DICK'S Sporting Goods Reports Third Quarter Results; Exceeds Expectations

- Consolidated earnings per diluted share totaled $0.40 and consolidated same store sales increased 3.3% (adjusted for the shifted calendar), in both cases exceeding prior guidance
- Company narrows full year non-GAAP guidance range to $2.62 to 2.65 per diluted share
- Capital allocation strategy on track, with additional share repurchases totaling approximately $25.0 million and declaration of $0.125 per share quarterly dividend

PR Newswire

PITTSBURGH, Nov. 19, 2013 /PRNewswire/ -- DICK'S Sporting Goods, Inc. (DKS), the largest U.S. based full-line sporting goods retailer, today reported sales and earnings results for the third quarter ended November 2, 2013.

Third Quarter Results

The Company reported consolidated net income for the third quarter ended November 2, 2013 of $50.0 million, or $0.40 per diluted share, compared to the Company's expectations provided on August 20, 2013 of $0.37 to 0.39 per diluted share. For the third quarter ended October 27, 2012, the Company reported consolidated net income of $50.1 million, or $0.40 per diluted share. 

Net sales for the third quarter of 2013 increased 6.7% to $1.4 billion.  Adjusted for the shifted calendar, due to the 53rd week in 2012, consolidated same store sales increased 3.3%, compared to the Company's guidance of approximately flat to an increase of 1%. Third quarter 2012 consolidated same store sales increased 5.1%. Shifted same store sales in the third quarter of 2013 for DICK'S Sporting Goods increased 3.4% while Golf Galaxy increased 2.2%.

Unshifted consolidated same store sales for the third quarter increased 0.3%, compared to the Company's guidance of an approximate 2 to 3% decrease. Unshifted same store sales in the third quarter of 2013 for DICK'S Sporting Goods increased 0.6% while Golf Galaxy decreased 4.7%. eCommerce penetration for the quarter was 6.5% of total sales.

"Despite the continued challenging consumer environment, we delivered better than expected results in the third quarter, exceeding both our sales and earnings expectations. The marketing efforts, improved customer experience and selective pricing initiatives we began in the third quarter were successful in driving traffic and sales, but at slightly lower than anticipated margins," said Edward W. Stack, Chairman and CEO. "We remain excited about the long-term opportunities in our business that we presented at our analyst day in September, and we will continue to drive towards those goals."

Store Development

In the third quarter, the Company opened 25 new DICK'S Sporting Goods stores, one new Golf Galaxy store and two new Field & Stream stores. The Company also relocated one DICK'S Sporting Goods store, repositioned one Golf Galaxy store and completed three full and 22 apparel remodels of DICK'S Sporting Goods stores. As of November 2, 2013, the Company operated 552 DICK'S Sporting Goods stores in 45 states, with approximately 29.9 million square feet and 82 Golf Galaxy stores in 30 states, with approximately 1.4 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."

In the beginning of the fourth quarter, the Company opened six new DICK'S Sporting Goods stores and remodeled one DICK'S Sporting Goods store. The Company also opened one new True Runner store.  

The Company has now completed its 2013 store development program, opening a total of 40 new DICK'S Sporting Goods stores, one new Golf Galaxy store, two new Field & Stream stores and one new True Runner store. The Company also relocated one DICK'S Sporting Goods store, repositioned one Golf Galaxy store and completed four full and 75 apparel remodels of DICK'S Sporting Goods stores in 2013.

Balance Sheet

The Company ended the third quarter of 2013 with approximately $66 million in cash and cash equivalents as compared to $294 million at the end of the third quarter of 2012. Due to seasonality and capital utilization over the last 12 months, which included investments in omni-channel growth, store remodels, share repurchases, and special and quarterly dividends, the Company ended the quarter with approximately $116 million in outstanding borrowings under its $500 million line of credit. The Company expects to end fiscal 2013 with no outstanding borrowings under the revolving credit facility.

Inventory per square foot was 5.6% higher at the end of the third quarter of 2013 as compared to the end of the third quarter of 2012. 

Year-to-Date Results

The Company reported consolidated non-GAAP net income for the 39 weeks ended November 2, 2013 of $199.3 million, or $1.59 per diluted share. For the 39 weeks ended October 27, 2012, the Company reported consolidated non-GAAP net income of $188.6 million, or $1.50 per diluted share.

On a GAAP basis, the Company reported consolidated net income for the 39 weeks ended November 2, 2013 of $199.0 million, or $1.58 per diluted share. For the 39 weeks ended October 27, 2012, on a GAAP basis, the Company reported consolidated net income of $161.0 million, or $1.28 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 39 weeks ended November 2, 2013 increased 5.8% from last year's period to $4.3 billion primarily due to the opening of new stores. Unshifted consolidated same store sales were flat year-to-date.

