UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 29, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    .

Commission File No. 001-31463

 DICK’S SPORTING GOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware	16-1241537
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

345 Court Street, Coraopolis, PA 15108

(Address of Principal Executive Offices)

(724) 273-3400

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, $0.01 par value	DKS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of November 18, 2022, DICK’S Sporting Goods, Inc. had 59,840,863 shares of common stock, par value $0.01 per share, and 23,570,633 shares of Class B common stock, par value $0.01 per share, outstanding.

1

INDEX TO FORM 10-Q

	Page Number
PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	24
PART II. OTHER INFORMATION	25
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 6. Exhibits	27
INDEX TO EXHIBITS	27
SIGNATURES	29

2

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

	13 Weeks Ended				39 Weeks Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Net sales	$	2,958,861	$	2,747,647	$	8,771,485	$	8,941,208
Cost of goods sold, including occupancy and distribution costs	1,946,438		1,691,071		5,652,966		5,488,928
GROSS PROFIT	1,012,423		1,056,576		3,118,519		3,452,280
Selling, general and administrative expenses	679,747		631,943		1,952,408		1,880,505
Pre-opening expenses	7,212		4,765		13,948		12,545
INCOME FROM OPERATIONS	325,464		419,868		1,152,163		1,559,230
Interest expense	26,131		13,789		77,267		40,971
Other (income) expense	(4,826)		(1,748)		11,559		(15,893)
INCOME BEFORE INCOME TAXES	304,159		407,827		1,063,337		1,534,152
Provision for income taxes	75,703		91,314		255,820		360,374
NET INCOME	$	228,456	$	316,513	$	807,517	$	1,173,778
EARNINGS PER COMMON SHARE:
Basic	$	2.94	$	3.79	$	10.55	$	13.93
Diluted	$	2.45	$	2.78	$	8.17	$	10.70
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	77,789		83,537		76,527		84,266
Diluted	96,681		113,664		101,900		109,648

See accompanying notes to unaudited consolidated financial statements.

3

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

	13 Weeks Ended				39 Weeks Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
NET INCOME	$	228,456	$	316,513	$	807,517	$	1,173,778
OTHER COMPREHENSIVE (LOSS) INCOME:
Foreign currency translation adjustment, net of tax	(277)		15		(280)		58
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME	(277)		15		(280)		58
COMPREHENSIVE INCOME	$	228,179	$	316,528	$	807,237	$	1,173,836

See accompanying notes to unaudited consolidated financial statements.

4

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands) 

(Unaudited)

	October 29, 2022		January 29, 2022		October 30, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,437,997	$	2,643,205	$	1,372,892
Accounts receivable, net	87,191		68,263		89,479
Income taxes receivable	4,082		1,978		683
Inventories, net	3,361,057		2,297,609		2,490,438
Prepaid expenses and other current assets	96,135		95,601		92,673
Total current assets	4,986,462		5,106,656		4,046,165
Property and equipment, net	1,342,786		1,319,681		1,314,567
Operating lease assets	2,025,149		2,044,819		2,070,135
Intangible assets, net	84,946		86,767		87,195
Goodwill	245,857		245,857		245,857
Deferred income taxes	58,945		35,024		42,862
Other assets	212,455		202,872		192,498
TOTAL ASSETS	$	8,956,600	$	9,041,676	$	7,999,279
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,473,424	$	1,281,322	$	1,399,716
Accrued expenses	500,246		620,143		522,010
Operating lease liabilities	487,119		480,318		478,674
Income taxes payable	32,664		13,464		28,430
Deferred revenue and other liabilities	268,677		317,433		239,472
Total current liabilities	2,762,130		2,712,680		2,668,302
LONG-TERM LIABILITIES:
Revolving credit borrowings	—		—		—
Senior notes due 2032 and 2052	1,482,110		1,481,443		—
Convertible senior notes due 2025	152,006		449,287		441,186
Long-term operating lease liabilities	2,026,774		2,099,146		2,135,515
Other long-term liabilities	156,408		197,534		223,459
Total long-term liabilities	3,817,298		4,227,410		2,800,160
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock	570		520		586
Class B common stock	236		236		237
Additional paid-in capital	1,399,694		1,488,834		1,476,701
Retained earnings	4,682,663		3,956,602		3,647,621
Accumulated other comprehensive (loss) income	(362)		(82)		9
Treasury stock, at cost	(3,705,629)		(3,344,524)		(2,594,337)
Total stockholders' equity	2,377,172		2,101,586		2,530,817
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,956,600	$	9,041,676	$	7,999,279

