EX-99.1 2 l32987aexv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
     
(DICK’S LOGO)
  PRESS RELEASE
Dick’s Sporting Goods Reports Second Quarter Results; Exceeds Guidance
PITTSBURGH, Pa., August 21, 2008 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the second quarter ended August 2, 2008. The results include the operating results of Golf Galaxy and Chick’s Sporting Goods from their respective acquisition dates of February 13, 2007 and November 30, 2007.
Second Quarter Results
The Company reported net income for the second quarter ended August 2, 2008 of $45.5 million, or $0.39 per diluted share, excluding the impact of costs related to the Golf Galaxy integration. These results exceeded earnings guidance provided on May 22, 2008 of $0.34 — 0.38 per diluted share. For the second quarter ended August 4, 2007, net income and earnings per diluted share were $47.9 million and $0.41, respectively.
Including the after-tax impact of costs related to the Golf Galaxy integration of $4.4 million, or $0.04 per diluted share, the Company reported net income for the second quarter ended August 2, 2008 of $41.1 million, or $0.35 per diluted share.
Net sales for the quarter increased 7% to $1,086.3 million due to the opening of new stores, the inclusion of Chick’s Sporting Goods in this year’s quarterly results and a 3.7% decrease in comparable store sales. The 3.7% consolidated same store sales decline consisted of a 3.7% decrease in Dick’s Sporting Goods stores and a 4.5% decline in the Golf Galaxy stores. Chick’s Sporting Goods was acquired on November 30, 2007 and is excluded from the comparable store sales calculation.
“We are pleased to deliver results that exceeded our guidance. We have demonstrated that our culture of financial discipline and emphasis on execution is evident even in these difficult times,” said Edward W. Stack, Chairman, CEO and President. “We remain focused on all aspects of our business as we continue to grow our store base, effectively manage inventory and control expenses.”
Golf Galaxy Integration
By the end of this fiscal year, the Company expects to integrate Golf Galaxy’s operations. Costs related to the integration are expected to be approximately $11.3 million, which includes $8.7 million of pre-tax costs and $2.6 million for income taxes reflecting the impact of non deductible executive separation costs. Of the approximately $11.3 million, $5.5 million was incurred in the second quarter and the Company estimates $2.5 million and $3.3 million will be incurred in the third and fourth quarters of 2008, respectively. Merger and integration costs include the expense of severance, retention, office closure and related taxes. The Pro-forma to GAAP reconciliation is included in a table later in the release under the heading “Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation.”
New Stores
In the second quarter, the Company opened nine Dick’s Sporting Goods stores and one Golf Galaxy store. The stores that opened in the second quarter are listed in a table later in the release under the heading “Store Count and Square Footage.”

 

 

Year-to-Date Results
The Company reported net income for the 26 weeks ended August 2, 2008 of $64.9 million, or $0.55 per diluted share, excluding the proceeds from the sale of the corporate aircraft and costs associated with the integration of Golf Galaxy. For the 26 weeks ended August 4, 2007, net income and earnings per diluted share were $69.6 million and $0.61, respectively. The Pro-forma to GAAP reconciliation is included in a table later in the release under the heading “Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation.”
Including the impact of the gain on the sale of the corporate aircraft and the integration costs related to Golf Galaxy, which totals $3.0 million, or $0.03 per diluted share, the Company reported net income for the 26 weeks ended August 2, 2008 of $61.9 million, or $0.53 per diluted share.
Net sales increased 9% to $1,998.4 million primarily due to the opening of new stores, the inclusion of Chick’s Sporting Goods in this year’s results and a comparable store sales decrease of 3.7%. Year-to-date comparable store sales exclude Golf Galaxy and Chick’s Sporting Goods.
Current 2008 Outlook
The Company’s current outlook for 2008 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
  v   Full Year 2008
  •   Based on an estimated 118 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.27 - 1.36, excluding costs from the Golf Galaxy integration. The Company anticipates reporting earnings per diluted share of approximately $1.20 — 1.29, including the integration costs. Earnings per diluted share for the full year 2007 were $1.33.
 