Dividend

On November 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 December 27, 2013 to stockholders of record at the close of business on December 6, 2013.

Share Repurchase Program

In the third quarter of 2013, the Company repurchased approximately 0.5 million shares of its common stock at an average cost of $52.09 per share, for a total cost of $25.0 million.

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. 

  • 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 3 to 4% in the fourth quarter of 2013, or increase 2 to 3% on an unshifted basis, as compared to a 1.2% increase in the fourth quarter of 2012.
                 
  • 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 $2.62 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.
                                
  • 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 third 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 approximately 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 10035658. The dial-in replay will be available for approximately 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, long-term opportunities, the Company's future goals, the amounts outstanding under the Company's credit facility in future periods 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 November 19, 2013, the Company operated 558 DICK'S Sporting Goods stores in 46 states, 82 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:

Anne-Marie Megela, VP – Treasury Services and Investor Relations or
Scott W. McKinney, Director of 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



November 2,
2013


% of

Sales


October 27,
2012


% of

Sales (1)










Net sales


$

1,400,623



100.00

%


$

1,312,072



100.00

%

Cost of goods sold, including occupancy and

    distribution costs


975,724



69.66



905,948



69.05











GROSS PROFIT


424,899



30.34



406,124



30.95











Selling, general and administrative expenses


333,724



23.83



314,637



23.98


Pre-opening expenses


12,122



0.87



9,294



0.71











INCOME FROM OPERATIONS


79,053



5.64



82,193



6.26











Interest expense


696



0.05



860



0.07


Other income


(2,735)



(0.20)



(1,113)



(0.08)











INCOME BEFORE INCOME TAXES


81,092



5.79



82,446



6.28











Provision for income taxes


31,115



2.22



32,307



2.46











NET INCOME


$

49,977



3.57

%


$

50,139



3.82

%










EARNINGS PER COMMON SHARE:









Basic


$

0.41





$

0.41




Diluted


$

0.40





$

0.40













WEIGHTED AVERAGE COMMON SHARES

    OUTSTANDING:









Basic


123,221





122,103




Diluted


125,842





125,938













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)




39 Weeks Ended



November 2,
2013


% of

Sales (1)


October 27,
2012


% of

Sales










Net sales


$

4,265,755



100.00

%


$

4,030,818



100.00

%

Cost of goods sold, including occupancy and

    distribution costs


2,949,872



69.15



2,782,306



69.03











GROSS PROFIT


1,315,883



30.85



1,248,512



30.97











Selling, general and administrative expenses


983,382



23.05



921,631



22.86


Pre-opening expenses


18,736



0.44



14,311



0.36











INCOME FROM OPERATIONS


313,765



7.36



312,570



7.75











Impairment of available-for-sale investments






32,370



0.80


Interest expense


2,081



0.05



5,309



0.13


Other income


(10,675)



(0.25)



(2,923)



(0.07)











INCOME BEFORE INCOME TAXES


322,359



7.56



277,814



6.89











Provision for income taxes


123,398



2.89



116,855



2.90











NET INCOME


$

198,961



4.66

%


$

160,959



3.99

%










EARNINGS PER COMMON SHARE:









Basic


$

1.62





$

1.33




Diluted


$

1.58





$

1.28













WEIGHTED AVERAGE COMMON SHARES

    OUTSTANDING:









Basic


122,942





121,181




Diluted


125,766





125,825













Cash dividends declared per share


$

0.375





$

0.375













(1) Column does not add due to rounding

 



DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands)




November 2,
2013


October 27,
2012


February 2,
2013

ASSETS







CURRENT ASSETS:







Cash and cash equivalents


$

65,647



$

294,493



$

345,214


Accounts receivable, net


81,389



57,212



34,625


Income taxes receivable


34,635



2,779



15,737


Inventories, net


1,570,034



1,382,684



1,096,186


Prepaid expenses and other current assets


104,806



35,367



73,838


Deferred income taxes


48,414



26,755



30,289


Total current assets


1,904,925



1,799,290



1,595,889









Property and equipment, net


1,059,865



851,302



840,135


Intangible assets, net


98,792



99,033



98,903


Goodwill


200,594



200,594



200,594


Other assets:







Deferred income taxes


3,286



8,269



4,382


Other


80,433



111,093



147,904


Total other assets


83,719



119,362



152,286


TOTAL ASSETS


$

3,347,895



$

3,069,581



$

2,887,807









LIABILITIES AND STOCKHOLDERS' EQUITY







CURRENT LIABILITIES:







Accounts payable


$

738,196



$

665,608



$

507,247


Accrued expenses


316,421



296,232



269,900


Deferred revenue and other liabilities


106,847



96,233



146,362


Income taxes payable






68,746


Current portion of other long-term debt and leasing

    obligations


7,540



8,584



8,513


Total current liabilities


1,169,004



1,066,657



1,000,768


LONG-TERM LIABILITIES:







Revolving credit borrowings


116,400






Other long-term debt and leasing obligations


6,596



14,157



7,762


Deferred income taxes


29,160





7,413


Deferred revenue and other liabilities


328,712



283,835



284,540


Total long-term liabilities


480,868



297,992



299,715


COMMITMENTS AND CONTINGENCIES







STOCKHOLDERS' EQUITY:







Common stock


982



977



981


Class B common stock


249



250



249


Additional paid-in capital


937,742



855,881



874,236


Retained earnings


1,064,511



1,047,668



911,704


Accumulated other comprehensive income


78



114



112


Treasury stock


(305,539)



(199,958)



(199,958)


Total stockholders' equity


1,698,023



1,704,932



1,587,324


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

3,347,895



$

3,069,581



$

2,887,807


 


DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)




39 Weeks Ended



November 2,
2013


October 27,
2012

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income


$

198,961



$

160,959


Adjustments to reconcile net income to net cash (used in) provided by operating activities:





Depreciation and amortization


113,437



88,627


Impairment of available-for-sale investments




32,370


Deferred income taxes


4,718



(10,128)


Stock-based compensation


20,610



23,643


Excess tax benefit from exercise of stock options


(20,966)



(61,461)


Tax benefit from exercise of stock options


125



4,761


Other non-cash items


435



227


Changes in assets and liabilities:





Accounts receivable


(28,850)



(17,374)


Inventories


(473,848)



(367,687)


Prepaid expenses and other assets


(9,752)



31,599


Accounts payable


209,346



178,700


Accrued expenses


3,440



18


Income taxes payable / receivable


(66,680)



33,260


Deferred construction allowances


37,125



21,744


Deferred revenue and other liabilities


(45,804)



(35,922)


Net cash (used in) provided by operating activities


(57,703)



83,336


CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures


(196,862)



(157,448)


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


(60,048)



(54,819)


Net cash used in investing activities


(245,910)



(244,253)


CASH FLOWS FROM FINANCING ACTIVITIES:





Revolving credit borrowings, net


116,400




Payments on other long-term debt and leasing obligations


(2,139)



(138,856)


Construction allowance receipts





Proceeds from exercise of stock options


34,920



71,683


Excess tax benefit from exercise of stock options


20,966



61,461


Minimum tax withholding requirements


(13,090)



(5,329)


Cash paid for treasury stock


(105,603)



(198,774)


Cash dividends paid to stockholders


(48,977)



(45,668)


Increase (decrease) in bank overdraft


21,603



(23,505)


Net cash provided by (used in) financing activities


24,080



(278,988)


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(34)



(4)


NET DECREASE IN CASH AND CASH EQUIVALENTS


(279,567)



(439,909)


CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


345,214



734,402


CASH AND CASH EQUIVALENTS, END OF PERIOD


$

65,647



$

294,493


 


Store Count and Square Footage


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


Store



Market



Concept

Tallahassee, FL



Tallahassee



DICK'S Sporting Goods

Duluth, MN



Duluth



DICK'S Sporting Goods

Gretna, LA



New Orleans



DICK'S Sporting Goods

South Plainfield, NJ



New Jersey North



DICK'S Sporting Goods

El Paso, TX



El Paso



DICK'S Sporting Goods

Gainesville, GA



Gainesville



DICK'S Sporting Goods

Athens, GA



Athens



DICK'S Sporting Goods

Lake Charles, LA



Lake Charles



DICK'S Sporting Goods

Albuquerque, NM



Albuquerque



DICK'S Sporting Goods

Prescott Valley, AZ



Prescott



DICK'S Sporting Goods

Issaquah, WA



Seattle



DICK'S Sporting Goods

Salina, KS



Salina



DICK'S Sporting Goods

Redding, CA



Redding



DICK'S Sporting Goods

Victorville, CA



Victorville



DICK'S Sporting Goods

Ashland, KY



Huntington



DICK'S Sporting Goods

Kendall, FL



Miami



DICK'S Sporting Goods

Bowling Green, KY



Bowling Green



DICK'S Sporting Goods

Riverhead, NY



Long Island



DICK'S Sporting Goods

Morganton, NC



Charlotte



DICK'S Sporting Goods

Casper, WY



Casper



DICK'S Sporting Goods

Batavia, NY



Rochester



DICK'S Sporting Goods

Corpus Christi, TX



Corpus Christi



DICK'S Sporting Goods

Newport, KY



Cincinnati



DICK'S Sporting Goods

Osage Beach, MO



Osage Beach



DICK'S Sporting Goods

Dover, DE



Dover



DICK'S Sporting Goods

Henderson, NV



Las Vegas



Golf Galaxy

Cranberry, PA



Pittsburgh



Field & Stream

Crescent Springs, KY



Cincinnati



Field & Stream

 