See accompanying notes to unaudited consolidated financial statements.

5

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

											Accumulated
				Class B			Additional				Other
	Common Stock			Common Stock			Paid-In		Retained		Comprehensive		Treasury
	Shares	Dollars		Shares	Dollars		Capital		Earnings		Loss		Stock		Total
BALANCE, January 29, 2022	51,989	$	520	23,621	$	236	$	1,488,834	$	3,956,602	$	(82)	$	(3,344,524)	$	2,101,586
Adjustment for cumulative effect from change in accounting principle (ASU 2020-06)	—	—		—	—		(118,961)		34,232		—		—		(84,729)
Exchange of convertible senior notes due 2025 and partial unwind of convertible bond hedge and warrants	1,833	18		—	—		3,793		—		—		—		3,811
Exercise of stock options	389	4		—	—		12,661		—		—		—		12,665
Restricted stock vested	933	9		—	—		(9)		—		—		—		—
Minimum tax withholding requirements	(332)	(3)		—	—		(33,284)		—		—		—		(33,287)
Net income	—	—		—	—		—		260,559		—		—		260,559
Stock-based compensation	—	—		—	—		15,177		—		—		—		15,177
Foreign currency translation adjustment, net of taxes of $2	—	—		—	—		—		—		(7)		—		(7)
Purchase of shares for treasury	(417)	(4)		—	—		—		—		—		(42,223)		(42,227)
Cash dividend declared, $0.4875 per common share	—	—		—	—		—		(38,942)		—		—		(38,942)
BALANCE, April 30, 2022	54,395	$	544	23,621	$	236	$	1,368,211	$	4,212,451	$	(89)	$	(3,386,747)	$	2,194,606
Exchange of convertible senior notes due 2025 and partial unwind of convertible bond hedge and warrants	1,675	17		—	—		5,750		—		—		—		5,767
Exercise of stock options	52	1		—	—		1,331		—		—		—		1,332
Restricted stock vested	47	—		—	—		—		—		—		—		—
Minimum tax withholding requirements	(13)	—		—	—		(1,860)		—		—		—		(1,860)
Net income	—	—		—	—		—		318,502		—		—		318,502
Stock-based compensation	—	—		—	—		11,517		—		—		—		11,517
Foreign currency translation adjustment, net of taxes of ($1)	—	—		—	—		—		—		4		—		4
Purchase of shares for treasury	(3,945)	(40)		—	—		—		—		—		(318,882)		(318,922)
Cash dividend declared, $0.4875 per common share	—	—		—	—		—		(37,437)		—		—		(37,437)
BALANCE, July 30, 2022	52,211	$	522	23,621	$	236	$	1,384,949	$	4,493,516	$	(85)	$	(3,705,629)	$	2,173,509
Exchange of convertible senior notes due 2025 and partial unwind of convertible bond hedge and warrants	4,312	43		—	—		5,989		—		—		—		6,032
Exchange of Class B common stock for common stock	50	—		(50)	—		—		—		—		—		—
Exercise of stock options	213	2		—	—		5,954		—		—		—		5,956
Restricted stock vested	282	3		—	—		(3)		—		—		—		—
Minimum tax withholding requirements	(74)	—		—	—		(8,080)		—		—		—		(8,080)
Net income	—	—		—	—		—		228,456		—		—		228,456
Stock-based compensation	—	—		—	—		10,885		—		—		—		10,885
Foreign currency translation adjustment, net of taxes of $88	—	—		—	—		—		—		(277)		—		(277)
Cash dividend declared, $0.4875 per common share	—	—		—	—		—		(39,309)		—		—		(39,309)
BALANCE, October 29, 2022	56,994	$	570	23,571	$	236	$	1,399,694	$	4,682,663	$	(362)	$	(3,705,629)	$	2,377,172

See accompanying notes to unaudited consolidated financial statements.

