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DICK'S Sporting Goods Reports Second Quarter Results
- Consolidated non-GAAP earnings per diluted share increased to $0.71 in the second quarter of 2013 from $0.65 per diluted share in the second quarter of 2012
- Board authorizes quarterly dividend of $0.125 per share

PITTSBURGH, Aug. 20, 2013 /PRNewswire/ -- 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 August 3, 2013.

Second Quarter Results

The Company reported consolidated non-GAAP net income for the second quarter ended August 3, 2013 of $88.9 million, or $0.71 per diluted share, excluding an asset impairment charge, compared to the Company's expectations provided on May 21, 2013 of $0.75 to 0.77 per diluted share.  For the second quarter ended July 28, 2012, the Company reported consolidated non-GAAP net income of $81.3 million, or $0.65 per diluted share, excluding an impairment charge related to the Company's investment in JJB Sports. 

On a GAAP basis, the Company reported consolidated net income for the second quarter ended August 3, 2013 of $84.2 million, or $0.67 per diluted share.  For the second quarter ended July 28, 2012, the Company reported consolidated net income of $53.7 million, or $0.43 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 2013 increased 6.6% to $1.5 billion.  Adjusted for the shifted calendar due to the 53rd week in 2012, consolidated same store sales decreased 0.4%, compared to the Company's guidance of an approximate 2 to 3% increase.  Second quarter 2012 consolidated same store sales increased 3.8%.  Shifted same store sales in the second quarter of 2013 for DICK'S Sporting Goods increased 0.1% while Golf Galaxy decreased 6.1%. 

Unshifted consolidated same store sales increased 1.2%, compared to the Company's guidance of an approximate 3.5 to 4.5% increase. Unshifted same store sales in the second quarter of 2013 for DICK'S Sporting Goods increased 1.9% while Golf Galaxy decreased 7.2%.  eCommerce penetration was 5.6% of total sales.

"Our second quarter results were below our guidance as a sluggish consumer environment along with higher levels of precipitation and cooler temperatures contributed to a decrease in traffic, resulting in lower than expected same store sales," said Edward W. Stack, Chairman and CEO. "Despite these challenges in the second quarter, we were able to generate record non-GAAP earnings per share."

Mr. Stack continued, "We are revising our full year guidance to a range of $2.60 to $2.65 per share, primarily due to lower sales expectations for the second half of the year, which are a result of our belief that consumers will remain relatively cautious. In order to drive traffic and respond to the consumer environment we are increasing our advertising levels, enhancing the customer experience, and investing in growth categories."

Mr. Stack concluded, "The current challenges we are facing are short-term in nature and we are actively pursuing strategies to address them. This does not change our view of the profitable long-term growth opportunities for our business."

New Stores

In the second quarter, the Company opened seven new 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 August 3, 2013, the Company operated 527 DICK'S Sporting Goods stores in 44 states, with approximately 28.7 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.4 million square feet.

Balance Sheet

The Company ended the second quarter of 2013 with approximately $135 million in cash and cash equivalents as compared to $350 million at the end of the second quarter of 2012.  As of the end of the second quarter of 2013, the Company did not have any outstanding borrowings under its $500 million revolving credit facility.  Over the course of the past twelve months, the Company utilized capital to invest in omni-channel growth, remodel stores, build a distribution center, fund shares purchased pursuant to share repurchase programs, pay a special dividend and quarterly dividends, and acquire intellectual property rights to the Field & Stream brand.

Inventory per square foot was 5.0% higher at the end of the second quarter of 2013 as compared to the end of the second quarter of 2012, while clearance inventory per square foot decreased 4.1% during the same period.

Year-to-Date Results

The Company reported consolidated non-GAAP net income for the 26 weeks ended August 3, 2013 of $149.4 million, or $1.19 per diluted share. For the 26 weeks ended July 28, 2012, the Company reported consolidated non-GAAP net income of $138.5 million, or $1.10 per diluted share.

On a GAAP basis, the Company reported consolidated net income for the 26 weeks ended August 3, 2013 of $149.0 million, or $1.18 per diluted share. For the 26 weeks ended July 28, 2012, the Company reported consolidated net income of $110.8 million, or $0.88 per diluted share.

Net sales for the first half of 2013 increased 5.4% from the first half of 2012 to $2.9 billion primarily due to the opening of new stores, partially offset by a consolidated same store sales decrease of 0.2% on an unshifted basis.

