2014 ANNUAL REPORT
WHO
WILL
YOU
BE?
We believe winning starts with a conscious
decision to be the best—a deep personal
commitment to achieving excellence,
despite the difficulties, the odds and the
competition. At DICK’S, we demonstrate our
commitment to winning by driving relentless
improvement across our business, from
our growth, productivity and profitability,
to our innovation and customer service.
In the process, we provide exceptional
experiences to our customers, support
and inspiration to our communities, new
opportunities to our associates, and long-
term value to our shareholders.
FINANCIAL HIGHLIGHTS 1
FISCAL YEAR
(Dollars in thousands, except per share data)
Net Sales
Gross Profit
Gross Profit Margin
2014
2013
2012
$
6,814,479
$
6,213,173
$
5,836,119
2,086,666
1,943,950
1,837,163
30.6%
31.3%
31.5%
Selling, General and Administrative Expenses
1,502,089
1,386,315
1,297,413
Pre-Opening Expenses
Income from Operations
Net Income
Adjusted Net Income2
Diluted Earnings per Common Share
Adjusted Diluted Earnings per Common Share2
Diluted Weighted Average Shares Outstanding (in thousands)
Total Stockholders’ Equity
EBITDA
Adjusted EBITDA2
Consolidated Same Store Sales Increase3
Store Count (DICK’S Sporting Goods stores)
$
$
$
$
$
$
$
30,518
554,059
344,198
347,760
2.84
2.87
121,238
1,832,225
738,660
730,275
2.4%
603
$
$
$
$
$
$
$
20,823
536,812
337,598
337,985
2.69
2.69
125,628
1,692,179
703,964
699,622
1.9%
558
$
$
$
$
$
$
$
16,076
523,674
290,709
318,345
2.31
2.53
125,995
1,587,324
620,955
653,325
4.3%
518
NET SALES
(in millions)
ADJUSTED NET INCOME 2
(in millions)
OPERATING MARGINS 2
GROSS PROFIT MARGINS
4
1
8
,
6
$
3
1
2
,
6
$
1
7
8
,
4
6
3
8
,
5
$
2
1
2
,
5
$
72+77+86+91+100$
‘13 ‘14
‘10
‘12
‘11
8
.
7
4
3
$
0
.
8
3
3
$
3
.
8
1
3
$
.
4
8
9
1
9
.
3
5
2
$
57+73+92+97+100$
‘13 ‘14
‘10
‘12
‘11
1 All fiscal years presented include 52 weeks of operations except fiscal 2012, which includes 53 weeks.
%
0
.
9
%
8
.
8
%
9
.
%
2
.
8
%
2
.
8
77+91+100+8+916
‘13 ‘14
‘10
‘12
‘11
%
7
.
9
%
6
.
0
3
%
5
.
1
3
%
3
.
1
3
%
6
.
0
3
94+97+100+9+972
‘13 ‘14
‘10
‘12
‘11
2 Adjusted amounts exclude certain non-recurring, infrequent or unusual items. The non-GAAP amounts are provided within Reg. G reconciliations on pages 80 to 84 and the Company’s website
at investors.DICKS.com.
3 Fiscal 2012 excludes sales during the 53rd week of operations.
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 1
DEAR FELLOW
SHAREHOLDERS:
DICK’S has an enduring commitment to generating profitable long-term growth. Over
the years, we have demonstrated this by steadily expanding our operations, building our
brand and driving our profitability through a range of market cycles. In 2014, we continued
to grow, both in stores and online, despite challenges within our industry. As we move into
2015, we are focused on fueling long-term growth and strengthening our position as the
leader in the sporting goods industry.
MANAGING MARKET SHIFTS
In 2014, we continued to demonstrate the value of our
commitment to driving growth. During the year, two of our
businesses, hunting and golf, experienced industry-wide
sales declines. We responded with decisive measures to
increase the profitability of these businesses and to
accelerate performance within our other merchandise
categories. We reallocated selling floor space, trimmed
golf-related operational costs, and created new efficiencies
within our DICK’S golf and Golf Galaxy businesses. As a
result, we not only met the challenges of 2014, but we
continued to grow, adding 46 new DICK’S stores and
delivering a 2.4% increase in consolidated same store sales.
DRIVING OMNI-CHANNEL GROWTH
Our omni-channel distribution platform includes an
extensive network of DICK’S stores and a rapidly growing
eCommerce business. This platform is central to our
success, and we are maximizing its potential by focusing
on several growth drivers, including:
• Driving store traffic and productivity,
• Opening new stores in underpenetrated markets, and
• Expanding our eCommerce business.
With 603 stores across 46 states, DICK’S is already the
largest full-line sporting goods retailer in the U.S. Given the
size of our network and the rapid growth of our eCommerce
business, some investors have questioned why we continue
to add new stores. The answer is simple – our sales data
shows that growing both our stores and eCommerce
business will enable us to capture greater market share
than expanding our eCommerce business alone. We have
BUILDING A SUCCESSFUL
OMNI-CHANNEL NETWORK
• Opened 45 net new DICK’S stores
• Rolled out buy-online, pick-up in-store to all
DICK’S stores
• Invested to build our eCommerce platform
• Aired dedicated eCommerce commercial for holiday
• Launched new mobile app
• Continued to iterate on our mobile, tablet and
desktop sites
found that customers who shop both channels spend three
times more than single-channel customers. Moreover,
growth in one channel drives growth in the other:
Approximately 80% of our online orders ship to customers
within the trade area of a DICK’S store, and when we open a
DICK’S store in a new market, our eCommerce sales in that
market typically double.
Our stores are also vital to the overall strength of our
omni-channel platform. In addition to delivering attractive
unit economics, DICK’S stores serve as the “face” of our
brand, enabling us to interact directly with athletes and
local sports teams. Stores are also important to our vendor
relationships. Our effective merchandising techniques
bring brands to life, encouraging vendors to invest in our
stores and partner with us to offer exclusive products. Our
stores also enable us to provide services that set DICK’S
apart from competitors, and they facilitate returns for
eCommerce customers. A significant percentage of
eCommerce returns are made in stores, underscoring the
value of the integration between the two channels. Finally,
stores enable us to offer delivery channels that reduce
costs and drive inventory productivity, including ship-from-
store and buy-online, pick-up in-store.
CAPITALIZING ON SIGNIFICANT MARKET SHARE OPPORTUNITY
Our research shows that there are still many attractive
markets across the U.S. where we have few stores or none
at all. This represents a significant opportunity for us to
expand our store network and substantially increase our
omni-channel sales over time. We are taking a measured
approach to leveraging this potential by steadily opening
new stores in select markets.
All 603 DICK’S stores enabled for ship-from-store
and buy-online, pick-up in-store
// 3
During 2014, we opened 46 new DICK’S stores, representing
an approximately eight percent growth rate, and in 2015,
we plan to open approximately 45 new DICK’S stores. We
continue to maintain disciplined store opening protocols,
as evidenced by our new store productivity rate of 94.7%
for 2014. We also continue to focus on strengthening our
existing store network. When a store lease comes up for
renewal, we carefully review the market opportunity,
applying the same in-depth analysis we devote to new
stores. We then decide the best course of action for each
location, whether it be renewing the lease, remodeling,
relocating or closing. In 2014, we relocated five stores
to preferred locations, completed five remodels and
closed one store.
DRIVING TRAFFIC AND PRODUCTIVITY
Most of our stores encompass approximately 50,000 square
feet, giving us the space to offer a broad and deep selection
of products, along with the flexibility to create seasonal
merchandise displays that drive traffic. Our extensive
assortment gives us a competitive advantage and helps
insulate our business against a temporary downturn in any
one area. We demonstrated the importance of this in 2014
by completing a strategic space reallocation to reflect the
changing needs of our customers. This involved dedicating
more square footage to categories that offer higher growth
and higher margins, such as womens and youth athletic
apparel, while shifting space away from lower growth and
lower margin areas, like golf and fitness equipment.
As we continue to grow, we remain focused on measures
to increase productivity. We continually review and refine
our assortments to ensure we are providing customers with
a broad but meaningful choice of key products that allow
for an easy shopping experience. We also emphasize
a differentiated product selection, featuring items
from national brands, as well as our own private label
merchandise. This approach not only sets us apart from
competitors, it also protects us from a dependency on
any one vendor.
Our eCommerce business offers a significantly broader
product assortment than our stores, including access to
additional styles, colors and sizes. This channel also helps
us to manage our inventory by using ship-from-store to
make in-store inventory available to online shoppers, and
by enabling direct shipment of certain products from our
vendors to our customers.
EXPANDING OUR ECOMMERCE BUSINESS
Our eCommerce business is an important growth vehicle
that has significantly outpaced the overall growth rate
of the online sporting goods market. During 2014, we
continued to develop this business, expanding our online
product assortment, rolling out our buy-online, pick-up
in-store capability to all stores, launching a new mobile
application, and leveraging our ship-from-store program.
Our eCommerce business grew by approximately 28%
during 2014, generating more than $625 million in sales
and contributing 9.2% of our overall sales during the year,
up from 7.9% in 2013.
We believe our eCommerce business has significant growth
potential, and we are working to leverage this potential by
executing a multi-phase program to take full control of this
business. We have already completed the build-out of a
new technology platform, and in the first quarter of 2015,
we linked this platform to our GolfGalaxy.com business.
We will add a new Field & Stream eCommerce business
to our platform in Fall 2015, and we will link our DICK’S
eCommerce business to it in January 2017. While this
process requires a meaningful investment, it will yield
significant long-term value by increasing our profitability
and providing multiple strategic benefits. These include
faster access to online data, greater control over
development cycles, and a more rapid ability to test product
and merchandising ideas. In addition, since our eCommerce
businesses will share a single technology platform, we will
be able to explore synergies across our entire retail network,
positioning us to increase omni-channel profitability.
INVESTING IN STRATEGIC MARKETING
As we drive our growth, we are committed to investing in
strategic marketing that embodies our brand and resonates
with athletes. This includes developing thematic advertising
campaigns that emphasize our commitment to sports and
bring our business strategy to life. We take a multi-media
approach to marketing that reflects the lifestyles of our
customers by utilizing traditional outlets, as well as social
and digital media. We also continue to leverage the vast
amount of data we gather from our ScoreCard loyalty
program to refine our marketing efforts. We further
reinforce our brand by forging relevant sponsorships
that enable us to connect with the athletes we serve. In
early 2015, we partnered with the United States Olympic
Committee (USOC) to make DICK’S the Official Sporting
Goods Retail Sponsor to the USOC and Team USA.
DEVELOPING OUR SPECIALTY RETAIL CONCEPTS
Another key facet of our business strategy is to develop our
specialty retail concepts, including Field & Stream and Golf
Galaxy. Field & Stream focuses on the estimated $34 billion1
market for outdoor equipment, including gear for hunting,
fishing and camping. This is a highly fragmented market that
STRATEGIES FOR
PROFITABLE GROWTH
DELIVER A COMPELLING OMNI-CHANNEL
SHOPPING EXPERIENCE BY:
• Expanding our store network
• Enriching our eCommerce merchandise
assortment, content and capabilities
• Leveraging our store base by integrating our
online presence with our stores
• Developing multi-faceted marketing campaigns
that drive omni-channel loyalty
4 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
represents an excellent opportunity for DICK’S. Our company got its start
as a bait-and-tackle store, and our heritage is firmly embedded in the
outdoor category. As a result, our Field & Stream stores bring to bear
more than six decades of outdoor experience, combined with an in-depth
understanding of customer needs and excellent vendor relationships.
We are committed to using Field & Stream to become a dominant player
in the specialty outdoor category, and we are pursuing this goal by
continually refining our operations, while taking a measured approach
to growth. During 2014, we opened eight new Field & Stream stores and
in 2015, we plan to add approximately nine stores.
Our Golf Galaxy chain also remains an important part of our business.
Though the golf industry is facing headwinds, we believe it will stabilize.
As the largest golf retailer in the U.S., DICK’S is committed to this
business, and Golf Galaxy offers us several advantages, including a
meaningful market presence in the golf world, access to premium
brands, insight into the needs of golf enthusiasts, scale with vendors
and integration benefits with our DICK’S golf business.
DELIVERING SUSTAINABLE GROWTH
Since our inception, DICK’S has been committed to delivering profitable
and sustainable growth. Over the years, this focus has generated
consistent value for our shareholders, while making DICK’S the largest
and most profitable publicly held full-line sporting goods retailer in the
nation. The credit for our success belongs to our associates, and I would
like to thank all of them for their loyalty and hard work. In particular,
I want to thank Joe Schmidt, our former President and Chief Operating
Officer, who retired at the end of 2014. During his 24 years with DICK’S,
Joe made countless contributions to our success, and we wish him the
best in his future endeavors.