6

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Continued)

(in thousands)

(Unaudited)

											Accumulated
				Class B			Additional				Other
	Common Stock			Common Stock			Paid-In		Retained		Comprehensive		Treasury
	Shares	Dollars		Shares	Dollars		Capital		Earnings		(Loss) Income		Stock		Total
BALANCE, January 30, 2021	61,195	$	612	23,736	$	237	$	1,442,298	$	3,064,702	$	(49)	$	(2,168,266)	$	2,339,534
Exercise of stock options	297	3		—	—		12,330		—		—		—		12,333
Restricted stock vested	791	8		—	—		(8)		—		—		—		—
Minimum tax withholding requirements	(237)	(3)		—	—		(18,598)		—		—		—		(18,601)
Net income	—	—		—	—		—		361,756		—		—		361,756
Stock-based compensation	—	—		—	—		12,870		—		—		—		12,870
Foreign currency translation adjustment, net of taxes of ($20)	—	—		—	—		—		—		64		—		64
Purchase of shares for treasury	(1,030)	(10)		—	—		—		—		—		(76,831)		(76,841)
Cash dividend declared, $0.3625 per common share	—	—		—	—		—		(32,391)		—		—		(32,391)
BALANCE, May 1, 2021	61,016	$	610	23,736	$	237	$	1,448,892	$	3,394,067	$	15	$	(2,245,097)	$	2,598,724
Exchange of Class B common stock for common stock	40	—		(40)	—		—		—		—		—		—
Exercise of stock options	189	2		—	—		8,313		—		—		—		8,315
Restricted stock vested	31	1		—	—		(1)		—		—		—		—
Minimum tax withholding requirements	(10)	—		—	—		(1,531)		—		—		—		(1,531)
Net income	—	—		—	—		—		495,509		—		—		495,509
Stock-based compensation	—	—		—	—		12,544		—		—		—		12,544
Foreign currency translation adjustment, net of taxes of $6	—	—		—	—		—		—		(21)		—		(21)
Purchase of shares for treasury	(808)	(8)		—	—		—		—		—		(75,838)		(75,846)
Cash dividend declared, $0.3625 per common share	—	—		—	—		—		(32,319)		—		—		(32,319)
BALANCE, July 31, 2021	60,458	$	605	23,696	$	237	$	1,468,217	$	3,857,257	$	(6)	$	(2,320,935)	$	3,005,375
Exercise of stock options	114	1		—	—		4,281		—		—		—		4,282
Restricted stock vested	305	3		—	—		(3)		—		—		—		—
Minimum tax withholding requirements	(80)	(1)		—	—		(9,760)		—		—		—		(9,761)
Net income	—	—		—	—		—		316,513		—		—		316,513
Stock-based compensation	—	—		—	—		13,966		—		—		—		13,966
Foreign currency translation adjustment, net of taxes of $(4)	—	—		—	—		—		—		15		—		15
Purchase of shares for treasury	(2,173)	(22)		—	—		—		—		—		(273,402)		(273,424)
Cash dividends declared, $5.9375 per common share	—	—		—	—		—		(526,149)		—		—		(526,149)
BALANCE, October 30, 2021	58,624	$	586	23,696	$	237	$	1,476,701	$	3,647,621	$	9	$	(2,594,337)	$	2,530,817

See accompanying notes to unaudited consolidated financial statements.

