid to stockholders

 

(30,417)

 

-

Increase in bank overdraft

 

8,823

 

2,941

Net cash (used in) provided by financing activities

 

(279,414)

 

30,788

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(12)

 

29

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(383,998)

 

80,363

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

734,402

 

546,052

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

350,404

 

$

626,415

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Construction in progress - leased facilities

 

$

10,207

 

$

-

Accrued property and equipment

 

$

35,213

 

$

21,536

Cash paid for interest

 

$

851

 

$

6,205

Cash paid for income taxes

 

$

92,375

 

$

19,173

 



 

Store Count and Square Footage

 

The stores that opened during the second quarter of 2012 are as follows:

 

DICK’S

Store

 

Market

Union, NJ

 

NJ North

Mt. Pleasant, MI

 

Mt. Pleasant, MI

Northborough, MA

 

Worcester

Bloomfield, MI

 

Detroit

 

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

 

 

 

Fiscal 2012

 

Fiscal 2011

 

 

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

Beginning stores

 

480

 

81

 

561

 

444

 

81

 

525

 

Q1 New

 

6

 

-

 

6

 

3

 

-

 

3

 

Q2 New

 

4

 

-

 

4

 

8

 

-

 

8

 

Ending stores

 

490

 

81

 

571

 

455

 

81

 

536

 

Closed stores

 

-

 

-

 

-

 

-

 

-

 

-

 

Ending stores

 

490

 

81

 

571

 

455

 

81

 

536

 

Remodeled stores

 

-

 

-

 

-

 

1

 

-

 

1

 

Relocated stores

 

1

 

-

 

1

 

-

 

1

 

1

 

 

Square Footage:

(in millions)

 

 

 

Dick’s
Sporting
Goods

 

Golf
Galaxy

 

Total

 

Q1 2011

 

24.7

 

1.3

 

26.0

 

Q2 2011

 

25.1

 

1.3

 

26.4

 

Q3 2011

 

26.0

 

1.3

 

27.3

 

Q4 2011

 

26.3

 

1.3

 

27.6

 

Q1 2012

 

26.5

 

1.3

 

27.8

 

Q2 2012

 

26.7

 

1.3

 

28.0

 

 



 

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, to exclude an impairment charge in the 13 and 26 weeks ended July 28, 2012 and a gain on sale of investment in the 13 and 26 weeks ended July 30, 2011; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses (“Adjusted EBITDA”); a reconciliation from the Company’s gross capital expenditures, net of tenant allowances; and calculations of consolidated and Dick’s Sporting Goods new store productivity.  These measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company’s management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company’s website at http://www.dickssportinggoods.com/investors.

 

Non-GAAP Net Income and Earnings Per Share Reconciliations

(in thousands, except per share data):

 

 

 

Fiscal 2012

 

 

 

13 Weeks Ended July 28, 2012

 

 

 

 

 

 

 

 

 

 

 

As

 

Impairment of

 

Non-GAAP

 

 

 

Reported

 

Investments

 

Total

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,437,041

 

$

-

 

$

1,437,041

 

Cost of goods sold, including occupancy and distribution costs

 

989,261

 

-

 

989,261

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

447,780

 

-

 

447,780

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

310,864

 

-

 

310,864

 

Pre-opening expenses

 

2,276

 

-

 

2,276

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

134,640

 

-

 

134,640

 

 

 

 

 

 

 

 

 

Impairment on available-for-sale investments

 

32,370

 

(32,370)

 

-

 

Interest expense

 

1,000

 

-

 

1,000

 

Other expense

 

54

 

-

 

54

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

101,216

 

32,370

 

133,586

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

47,553

 

4,734

 

52,287

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

53,663

 

$

27,636

 

$

81,299

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

 

$

0.45

 

 

 

$

0.68

 

Diluted

 

$

0.43

 

 

 

$

0.65

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

119,928

 

 

 

119,928

 

Diluted

 

124,533

 

 

 

124,533

 

 

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 to incur as a result of the impairment of its investment in JJB.

 



 

 

 

Fiscal 2012

 

 

 

26 Weeks Ended July 28, 2012

 

 

 

 

 

 

 

 

 

 

 

As

 

Impairment of

 

Non-GAAP

 

 

 

Reported

 

Investments

 

Total

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,718,745

 

$

-

 

$

2,718,745

 

Cost of goods sold, including occupancy and distribution costs

 

1,876,358

 

-

 

1,876,358

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

842,387

 

-

 

842,387

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

606,995

 

-

 

606,995

 

Pre-opening expenses

 

5,017

 

-

 

5,017

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

230,375

 

-

 

230,375

 

 

 

 

 

 

 

 

 

Impairment on available-for-sale investments

 

32,370

 

(32,370)

 

-

 

Interest expense

 

4,449

 

-

 

4,449

 

Other income

 

(1,811)

 

-

 

(1,811)

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

195,367

 

32,370

 

227,737

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

84,547

 

4,734

 

89,281

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

110,820

 

$

27,636

 

$

138,456

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

 

$

0.92

 

 

 

 

$

1.15

 

Diluted

 

$

0.88

 

 

 

 

$

1.10

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

120,721

 

 

 

120,721

 

Diluted

 

125,768

 

 

 

125,768

 

 

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 to incur as a result of the impairment of its investment in JJB.