Our primary goal in delivering growth has always been to reward you—
our shareholders—for your support. During 2014, we demonstrated this
by repurchasing $200 million in shares under our five-year, up to $1 billion
share repurchase program, bringing the total value of shares we have
repurchased under this program to more than $455 million. We also paid
more than $60 million in quarterly dividends during 2014, and in 2015, we
increased our quarterly dividend payment by ten percent. In addition to
demonstrating our commitment to shareholders, these measures
underscore our ongoing confidence in DICK’S business outlook. As we
move ahead, we will continue to focus on long-term growth, working to
capture additional market share by expanding our omni-channel platform
and driving productivity. In the process, we will strengthen our industry
leadership position and continue to reward your loyalty with the strong
and sustainable value you have come to expect.
Edward W. Stack
CHA IRMAN A ND CHIEF E XECUTI V E OFFICER
1 Source: U.S. Census data, Outdoor Industry Association data published every five years, and company estimates; core outdoor
equipment market is defined as camping, watersports, hunting, fishing and trail sports, excluding specialized equipment such
as motorized vehicles.
COMMITMENT
TO GROWTH
2014
• Opened 45 net new DICK’S Sporting
Goods stores, an approximately eight
percent growth rate
• Reallocated space within DICK’S
stores towards high growth categories,
including womens and youth athletic
apparel
• Continued to enhance our eCommerce
platform by increasing our ship-from-
store penetration, rolling out buy-online,
pick-up in-store to all DICK’S locations,
and redesigning our mobile app
• Opened eight new Field & Stream
specialty stores
2013
• Opened 40 new DICK’S Sporting Goods
stores, an approximately eight percent
growth rate
• Continued to enhance our eCommerce
platform by expanding our ship-from-
store capability, piloting buy-online,
pick-up in-store, and optimizing our
mobile site for tablet use
• Opened two Field & Stream specialty
stores
• Laid plans to expand distribution center
in Georgia
2012
• Opened 38 new DICK’S Sporting Goods
stores, an eight percent growth rate
• Enhanced eCommerce platform by
launching a ship-from-store capability
and a mobile application
• Purchased Field & Stream and
Top-Flite brands
• Opened a fourth distribution center
in Arizona, increasing total network
service capacity to 750 stores
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 5
A POWERFUL
OMNI-CHANNEL
PLATFORM
OUR POWERFUL OMNI-CHANNEL PLATFORM SPANS A NATIONWIDE
NETWORK OF MORE THAN 600 DICK’S STORES, AS WELL AS RAPIDLY
GROWING ECOMMERCE SITES. WE ARE COMMITTED TO USING THIS
PLATFORM TO DELIVER A CONSISTENT, SEAMLESS AND HIGH-QUALITY
SHOPPING EXPERIENCE TO EVERY CUSTOMER AT EVERY POINT OF CONTACT.
DICK’S
DELIVERING
INTEGRATED SERVICES
We leverage the power of our omni-
channel platform through a growing range
of integrated services and capabilities.
These include value-added capabilities
that link our DICK’S eCommerce site to
our store network, such as ship-from-
store and buy-online, pick-up in-store.
Many of our selling floors also feature
in-store kiosks where customers can order
products from our DICK’S eCommerce
site for home delivery. In addition, we
are equipping our DICK’S associates
with handheld devices that enable them to
provide timely information to customers
without leaving the sales floor.
6 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
CONNECTING WITH
CUSTOMERS ON-THE-GO
Our eCommerce sites give customers instant access to
our merchandise, expertise and services whenever and
wherever they like. We complement this through convenient
mobile capabilities that enable customers to browse our
product assortment, make purchases, locate stores and
take advantage of ScoreCard rewards benefits—all via a
smartphone or tablet.
LEVERAGING OUR NATIONAL PRESENCE
Our store network spans 603 DICK’S locations across 46 states. Each of these is a full-
scale sporting goods destination that houses several sports specialty stores under a single
roof—including shops dedicated to golf, outdoor pursuits, fitness, team sports, footwear
and athletic apparel. Our specialty shops meet the needs of today’s athletes and outdoor
enthusiasts by featuring authentic products, expert guidance and professional services,
as well as leading national brands, exclusive promotions and a full range of amenities.
603
DICK’S STORES
IN 46 STATES
AS OF 1/31/2015
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 7
8 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 9
TRUST THE PROS
CLUB TECHNICIANS
OUR EXPERIENCED TECHNICIANS CAN
HELP YOU IDENTIFY THE RIGHT CUSTOM
EQUIPMENT AND ORDER IT FOR FAST
AND CONVENIENT HOME DELIVERY.
WE MAKE IT OUR BUSINESS TO STAY AT THE FOREFRONT OF EMERGING GOLF TECHNOLOGY, OFFERING THE
NEWEST CLUBS, BALLS, APPAREL AND ACCESSORIES FROM THE INDUSTRY’S LEADING BRANDS.
DICK’S is the nation’s number one retailer of golf
equipment, apparel, accessories and footwear, and
our unparalleled leadership within the industry is
evident in our Golf pro shop. Our product lineup includes
merchandise from the most trusted names in the golf
world, such as TaylorMade, Callaway, PING, Titleist,
FootJoy, NIKE, adidas and Under Armour. We complement
this assortment with exclusive offerings from our private
brands, which include Top-Flite, MAXFLI, Walter Hagen
and Slazenger. We understand serious golfers and know
they want access to a complete, full-service environment,
so our Golf pro shop offers on-site golf simulators, launch
monitors and putting greens, as well as access to a full
menu of equipment services provided by Certified Club
Technicians.
10 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
GOLF PRO SHOP
TRUST THE PROS
FISHING SERVICES
GUN SERVICES
ARCHERY SERVICES
C02 FILLING SERVICES
THE LODGE MEETS THE DEMANDS OF OUTDOORSMEN FROM ALL WALKS OF LIFE — FROM SUMMER CAMPERS,
TO WEEKEND HIKERS TO AVID ANGLERS — THROUGH A VAST ASSORTMENT OF MERCHANDISE THAT RANGES
FROM CLASSIC TO HIGH-TECH AND FROM ENTRY-LEVEL TO PREMIUM.
The Lodge at DICK’S is a dedicated outdoor shop where
today’s outdoor enthusiasts can get the equipment, apparel
and services they need for a wide range of pursuits. With
more than six decades of experience, DICK’S is a national
leader in the outdoor sporting goods market. We leverage this
experience to stock the products our customers want and the
brands they trust. Our selection includes premier names like
Remington, Winchester, Shimano, St. Croix, Under Armour and
Pelican Kayaks, as well as our own Field & Stream private
brand products. We complement our product line-up by
offering value-added amenities, such as on-site archery
ranges for testing potential purchases, and access to
specialized equipment services, like mounting rifle-scopes,
spooling lines and cutting arrow heads.
12 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
PLANNING FOR YOUR NEXT ADVENTURE HAS NEVER
BEEN SO EASY—OUR ECOMMERCE SITES OFFER HELPFUL
BUYING GUIDES, CONVENIENT PRODUCT COMPARISONS
AND A FULL LINE OF HIGH-QUALITY GEAR.
THE LODGE
TRUST THE PROS
BIKE SERVICES
OUR REVAMPED FITNESS SHOPS REFLECT CONSUMER INTEREST IN A WIDE RANGE OF ACTIVITIES,
INCLUDING FUNCTIONAL TRAINING, AEROBIC, CARDIO AND STRENGTH TRAINING, YOGA, PILATES, BOXING
AND MIXED MARTIAL ARTS.
DICK’S Fitness shop helps today’s athletes meet their
personal goals by offering an extensive selection of specialized
equipment, accessories and training devices. Our inventory
spans top-quality products from the industry’s leading brands,
including Everlast, Skilz, Sole and Rage, as well as our
exclusive Fitness Gear and Fitness Gear Pro private brands.
We help customers navigate our selection by employing highly
knowledgeable associates, who can quickly zero in on the best
products and techniques for individual needs. Many of our
Fitness areas also house dedicated cycle shops, which stock
bicycles, accessories and riding apparel from leading
manufacturers, including Diamondback, GT, Thule, Giro, Bell
and our exclusive Nishiki brand. Our cycle shops also offer
on-site access to a menu of value-added equipment services,
including custom fittings, safety inspections, repairs, tune-ups
and assembly by bicycle mechanics.
14 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
BEING ON-THE-GO SHOULDN’T
INVOLVE TRADE-OFFS — WITH DICK’S
NEW MOBILE APP, YOUR SCORECARD
REWARDS BENEFITS ARE ALWAYS
RIGHT AT YOUR FINGERTIPS.
FITNESS
TRUST THE PROS
LACROSSE SERVICES
RACQUET SERVICES
GLOVE SERVICES
SKATE SERVICES
WE HAVE A DEEP COMMITMENT TO PROMOTING SPORTS WITHIN THE COMMUNITY, WHICH WE UPHOLD BY
DONATING EQUIPMENT TO AREA COACHES, OFFERING LEAGUE DISCOUNTS, HOSTING PLAYER REGISTRATIONS
FOR LOCAL TEAMS AND STAGING INSTRUCTIONAL CLINICS.
Team players rely on each other to win, and at DICK’S, we do
our part by providing easy access to everything today’s sports
teams need to stay in the game. Our Team Sports shop
features a complete line of equipment, accessories and
training devices for virtually every team sport, including top
products from leading national brands, like Nike, adidas, Under
Armour, Umbro, Mizuno, Wilson, Easton, Rawlings, STX,
Warrior, Marucci and Evo Shield. Our selection meets the
needs of players of all ages, skill levels and budgets, and we
maintain our stock throughout the year, so players and coaches
have what they need to continue to train in the off-season.
We also offer a menu of specialized equipment services to
keep gear in peak condition—from steaming new baseball
gloves to stringing lacrosse racquets and sharpening hockey
skates. Our amenities bring parents, coaches and players back
to DICK’S for every sport in every season. Our ScoreCard
program further encourages customer loyalty by offering
repeat customers the opportunity to earn rewards and take
advantage of exclusive discounts and promotions.
16 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
NEED SHIN GUARDS FOR TODAY’S GAME?
OUR BUY-ONLINE, PICK-UP IN-STORE OPTION LETS YOU
CHECK STOCK, MAKE A PURCHASE AND COLLECT YOUR
GEAR — ALL IN TIME FOR THE STARTING WHISTLE.
TEAM SPORTS
WORK WITH OUR RUNNING SPECIALISTS TO
ORDER THE STYLES, SIZES AND COLORS YOU
NEED FROM OUR IN-STORE KIOSKS AND HAVE
THEM SHIPPED RIGHT TO YOUR HOME.
MANY OF OUR FOOTWEAR SHOPS FEATURE ON-SITE TRACKS AND TREADMILLS WHERE CUSTOMERS CAN
TEST POTENTIAL PURCHASES OR WORK WITH OUR ASSOCIATES TO COMPLETE CUSTOM GAIT ANALYSES
THAT CAN HELP IDENTIFY THE BEST FOOTWEAR OPTIONS FOR INDIVIDUAL NEEDS.
High-quality footwear can be vital to athletic performance, and
the Footwear shop at DICK’S is the place to go for a complete
selection of shoes, accessories, socks and insoles that are
optimized for virtually every sport. Our shoe selection spans a
vast range of performance footwear—from technical running
shoes to high-traction basketball shoes and performance
baseball cleats. We carry a full assortment of sizes and styles
that meet the needs of men, women and children, and we
represent the nation’s top athletic footwear manufacturers,
including Nike, adidas, ASICS, Brooks, Mizuno, Saucony and
Under Armour. We also offer a broad selection of rugged boots
for work, snow and hiking from premier vendors like Merrell,
Timberland, KEEN, Reef and our own Field & Stream brand.
18 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
FOOTWEAR
OUR MOBILE APP LETS YOU FIND A
STORE, BROWSE PRODUCTS, CHECK
STOCK AND PLACE ORDERS, ALL
FROM A TABLET OR SMARTPHONE —
SO ACCESS TO THE ATHLETIC
APPAREL YOU RELY ON IS ALWAYS
IN THE PALM OF YOUR HAND.
OUR ATHLETIC APPAREL SHOP ADDRESSES THE NEEDS OF ATHLETES IN VIRTUALLY EVERY SPORT,
AGE CATEGORY AND SKILL LEVEL, AND IT REPRESENTS THE INDUSTRY’S LEADING MANUFACTURERS,
INCLUDING NIKE, UNDER ARMOUR, THE NORTH FACE AND ADIDAS.