  •   Comparable store sales, which include Dick’s Sporting Goods stores only, are expected to decrease approximately 5 to 3%. The comparable store sales calculation for the full year excludes the Golf Galaxy and Chick’s Sporting Goods stores.
 
  •   The Company expects to open approximately 43 new Dick’s Sporting Goods stores, ten new Golf Galaxy stores, relocate one Dick’s Sporting Goods store and convert one Chick’s Sporting Goods store to a Dick’s Sporting Goods store in 2008.
  v   Third Quarter 2008
  •   Based on an estimated 117 million diluted shares outstanding, the Company anticipates reporting consolidated earnings per diluted share of approximately $0.04 - 0.08, excluding costs from the Golf Galaxy integration. The Company anticipates reporting earnings per diluted share of approximately $0.02 — 0.06, including the integration costs. Earnings per diluted share for the third quarter of 2007 were $0.10.
 
  •   Comparable store sales are expected to decrease approximately 5 to 2%, which compares to a 1% decrease in the third quarter last year, as adjusted for the shifted retail calendar. The comparable store sales calculation for the third quarter includes Golf Galaxy stores and excludes the Chick’s Sporting Goods stores.
 
  •   The Company expects to open approximately 26 new Dick’s Sporting Goods stores and convert one Chick’s Sporting Goods store to a Dick’s Sporting Goods store.

 

 

Conference Call Info
The Company will be hosting a conference call today at 10:00 am 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 web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, the web cast will be archived on the Company’s web site for 30 days. In addition, a dial-in replay will be available shortly after the call. To listen to the replay, investors should dial 888-286-8010 (domestic callers) or 617-801-6888 (international callers) and enter confirmation code 88334087. The dial-in replay will be available for 30 days following the live call.
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “guidance,” “estimate,” “intend,” “predict,” and “continue” or similar words. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, without limitation, changes in economic and market conditions that affect consumer spending, changes in consumer demand, competitive pressures, currency exchange rate fluctuations, weather conditions, litigation, risks and costs associated with combining businesses and/or assimilating acquired companies and our ability to manage our operations and growth. Known and unknown risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended February 2, 2008 as filed with the Securities and Exchange Commission on March 27, 2008, and other reports filed with the Securities and Exchange Commission. The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws.
The prior period EPS numbers presented in this press release have been adjusted to give effect to the two-for-one stock split, in the form of a stock dividend, which became effective on October 19, 2007 to our stockholders of record on September 28, 2007.
About Dick’s Sporting Goods, Inc.
Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment. As of August 2, 2008, the Company operated 357 Dick’s Sporting Goods stores in 38 states primarily throughout the eastern half of the U.S. The Company also owns Golf Galaxy, Inc., a multi-channel golf specialty retailer, with 84 stores in 30 states, ecommerce websites and catalog operations and Chick’s Sporting Goods, Inc., which operates 15 specialty sporting goods stores in Southern California.
Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page).
Contact:
Timothy E. Kullman, EVP — Finance, Administration & Chief Financial Officer or
Anne-Marie Megela, Director, Investor Relations
724-273-3400
investors@dcsg.com

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
(In thousands, except per share data)
                                 
    13 Weeks Ended  
    August 2,     % of     August 4,     % of  
    2008     Sales     2007     Sales  
Net sales
   $ 1,086,294       100.00 %   $ 1,013,421       100.00 %
Cost of goods sold, including occupancy and distribution costs
     766,636       70.57       714,761       70.53  
 
                        
 
                                
GROSS PROFIT
     319,658       29.43       298,660       29.47  
 
                                
Selling, general and administrative expenses
     237,667       21.88       212,747       20.99  
Pre-opening expenses
     3,681       0.34       2,719       0.27  
Merger and integration costs
     2,879       0.27       —       —  
 
                        
 