Dividend

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

Current 2013 Outlook

The Company's current outlook for 2013 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as described later in this release.  Although the Company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct.

* Full Year 2013 – (52 Week Year) Comparisons to Fiscal 2012 – (53 Week Year)

  • Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.60 to 2.65, excluding an asset impairment charge and the partial recovery of a previously impaired asset.  For the 53 weeks ended February 2, 2013, the Company reported consolidated non-GAAP earnings per diluted share of $2.53, excluding an impairment charge.  The 53rd week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.
  • Consolidated same store sales are currently expected to be approximately flat to an increase of 1% on a 52-week to 52-week comparative basis, compared to a 4.3% increase in fiscal 2012.
  • The Company expects to open approximately 40 new DICK'S Sporting Goods stores, relocate one DICK'S Sporting Goods store and complete four full and 75 partial remodels of DICK'S Sporting Goods stores in 2013. The Company also expects to open one new Golf Galaxy store and relocate one Golf Galaxy store in 2013, both of which will be in the new, larger format.
  • The Company expects to open approximately one new True Runner store and approximately two new Field & Stream stores in 2013.

* Third Quarter 2013      

  • Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.37 to 0.39 in the third quarter of 2013, compared to third quarter 2012 consolidated earnings per diluted share of $0.40
  • Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to be approximately flat to an increase of 1% in the third quarter of 2013, or decrease approximately 2 to 3% on an unshifted basis, as compared to a 5.1% increase in the third quarter of 2012.
  • The Company expects to open approximately 20 new DICK'S Sporting Goods stores, relocate one DICK'S Sporting Goods store and remodel three DICK'S Sporting Goods stores in the third quarter of 2013.
  • The Company expects to open one new True Runner store and one new Field & Stream store in the third quarter of 2013.

* Fourth Quarter 2013     

  • Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.04 to 1.07 in the fourth quarter of 2013, compared to fourth quarter 2012 consolidated earnings per diluted share of $1.03.  The 14th week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.
  • Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to increase approximately 3 to 4% in the fourth quarter of 2013, or  approximately negative 2 to negative 1% on an unshifted basis, as compared to a 1.2% increase in the fourth quarter of 2012.
  • The Company expects to open approximately eleven new DICK'S Sporting Goods stores and remodel one DICK'S Sporting Goods store in the fourth quarter of 2013.
  • The Company expects to open approximately one new Field & Stream store in the fourth quarter of 2013.

* Capital Expenditures

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

Conference Call Info

The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the 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 10031652. 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 include statements regarding, among other things, our expectations for future performance, our efforts to drive traffic, our belief that current challenges are short-term and will not impact profitable long-term growth, investing in new, relocated or remodeled stores and expectations on capital expenditures.

The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2013 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by our management: ongoing economic and financial uncertainties may cause a decline in consumer spending; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; competition in the sporting goods industry; changes in consumer demand; limitations on the availability of attractive store locations; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; access to adequate capital; changing laws and regulations affecting our business including the regulation of firearms and ammunition; factors affecting our vendors; litigation risks; foreign trade issues and currency exchange rate fluctuations; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; protection of our intellectual property; disruptions with our eCommerce services provider or of our information systems; disruption at our distribution facilities; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; regional risks; risks associated with strategic investments or acquisitions; labor needs; risks associated with being a controlled company; our anti-takeover provisions; our current intention to issue quarterly cash dividends; and our share repurchase activity, if any.

Known and unknown risks and uncertainties are more fully described in the Company's Annual Report on Form 10-K for the year ended February 2, 2013 as filed with the Securities and Exchange Commission ("SEC") on March 22, 2013 and in other reports filed with the SEC.  In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict or assess the impact of all such risk factors. Forward-looking statements included in this release are made as of the date of this release. We do not assume any obligation and do not intend to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the securities laws.

About DICK'S Sporting Goods, Inc.

DICK'S Sporting Goods, Inc. is an authentic full-line sports and fitness specialty omni-channel retailer offering a broad assortment of high quality, competitively-priced brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer.