The Athletic Apparel shop at DICK’S truly has something for
everyone—from specialized, high-technology garments for
outdoor pursuits, to comfortable and stylish workout clothes,
to licensed items for die-hard sports fans. In 2014, we
expanded and refreshed our Athletic Apparel shops, and today,
they encompass dedicated clothing sections for men, women
and young athletes, as well as separate outerwear
departments, which feature top national brands like The
North Face and Columbia. Many of our stores also house
premier specialty shops from leading vendors including Nike,
Under Armour, adidas and The North Face, as well as “sports-
fan” walls that are exclusively dedicated to high-demand
licensed items from the NFL, MLB, NBA, NCAA and NHL.
20 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
ATHLETIC APPAREL
SPECIALTY CONCEPTS
FIELD & STREAM
Our Field & Stream stores are an outdoor enthusiast’s paradise, with an
extensive assortment of authentic, high-quality merchandise related to
virtually every outdoor pursuit. Each Field & Stream store houses several
specialty shops that are dedicated to specific activities, such as archery,
hunting, fishing and camping. These specialty shops feature a range of
exclusive amenities, including a broad selection of merchandise from the
industry’s most trusted brands, as well as access to specialized equipment
services, such as knife sharpening, arrow cutting, bow tuning, scope
mounting and line spooling. We staff our Field & Stream stores with highly
knowledgeable associates, including seasoned anglers, hunters and
trekkers, who have first-hand experience with the products we sell. We draw
on the expertise of our associates to offer a continuous series of free in-store
educational events that are designed for all ages and skill sets and address a
wide range of pursuits—from ice fishing to wilderness ethics and emergency
preparedness. Our Field & Stream customers can also reap the benefits of
our Sportsman’s Advantage Club loyalty program, which offers members
exclusive discounts and the opportunity to earn rewards on their purchases.
CUSTOMER RESPONSE
TO OUR FIELD & STREAM
STORES HAS BEEN STRONG,
AND WE PLAN TO EXPAND
OUR NETWORK FROM
10 STORES AT THE CLOSE
OF 2014 TO APPROXIMATELY
19 STORES BY THE END
OF 2015.
22 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
GOLF GALAXY
Our network of 78 Golf Galaxy locations across 29 states offer
golfers a full line of products from the industry’s premier
manufacturers, including TaylorMade, Callaway, PING, Titleist,
Mizuno, FootJoy, NIKE, adidas and Under Armour, as well as our
private golf brands. We complement our product assortment by
providing access to a full range of equipment services from our
PGA Pros, such as club fitting and repair and individual lessons.
In 2015, we plan to bring our Golf Galaxy eCommerce site onto our
own platform, setting the stage to offer our customers an enhanced
omni-channel experience with access to value-added capabilities,
such as ship-from-store and buy-online, pick-up in-store.
GOLF GALAXY PROVIDES
TODAY’S GOLFERS WITH
EVERYTHING THEY NEED
TO IMPROVE THEIR GAME —
FROM A WORLD-CLASS
SELECTION OF EQUIPMENT,
APPAREL AND ACCESSORIES,
TO ON-SITE PUTTING GREENS
AND HITTING BAYS, TOUR-GRADE
SERVICES, AND HIGHLY
KNOWLEDGEABLE SALES
ASSOCIATES.
COMMUNITY
GIVING
DICK’S Sporting Goods has a longstanding commitment to
promoting sports within the community. We firmly believe
that sports make people better by teaching them essential
life skills, such as leadership, discipline and integrity, as well
as by motivating them to challenge their abilities and reach
their full potential. We accomplish these goals through several
programs, including:
The DICK’S Sporting Goods Community Program was
established in 2000 and is our flagship vehicle for community
giving. This program supports thousands of youth sports
leagues, teams, athletes and outdoor enthusiasts across the
nation each year, inspiring and enabling sports participation
for millions of young athletes.
Our Sports Matter initiative addresses the growing issue
of underfunded youth athletics through a public awareness
campaign and a proprietary crowd-funding platform. During
2014, Sports Matter raised more than $2 million in donations,
and the DICK’S Sporting Goods Foundation matched $2 million
of these funds, generating a total of more than $4 million for
disbanded or financially challenged sports teams. The DICK’S
Sporting Goods Foundation also partnered with Tribeca Digital
Studios and director Judd Ehrlich to create We Could Be King, a
documentary highlighting the issue of underfunded sports teams
and raising awareness of the Sports Matter movement. The film
aired on ESPN channels and ABC during the spring of 2014.
In 2015, we forged a groundbreaking sponsorship that
established DICK’S as the Official Sporting Goods Retail
Sponsor to the United States Olympic Committee (USOC)
and Team USA. Through this partnership, we will support
U.S. Olympic and Paralympic hopefuls who seek to represent
the United States at the 2016 Olympic and Paralympic Games.
Our role will include sponsorships of several Team USA athletes,
sporting goods donations to U.S. Olympic Training Centers, and
a new in-store employment program, which will provide flexible
work opportunities to U.S. Olympic and Paralympic hopefuls
who need to accommodate their training schedules.
24 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2015
Commission File No. 001-31463
DICK'S SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
16-1241537
(I.R.S. Employer Identification No.)
345 Court Street, Coraopolis, Pennsylvania 15108
(724) 273-3400
(Address of principal executive offices, zip code, telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Name of Each Exchange on which Registered
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2
of the Act (check one).
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the voting common equity held by non-affiliates of the registrant was $3,961,456,846 as of August 1,
2014 based upon the closing price of the registrant's common stock on the New York Stock Exchange reported for August 1, 2014.
The number of shares of common stock and Class B common stock of the registrant outstanding as of March 23, 2015 was 93,892,245
and 24,900,870, respectively.
Documents Incorporated by Reference: Part III of this Annual Report on Form 10-K incorporates certain information from the
registrant's definitive proxy statement for its Annual Meeting of Stockholders to be held on June 3, 2015 (the "2015 Proxy
Statement").
1
TABLE OF CONTENTS
PAGE
Part I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters . . . . . .
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 14. Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15. Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
4
12
18
18
20
20
20
20
21
24
36
36
36
36
39
39
39
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68
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2
2
Forward-Looking Statements
We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of
1995) contained in this Annual Report on Form 10-K or made by our management involve risks and uncertainties and are
subject to change based on various important factors, many of which may be beyond our control. Accordingly, our future
performance and financial results may differ materially from those expressed or implied in any such forward-looking
statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. These
statements can be identified 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 any variations of such words or other words
with similar meanings. Forward-looking statements address, among other things, our expectations, our growth strategies,
including our plans to open new stores and develop our own eCommerce platform, our efforts to increase profit margins and
return on invested capital, plans to grow our private brand business, projections of our future profitability, results of operations,
capital expenditures, plans to return capital to stockholders through dividends or share repurchases, our financial condition or
other "forward-looking" information and include statements about revenues, earnings, spending, margins, costs, liquidity, store
openings, eCommerce, operations, inventory, private brand products or our actions, plans or strategies.
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 2015 and beyond to differ materially from those expressed or implied in
any forward-looking statements included in this Annual Report on Form 10-K or otherwise made by our management:
• Our business is dependent on consumer discretionary spending;
•
Intense competition in the sporting goods industry and in retail;
• Our ability to predict or effectively react to changes in consumer demand or shopping patterns;
• Lack of available retail store sites on terms acceptable to us, rising real estate prices and other costs and risks relating
to a brick and mortar retail store model;
• Omni-channel growth and our development of an eCommerce platform;
• Unauthorized disclosure of sensitive or confidential customer information;
• Risks associated with our private brand offerings and new retail concepts;
• Disruption of or other problems with the services provided by our primary eCommerce services provider;
• Our ability to access adequate capital to operate and expand our business and to respond to changing business and
economic conditions;
• Risks and costs relating to changing laws and regulations affecting our business, including: consumer products and
firearms and ammunition;
• Our relationships with our vendors or disruptions in our or our vendors' supply chains which could be caused by
foreign trade issues, currency exchange rate fluctuations, increasing prices for raw materials and foreign political
instability;
• Litigation risks for which we may not have sufficient insurance or other coverage;
• Our ability to attract, train, engage and retain qualified leaders and associates and the loss of Mr. Edward Stack as our
key executive;
• Our ability to secure and protect our trademarks and other intellectual property and defend claims of intellectual
property infringement;
• Disruption of or other problems with our information systems;
3
3
• Any serious disruption at our distribution facilities;
•
Performance of professional sports teams, professional team lockouts or strikes or retirement or scandal involving
sports superstars;
• The seasonality of our business;
• Regional risks because our stores are generally concentrated in the eastern half of the United States;
• Our pursuit of strategic investments or acquisitions, including costs and uncertainties associated with combining
businesses and / or assimilating acquired companies;
• We are controlled by our Chairman and Chief Executive Officer and his relatives, whose interests may differ from
those of our other stockholders;
• Our current anti-takeover provisions, which could prevent or delay a change in control of the Company;
• Our current intention to issue quarterly cash dividends; and
• Our repurchase activity, if any, pursuant to our share repurchase program.
The foregoing and additional risk factors are described in more detail herein under Item 1A. "Risk Factors". In addition, we
operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible
for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to
which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in
any forward-looking statement. The forward-looking statements included in this Annual Report on Form 10-K are made as of
this date. We do not assume any obligation and do not intend to update or revise any forward-looking statements whether as a
result of new information, future developments or otherwise except as may be required by the securities laws.
PART I
ITEM 1. BUSINESS
General
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 associates, in-store services and unique specialty
shop-in-shops. The Company also owns and operates Golf Galaxy, Field & Stream and True Runner specialty stores. The
Company was founded in 1948 when Richard "Dick" Stack, the father of Edward W. Stack, our Chairman and Chief Executive
Officer, opened his original bait and tackle store in Binghamton, New York. Edward W. Stack joined his father's business full-
time in 1977 and in 1984 became President and Chief Executive Officer of the then two store chain. Our vision is to build
leading brands that serve and inspire athletes and outdoor enthusiasts around the world to achieve their personal best; create
value for our stockholders through the relentless improvement of everything we do; and make a lasting impact in our
communities through sport.
We were incorporated in 1948 in New York under the name Dick's Clothing and Sporting Goods, Inc. In November 1997, we
reincorporated as a Delaware corporation and in April 1999 we changed our name to Dick's Sporting Goods, Inc. Our executive
office is located at 345 Court Street, Coraopolis, Pennsylvania 15108 and our phone number is (724) 273-3400. Our website is
located at www.DICKS.com. The information on our website does not constitute a part of this Annual Report on Form 10-K.
We include on our website, free of charge, copies of our Annual and Quarterly Reports filed on Forms 10-K and 10-Q, Current
Reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as
amended.
As of January 31, 2015, the Company operated 603 Dick's Sporting Goods stores in 46 states, 78 Golf Galaxy stores in 29
states, 10 Field & Stream stores in five states and three True Runner stores in three states. We also operate eCommerce websites
at www.DICKS.com and www.golfgalaxy.com.
4
4
Business Strategy
The key elements of our business strategy are:
Authentic Sporting Goods Retailer. Our history and core foundation is as a retailer of high-quality authentic athletic equipment,
apparel and footwear, intended to enhance our customers' performance and enjoyment of athletic pursuits, rather than focusing
our merchandise selection on the latest fashion trend or style. We believe our customers seek genuine, deep product offerings,
and that ultimately this merchandising approach positions us with advantages in the market, which we believe will continue to
benefit from new product offerings with enhanced technological features.
Our objective is not only to carry leading brands, but to carry a full range of products within each brand, including premium
items for the sports enthusiast. We believe that the breadth of our product selections in each category of sporting goods offers
our customers a wide range of good, better and best price points and enables us to address the needs of sporting goods
consumers, from the beginner to the sports enthusiast, which distinguishes us from other large format sporting goods stores. We
also believe that the range of merchandise we offer allows us to compete effectively against all of our competitors, from
traditional independent sporting goods stores and specialty shops to other large format sporting goods stores and mass merchant
discount retailers to internet-based retailers.
Omni-channel Development. We believe when our customers connect with the Dick's Sporting Goods brand they expect a
seamless shopping experience, regardless of the manner in which they choose to shop us. We continue to see growth in the
number of customers who shop us both online and in our stores and believe these omni-channel customers represent the future
of retail.
Our customers may research products online, then visit a store to experience the merchandise and consult with one of our in-
store experts, such as a bicycle mechanic or running specialist. Other customers may be inspired by one of our push
notifications on their mobile device, visit our store to test the merchandise by utilizing such features as the golf hitting bay,
archery lane or trying a pair of running shoes on the treadmill and complete the purchase in the store or later on their tablet
device.