                                
INCOME FROM OPERATIONS
     75,431       6.94       83,194       8.21  
 
                                
Interest expense, net
     2,429       0.22       3,629       0.36  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     73,002       6.72       79,565       7.85  
 
                                
Provision for income taxes
     31,887       2.94       31,635       3.12  
 
                        
 
                                
NET INCOME
   $ 41,115       3.78 %   $ 47,930       4.73 %
 
                        
 
                                
EARNINGS PER COMMON SHARE:
                                
Basic
   $ 0.37             $ 0.44          
Diluted
   $ 0.35             $ 0.41          
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
     111,483               108,580          
Diluted
     116,806               115,528          

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
(In thousands, except per share data)
                                 
    26 Weeks Ended  
    August 2,     % of     August 4,     % of  
    2008     Sales     2007     Sales  
Net sales
   $ 1,998,405       100.00 %   $ 1,836,975       100.00 %
Cost of goods sold, including occupancy and distribution costs
     1,419,641       71.04       1,293,896       70.44  
 
                        
 
                                
GROSS PROFIT
     578,764       28.96       543,079       29.56  
 
                                
Selling, general and administrative expenses
     457,631       22.90       410,755       22.36  
Pre-opening expenses
     8,604       0.43       9,840       0.54  
Merger and integration costs
     2,879       0.14       —       —  
 
                        
 
                                
INCOME FROM OPERATIONS
     109,650       5.49       122,484       6.67  
 
                                
Gain on sale of asset
     (2,356 )     (0.12 )     —       —  
Interest expense, net
     4,088       0.20       6,835       0.37  
 
                        
 
                                
INCOME BEFORE INCOME TAXES
     107,918       5.40       115,649       6.30  
 
                                
Provision for income taxes
     46,028       2.30       46,017       2.51  
 
                        
 
                                
NET INCOME
   $ 61,890       3.10 %   $ 69,632       3.79 %
 
                        
 
                                
EARNINGS PER COMMON SHARE:
                                
Basic
   $ 0.56             $ 0.65          
Diluted
   $ 0.53             $ 0.61          
 
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                
Basic
     111,350               107,840          
Diluted
     117,051               114,986          

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                         
    August 2,     August 4,     February 2,  
    2008     2007     2008  
    (unaudited)     (unaudited)          
ASSETS
                        
CURRENT ASSETS:
                        
Cash and cash equivalents
   $ 51,530     $ 50,489     $ 50,307  
Accounts receivable, net
     84,114       62,514       62,035  
Inventories, net
     912,619       791,654       887,364  
Prepaid expenses and other current assets
     48,942       41,811       50,274  
Deferred income taxes
     18,255       1,079       19,714  
 
                  
Total current assets
     1,115,460       947,547       1,069,694  
 
Property and equipment, net
     541,413       499,109       531,779  
Construction in progress — leased facilities
     16,476       7,681       23,744  
Intangible assets, net
     97,636       9,276       80,038  
Goodwill
     304,363       320,156       304,366  
Other assets
     50,651       62,382       26,014  
 
                  
TOTAL ASSETS
   $ 2,125,999     $ 1,846,151     $ 2,035,635  
 
                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accounts payable
   $ 416,550     $ 357,184     $ 365,750  
Accrued expenses
     228,584       208,061       228,816  
Deferred revenue and other liabilities
     82,275       74,631       104,549  
Income taxes payable
     10,177       2,717       62,583  
Current portion of other long-term debt and capital leases
     243       152       250  
 
                  
Total current liabilities
     737,829       642,745       761,948  
 
                  
LONG-TERM LIABILITIES:
                        
Senior convertible notes
     172,500       172,500       172,500  
Revolving credit borrowings
     10,137       52,307       —  
Other long-term debt and capital leases
     8,555       8,320       8,685  
Non-cash obligations for construction in progress — leased facilities
     16,476       7,681       23,744  
Deferred revenue and other liabilities
     205,636       187,994       180,238  
 