7

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	39 Weeks Ended
	October 29, 2022		October 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	807,517	$	1,173,778
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	250,522		237,666
Amortization of deferred financing fees and debt discount	3,558		22,693
Deferred income taxes	5,344		8,613
Stock-based compensation	37,579		39,380
Other, net	15,879		—
Changes in assets and liabilities:
Accounts receivable	(36,699)		(20,655)
Inventories	(1,063,448)		(536,870)
Prepaid expenses and other assets	(936)		(7,995)
Accounts payable	178,633		194,084
Accrued expenses	(94,177)		(13,918)
Income taxes payable / receivable	19,023		(6,854)
Construction allowances provided by landlords	36,100		27,677
Deferred revenue and other liabilities	(58,613)		(30,219)
Operating lease assets and liabilities	(64,663)		(80,734)
Net cash provided by operating activities	35,619		1,006,646
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(274,307)		(231,087)
Proceeds from sale of other assets	14,261		9,671
Deposits and other investing activities	(32,885)		(19,130)
Net cash used in investing activities	(292,931)		(240,546)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal paid in connection with exchange of convertible senior notes due 2025	(420,558)		—
Payments on finance lease obligations	(548)		(553)
Proceeds from exercise of stock options	19,953		24,930
Minimum tax withholding requirements	(43,227)		(29,893)
Cash paid for treasury stock	(392,882)		(426,111)
Cash dividends paid to stockholders	(123,823)		(567,245)
Increase (decrease) in bank overdraft	13,469		(52,461)
Net cash used in financing activities	(947,616)		(1,051,333)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(280)		58
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,205,208)		(285,175)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	2,643,205		1,658,067
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,437,997	$	1,372,892
Supplemental disclosure of cash flow information:
Accrued property and equipment	$	41,773	$	44,545
Cash paid for interest	$	41,441	$	21,870
Cash paid for income taxes	$	232,705	$	364,875

See accompanying notes to unaudited consolidated financial statements.

8

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Basis of Presentation

DICK’S Sporting Goods, Inc. (together with its subsidiaries, referred to as “the Company”, “we”, “us” and “our” unless specified otherwise) is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories through a blend of dedicated teammates, in-store services and unique specialty shop-in-shops. In addition to DICK’S Sporting Goods stores, the Company also owns and operates Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! specialty concept stores, and offers its products both online and through its mobile apps. The Company also owns and operates DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for scheduling, communications, live scorekeeping, and video streaming. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies, any reference to “year” is to the Company’s fiscal year.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the requirements for Quarterly Reports on Form 10-Q and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim consolidated financial statements are unaudited and have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the interim financial information. 

The unaudited interim financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022 as filed with the Securities and Exchange Commission on March 23, 2022. Operating results for the 13 and 39 weeks ended October 29, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2023 or any other period.

Recently Adopted Accounting Pronouncement

Convertible Instruments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40),” which removes the separation models for convertible debt with cash conversion or beneficial conversion features. ASU 2020-06 also requires the application of the if-converted method for calculating earnings per diluted share, under which the Company must assume that any conversion of its convertible senior notes due 2025 (the “Convertible Senior Notes”) will be satisfied entirely in common stock.

The Company adopted ASU 2020-06 on the first day of fiscal 2022 using the modified retrospective approach, which resulted in the following adjustments to the Consolidated Balance Sheet (in millions):

	Last Day of Fiscal 2021		Adoption of ASU 2020-06		First Day of Fiscal 2022
Balance sheet line item
Convertible senior notes due 2025	$	449.3	$	114.0	$	563.3
Net deferred tax assets	$	35.0	$	29.3	$	64.3
Additional paid-in capital	$	1,488.8	$	(119.0)	$	1,369.8
Retained earnings	$	3,956.6	$	34.2	$	3,990.8

9

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Following the adoption of ASU 2020-06, the embedded conversion feature of the Convertible Senior Notes is no longer separately presented within stockholders’ equity, eliminating the non-cash debt discount. Accordingly, the Company’s effective interest rate on the Convertible Senior Notes decreased from 11.6% to 3.9% upon adoption, resulting in a $20.1 million reduction in non-cash interest expense for the 39 weeks ended October 29, 2022 as compared to the same prior year period. The Company anticipates that fiscal 2022 earnings will not include $27.4 million of pre-tax non-cash interest expense that was incurred in fiscal 2021 as a result of the adoption of ASU 2020-06.