We believe that leveraging all of our sales channels to deliver a consistent, seamless and high-quality customer experience
across our store, on the web and via mobile technology, will differentiate us from our online-only competitors. As a result, we
continually upgrade website functionality, expand assortment and content and invest in new capabilities to maximize device
shift and leverage our store network. We believe this will provide customers with an enhanced shopping experience that will
enable our customers to buy and receive products where, when and how they want. We are also planning the development of an
eCommerce platform that will allow us to fully control our customer experience and maximize profitability, while continuing
store growth. We believe our store base is a competitive advantage to our online-only competitors, as our physical presence
allows us to better serve our customers, whether through the convenience of accepting in-store returns or exchanges, or
expediting fulfillment of eCommerce orders. We believe that offering support services for the products we sell enhances the
credibility of our associates and specialty store concepts with our customers and further differentiates our stores from our
competitors.
The primary factors that have historically influenced our profitability and success have been the growth in our number of stores
and selling square footage, positive same store sales and our strong gross profit margins. We have grown from 419 Dick's
Sporting Goods stores at the end of fiscal 2009 to 603 Dick's Sporting Goods stores at the end of fiscal 2014. We seek to
expand our presence through the opening of new stores and the Company believes it has the potential to reach approximately
1,100 Dick's Sporting Goods locations, including smaller-market locations across the United States. The Company believes the
expansion of its store network will also drive growth in eCommerce sales as the Company continues to deliver an omni-channel
shopping experience for its customers. We also make continued investments in our store locations in order to maintain our
brand standards and improve our customers' shopping experience.
Brand Partnerships. We carry a wide variety of well-known brands, including adidas, Asics, Callaway Golf, Columbia, Nike,
Remington, TaylorMade-adidas Golf, The North Face and Under Armour. In addition to the cost efficiencies of shared
investments with our brand partners, we seek to leverage our partnerships to offer authenticity and credibility to our customers,
while differentiating ourselves from our competitors. We partner with our brands on important marketing initiatives and product
launches, in addition to leveraging athletes that these brands bring to us for our marketing campaigns. Our brand partnerships
also provide us with access to exclusive products and allow us to differentiate our customers' shopping experience, such as our
brand shops, which provide our customers with a wider and deeper selection of products from our key brands.
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Private Brands. We also offer a wide variety of private brands and products through exclusive licenses such as adidas baseball,
CALIA, DBX, Field & Stream, Fitness Gear, Lady Hagen, MAXFLI, Nishiki, Primed, Quest, Reebok (performance apparel),
Slazenger (golf and racquets), Top-Flite, Umbro (performance equipment, footwear and apparel) and Walter Hagen. Our private
brands and other exclusive products offer our customers products that they cannot find anywhere else. Our private brands also
offer exceptional value and quality to our customers at each price point and obtain higher gross margins than we obtain on sales
of comparable branded products. We have invested in a development and procurement staff to support our private brand
business.
Retail Concept Development. In fiscal 2014, we opened eight Field & Stream stores, a specialized outdoor concept. In fiscal
2015, we plan to open approximately nine additional Field & Stream locations. Our highly specialized concept stores enable us
to connect with outdoor enthusiasts in their own element, giving us valuable insight into key merchandise categories that we
can apply across our entire network.
Strategic Marketing. Our marketing program is designed to build loyalty for the Dick's Sporting Goods brand while promoting
our broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment. Our
historical marketing strategy consisted largely of newspaper advertising supplemented by direct mail and seasonal use of local
and national television and radio. While we continue to market our merchandise assortment through these traditional channels,
we have reduced our newspaper advertising, developed brand-building marketing campaigns focused on building passion and
loyalty to the Dick's Sporting Goods brand and shifted our advertising mix to include more digital marketing. We continue to
optimize our media mix by shifting to more efficient and effective marketing channels and by leveraging our extensive and
expanding customer relationship marketing database from our "ScoreCard Rewards", "Advantage Club", "Sportsman's
Advantage Club" and "True Runner Rewards" loyalty programs. The Company is also actively involved in communities,
sponsoring thousands of teams at the local level.
Merchandising
We offer a full range of sporting goods, active apparel and footwear at each price point in order to appeal to the beginner,
intermediate and enthusiast sports consumer. The following table sets forth the approximate percentage of our sales attributable
to the hardlines, apparel and footwear categories for the periods presented:
Category
Hardlines (1)
Apparel
Footwear
Other (2)
Total
2014
Fiscal Year
2013
2012
44%
36%
19%
1%
44%
35%
20%
1%
47%
33%
19%
1%
100%
100%
100%
(1)
(2)
Includes items such as sporting goods equipment, fitness equipment, golf equipment and hunting and fishing gear.
Includes the Company's non-merchandise sales categories, including in-store services and shipping revenues.
Selling Channels
We offer products to our customers through our retail stores and online. Although we sell through both of these channels, we
believe that sales in one channel are not independent of the other. Regardless of the sales channel, we seek to provide our
customers with a seamless omni-channel shopping experience in our stores, online and via mobile devices.
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Retail Stores:
Store Format. Each of our Dick's Sporting Goods stores unites several sports specialty stores under one roof and typically
contains the following specialty shops: Footwear, Team Sports, Outdoor Lodge, Golf, Fitness and Athletic Apparel. We
believe our "store-within-a-store" concept creates a unique shopping environment by combining the convenience, broad
assortment and competitive prices of large format stores with the brand names, deep product selection and customer service
of a specialty store. Our Golf Galaxy and Field & Stream stores are designed to create an exciting and interactive shopping
environment for the sporting enthusiast that highlights our extensive product assortments and value-added services.
Our primary prototype Dick's Sporting Goods store is a single-level store of approximately 50,000 square feet. We also
have a prototype two-level store of approximately 80,000 square feet for those trade areas that have sufficient in-profile
customers to support it as well as a smaller-market model that is approximately 35,000 to 40,000 square feet. Our primary
prototype Golf Galaxy store is a single-level store that generally ranges from 13,000 to 18,000 square feet. In addition, we
also have a prototype Golf Galaxy store of approximately 35,000 square feet, which includes more services and
experiential shopping. Our primary prototype Field & Stream store is a single-level store of approximately 50,000 square
feet. In our Dick's Sporting Goods stores, approximately 83% of store space is used for selling and approximately 17% is
used for backroom storage of merchandise, receiving and office space.
We seek to encourage cross-selling and impulse buying through the layout of our departments. We provide a bright, open
shopping environment through the use of glass, lights and lower shelving that enable customers to see the array of
merchandise offered throughout our stores. We avoid the warehouse store look featured by some of our large format
competitors.
Store Associates and Operations. We strive to complement our merchandise selection and innovative store design with
superior customer service. We seek to recruit sports enthusiasts to serve as sales associates because we believe that they are
more knowledgeable and passionate about the products they sell. For example, we currently employ bicycle mechanics
who sell and service bicycles and running specialists who provide expertise and perform gait analysis to match footwear to
a customer’s running style. As of January 31, 2015, we employed 887 bicycle mechanics and 572 running specialists. We
believe that our associates' enthusiasm and ability to demonstrate and explain the advantages of products lead to increased
sales. We believe our prompt, knowledgeable and enthusiastic service fosters the confidence and loyalty of our customers
and differentiates us from other large format sporting goods stores.
Our Dick's Sporting Goods stores are typically open seven days a week, generally from 9:00 a.m. to 9:30 p.m. Monday
through Saturday and 10:00 a.m. to 7:00 p.m. on Sunday. Our Golf Galaxy stores are typically open seven days a week,
generally from 10:00 a.m. to 9:00 p.m. Monday through Saturday and 10:00 a.m. to 6:00 p.m. on Sunday.
Support Services. At our Dick's Sporting Goods stores and Golf Galaxy stores, we offer a complete range of expert golf
services, including custom club fitting, club repair and grip and shaft installation for drivers, irons and putters, and we also
have certified club technicians on hand. We offer private lessons with our PGA and LPGA professionals in our Golf Galaxy
Stores. Our Dick's Sporting Goods stores also feature bicycle maintenance and repair stations on the sales floor that allow
our bicycle mechanics to service bicycles in addition to assisting customers. At our Dick's Sporting Goods stores, we also
steam baseball gloves, string tennis racquets and lacrosse sticks, sharpen ice skates, provide home delivery and assembly of
fitness equipment, provide scope mounting and bore sighting services, cut arrows, sell hunting and fishing licenses and fill
CO2 tanks for paintball.
Site Selection and Store Expansion. We select geographic markets and store sites based on a variety of factors, including
demographic information, quality and nature of neighboring tenants, store visibility and accessibility. Key demographics
include population density, household income, age and average number of occupants per household. In addition to these
demographics, golf and outdoor recreation participation rates are considered in selecting sites for our Golf Galaxy and
Field & Stream stores. We seek to locate our Dick's Sporting Goods stores in primary retail centers with an emphasis on
co-tenants, including major discount retailers such as Wal-Mart or Target, or specialty retailers from other categories such
as Lowe's or Best Buy.
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We seek to balance our expansion of Dick's Sporting Goods stores between new and existing markets. In our existing
markets, we add stores as necessary to cover appropriate trade areas. Clustering stores allows us to take advantage of
economies of scale in advertising, promotion, distribution and supervisory costs. We seek to locate stores within separate
trade areas within each metropolitan area and expand in geographically contiguous areas, in order to establish long-term
market penetration and build on our experience in the same or nearby regions. We believe that local knowledge is an
important part of success. In considering new regions, we locate our stores in areas we believe are underserved. In order to
achieve the same economies of scale we have in multi-store existing markets, we identify multiple locations in new
markets as well. In addition to larger metropolitan areas, we also target smaller population centers in which we locate
single stores, generally in shopping centers with a wide regional draw.
The following table summarizes store openings and closings for 2014 and 2013:
Fiscal 2014
Fiscal 2013
Dick's
Sporting
Goods
Specialty Store
Concepts (1)
Total
Dick's
Sporting
Goods
Specialty Store
Concepts (1)
Total
Beginning stores
New stores:
Single-level stores
Two-level stores
Total new stores
Ending stores
Closed stores
Ending stores
Remodeled stores
Relocated stores
558
42
4
46
604
1
603
5
5
84
9
—
9
93
2
91
—
2
642
51
4
55
697
3
694
5
7
518
40
—
40
558
—
558
4
1
83
4
—
4
87
3
84
—
1
601
44
—
44
645
3
642
4
2
(1)
Includes the Company's Golf Galaxy, Field & Stream and True Runner stores.
Future openings will depend upon several factors, including but not limited to general economic conditions, consumer
confidence in the economy, unemployment trends, interest rates and inflation, the availability of retail store sites on
acceptable terms, real estate prices and the availability of adequate capital. Because our new store openings depend on
many factors, they are subject to risks and uncertainties as described below within Item 1A. "Risks Factors".
eCommerce:
Through our Dick's Sporting Goods and Golf Galaxy websites, we seek to provide our customers with in-depth product
knowledge and the ability to shop with us at any time. We continue to develop our online content and capabilities to
enhance the online experience and fully integrate our online business with our stores to provide our customers with an
omni-channel shopping experience. Currently, we have return-to-store capabilities for online orders and the ability to place
online orders in our stores if we are out of stock in the retail store. We also have the ability through our Dick’s Sporting
Goods website to ship orders placed online from our retail locations, which reduces delivery times for online orders and
improves inventory productivity, and we have recently added capability for our customers to buy merchandise online and
pick it up in store. In fiscal 2014, our eCommerce business accounted for approximately 9% of our total sales.
Information Systems
Our core merchandising, allocation and replenishment systems are from JDA Software Group, Inc. ("JDA"). The data generated
by these systems are consolidated into a comprehensive data warehouse application that was purpose-built to provide near real-
time performance information across a broad spectrum of critical metrics for our business. All functions of the business have
access to highly accurate and consistent information related to the various components of sales, inventory and margin from
department to SKU level.
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Our end-to-end supply chain management suite of software applications is from Manhattan Associates and operates our four
distribution centers from the central computing complex in our corporate headquarters, which we refer to as the Store Support
Center ("SSC"). The Company's Financial and Human Resource Management systems are PeopleSoft applications provided by
Oracle. All third party applications are integrated and enhanced using state-of-the-art software tools and techniques developed
internally.
The enterprise data center located within our SSC is equipped with mainframe and mid-range computers and storage systems
from IBM, integrated with voice and data networking communication equipment from Cisco. This facility has been built to
support the future growth of the Company. The Company has also established a separate data center to serve as the Company's
disaster recovery redundancy location.
Purchasing and Distribution
We purchase merchandise from approximately 1,500 vendors. During fiscal 2014, Nike and Under Armour, our largest vendors,
represented approximately 19% and 12%, respectively, of our merchandise purchases. No other vendor represented 10% or
more of our fiscal 2014 merchandise purchases. We do not have long-term purchase contracts with any of our vendors and all of
our purchases from vendors are made on a short-term purchase order basis.