                  
Total long-term liabilities
     413,304       428,802       385,167  
 
                  
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
                        
Common stock
     854       838       848  
Class B common stock
     262       266       263  
Additional paid-in capital
     441,163       387,425       416,423  
Retained earnings
     530,864       383,570       468,974  
Accumulated other comprehensive income
     1,723       2,505       2,012  
 
                  
Total stockholders’ equity
     974,866       774,604       888,520  
 
                  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 2,125,999     $ 1,846,151     $ 2,035,635  
 
                  

 

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)
                 
    26 Weeks Ended  
    August 2,     August 4,  
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
                
Net income
   $ 61,890     $ 69,632  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     42,212       38,036  
Deferred income taxes
     (15,927 )     (10,391 )
Stock-based compensation
     15,150       14,781  
Excess tax benefit from stock-based compensation
     (1,004 )     (30,592 )
Tax benefit from exercise of stock options
     242       3,745  
Tax benefit from convertible bond hedge
     1,483       1,370  
Gain on sale of asset
     (2,356 )     —  
Changes in assets and liabilities:
                
Accounts receivable
     (2,049 )     (12,056 )
Income taxes payable/receivable
     (51,250 )     46,551  
Inventories
     (25,254 )     (79,217 )
Prepaid expenses and other assets
     (12,138 )     (2,550 )
Accounts payable
     61,841       57,967  
Accrued expenses
     (6,909 )     1,527  
Deferred construction allowances
     15,288       22,593  
Deferred revenue and other liabilities
     (7,259 )     (8,460 )
 
            
Net cash provided by operating activities
     73,960       112,936  
 
            
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Capital expenditures
     (108,794 )     (76,884 )
Purchase of corporate aircraft
     (25,107 )     —  
Proceeds from sale of corporate aircraft
     27,463       —  
Proceeds from sale-leaseback transactions
     16,384       9,226  
Payment for purchase of Golf Galaxy, net of $4,859 cash acquired
     —       (221,461 )
 
            
Net cash used in investing activities
     (90,054 )     (289,119 )
 
            
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Revolving credit borrowings, net
     10,137       52,307  
Payments on other long-term debt and capital leases
     (136 )     (97 )
Construction allowance receipts
     10,424       2,699  
Proceeds from sale of common stock under employee stock purchase plan
     2,986       2,466  
Proceeds from exercise of stock options
     3,953       24,712  
Excess tax benefit from stock-based compensation
     1,004       30,592  
Decrease in bank overdraft
     (11,043 )     (22,013 )
 
            
Net cash provided by financing activities
     17,325       90,666  
 
            
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
     (8 )     64  
 
            
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     1,223       (85,453 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     50,307       135,942  
 
            
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 51,530     $ 50,489  
 
            
Supplemental disclosure of cash flow information:
                
Construction in progress — leased facilities
   $ (7,268 )   $ (5,406 )
Accrued property and equipment
   $ 671     $ 1,027  
Cash paid for interest
   $ 4,084     $ 7,509  
Cash paid for income taxes
   $ 112,811     $ 5,426  
Stock options issued for acquisition
   $ 7,234     $ 8,647  

 

 

Store Count and Square Footage
The stores that opened during the second quarter of 2008 are as follows:
             
DICK’S SPORTING GOODS   GOLF GALAXY
Store   Market   Store   Market
S. Fredericksburg, VA
  Fredericksburg   Encinitas, CA   San Diego
San Antonio (Rim), TX
  San Antonio        
Garland, TX
  Dallas-Ft. Worth        
Montgomeryville, PA
  Philadelphia        
St. Peters, MO
  St. Louis        
Gilbert, AZ
  Phoenix        
Brighton, CO
  Denver-Boulder        
Cedar Hill, TX
  Dallas-Ft. Worth        
San Antonio (Alamo), TX
  San Antonio        
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
                                                       