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


Store Count:



Fiscal 2013


Fiscal 2012



DICK'S
Sporting
Goods


Golf Galaxy /

Specialty Store

Concepts (1)


Total


DICK'S
Sporting
Goods


Golf Galaxy /

Specialty Store

Concepts (1)


Total

Beginning stores


518



83



601



480



81



561


Q1 New stores


2





2



6





6


Q2 New stores


7





7



4





4


Q3 New stores


25



3



28



21



2



23


Ending stores


552



86



638



511



83



594















Remodeled stores


3





3








Relocated stores


1



1



2



4





4








































Square Footage:

(in millions)






























DICK'S Sporting
Goods


Golf Galaxy /

Specialty Store

Concepts (1)


Total (2)

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



30.0


Q3 2013











29.9



1.5



31.4



(1) Includes the Company's Field & Stream and True Runner stores.

(2) Column may not add due to rounding.

 


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



39 Weeks Ended November 2, 2013












As
Reported


Recovery of

Previously

Impaired Asset


Asset

Impairment

Charge


Non-GAAP
Total

Net sales


$

4,265,755



$



$



$

4,265,755


Cost of goods sold, including occupancy and

    distribution costs


2,949,872







2,949,872











GROSS PROFIT


1,315,883







1,315,883











Selling, general and administrative expenses


983,382





(7,881)



975,501


Pre-opening expenses


18,736







18,736











INCOME FROM OPERATIONS


313,765





7,881



321,646











Interest expense


2,081







2,081


Other income


(10,675)



4,342





(6,333)











INCOME BEFORE INCOME TAXES


322,359



(4,342)



7,881



325,898











Provision for income taxes


123,398





3,152



126,550











NET INCOME


$

198,961



$

(4,342)



$

4,729



$

199,348











EARNINGS PER COMMON SHARE:









Basic


$

1.62







$

1.62


Diluted


$

1.58







$

1.59











WEIGHTED AVERAGE COMMON SHARES

    OUTSTANDING:









Basic


122,942







122,942


Diluted


125,766







125,766




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



39 Weeks Ended October 27, 2012










As Reported


Impairment of

Investments


Non-GAAP

Total

Net sales


$

4,030,818



$



$

4,030,818


Cost of goods sold, including occupancy and

    distribution costs


2,782,306





2,782,306









GROSS PROFIT


1,248,512





1,248,512









Selling, general and administrative expenses


921,631





921,631


Pre-opening expenses


14,311





14,311









INCOME FROM OPERATIONS


312,570





312,570









Impairment of available-for-sale investments


32,370



(32,370)




Interest expense


5,309





5,309


Other income


(2,923)





(2,923)









INCOME BEFORE INCOME TAXES


277,814



32,370



310,184









Provision for income taxes


116,855



4,734



121,589









NET INCOME


$

160,959



$

27,636



$

188,595









EARNINGS PER COMMON SHARE:







Basic


$

1.33





$

1.56


Diluted


$

1.28





$

1.50









WEIGHTED AVERAGE COMMON SHARES

    OUTSTANDING:







Basic


121,181





121,181


Diluted


125,825





125,825




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



November 2,
2013


October 27,
2012



(dollars in thousands)

Net income


$

49,977



$

50,139


Provision for income taxes


31,115



32,307


Interest expense


696



860


Depreciation and amortization


37,123



30,527


EBITDA


$

118,911



$

113,833







% increase in EBITDA


4

%























39 Weeks Ended



November 2,
2013


October 27,
2012



(dollars in thousands)

Net income


$

198,961



$

160,959


Provision for income taxes


123,398



116,855


Interest expense


2,081



5,309


Depreciation and amortization


113,437



88,627


EBITDA


$

437,877



$

371,750


Add: Impairment of available-for-sale investments




32,370


Less: Recovery of previously impaired asset


(4,342)




Adjusted EBITDA, as defined


$

433,535



$

404,120







% increase in adjusted EBITDA


7

%



 


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.




39 Weeks Ended



November 2,
2013


October 27,
2012



(dollars in thousands)

Gross capital expenditures


$

(196,862)



$

(157,448)


Proceeds from sale-leaseback transactions





Deferred construction allowances


37,125



21,744


Construction allowance receipts





Net capital expenditures


$

(159,737)



$

(135,704)


 

Rates

View Comments (0)