We operate four regional distribution centers: a 914,000 square foot distribution center near Atlanta, Georgia, a 725,000 square
foot distribution center in Plainfield, Indiana, a 601,000 square foot distribution center in Smithton, Pennsylvania and a 624,000
square foot distribution center in Goodyear, Arizona. Vendors directly ship floor ready merchandise to our distribution centers,
where it is processed and allocated directly to our stores or to temporary storage at our distribution centers. Our distribution
centers are responsible for consolidating damaged or defective merchandise from our stores that is being returned to vendors.
We have contracted with common carriers to deliver merchandise from all of our distribution centers to our stores.
Competition
The market for sporting goods retailers is highly fragmented and intensely competitive. The retail sporting goods industry
comprises five principal categories:
Large Format Sporting Goods Stores
The large format stores generally range from 20,000 to 100,000 square feet and offer a broad selection of sporting goods
merchandise. Our large format store has had strong performance due in part to our unique approach in blending the best
attributes of a large format store with the best attributes of a specialty shop.
Traditional Sporting Goods Stores
These stores generally range from 5,000 to 20,000 square feet and are frequently located in regional malls and multi-store
shopping centers. Although they typically carry a varied assortment of merchandise, these stores offer a more limited product
assortment than our stores. We believe these stores do not cater to the sports enthusiast.
Specialty and Vendor Stores
These stores generally range from 2,000 to 20,000 square feet and typically focus on a specific category, such as athletic
footwear, or an activity, such as golf or skiing. Certain specialty stores that focus on a group of related activities can have
significantly larger square footage footprints and be designed as destination stores. We believe prices at these stores typically
tend to be higher than prices at the large format sporting goods stores and traditional sporting goods stores. In addition, several
sporting goods brands, many of which we sell in our stores, also sell their products direct to consumers through their own retail
stores and internet operations. While these stores may offer a deep selection of products within their specialty or across a single
brand, they lack the wide range of products or brand selection that we offer.
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Mass Merchants and Department Stores
These stores generally range from 50,000 to over 200,000 square feet and are primarily located in shopping centers,
freestanding sites or regional malls. Sporting goods merchandise and apparel represent a small portion of the total merchandise
in these stores and the selection is often more limited than in other sporting goods retailers. Although Wal-Mart is currently the
largest retailer of sporting goods as measured by sales, we believe that mass merchants' limited selection, particularly with well-
known brand names, combined with the reduced service levels typical of a mass merchandiser, limit their ability to meet the
needs of sporting goods customers. Department stores may have more selection from well-known brands in athletic apparel and
footwear than mass merchants, but do not typically carry hardline equipment for the sporting goods customer.
Internet and Catalog-Based Retailers
These retailers either focus on a specific category or activity or sell a full line of sporting goods through the use of the Internet
and/or catalogs. We believe that the relationships we have developed with our suppliers and customers through our retail stores,
our growing eCommerce business, our omni-channel capabilities and our merchandise offerings, including a wide range of
exclusive and private brand products, provide us with a significant advantage over internet and catalog-based retailers.
Employees
As of January 31, 2015, we employed approximately 12,000 full-time and 25,600 part-time associates. Due to the seasonal
nature of our business, total employment figures fluctuate throughout the year and typically peak during the fourth quarter.
None of our associates are covered by a collective bargaining agreement. We believe that our relations with our associates are
good.
Proprietary Rights
The Company has a number of registered service marks and trademarks with the United States Patent and Trademark Office,
including various versions of the following: "Acuity", "DBX", "Dick's", "Dick's Sporting Goods", "Field & Stream", "Fitness
Gear", "Golf Galaxy", "Lady Hagen", "MAXFLI", "Nishiki", "Primed", "Quest", "ScoreCard", "ScoreCard Rewards", "Top-
Flite" and "Walter Hagen". The Company also has a number of registered domain names, including "dickssportinggoods.com",
"DICKS.com", "golfgalaxy.com" and "FieldandStreamShop.com". Our trademarks and other intellectual property are subject to
risks and uncertainties that are discussed within Item 1A. "Risk Factors". We have entered into licensing agreements for names
that we do not own, which provide for exclusive rights to use names such as "adidas" (baseball only), "Slazenger" (golf and
racquets), "Louisville Slugger" (hosiery only), "Reebok" (performance apparel) and "Umbro" (performance soccer equipment,
footwear and apparel) for specified product categories and, in some cases, specified channels. These licenses contemplate long-
term business relationships, with substantial initial terms and the opportunity for multi-year extensions. These licenses contain
customary termination provisions at the option of the licensor including, in some cases, termination upon our failure to
purchase or sell a minimum volume of products and may include early termination fees. Our licenses are also subject to risks
and uncertainties common to licensing arrangements that are described within Item 1A. "Risk Factors".
Governmental Regulations
We must comply with various federal, state and local regulations, including regulations relating to consumer products and
consumer protection, advertising and marketing, labor and employment, data protection and privacy, intellectual property, the
environment and tax. In addition, in connection with the sale of firearms in our stores, we must comply with a number of
federal and state laws and regulations related to the sale of firearms, including the federal Brady Handgun Violence Prevention
Act. Ensuring our compliance with these various laws and regulations, and keeping abreast of changes to the legal and
regulatory landscape, requires us to expend considerable resources.
Executive Officers of the Company
The current executive officers of the Company, and their prior business experience, are as follows:
Edward W. Stack – 60, has served as our Chairman and Chief Executive Officer since 1984 when our founder and Mr. Stack's
father, Richard "Dick" Stack, retired from our then two store chain. Mr. Stack has served us full-time since 1977 in a variety of
positions, including President, Store Manager and Merchandise Manager.
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André J. Hawaux – 54, became our Executive Vice President - Chief Operating Officer / Chief Financial Officer in February
2015. From June 2013 to January 2015, Mr. Hawaux served as our Executive Vice President - Finance, Administration and
Chief Financial Officer. Prior to joining the Company, Mr. Hawaux served as the President, Consumer Foods at ConAgra
Foods, Inc., one of North America's leading packaged food companies, since 2009. From 2006 to 2009, Mr. Hawaux served as
ConAgra Foods' Executive Vice President, Chief Financial Officer where he was responsible for the company's Finance and
Information System and Services organizations. Prior to ConAgra Foods, Mr. Hawaux served as general manager of a large
U.S. division of PepsiAmericas and previously served as Chief Financial Officer for Pepsi-Cola North America and Pepsi
International's China business unit. Mr. Hawaux is also a Trustee of Southern New Hampshire University and a member of the
Board of Directors of PulteGroup, Inc. (NYSE: PHM).
Lee J. Belitsky – 54, became our Executive Vice President - Product Development and Planning, Allocations and
Replenishment in September 2014. Mr. Belitsky joined Dick's Sporting Goods in 1997 as Vice President - Controller and has
held a number of roles at Dick's Sporting Goods. From July 2013 to September 2014, Mr. Belitsky served as Senior Vice
President - Product Development; from September 2011 to July 2013, he served as Senior Vice President - Chief Risk and
Compliance Officer; from January 2010 to September 2011, he served as Senior Vice President - Strategic Planning and
Analysis and Treasury Services; from February 2009 to January 2010, he served as Senior Vice President - Store Operations
and Distribution / Transportation; from April 2006 to February 2009, he served as Senior Vice President - Distribution and
Transportation; from December 2005 to April 2006, he served as Vice President - Treasurer; and from December 1997 to
December 2005, he served as Vice President - Controller. Prior to joining Dick's Sporting Goods, Mr. Belitsky was the Chief
Financial Officer of Domain, Inc., a Boston-based home furnishings retailer, he also served as Vice President - Controller and
Treasurer with Morse Shoe, Inc. and as an Audit Manager with KPMG LLP.
Michele B. Willoughby – 49, has served as our Executive Vice President - eCommerce and Supply Chain since July 2013. Ms.
Willoughby joined Dick's Sporting Goods in 2004. From November 2010 to July 2013, Ms. Willoughby served as Senior Vice
President - eCommerce and from February 2009 to November 2010, she served as Senior Vice President - Supply Chain. She
joined Dick's Sporting Goods in 2004 as Vice President, Planning and Allocation. Prior to joining Dick's Sporting Goods,
Ms. Willoughby was employed by Kohl's Department Stores, where she held various positions in Merchandise Planning and
Allocation from 1997 to 2004, most recently as Vice President, Planning and Allocation.
John E. Hayes III – 52, became our Senior Vice President, General Counsel and Secretary in January 2015. Prior to joining
Dick's Sporting Goods, Mr. Hayes served as Senior Vice President and General Counsel of Coldwater Creek Inc. from February
2009 to September 2014. During his tenure with Coldwater Creek, Mr. Hayes also served as the Company's interim Chief
Financial Officer from November 2009 to April 2010 and as Senior Vice President, Human Resources from April 2010 to May
2013. Prior to joining Coldwater Creek, Mr. Hayes was engaged for seventeen years in private law practice, most recently as a
partner with Hogan & Hartson, LLP, from March 2003 to February 2009. Prior to his legal career, Mr. Hayes practiced as an
accountant with KPMG LLP.
Lauren R. Hobart – 46, joined Dick's Sporting Goods in February 2011 as our Senior Vice President and Chief Marketing
Officer. Prior to that, Ms. Hobart spent 14 years with PepsiCo, Inc., most recently serving as Chief Marketing Officer for its
Carbonated Soft Drink portfolio in the United States. During her career at PepsiCo, Ms. Hobart held several other significant
marketing roles and also spent several years in strategic planning. Prior to joining PepsiCo, Ms. Hobart worked in commercial
banking for JP Morgan Chase and Wells Fargo Bank. Ms. Hobart also serves as a member of the Board of Directors of Sonic
Corp. (Nasdaq: SONC).
Joseph R. Oliver – 55, has served as our Senior Vice President and Chief Accounting Officer since April 2011 and prior to that
served as our Controller since November 2009. Previously, Mr. Oliver served as our Vice President and Controller since
February 2006 and as our Director of Accounting from May 2000 to February 2006. Prior to joining Dick's Sporting Goods,
Mr. Oliver was employed by Dominion Resources, Inc. from 1983 to 2000 in various finance functions, most recently as
Director of Accounting.
Deborah M. Victorelli – 52, became our Senior Vice President - Human Resources in September 2014. Ms. Victorelli joined
Dick's Sporting Goods in 1999 and has held numerous leadership roles of increasing responsibility. From February 2013 to
September 2014, she served as Vice President - Human Resources and from November 2004 to January 2013, she served as
Vice President of Human Resources - Field. Prior to joining Dick's Sporting Goods, Ms. Victorelli was employed by Mine
Safety Appliances and Coca-Cola Bottling Company in various human resource roles.
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ITEM 1A. RISK FACTORS
Risks and Uncertainties
Our business is dependent on consumer discretionary spending and reduced consumer spending may adversely affect the
Company's business, operations, liquidity, financial results and stock price.
Our business depends on consumer discretionary spending, and as a result, our results are highly dependent on U.S. consumer
confidence and the health of the U.S. economy. Consumer spending may be affected by many factors outside of the Company’s
control, including general economic conditions, consumer disposable income levels, consumer confidence levels, the
availability, cost and level of consumer debt and consumer behaviors towards incurring and paying debt, the costs of basic
necessities and other goods and the effects of the weather or natural disasters. Decreases in consumer discretionary spending
that leads to a decrease in same store sales, customer traffic or average value per transaction could negatively affect the
Company's financial performance, particularly if consumer spending is depressed for a prolonged period of time. Furthermore,
promotional activities and decreased demand for consumer products, particularly higher-end products, could affect profitability
and margins. The impact of a prolonged decline of consumer spending could also affect the Company if the decline leads to one
or more vacancies of other retailers in shopping plazas as a result of reduced traffic to our store in that location. All of the
foregoing factors could have a material adverse effect on our business.
Intense competition in the sporting goods industry and in retail could limit our growth and reduce our profitability.
The market for sporting goods retailers is highly fragmented and intensely competitive. Our current and prospective
competitors include many large companies, some of which have greater market presence, name recognition and financial,
marketing and other resources than we do. We compete, directly or indirectly, with retailers from multiple categories, including
stores and chains utilizing large format, traditional and specialty formats, mass merchants, department stores and catalog,
Internet-based and direct-sell retailers. Many factors affect the extent to which competition could affect our results, including
our, and our competitors' prices, quality, assortment, advertising, service, locations and reputation. Competition on these
factors, aggressive pricing strategies, and continued evolution of retail sale methods, including eCommerce, could affect our
long-term strategy and could have an adverse effect on our business, financial condition, results of operations and cash flows.
If we are unable to predict or effectively react to changes in consumer demand or shopping patterns, we may lose customers
and our sales may decline.
Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand,
preferences and shopping patterns regarding sporting goods. We must develop and execute merchandising initiatives with
marketing programs that appeal to a broad range of consumers. Consumer preferences cannot be predicted with certainty and
are subject to continual change and evolution. We often make commitments to purchase products from our vendors several
months in advance of the proposed delivery. If we misjudge the market for our new merchandise our sales may decline
significantly. We may overstock unpopular products and be forced to take significant inventory markdowns or miss
opportunities for other products, both of which could have a negative impact on our profitability. Conversely, shortages of items
that prove popular could also be detrimental to our net sales. A major shift in consumer demand away from sporting goods
generally could also have a material adverse effect on our business, results of operations and financial condition. Failure to
timely identify or effectively respond to changing consumer tastes, preferences and spending patterns could negatively affect
our relationship with our customers, the demand for our products and services, our market share, or financial results.
Lack of available retail store sites on terms acceptable to us, rising real estate prices and other costs and risks relating to a
brick & mortar retail store model could affect our results.
Our business strategy includes opening stores in new and existing markets. We must successfully choose store sites, execute
real estate transactions on terms that are acceptable to us, hire competent personnel and effectively open and operate these new
stores. Our plans to increase our number of retail stores will depend in part on the availability of existing retail stores or store
sites. A lack of available financing on terms acceptable to real estate developers may adversely affect the number or quality of
retail sites available to us, and as a result, adversely affect our growth plans. Furthermore, we incur substantial financial
commitments and fixed costs associated with opening new stores. The success of those stores depends on a number of factors,
including the success of the shopping center where our store is located, consumer demographics and consumer shopping
patterns. These factors cannot be predicted with complete accuracy. If we fail to effectively operate these new stores, or if we
have to close stores locations that are not successful, our financial performance could be adversely affected.
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Omni-channel growth in our business is complex and involves the development of an internal eCommerce platform.
Our business has become increasingly omni-channel so our customers are able to shop online or in-store for a seamless
shopping experience. We have developed, and continue to develop and implement new customer offerings, including ship-
from-store and buy-online, pick-up in-store, which requires substantial investment in technology, information systems,
employees, and management time and resources. Our omni-channel strategy also includes the development of an internal
eCommerce platform. Installing a new eCommerce platform involves integrating a number of information and management
systems from different vendors, increasing supply chain and distribution capabilities, attracting, developing and retaining
qualified personnel, and managing the customer experience. This involves substantial risk, including risk of implementation
delays, cost overruns, technology interruptions, supply and distribution delays, and other issues that can affect the successful
implementation and operation of our internal eCommerce platform. If we are not able to successfully implement and operate
our internal eCommerce platform, our financial performance and future growth could be materially adversely affected.
Unauthorized disclosure of sensitive or confidential customer information could harm the Company's business and standing
with our customers.
The protection of our customer, associate and Company data is critical to us. The Company relies on commercially available
systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer
information, such as payment card and personally identifiable information. Increasing costs associated with information
security - such as increased investment in technology, the costs of compliance with consumer protection laws and costs
resulting from consumer fraud - could negatively impact our business and results of operations. Additionally, the success of our
online operations depends upon the secure transmission of confidential information over public networks, including the use of
cashless payments. While we have taken significant steps to protect customer and confidential information, the intentional or
negligent actions of employees, business associates or third parties may undermine our security measures. As a result,
unauthorized parties may obtain access to our data systems and misappropriate confidential data. There can be no assurance that
advances in computer capabilities, new discoveries in the field of cryptography or other developments will prevent the
compromise of our customer transaction processing capabilities and personal data. Because the techniques used to obtain
unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until
launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
While we have not experienced a material data security breach, any compromise of our data security could result in a violation
of applicable privacy and other laws or standards, significant legal and financial exposure beyond the scope or limits of
insurance coverage, interruption of our operations, increased operating costs associated with remediation, equipment
acquisitions or disposal and added personnel, and a loss of confidence in our security measures, which could harm our business
or investor confidence. Data security breaches may also result from non-technical means, for example, actions by an employee.
Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information could
attract a substantial amount of media attention, damage our reputation, expose us to risk of litigation and liability, disrupt our
operations and harm our business.
Our private brand offerings and new retail concepts expose us to increased costs and certain additional risks.
In addition to brand name products, we offer our customers private brand products that are not available from other retailers.
We expect to continue to grow our exclusive private brand offerings through a combination of brands that we own and brands
that we license from third parties. We also evaluate and operate new retail concepts, including, for example, our Field & Stream
and True Runner concepts. We invest in our development and procurement resources and marketing efforts relating to these
private brand offerings and new retail concepts. There is no assurance that our private brand products or our new retail concepts
will be successful, and we could curtail or abandon any of our private brands or retail concepts at any time. Factors that could
cause us to curtail or abandon one of our private brands or retail concepts include unexpected or increased costs or delays in
development of the brand, demands on management resources, legal or regulatory constraints, change in consumer demands,
preferences and shopping patterns regarding sporting goods, or a determination that the demand does not support the brand.
Additional risks relating to private brand offerings include product liability and product recalls; our ability to successfully
protect our proprietary rights (e.g., defending against counterfeit or otherwise unauthorized goods); our ability to successfully
navigate and avoid claims related to the proprietary rights of third parties; and our ability to successfully administer and comply
with obligations under license agreements that we have with the licensors of brand. If we were to curtail or abandon a private
brand or retail concept, we may be required to write off or incur substantial costs, including impairments of our trademarks,
trade names or other intangible assets, lease termination costs, minimum payments under license agreements, potential costs
related to accompanying litigation, or other costs, which could have a material adverse effect on our business, results of
operations and financial condition.
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We rely on a single third-party provider to maintain and operate certain aspects of our www.DICKS.com operations, and
disruptions with the provider or in the services it provides to us could materially affect our reputation, operations or
financial results.
We have contracted with a single third party to operate and host our DICKS.com eCommerce website and provide related
fulfillment and customer service. We rely on that party's operational, privacy and security procedures and controls to operate
and host our DICKS.com eCommerce business. Failure by such third party to adequately service these aspects of our
DICKS.com eCommerce business could result in a prolonged disruption that affects our customers' ability to utilize our website
or receive product in a timely manner. As a result, we may lose customer sales and / or experience increased costs, which could
materially affect our reputation, operations or financial results.
Our ability to operate and expand our business and to respond to changing business and economic conditions will be
dependent upon the availability of adequate capital. The terms of our senior secured revolving credit facility impose certain
restrictions that may impair our ability to access sufficient capital.
The operation and growth of our business, including opening new stores and expanding our eCommerce business, and our
ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn
depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital. We cannot provide
assurance that our cash flow will be sufficient to meet these needs or that we would be able to obtain equity or debt capital on
acceptable terms or at all. Our current senior secured revolving credit facility contains provisions that limit our ability to incur
additional indebtedness or make substantial asset sales, which might otherwise be used to finance our operations. In the event of
our insolvency, liquidation, dissolution or reorganization, the lenders under our senior secured revolving credit facility would be
entitled to payment in full from our assets before distributions, if any, were made to our stockholders.
If we are unable to generate sufficient cash flows from operations in the future, and if availability under our current senior
secured revolving credit facility is not sufficient, we may have to obtain additional financing. We cannot provide assurance that
we could obtain refinancing or additional financing on favorable terms or at all. Our liquidity or access to capital could also be
adversely affected by unforeseen changes in the financial markets and global economy.
We are subject to costs and risks associated with increased or changing laws and regulations affecting our business,
including those relating to the sale of consumer products and firearms and ammunition.
We operate in a complex regulatory and legal environment that exposes us to compliance and litigation risks that could
materially affect our operations and financial results. These laws may change, sometimes significantly, as a result of political,
economic or social events. Some of the federal, state or local laws and regulations that affect us include those relating to
consumer products, product liability or consumer protection; eCommerce, data protection and privacy; advertisement and
marketing; labor and employment; firearms, ammunition, knives, food items or other regulated products; custom or import; and
intellectual property.
The complexity of the regulatory environment in which we operate and the related cost of compliance are both increasing due
to additional or changing legal and regulatory requirements, our ongoing expansion into new markets and new channels and the
fact that foreign laws occasionally conflict with domestic laws. In addition to potential damage to our reputation and brand,
failure to comply with applicable federal, state and local laws and regulations such as those outlined above may result in our
being subject to claims, lawsuits, fines and adverse publicity that could have a material adverse effect on our business, results of
operations and financial condition.
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We depend on our suppliers, distributors and manufacturers to provide us with sufficient quantities of products in a timely
fashion.
We purchase merchandise from approximately 1,500 vendors. In fiscal 2014, purchases from Nike and Under Armour
represented approximately 19% and 12%, respectively, of our merchandise purchases. Although in fiscal 2014 purchases from
no other vendor represented 10% or more of our total purchases, our dependence on our principal suppliers involves risk. We
generally do not have long-term written contracts with our major suppliers that would require them to continue supplying us
with merchandise. If any of our key vendors fails to supply us with products or continue to develop new products that create
consumer demand, we may not be able to meet the demands of our customers and our revenue could materially decline. If there
is a disruption in supply from a principal supplier or distributor, we may be unable to obtain the merchandise or obtain an
adequate quantity that we desire to sell and that consumers desire to purchase. Moreover, many of our suppliers provide us with
incentives, such as return privileges, volume purchasing allowances and cooperative advertising. A decline or discontinuation of
these incentives could reduce or eliminate our profit margins. Further, to the extent our suppliers are affected by economic
uncertainty and other concerns relating to global economic conditions, there may be an adverse impact with respect to their
respective inventory and production levels, customer incentives and vendor allowances, product quality, or ability to continue
operations, all of which could ultimately have an adverse impact on our supply chain.
We may be subject to various types of litigation and other claims, and our insurance may not be sufficient to cover damages
related to those claims.
From time to time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the ordinary course of
business, including those related to federal or state wage and hour laws, product liability, consumer protection, advertising,
employment, intellectual property, tort, privacy or data protection and other matters.
In addition, although we do not sell assault weapons or automatic firearms, we do sell hunting rifles, semi-automatic hunting
rifles and ammunition, and in some of our stores, including Field & Stream stores, handguns. These are products that are
associated with an increased risk of injury and related lawsuits with respect to our compliance with Bureau of Alcohol,
Tobacco, Firearms and Explosives (ATF) or state laws or regulations. In addition, any improper or illegal use by our customers
of ammunition or firearms sold by us could have a negative impact on our reputation and business.
We may incur losses relating to claims filed against us, including costs associated with defending against such claims, and there
is risk that any such claims or liabilities will exceed our insurance coverage, or affect our ability to retain adequate liability
insurance in the future. Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such
assertions could adversely affect our reputation with our customers. Due to the inherent uncertainties of litigation and other
claims, we cannot accurately predict the ultimate outcome of any such matters.
If our product costs are adversely affected by foreign trade issues, currency exchange rate fluctuations, increasing prices for
raw materials, political instability or other reasons, our sales and profitability may suffer.
A significant portion of the products that we purchase, including those purchased from domestic suppliers, is manufactured
abroad in countries such as China, Taiwan and South Korea. In addition, most of our private brand merchandise is
manufactured abroad. Foreign imports subject us to risk relating to changes in import duties, quotas, loss of "most favored
nation" status with the U.S., shipment delays and shipping port constraints, labor strikes, work stoppages or other disruptions,
freight cost increases and economic uncertainties. In addition, the U.S. government periodically considers other restrictions on
the importation of products obtained by our vendors and us. If any of these or other factors were to cause a disruption of trade
from the countries in which our vendors' supplies or our private brand products' manufacturers are located, our inventory levels
may be reduced or the cost of our products may increase. In addition, to the extent that any foreign manufacturers from whom
we directly or indirectly purchase products utilize labor, environmental, worker safety and other practices that vary from those
commonly accepted in the U.S., we could be hurt by any resulting negative publicity or, in some cases, face potential liability.
Also, the prices charged by foreign manufacturers may be affected by the fluctuation of their local currency against the U.S.
dollar and the price of raw materials, which could cause the cost of our products to increase and negatively impact our sales or
profitability.
15
15
Our inability or failure to protect our intellectual property rights, or any claimed infringement by us of third party
intellectual rights could have a negative impact on our operating results.
Our trademarks, service marks, copyrights, patents, trade secrets, domain names and other intellectual property are valuable
assets that are critical to our success. Effective trademark and other intellectual property protection may not be available in
every country in which our products are manufactured or may be made available. The unauthorized reproduction or other
misappropriation of our intellectual property could diminish the value of our brands or goodwill and cause a decline in our
revenue. In addition, any infringement or other intellectual property claim made against us, whether or not it has merit, could be
time-consuming to address, result in costly litigation, cause product delays, require us to enter into royalty or licensing
agreements or result in our loss of ownership or use of the intellectual property. As a result, any such claim or our failure to
protect our intellectual property could have an adverse effect on our operating results.