    Fiscal 2008     Fiscal 2007
    Dick’s             Chick’s             Dick’s          
    Sporting     Golf     Sporting             Sporting     Golf      
    Goods     Galaxy     Goods     Total     Goods     Galaxy     Total
Beginning stores
     340       79       15       434       294       65       359
Q1 New
     8       4       —       12       15       10       25
Q2 New
     9       1       —       10       6       2       8
 
                                        
Ending stores
     357       84       15       456       315       77       392
 
                                        
 
                                                      
Relocated stores
     —       —       —       —       1       —       1
 
                                        
Square Footage:
(in millions)
                               
    Dick’s             Chick’s      
    Sporting     Golf     Sporting      
    Goods     Galaxy     Goods     Total
Q1 2007
     17.4       1.1       —       18.5
Q2 2007
     17.8       1.1       —       18.9
Q3 2007
     19.0       1.2       —       20.2
Q4 2007
     19.0       1.3       0.8       21.1
 
                      
Q1 2008
     19.5       1.3       0.8       21.6
Q2 2008
     20.0       1.3       0.8       22.1

 

 

Non-GAAP Financial Measures
In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company provides information regarding net income and earnings per diluted share adjusted for merger integration costs and the gain on sale of asset, pro-forma comparable store sales, earnings before interest, taxes and depreciation (“EBITDA”) as well as a reconciliation from the Company’s gross capital expenditures, net of tenant allowances. The following measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company’s management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company’s website at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page). The Company’s website is not part of this press release.
Pro-forma Net Income and Pro-forma Earnings Per Share Reconciliation
(in thousands, except per share data):
                         
    Fiscal 2008
    13 Weeks Ended August 2, 2008
            Merger and   Non-GAAP
    As   Integration   Pro-forma
    Reported   Costs   Total
     
Net sales
   $ 1,086,294     $ —     $ 1,086,294  
Cost of goods sold, including occupancy and distribution costs
     766,636       —       766,636  
     
 
                        
GROSS PROFIT
     319,658       —       319,658  
 
                        
Selling, general and administrative expenses
     237,667               237,667  
Pre-opening expenses
     3,681       —       3,681  
Merger and integration costs
     2,879       (2,879 )     —  
     
 
                        
INCOME FROM OPERATIONS
     75,431       2,879       78,310  
 
                        
Interest expense, net
     2,429       —       2,429  
     
 
                        
INCOME BEFORE INCOME TAXES
     73,002       2,879       75,881  
 
                        
Provision for income taxes, excluding tax impact of non deductible executive separation costs
     29,272       (1,119 )     30,391  
Tax impact of non deductible executive separation costs
     2,615       2,615       —  
     
Provision for income taxes
     31,887       1,496       30,391  
     
 
                        
NET INCOME
   $ 41,115     $ 4,375     $ 45,490  
     
 
                        
EARNINGS PER COMMON SHARE:
                        
Basic
   $ 0.37                  
Diluted
   $ 0.35     $ 0.04     $ 0.39  
 
                        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                        
Basic
     111,483               111,483  
Diluted
     116,806               116,806  
Note: Costs related to the Golf Galaxy integration total $5.5 million, which includes $2.9 million of pre tax “merger and integration costs” and $2.6 million included in the Company’s provision for income taxes reflecting the “tax impact of non deductible executive separation costs”. The net income impact of costs related to the Golf Galaxy integration equals $4.4 million, which includes $1.8 million for the after tax amount of “merger and integration costs” and the $2.6 million included in the Company’s provision for income taxes reflecting the “tax impact of non deductible executive separation costs.”