As of August 3, 2013, the Company operated 527 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:

Andre J. Hawaux, EVP – Finance, Administration and Chief Financial Officer or
Anne-Marie Megela, VP – Treasury Services and Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400


 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)







13 Weeks Ended




August 3,
2013


% of

Sales (1)


July 28,
2012


% of

Sales (1)










Net sales


$

1,531,431



100.00

%


$

1,437,041



100.00

%

Cost of goods sold, including occupancy and distribution costs


1,052,101



68.70



989,261



68.84











GROSS PROFIT


479,330



31.30



447,780



31.16











Selling, general and administrative expenses


336,950



22.00



310,864



21.63


Pre-opening expenses


5,285



0.35



2,276



0.16











INCOME FROM OPERATIONS


137,095



8.95



134,640



9.37











Impairment of available-for-sale investments






32,370



2.25


Interest expense


716



0.05



1,000



0.07


Other (income) expense


(1,735)



(0.11)



54













INCOME BEFORE INCOME TAXES


138,114



9.02



101,216



7.04











Provision for income taxes


53,951



3.52



47,553



3.31











NET INCOME


$

84,163



5.50

%


$

53,663



3.73

%










EARNINGS PER COMMON SHARE:









Basic


$

0.68





$

0.45




Diluted


$

0.67





$

0.43













WEIGHTED AVERAGE COMMON SHARES









OUTSTANDING:









Basic


122,901





119,928




Diluted


125,593





124,533













Cash dividend declared per share


$

0.125





$

0.125













(1) Column does not add due to rounding







 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)







26 Weeks Ended




August 3,
2013


% of

Sales (1)


July 28,
2012


% of

Sales










Net sales


$

2,865,132



100.00

%


$

2,718,745



100.00

%

Cost of goods sold, including occupancy and distribution costs


1,974,149



68.90



1,876,358



69.02











GROSS PROFIT


890,983



31.10



842,387



30.98











Selling, general and administrative expenses


649,658



22.67



606,995



22.33


Pre-opening expenses


6,614



0.23



5,017



0.18











INCOME FROM OPERATIONS


234,711



8.19



230,375



8.47











Impairment of available-for-sale investments






32,370



1.19


Interest expense


1,385



0.05



4,449



0.16


Other income


(7,940)



(0.28)



(1,811)



(0.07)











INCOME BEFORE INCOME TAXES


241,266



8.42



195,367



7.19











Provision for income taxes


92,282



3.22



84,547



3.11











NET INCOME


$

148,984



5.20

%


$

110,820



4.08

%










EARNINGS PER COMMON SHARE:









Basic


$

1.21





$

0.92




Diluted


$

1.18





$

0.88













WEIGHTED AVERAGE COMMON SHARES









OUTSTANDING:









Basic


122,802





120,721




Diluted


125,728





125,768













Cash dividends declared per share


$

0.250





$

0.250













(1) Column does not add due to rounding







 


DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands)










August 3,
2013


July 28,
2012


February 2,
2013

ASSETS







CURRENT ASSETS:







Cash and cash equivalents


$

134,765



$

350,404



$

345,214


Accounts receivable, net


84,956



53,704



34,625


Income taxes receivable


2,455



7,845



15,737


Inventories, net


1,275,215



1,134,594



1,096,186


Prepaid expenses and other current assets


109,146



67,071



73,838


Deferred income taxes


46,138



27,689



30,289


   Total current assets


1,652,675



1,641,307



1,595,889









Property and equipment, net


937,310



817,427



840,135


Construction in progress - leased facilities




10,207




Intangible assets, net


97,858



75,061



98,903


Goodwill


200,594



200,594



200,594


Other assets:







   Deferred income taxes


4,114



8,196



4,382


   Other


126,920



110,148



147,904


   Total other assets


131,034



118,344



152,286


TOTAL ASSETS


$

3,019,471



$

2,862,940



$

2,887,807









LIABILITIES AND STOCKHOLDERS' EQUITY







CURRENT LIABILITIES:







Accounts payable


$

598,263



$

561,161



$

507,247


Accrued expenses


295,010



275,158



269,900


Deferred revenue and other liabilities


111,101



101,437



146,362


Income taxes payable


12,777





68,746


Current portion of other long-term debt and leasing obligations


8,300



8,579



8,513


   Total current liabilities


1,025,451



946,335



1,000,768


LONG-TERM LIABILITIES:







Other long-term debt and leasing obligations


6,360



14,407



7,762


Non-cash obligations for construction in progress - leased facilities




10,207




Deferred income taxes


8,449





7,413


Deferred revenue and other liabilities


314,756



279,927



284,540


   Total long-term liabilities


329,565



304,541



299,715


COMMITMENTS AND CONTINGENCIES







STOCKHOLDERS' EQUITY:







Common stock


981



959



981


Class B common stock


249



250



249


Additional paid-in capital


913,580



797,620



874,236


Retained earnings


1,030,108



1,013,087



911,704


Accumulated other comprehensive income


81



106



112


Treasury stock


(280,544)



(199,958)



(199,958)


   Total stockholders' equity


1,664,455



1,612,064



1,587,324


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

3,019,471



$

2,862,940



$

2,887,807









 


DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)






26 Weeks Ended



August 3,
2013


July 28,
2012

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income


$

148,984



$

110,820


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





Depreciation and amortization


76,314



58,100


Impairment of available-for-sale investments




32,370


Deferred income taxes


(14,545)



(10,989)


Stock-based compensation


13,925



15,207


Excess tax benefit from exercise of stock options


(15,475)



(39,863)


Tax benefit from exercise of stock options


102



3,141


Other non-cash items


290



(84)


Changes in assets and liabilities:





    Accounts receivable


(21,690)



(13,228)


    Inventories


(179,029)



(119,597)


    Prepaid expenses and other assets


(12,738)



(688)


    Accounts payable


83,458



41,925


    Accrued expenses


(15,561)



1,369


    Income taxes payable / receivable


(27,212)



6,623


    Deferred construction allowances


12,756



12,191


    Deferred revenue and other liabilities


(44,173)



(30,317)


Net cash provided by operating activities


5,406



66,980


CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures


(95,479)



(95,158)


Purchase of JJB Sports convertible notes and equity securities




(31,986)


Proceeds from sale of other assets


11,000




Deposits and purchases of other assets


(48,469)



(44,408)


Net cash used in investing activities


(132,948)



(171,552)


CASH FLOWS FROM FINANCING ACTIVITIES:





Payments on other long-term debt and leasing obligations


(1,615)



(138,611)


Construction allowance receipts





Proceeds from exercise of stock options


22,736



44,939


Excess tax benefit from exercise of stock options


15,475



39,863


Minimum tax withholding requirements


(12,877)



(5,237)


Cash paid for treasury stock


(80,603)



(198,774)


Cash dividend paid to stockholders


(33,550)



(30,417)


Increase in bank overdraft


7,558



8,823


Net cash used in financing activities


(82,876)



(279,414)


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(31)



(12)


NET DECREASE IN CASH AND CASH EQUIVALENTS


(210,449)



(383,998)


CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


345,214



734,402


CASH AND CASH EQUIVALENTS, END OF PERIOD


$

134,765



$

350,404


Supplemental disclosure of cash flow information:





Construction in progress - leased facilities


$



$

10,207


Accrued property and equipment


$

77,409



$

35,213


Cash paid for interest


$

1,091



$

851


Cash paid for income taxes


$

140,712



$

92,375


Store Count and Square Footage

The stores that opened during the second quarter of 2013 are as follows:

DICK'S

Store


Market

Alliance, TX


Dallas

Dublin, CA


San Francisco

Petaluma, CA


Santa Rosa

Pensacola, FL


Pensacola

Chico, CA


Chico

Colonial Heights, VA


Richmond

Portage, MI


Kalamazoo

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated (1):

 



Fiscal 2013



Fiscal 2012




DICK'S
Sporting
Goods


Golf
Galaxy


Total


DICK'S
Sporting
Goods


Golf
Galaxy


Total

Beginning stores


518



81



599



480



81



561


Q1 New stores


2





2



6





6


Q2 New stores


7





7



4





4


Ending stores


527



81



608



490



81



571


Remodeled stores













Relocated stores








1





1


 


Square Footage:







(in millions)
















DICK'S Sporting
Goods


Golf
Galaxy


Total

Q1 2012


26.5



1.3



27.8


Q2 2012


26.7



1.3



28.0


Q3 2012


27.9



1.3



29.2


Q4 2012


28.2



1.4



29.6


Q1 2013


28.3



1.4



29.7


Q2 2013


28.7



1.4



30.1












 (1) Store count and square footage amounts do not include the Company's True Runner stores.

 

Non-GAAP Financial Measures

In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding net income and earnings per diluted share adjusted for certain non-recurring, infrequent or unusual items; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses ("adjusted EBITDA") and a reconciliation from the Company's gross capital expenditures, net of tenant allowances. These measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company's management, analysts and investors can use to compare core operating results between reporting periods. These non-GAAP measures are provided below and on the Company's website at http://www.dickssportinggoods.com/investors.