Problems with our information system software could disrupt our operations and negatively impact our financial results and
materially adversely affect our business operations.
We utilize a number of third party information systems for core system needs of our business. For example, our Dick's Sporting
Goods stores and Golf Galaxy stores utilize a suite of applications from JDA for our core merchandising, allocation and
replenishment systems. These systems, if not functioning properly, could disrupt our operations, including our ability to track,
record and analyze the merchandise that we sell, process shipments of goods, process financial information or credit card
transactions, deliver products or engage in similar normal business activities. Any material disruption, malfunction or other
similar problems in or with our core information systems could negatively impact our financial results and materially adversely
affect our business operations.
We may be unable to attract, train, engage and retain qualified leaders and associates. Furthermore, the loss of Edward W.
Stack as our key executive, could have a material adverse effect on our business.
The training and development of our future leaders and key personnel is important to our long-term success. If we do not
effectively implement our strategic and business planning processes to attract, retain, train and develop future leaders, our
business may suffer. In addition, stores depend significantly on our ability to hire and retain quality associates, including store
managers and sales associates. We plan to expand our associate base to manage our anticipated growth. The market for non-
entry level personnel, particularly for associates with retail expertise, is highly competitive. Additionally, our ability to maintain
consistency in the quality of customer service in our stores is critical to our success. We are also dependent on the associates
who staff our distribution centers, many of whom are skilled. We may be unable to meet our leadership needs or our labor
needs. If we are unable to train and develop future leaders and key personnel, or hire and retain store-level and distribution
center associates capable of providing a high level of customer service, our business could be materially adversely affected.
Furthermore, our success depends on continued service from Edward W. Stack, our Chairman and Chief Executive Officer, who
has been operating the Company since 1984. Mr. Stack possesses detailed and in-depth knowledge of the issues, opportunities
and challenges facing the Company and the industry. If we were to lose Mr. Stack, our business could be materially adversely
affected.
We rely on four distribution centers, and if there is a natural disaster or other serious disruption at one or more of these
facilities, we may lose merchandise and be unable to effectively deliver it to our stores.
We currently operate a 914,000 square foot distribution center near Atlanta, Georgia, a 725,000 square foot distribution center
in Plainfield, Indiana, a 601,000 square foot distribution center in Smithton, Pennsylvania and a 624,000 square foot
distribution center in Goodyear, Arizona. Any natural disaster or other serious disruption to one of these facilities due to fire,
tornado or any other cause could damage a material portion of our inventory, impair our ability to adequately stock our stores
and process returns of products to vendors, and could negatively affect our sales and profitability. In addition, as we grow, we
may require additional distribution capacity, which could come in the form of expanding existing facilities or opening
alternative or additional facilities. Any future expansions or other openings could affect us in ways we cannot predict.
16
16
Poor performance of professional sports teams within our core regions of operation, as well as professional team lockouts or
strikes, retirement of sports superstars or scandals involving sports superstars could adversely affect our financial results.
We sell a significant amount of professional sports team merchandise, the sale of which may be subject to fluctuations based on
the success or failure of such teams. The poor performance by the professional sports teams within our core regions of
operations, as well as professional team lockouts and strikes, could cause our financial results to fluctuate accordingly year over
year. In addition, to the extent we use sports superstars to market our products and advertise our stores, or we sell merchandise
branded by one or more sports superstars, the retirement of such individuals or scandals in which they may be implicated could
negatively impact our financial results.
The relative seasonality of our operations, along with the current geographic concentrations of our Dick's stores, exposes us
to certain risks.
Our business is seasonal based on sports seasons. Furthermore, a majority of our Dick's Sporting Goods stores are located in the
eastern half of the United States, which exposes us to various regional risks, including those relating to weather conditions.
Many of our stores are located in geographic areas that experience seasonably cold weather, and we sell a significant amount of
cold weather sporting goods and apparel. Our highest sales and operating income results historically occur during our fourth
fiscal quarter, which is due, in part, to the holiday selling season and, in part, to our strong sales of cold weather sporting goods
and apparel. Abnormally warm weather conditions could reduce our sales of these items and cause a decrease in our
profitability. The fourth quarter generated approximately 32% of our net sales for fiscal 2014. Poor performance during our
fourth quarter, whether because of a slow holiday selling season, unseasonable weather conditions, economic conditions or
otherwise, could have a material adverse effect on our business, financial condition and operating results for the entire fiscal
year. Additionally, abnormally wet or cold weather in the spring or summer months could reduce our sales of golf, team sports
or other merchandise and cause a decrease in our profitability.
We may pursue strategic acquisitions or investments and the failure of an acquisition or investment to produce the
anticipated results or the inability to fully integrate the acquired companies could have an adverse impact on our business.
We may from time to time acquire or invest in complementary companies or businesses. The success of such acquisitions or
investments is based on our ability to make accurate assumptions regarding the valuation, operations, growth potential,
integration and other factors relating to the respective business. There can be no assurance that our acquisitions or investments
will produce the results that we expect at the time we enter into or we complete the transaction. For example, we may not be
able to capitalize on previously anticipated synergies. Furthermore, acquisitions may result in dilutive issuances of our equity
securities, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or other intangibles, any
of which could harm our financial condition. We also may not be able to successfully integrate operations that we acquire,
including their personnel, financial systems, supply chain and other operations, which could adversely affect our business.
Acquisitions may also result in the diversion of our capital and our management's attention from other business issues and
opportunities.
We are controlled by our Chairman and Chief Executive Officer and his relatives, whose interests may differ from other
stockholders.
We have two classes of common stock: our common stock has one vote per share and our Class B common stock has 10 votes
per share. As of January 31, 2015, Mr. Edward W. Stack, our Chairman and Chief Executive Officer, and his relatives controlled
a majority of the combined voting power of our common stock and Class B common stock and would control the outcome of a
vote on any corporate transaction or other matter submitted to our stockholders for approval, including mergers, consolidations
and the sale of all or substantially all of our assets. The interests of Mr. Stack and his relatives may differ from the interests of
our other stockholders and they may take actions with which our other stockholders disagree.
17
17
Our anti-takeover provisions could prevent or delay a change in control of our Company, even if such change in control
would be beneficial to our stockholders.
Provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws as well as provisions
of Delaware law could discourage, delay or prevent a merger, acquisition or other change in control of our Company, even if
such change in control would be beneficial to our stockholders. These provisions include: authorizing the issuance of Class B
common stock; classifying the Board of Directors such that only one-third of directors are elected each year; authorizing the
issuance of "blank check" preferred stock that could be issued by our Board of Directors to increase the number of outstanding
shares and thwart a takeover attempt; prohibiting the use of cumulative voting for the election of directors; if our Class B
common stock is no longer outstanding, prohibiting stockholder action by partial written consent and requiring all stockholder
actions to be taken at a meeting of our stockholders or by unanimous written consent; and establishing advance notice
requirements for nominations for election to the Board of Directors or for proposing matters that can be acted upon by
stockholders at stockholder meetings.
In addition, the Delaware General Corporation Law, to which we are subject, prohibits us, except under specified
circumstances, from engaging in any mergers, significant sales of stock or assets or business combinations with any stockholder
or group of stockholders who owns 15% or more of our common stock.
We cannot provide any guaranty of future dividend payments or that we will continue to repurchase our common stock
pursuant to our stock repurchase program.
Although our Board of Directors has indicated an intention to pay future quarterly cash dividends on our common stock, any
determination to pay cash dividends on our common stock in the future will be based primarily upon our financial condition,
results of operations, business requirements, and the continuing determination from our Board of Directors that the declaration
of dividends is in the best interests of our stockholders and is in compliance with all laws and agreements applicable to the
dividend. Furthermore, although we have authorized a five-year $1 billion share repurchase program, we are not obligated to
make any purchases under the program and we may discontinue it at any time.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
On May 7, 2012, the Company purchased its corporate headquarters building in Coraopolis, Pennsylvania, pursuant to a
purchase option included in its pre-existing lease agreement. The Company is a direct tenant of the Allegheny County Airport
Authority pursuant to an underlying ground lease. The property consists of approximately 670,000 square feet of office space.
On November 1, 2013, the Company entered into an additional ground lease with the Allegheny County Airport Authority for
the future expansion of its corporate headquarters, adjacent to its current headquarters location. The lease provides the
Company with an additional 89 acres for expansion.
We currently lease a 914,000 square foot distribution center near Atlanta, Georgia, a 725,000 square foot distribution center in
Plainfield, Indiana and a 601,000 square foot distribution center in Smithton, Pennsylvania. The terms of these leases expire in
2026, 2022 and 2025, respectively. The Company also owns and operates a 624,000 square foot distribution center in Goodyear,
Arizona.
We lease all of our stores. Initial lease terms are generally for 10 years, and most leases contain multiple five-year renewal
options and rent escalation provisions. We believe that our leases, when entered into, are at market rate rents. We generally
select a new store site nine to 18 months before its opening. Our stores are primarily located in shopping centers in regional
shopping areas, as well as in freestanding locations and malls.
18
18
As of January 31, 2015, we operated 694 stores in 46 states. The following table sets forth the number of stores by state:
State
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Dick's
Sporting
Goods
Specialty
Store
Concepts (1)
Total
11
7
3
38
13
10
3
32
18
3
24
19
5
10
12
7
4
15
18
23
9
6
14
3
1
5
18
3
38
31
38
8
9
38
2
12
1
14
22
5
2
27
6
6
9
1
603
—
—
—
2
2
1
1
3
—
1
6
1
1
1
2
—
—
3
2
1
4
—
3
1
2
—
4
—
6
7
9
2
—
10
—
—
—
1
6
1
—
4
—
—
4
—
91
11
7
3
40
15
11
4
35
18
4
30
20
6
11
14
7
4
18
20
24
13
6
17
4
3
5
22
3
44
38
47
10
9
48
2
12
1
15
28
6
2
31
6
6
13
1
694
(1)
Includes the Company's 78 Golf Galaxy, 10 Field & Stream and three True Runner stores.
19
19
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various proceedings that are incidental to the normal course of their
businesses. As of the date of this report, the Company does not expect that any of such proceedings will have a material adverse
effect on the Company's financial position or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION AND DIVIDEND POLICY
The shares of Dick's Sporting Goods, Inc. common stock are listed and traded on the New York Stock Exchange ("NYSE")
under the symbol "DKS". The Company also has shares of Class B common stock outstanding, which are not listed or traded on
any stock exchange or other market. Shares of our Class B common stock can be converted on a one-for-one basis to shares of
our common stock at any time at the holder's option and are automatically converted upon certain events. The following table
shows the quarterly high and low closing sale prices per share of the Company's common stock as reported by the NYSE for
each quarter during the last two fiscal years and the quarterly cash dividend declared per share of our common stock during the
periods indicated:
Fiscal Quarter Ended
May 3, 2014
August 2, 2014
November 1, 2014
January 31, 2015
Fiscal Quarter Ended
May 4, 2013
August 3, 2013
November 2, 2013
February 1, 2014
High
Low
$
$
$
$
$
$
$
$
57.26
53.16
46.37
55.65
High
50.98
53.20
53.90
58.58
$
$
$
$
$
$
$
$
Dividend (a)
0.125
0.125
0.125
0.125
50.17
42.12
41.90
43.97
$
$
$
$
Low
45.11
49.25
46.24
50.88
Dividend (b)
0.125
$
0.125
$
0.125
$
0.125
$
(a) Quarterly cash dividend of $0.125 per share of common stock and Class B common stock paid on March 28, 2014,
June 27, 2014, September 26, 2014 and December 26, 2014 to stockholders of record on March 7, 2014, June 6, 2014,
September 5, 2014 and December 5, 2014, respectively.
(b) Quarterly cash dividend of $0.125 per share of common stock and Class B common stock paid on March 29, 2013,
June 28, 2013, September 27, 2013 and December 27, 2013 to stockholders of record on March 8, 2013, June 7, 2013,
September 6, 2013 and December 6, 2013, respectively.
The number of holders of record of shares of the Company's common stock and Class B common stock as of March 23, 2015
was 271 and 25, respectively.
The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such
future dividends are subject to the final determination of the Board of Directors, and will be dependent upon future earnings,
cash flows, financial requirements and other factors.
20
20
ISSUER PURCHASES OF EQUITY SECURITIES
The following table sets forth information with respect to common stock repurchases made during the three months ended
January 31, 2015:
Total
Number of
Shares
Purchased (a)
607
$
— $
897
1,504
$
$
Average
Price Paid
Per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (b)
Dollar Value of
Shares That May
Yet be Purchased
Under the Plan or
Program
45.69
—
49.67
48.06
— $
— $
— $
—
544,397,638
544,397,638
544,397,638
Period
November 2, 2014 to November 29, 2014
November 30, 2014 to January 3, 2015
January 4, 2015 to January 31, 2015
Total
(a)
Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting
of restricted stock during the period.