 

 

                         
    Fiscal 2008
    26 Weeks Ended August 2, 2008
            Merger and    
            Integration   Non-GAAP
    As   Costs, Gain   Pro-forma
    Reported   on Asset Sale   Total
     
Net sales
   $ 1,998,405     $ —     $ 1,998,405  
Cost of goods sold, including occupancy and distribution costs
     1,419,641       —       1,419,641  
     
 
                        
GROSS PROFIT
     578,764       —       578,764  
 
                        
Selling, general and administrative expenses
     457,631               457,631  
Pre-opening expenses
     8,604       —       8,604  
Merger and integration costs
     2,879       (2,879 )     —  
     
 
                        
INCOME FROM OPERATIONS
     109,650       2,879       112,529  
 
                        
Gain on sale of asset
     (2,356 )     2,356       —  
Interest expense, net
     4,088       —       4,088  
     
 
                        
INCOME BEFORE INCOME TAXES
     107,918       523       108,441  
 
                        
Provision for income taxes, excluding tax impact of non deductible executive separation costs
     43,413       (172 )     43,585  
Tax impact of non deductible executive separation costs
     2,615       2,615       —  
     
Provision for income taxes
     46,028       2,443       43,585  
     
 
                        
NET INCOME
   $ 61,890     $ 2,966     $ 64,856  
     
 
                        
EARNINGS PER COMMON SHARE:
                        
Basic
   $ 0.56                  
Diluted
   $ 0.53     $ 0.03     $ 0.55  
 
                        
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                        
Basic
     111,350               111,350  
Diluted
     117,051               117,051  

 

 

Pro-forma Comparable Store Sales
The following pro-forma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented. The sales have been adjusted to conform to the Company’s reporting calendar and method of reporting comparable sales. Golf Galaxy is included in the quarterly comparable store base beginning in Q2 2008, which is the first full quarter following the anniversary of the date of acquisition.
                         
    Dick’s        
    Sporting   Golf    
    Goods   Galaxy   Consolidated
13 weeks ended August 4, 2007
     7.2 %     4.7 %     7.0 %
 
                        
13 weeks ended August 4, 2007 - shifted (1)
     5.8 %     5.5 %     5.8 %
 
                        
26 weeks ended August 4, 2007
     4.7 %     4.7 %     4.7 %
 
                        
26 weeks ended August 4, 2007 - shifted (1)
     3.1 %     3.0 %     3.1 %
 
                        
26 weeks ended August 2, 2008
     -3.7 %     -6.2 %     -4.0 %
 
(1)   Adjusted for the shifted retail calendar

 

 

EBITDA
EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, and capital investments.
                 
    13 Weeks Ended  
    August 2,     August 4,  
EBITDA   2008     2007  
    (dollars in thousands)  
Net income
   $ 41,115     $ 47,930  
Provision for income taxes
     31,887       31,635  
Interest expense, net
     2,429       3,629  
Depreciation and amortization
     21,812       21,634  
Less: Depreciation and amortization (merger integration)
     (100 )     —  
Add: Merger and integration costs
     2,879       —  
 
            
EBITDA
   $ 100,022     $ 104,828  
 
            
 
                
% decrease in EBITDA
     -5 %        
                 
    26 Weeks Ended  
    August 2,     August 4,  
EBITDA   2008     2007  
    (dollars in thousands)  
Net income
   $ 61,890     $ 69,632  
Provision for income taxes
     46,028       46,017  
Interest expense, net
     4,088       6,835  
Depreciation and amortization
     42,212       38,036  
Less: Depreciation and amortization (merger integration)
     (100 )     —  
Add: Merger and integration costs
     2,879       —  
Less: Gain on sale of asset
     (2,356 )     —  
 
            
EBITDA
   $ 154,641     $ 160,520  
 
            
 
                
% decrease in EBITDA
     -4 %        
Reconciliation of Gross Capital Expenditures to Capital Expenditures
The following table represents a reconciliation of the Company’s gross capital expenditures to its capital expenditures, net of tenant allowances.
                 
    26 Weeks Ended  
    August 2,     August 4,  
    2008     2007  
    (dollars in thousands)  
Gross capital expenditures
   $ (108,794 )   $ (76,884 )
Proceeds from sale-leaseback transactions
     16,384       9,226  
Changes in deferred construction allowances
     15,288       22,593  
Construction allowance receipts
     10,424       2,699  
 
            
Net capital expenditures
   $ (66,698 )   $ (42,366 )