Despite the Company’s intention to settle the principal amount of the Convertible Senior Notes in cash, the application of the if-converted method requires earnings per diluted share to reflect that the Convertible Senior Notes will be settled entirely in shares upon conversion. As of October 29, 2022, approximately 4.8 million shares underlie the Convertible Senior Notes, which provides the basis for earnings per diluted share. The Company used the treasury stock method prior to adoption of ASU 2020-06, which allowed the Company to assume that the principal amount of the Convertible Senior Notes would be paid in cash. The impact of adoption was not material to earnings per diluted share.

Recently Issued Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”). The amendments in this ASU can be applied anytime between the first quarter of fiscal 2020 and the fourth quarter of fiscal 2022 and apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued. The Company’s primary association with LIBOR was through interest rates applicable to loans under its former revolving credit facility, which was terminated in January 2022 and replaced with a new revolving credit facility that uses an adjusted secured overnight financing rate (“SOFR”). Accordingly, the impact of ASU 2020-04 on the Company's financial statements and related disclosures is not expected to be significant.

Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04, “Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. The amendments in this ASU are effective for the first quarter of 2023, except for the amendment on roll-forward information, which is effective for the first quarter of 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this accounting standard will have on its financial disclosures.

2. Earnings Per Common Share

Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock outstanding, plus the effect of dilutive potential common shares, which include shares the Company could be obligated to issue from its Convertible Senior Notes and warrants, and stock-based awards, such as stock options and restricted stock. Dilutive potential common shares are excluded from the computation of earnings per share if their effect is anti-dilutive.

For all periods presented, dilutive potential common shares for the Company’s stock-based awards and warrants were determined using the treasury stock method. For the 13 and 39 weeks ended October 30, 2021, the dilutive effect of the Convertible Senior Notes was calculated using the treasury stock method; however, upon the adoption of ASU 2020-06, the Company was required to calculate diluted earnings per common share using the if-converted method, which was applied to the 13 and 39 weeks ended October 29, 2022. See Note 1 – Description of Business and Basis of Presentation for further discussion.

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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The computations for basic and diluted earnings per common share were as follows for the periods presented (in thousands, except per share data):

	13 Weeks Ended				39 Weeks Ended
	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
Numerator:
Numerator for basic earnings per common share - Net income	$	228,456	$	316,513	$	807,517	$	1,173,778
Effect of dilutive securities
Interest expense associated with Convertible Senior Notes, net of tax	8,472		—		24,673		—
Numerator for diluted earnings per common share - Net income after the effect of dilutive securities	$	236,928	$	316,513	$	832,190	$	1,173,778
Denominator:
Weighted average common shares outstanding - basic	77,789		83,537		76,527		84,266
Dilutive effect of stock-based awards	5,120		6,791		5,357		6,498
Dilutive effect of warrants	4,947		10,542		6,754		7,988
Dilutive effect of Convertible Senior Notes	8,825		12,794		13,262		10,896
Weighted average common shares outstanding - diluted	96,681		113,664		101,900		109,648
Earnings per common share:
Basic	$	2.94	$	3.79	$	10.55	$	13.93
Diluted	$	2.45	$	2.78	$	8.17	$	10.70
Stock-based awards excluded from diluted shares	—		1		185		55

The dilutive effect of the Convertible Senior Notes included 6.2 million and 12.8 million shares for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively, and 8.9 million and 10.9 million shares for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively, that are designed to be offset at settlement by shares delivered from the bond hedge purchased by the Company. The shares provided by the bond hedge are anti-dilutive; accordingly, they are not treated as a reduction to diluted weighted average shares outstanding for any periods presented. In addition, the dilutive effect of the Convertible Senior Notes for the 13 and 39 weeks ended October 29, 2022 included approximately 2.6 million and 4.4 million shares, respectively, related to the principal amount of the Convertible Senior Notes, which the Company intends to settle in cash.