 

Non-GAAP Net Income and Earnings Per Share Reconciliations:

(in thousands, except per share data):








Fiscal 2013




13 Weeks Ended August 3, 2013












As Reported


Asset Impairment
Charge


Non-GAAP
Total

Net sales



$

1,531,431



$



$

1,531,431


Cost of goods sold, including occupancy and distribution costs



1,052,101





1,052,101










GROSS PROFIT



479,330





479,330










Selling, general and administrative expenses



336,950



(7,881)



329,069


Pre-opening expenses



5,285





5,285










INCOME FROM OPERATIONS



137,095



7,881



144,976










Interest expense



716





716


Other income



(1,735)





(1,735)










INCOME BEFORE INCOME TAXES



138,114



7,881



145,995










Provision for income taxes



53,951



3,152



57,103










NET INCOME



$

84,163



$

4,729



$

88,892










EARNINGS PER COMMON SHARE:








Basic



$

0.68





$

0.72


Diluted



$

0.67





$

0.71










WEIGHTED AVERAGE COMMON SHARES








OUTSTANDING:








Basic



122,901





122,901


Diluted



125,593





125,593


 

During the second quarter of 2013, the Company recorded a pre-tax $7.9 million non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to fair market value.  The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.

 




Fiscal 2013




26 Weeks Ended August 3, 2013














As
Reported


Recovery of
Previously
Impaired Asset


Asset
Impairment
Charge


Non-GAAP
Total

Net sales



$

2,865,132



$



$



$

2,865,132


Cost of goods sold, including occupancy and distribution costs



1,974,149







1,974,149












GROSS PROFIT



890,983







890,983












Selling, general and administrative expenses



649,658





(7,881)



641,777


Pre-opening expenses



6,614







6,614












INCOME FROM OPERATIONS



234,711





7,881



242,592












Interest expense



1,385







1,385


Other income



(7,940)



4,342





(3,598)












INCOME BEFORE INCOME TAXES



241,266



(4,342)



7,881



244,805












Provision for income taxes



92,282





3,152



95,434












NET INCOME



$

148,984



$

(4,342)



$

4,729



$

149,371












EARNINGS PER COMMON SHARE:










Basic



$

1.21







$

1.22


Diluted



$

1.18







$

1.19












WEIGHTED AVERAGE COMMON










SHARES OUTSTANDING:










Basic



122,802







122,802


Diluted



125,728







125,728


 

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

 




Fiscal 2012




13 Weeks Ended July 28, 2012












As Reported


Impairment of
Investments


Non-GAAP
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 of 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 not to realize as a result of the impairment of its investment in JJB Sports.

 




Fiscal 2012




26 Weeks Ended July 28, 2012












As Reported


Impairment of
Investments


Non-GAAP
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 of 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 not to realize as a result of the impairment of its investment in JJB Sports.


Adjusted EBITDA

Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity.  Adjusted EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies.  Adjusted EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations and capital investments.

 



13 Weeks Ended



August 3,
2013


July 28,
2012



(dollars in thousands)

Net income


$

84,163



$

53,663


Provision for income taxes


53,951



47,553


Interest expense


716



1,000


Depreciation and amortization


43,506



30,444


EBITDA


$

182,336



$

132,660


Add: Impairment of available-for-sale investments




32,370


Adjusted EBITDA, as defined


$

182,336



$

165,030







% increase in adjusted EBITDA


10

%



 



26 Weeks Ended



August 3,
2013


July 28,
2012



(dollars in thousands)

Net income


$

148,984



$

110,820


Provision for income taxes


92,282



84,547


Interest expense


1,385



4,449


Depreciation and amortization


76,314



58,100


EBITDA


$

318,965



$

257,916


Add: Impairment of available-for-sale investments




32,370


Less: Recovery of previously impaired asset


(4,342)




Adjusted EBITDA, as defined


$

314,623



$

290,286







% increase in adjusted EBITDA


8

%



 


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



August 3,
2013


July 28,
2012



(dollars in thousands)

Gross capital expenditures


$

(95,479)



$

(95,158)


Proceeds from sale-leaseback transactions





Deferred construction allowances


12,756



12,191


Construction allowance receipts





Net capital expenditures


$

(82,723)



$

(82,967)


SOURCE DICK's Sporting Goods, Inc.