 



 

 

 

Fiscal 2011

 

 

 

13 Weeks Ended July 30, 2011

 

 

 

 

 

 

 

 

 

 

 

As

 

Gain on Sale

 

Non-GAAP

 

 

 

Reported

 

of Investment

 

Total

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,306,695

 

$

-

 

$

1,306,695

 

Cost of goods sold, including occupancy and distribution costs

 

905,620

 

-

 

905,620

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

401,075

 

-

 

401,075

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

285,729

 

-

 

285,729

 

Pre-opening expenses

 

3,655

 

-

 

3,655

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

111,691

 

-

 

111,691

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

(13,900)

 

13,900

 

-

 

Interest expense

 

3,480

 

-

 

3,480

 

Other expense

 

517

 

-

 

517

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

121,594

 

(13,900)

 

107,694

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

47,746

 

(5,162)

 

42,584

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

73,848

 

$

(8,738)

 

$

65,110

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

 

$

0.61

 

 

 

$

0.54

 

Diluted

 

$

0.59

 

 

 

$

0.52

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

120,207

 

 

 

120,207

 

Diluted

 

125,836

 

 

 

125,836

 

 

During the second quarter of 2011, the Company recorded a pre-tax gain of $13.9 million relating to the sale of available-for-sale securities.

 



 

 

 

Fiscal 2011

 

 

 

26 Weeks Ended July 30, 2011

 

 

 

 

 

 

 

 

 

 

 

As

 

Gain on Sale

 

Non-GAAP

 

 

 

Reported

 

of Investment

 

Total

 

 

 

 

 

 

 

 

 

Net sales

 

$

2,420,544

 

$

-

 

$

2,420,544

 

Cost of goods sold, including occupancy and distribution costs

 

1,689,026

 

-

 

1,689,026

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

731,518

 

-

 

731,518

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

549,465

 

-

 

549,465

 

Pre-opening expenses

 

5,921

 

-

 

5,921

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

176,132

 

-

 

176,132

 

 

 

 

 

 

 

 

 

Gain on sale of investment

 

(13,900)

 

13,900

 

-

 

Interest expense

 

6,964

 

-

 

6,964

 

Other income

 

(591)

 

-

 

(591)

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

183,659

 

(13,900)

 

169,759

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

72,313

 

(5,162)

 

67,151

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

111,346

 

$

(8,738)

 

$

102,608

 

 

 

 

 

 

 

 

 

EARNINGS PER COMMON SHARE:

 

 

 

 

 

 

 

Basic

 

$

0.93

 

 

 

$

0.86

 

Diluted

 

$

0.89

 

 

 

$

0.82

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

119,784

 

 

 

119,784

 

Diluted

 

125,602

 

 

 

125,602

 

 

During the second quarter of 2011, the Company recorded a pre-tax gain of $13.9 million relating to the sale of available-for-sale securities.

 



 

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

 

 

 

July 28,

 

July 30,

 

 

 

2012

 

2011

 

 

 

(dollars in thousands)

 

Net income

 

$

53,663

 

$

73,848

 

Provision for income taxes

 

47,553

 

47,746

 

Interest expense

 

1,000

 

3,480

 

Depreciation and amortization

 

30,444

 

27,880

 

EBITDA

 

$

132,660

 

$

152,954

 

Less: Gain on sale of investment

 

-

 

(13,900)

 

Add: Impairment of available-for-sale investments

 

32,370

 

-

 

Adjusted EBITDA, as defined

 

$

165,030

 

$

139,054

 

 

 

 

 

 

 

% increase in Adjusted EBITDA

 

19%

 

 

 

 

 

 

26 Weeks Ended

 

 

 

July 28,

 

July 30,

 

 

 

2012

 

2011

 

 

 

(dollars in thousands)

 

Net income

 

$

110,820

 

$

111,346

 

Provision for income taxes

 

84,547

 

72,313

 

Interest expense

 

4,449

 

6,964

 

Depreciation and amortization

 

58,100

 

55,316

 

EBITDA

 

$

257,916

 

$

245,939

 

Less: Gain on sale of investment

 

-

 

(13,900)

 

Add: Impairment of available-for-sale investments

 

32,370

 

-

 

Adjusted EBITDA, as defined

 

$

290,286

 

$

232,039

 

 

 

 

 

 

 

% increase in Adjusted EBITDA

 

25%

 

 

 

 



 

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.

 

 

 

26 Weeks Ended

 

 

 

July 28,

 

July 30,

 

 

 

2012

 

2011

 

 

 

(dollars in thousands)

 

Gross capital expenditures

 

$

(95,158)

 

$

(85,600)

 

Proceeds from sale-leaseback transactions

 

-

 

3,073

 

Deferred construction allowances

 

12,191

 

12,687

 

Construction allowance receipts

 

-

 

-

 

Net capital expenditures

 

$

(82,967)

 

$

(69,840)

 

 

New Store Productivity Calculation

 

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

 

 

 

Consolidated

 

Dick’s Sporting Goods Only

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

July 28,

 

July 30,

 

July 28,

 

July 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Sales % increase for the period

 

10.0%

 

 

 

9.8%

 

 

 

Same store sales % increase for the period

 

3.8%

 

 

 

2.9%

 

 

 

New store sales % increase (A) (1)

 

6.2%

 

 

 

6.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Store square footage (000’s):

 

 

 

 

 

 

 

 

 

Beginning of period

 

27,857

 

26,054

 

26,516

 

24,722

 

End of period

 

28,054

 

26,462

 

26,714

 

25,122

 

Average for the period

 

27,956

 

26,258

 

26,615

 

24,922

 

Average square footage % increase for the period (B)

 

6.5%

 

 

 

6.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

New store productivity (A)/(B) (1)

 

95.4%

 

 

 

102.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) - Amounts do not recalculate due to rounding.