3. Fair Value Measurements

Accounting Standard Codification (“ASC”) 820, “Fair Value Measurement and Disclosures,” outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop

its own assumptions.

Recurring

The Company measures its deferred compensation plan assets held in trust at fair value on a recurring basis using Level 1 inputs. Such assets consist of investments in various mutual funds made by eligible individuals as part of the Company’s deferred compensation plans. As of October 29, 2022, January 29, 2022 and October 30, 2021, the fair value of the Company’s deferred compensation plans was $128.8 million, $150.8 million, and $150.7 million, respectively, as determined by quoted prices in active markets.

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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company discloses the fair value of its senior notes due 2032 and 2052 and Convertible Senior Notes using Level 2 inputs, which are based on quoted prices for similar or identical instruments in inactive markets, as follows (in millions):

	October 29, 2022				January 29, 2022				October 30, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Senior notes due 2032	$	742.2	$	571.7	$	741.7	$	733.1	$	—	$	—
Senior notes due 2052	$	739.9	$	461.4	$	739.7	$	711.3	$	—	$	—
Convertible Senior Notes	$	152.0	$	559.5	$	449.3	$	2,016.3	$	441.2	$	2,188.0

Prior to the adoption of ASU 2020-06, the carrying value of the Convertible Senior Notes excluded amounts classified within additional paid-in capital and any unamortized discounts as of January 29, 2022 and October 30, 2021. See Note 1 – Description of Business and Basis of Presentation for further information.

Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at October 29, 2022, January 29, 2022, and October 30, 2021.

Nonrecurring

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include property and equipment, operating lease assets, goodwill and other intangible assets, equity and other assets. These assets are required to be assessed for impairment when events or circumstances indicate that the carrying value may not be recoverable, and at least annually, for goodwill and indefinite-lived intangible assets. In the event that an impairment is required, the asset is adjusted to fair value, using Level 3 inputs.

4. Leases

The Company leases substantially all of its stores, three of its distribution centers and certain equipment under non-cancellable operating leases that expire at various dates through 2034. The Company’s stores generally have initial lease terms of 10 to 15 years and contain multiple five-year renewal options and rent escalation provisions. The lease agreements are primarily for the payment of minimum annual rentals, costs of utilities, property taxes, maintenance, common areas and insurance.

Supplemental cash flow information related to operating leases for the 39 weeks ended October 29, 2022 and October 30, 2021 were as follows (in millions):

	39 Weeks Ended
	October 29, 2022		October 30, 2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	499.2	$	511.8
Non-cash operating lease assets obtained in exchange for operating lease liabilities	$	325.3	$	273.6

5. Convertible Senior Notes

Overview

In April 2020, the Company issued an aggregate $575.0 million of 3.25% Convertible Senior Notes due 2025, which included the full exercise of a $75.0 million over-allotment option, receiving proceeds of $557.6 million, net of $17.4 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes are scheduled to mature on April 15, 2025 and accrue interest at a rate of 3.25% per annum, payable semi-annually in arrears on April 15 and October 15.

As of October 29, 2022, the conversion rate for the Convertible Senior Notes was 30.9636, which represents a conversion price of $32.30 per share. The difference between the initial conversion rate and the conversion rate as of October 29, 2022 is due to dividends that have been declared and paid on shares of the Company’s common stock following the issuance of the Convertible Senior Notes.

Upon conversion, the Company may settle the Convertible Senior Notes for cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option. The Company currently intends to settle the principal amount of the Convertible Senior Notes in cash and any conversion premium in shares of its common stock.

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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Convertible Senior Notes Exchanges

During fiscal 2