(b) Shares repurchased as part of the Company's previously announced five-year $1 billion share repurchase program,
authorized by the Board of Directors on March 7, 2013.
The information set forth under Part III, Item 12. "Security Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters" is incorporated herein.
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data for fiscal years 2014, 2013, 2012, 2011 and 2010 presented below under the captions
"Statement of Income Data", "Per Common Share Data", "Other Data" and "Balance Sheet Data" have been derived from our
Consolidated Financial Statements for those periods. The selected consolidated financial data for fiscal years 2014, 2013, 2012,
2011 and 2010 presented below under the caption "Store Data" have been derived from internal records of our operations.
Our fiscal year consists of 52 or 53 weeks, ends on the Saturday nearest to the last day in January and is referenced by the
calendar year ending closest to that date. All fiscal years presented include 52 weeks of operations except fiscal 2012, which
included 53 weeks.
21
21
The information set forth below should be read in conjunction with other sections of this Annual Report on Form 10-K
including Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our
Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K.
Statement of Income Data:
Net sales
Cost of goods sold (1)
Gross profit
Selling, general and administrative
expenses (2)
Pre-opening expenses
Income from operations
Impairment of available-for-sale
investments (3)
Gain on sale of investment (4)
Interest expense (5)
Other (income) expense (6)
Income before income taxes
Provision for income taxes
Net income
Per Common Share Data:
Earnings per common share - Basic
Earnings per common share - Diluted
Dividends declared per common share (7)
Weighted average common shares
outstanding:
Basic
Diluted
Store Data:
Same store sales increase (8)
Number of stores at end of period (9)
Total square footage at end of period (9)
Net sales per square foot (10)
Other Data:
Gross profit margin
Selling, general and administrative expenses
as a percentage of net sales
Operating margin
Inventory turnover (11)
Depreciation and amortization
Balance Sheet Data:
Inventories, net
Working capital (12)
Total assets
Total debt including capital and financing
lease obligations (5)
Retained earnings
Total stockholders' equity
2014
2013
Fiscal Year
2012
2011
2010
(Dollars in thousands, except per share and per square foot data)
$
6,814,479
$
6,213,173
$
5,836,119
$
5,211,802
$
4,871,492
4,727,813
2,086,666
4,269,223
1,943,950
3,998,956
1,837,163
3,616,921
1,594,881
3,422,462
1,449,030
1,502,089
1,386,315
1,297,413
1,148,268
1,129,293
30,518
554,059
—
—
3,215
(5,170)
556,014
211,816
344,198
2.89
2.84
0.50
$
$
$
$
20,823
536,812
—
—
2,929
(12,224)
546,107
208,509
337,598
2.75
2.69
0.50
$
$
$
$
16,076
523,674
32,370
—
6,034
(4,555)
489,825
199,116
290,709
2.39
2.31
2.50
$
$
$
$
14,593
432,020
—
(13,900)
13,868
26
432,026
168,120
263,906
2.19
2.10
0.50
$
$
$
$
10,488
309,249
—
—
14,016
(2,278)
297,511
115,434
182,077
1.57
1.50
—
$
$
$
$
119,244
121,238
122,878
125,628
121,629
125,995
120,232
125,768
116,236
121,724
2.4%
694
1.9%
642
4.3%
601
2.0%
561
7.2%
525
34,245,885
31,621,488
29,587,733
27,596,140
25,889,771
$
185
$
186
$
193
$
187
$
185
30.6%
22.0%
8.1%
3.10x
31.3%
22.3%
8.6%
3.18x
31.5%
22.2%
9.0%
3.33x
30.6%
22.0%
8.3%
3.37x
29.7%
23.2%
6.3%
3.39x
$
$
$
$
$
$
$
179,431
1,390,767
731,551
3,436,198
6,450
1,471,182
1,832,225
$
$
$
$
$
$
$
154,928
1,232,065
617,484
3,071,487
7,375
1,187,514
1,692,179
$
$
$
$
$
$
$
125,096
1,096,186
595,121
2,887,807
16,275
911,704
1,587,324
$
$
$
$
$
$
$
116,581
1,014,997
928,247
2,996,452
159,022
932,871
1,632,745
$
$
$
$
$
$
$
110,394
896,895
715,787
2,597,536
140,841
730,468
1,363,581
22
22
(1) Cost of goods sold includes the cost of merchandise, vendor allowances, inventory shrinkage and obsolescence,
freight, distribution, shipping and store occupancy costs. The Company defines merchandise margin as net sales less
the cost of merchandise sold. The cost of merchandise includes product costs paid to the vendor, including items such
as purchase discounts and vendor chargebacks, as well as inventory write-downs for the lower of cost or market. Store
occupancy costs include rent, common area maintenance charges, real estate and other asset-based taxes, store
maintenance, utilities, depreciation, fixture lease expenses and certain insurance expenses. The cost of merchandise for
fiscal 2014 includes a $2.4 million write-down of golf-related inventory relating to the Company's golf restructuring.
(2) Selling, general and administrative expenses for fiscal 2010 included $16.4 million relating to future lease obligations
and asset impairment charges resulting from the closure of 12 underperforming Golf Galaxy stores and $10.8 million
relating to litigation settlement costs. Selling, general and administrative expenses for fiscal 2011 included a
$2.1 million expense reduction relating to the partial reversal of previously accrued litigation settlement costs. Selling,
general and administrative expenses for fiscal 2013 included $7.9 million related to a non-cash impairment charge to
reduce the carrying value of a Gulfstream G450 corporate aircraft held for sale to fair market value. Selling, general
and administrative expenses for fiscal 2014 includes a $14.4 million gain on sale of a Gulfstream G650 corporate
aircraft and asset impairment and severance charges relating to the Company's golf restructuring of $14.3 million and
$3.7 million, respectively.
(3)
Impairment of available-for-sale investments reflects the Company's impairment of its investment in JJB Sports, plc
("JJB Sports").
(4) Gain on sale of investment reflects the sale of the Company's available-for-sale securities in GSI Commerce, Inc.
(5)
(6)
Interest expense in fiscal 2010, 2011 and 2012 included rent payments under the Company's financing lease obligation
for its corporate headquarters building, which the Company purchased in fiscal 2012 for $133.4 million, including
closing costs. The Company's payment to purchase the building is reflected as a payment of its financing lease
obligation in fiscal 2012.
Includes investment income recognized to reflect changes in deferred compensation plan investment values with a
corresponding charge to selling, general and administrative expenses for the same amount. During fiscal 2013, the
Company recorded $4.3 million related to the partial recovery of its previously impaired investment in JJB Sports,
which is reflected herein.
(7) Dividends declared per common share in fiscal 2011 represent the Company's first dividend of $0.50 per share of
common stock and Class B common stock. Dividends declared per common share in fiscal 2012 and thereafter
represent quarterly dividends of $0.125 per share of common stock and Class B common stock. Fiscal 2012 included a
special cash dividend of $2.00 per share of common stock and Class B common stock.
(8) A store is included in the same store sales calculation in the same fiscal period that it commences its 14th full month of
operations. Stores that were closed or relocated during the applicable period have been excluded from same store sales.
Each relocated store is returned to the same store sales base in the fiscal period that it commences its 14th full month of
operations at that new location. The same store sales calculation for fiscal 2012 excluded sales during the 53rd week.
(9)
Includes Dick's Sporting Goods, Golf Galaxy, Field & Stream and True Runner stores.
(10) Calculated using net sales and gross square footage of all stores open at both the beginning and the end of the period,
excluding eCommerce sales. Gross square footage includes the storage, receiving and office space that generally
occupies approximately 17% of total store space in our Dick's Sporting Goods stores.
(11) Calculated as cost of goods sold divided by the average monthly ending inventories of the last 13 months.
(12) Defined as current assets less current liabilities.
23
23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with Part II, Item 6, "Selected Financial Data" and our
Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This Annual
Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. See "Forward-Looking Statements" and Part I, Item 1A. "Risk Factors".
Overview
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 associates, in-store services and unique specialty
shop-in-shops.
As of January 31, 2015, we operated 603 Dick's Sporting Goods stores in 46 states, 78 Golf Galaxy stores in 29 states and 10
Field & Stream stores in five states, with approximately 34.2 million square feet on a consolidated basis, the majority of which
are located throughout the eastern half of the United States. We also operate eCommerce websites at www.DICKS.com and
www.golfgalaxy.com.
The primary factors that have historically influenced the Company's profitability and success have been the growth in its
number of stores and selling square footage, positive same store sales and strong gross profit margins. For example, in the last
five years, the Company has grown from 419 Dick's Sporting Goods stores at the end of fiscal 2009 to 603 Dick's Sporting
Goods stores at the end of fiscal 2014.
As a complement to the Company's store growth, the Company has also grown its eCommerce business year-over-year. Over
the past three years, the Company has innovated its eCommerce sites, with enhancements in the customer experience, new
releases of its mobile and tablet sites, and development of capabilities that integrate the Company's online presence with its
brick and mortar stores, including ship-from-store; buy-online, pick-up in-store; return-to-store and multi-faceted marketing
campaigns that are consistent across our stores and our eCommerce websites.
The Company's store network remains fundamental to the strength of its omni-channel platform, and it continues to expand its
presence through the opening of new stores. The Company believes it has the potential to reach approximately 1,100 Dick's
Sporting Goods locations, including smaller-market locations across the United States. The Company believes the expansion of
its store network will also drive growth in eCommerce sales as the Company continues to deliver an omni-channel shopping
experience for its customers.
The Company's senior management focuses on certain key indicators to monitor the Company's performance including:
• Consolidated same store sales performance – Same store sales provide a measure of sales growth for stores open at
least one year over the comparable prior year period and sales completed on our eCommerce websites. A store is
included in the same store sales calculation in the same fiscal period that it commences its 14th full month of
operations. Stores that were closed or relocated during the applicable period have been excluded from same store sales.
Each relocated store is returned to the same store sales base in the fiscal period that it commences its 14th full month of
operations at that new location. Our management considers same store sales to be an important indicator of our current
performance. Same store sales results are important to leverage our costs, which include occupancy costs, store payroll
and other store expenses. Same store sales also have a direct impact on our total net sales, cash and working capital.
See further discussion of the Company's same store sales in the "Results of Operations" section herein.
• Operating cash flow – Cash flow generation supports the general operating needs of the Company and funds capital
expenditures related to its omni-channel platform, distribution and administrative facilities, costs associated with
continued improvement of information technology tools, costs associated with potential strategic acquisitions or
investments that may arise from time to time and stockholder return initiatives, including cash dividends and share
repurchases. We typically generate significant positive operating cash flows and proportionately higher net income
levels in our fiscal fourth quarter in connection with the holiday selling season. See further discussion of the
Company's cash flows in the "Liquidity and Capital Resources" section herein.
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24
• Quality of merchandise offerings – To measure acceptance of its merchandise offerings, the Company monitors sell-
throughs, inventory turns, gross margins and markdown rates on a department and style level. This analysis helps the
Company manage inventory levels to reduce cash flow requirements and deliver optimal gross margins by improving
merchandise flow and establishing appropriate price points to minimize markdowns.
•
Store productivity – To assess store-level performance, the Company monitors various indicators, including new store
productivity, sales per square foot, store operating contribution margin and store cash flow.
Executive Summary
• Net income for the 52 weeks ended January 31, 2015 increased 2% to $344.2 million, or $2.84 per diluted share, as
compared to net income of $337.6 million, or $2.69 per diluted share, during the 52 weeks ended February 1, 2014.
•
•
Fiscal 2014 net income includes $8.7 million, net of tax, or $0.07 per diluted share, related to a gain on the sale of
a Gulfstream G650 corporate aircraft and charges totaling $12.2 million, net of tax, or $0.10 per diluted share,
related to the Company's golf restructuring.
Fiscal 2013 net income included $4.3 million, net of tax, or $0.03 per diluted share, related to the partial recovery
from the Company's previously impaired investment in JJB Sports and $4.7 million, net of tax, or $0.04 per
diluted share, related to a non-cash impairment charge to reduce the carrying value of a Gulfstream G450
corporate aircraft held for sale to fair market value.
• Net sales increased 10% to $6,814.5 million in fiscal 2014 from $6,213.2 million in fiscal 2013 due primarily to a
2.4% increase in consolidated same store sales and the growth of our store network.
•
eCommerce sales penetration in fiscal 2014 increased to 9.2% of total sales compared to 7.9% in fiscal 2013.
• Gross profit decreased to 30.62% in fiscal 2014 as a percentage of net sales from 31.29% in fiscal 2013 due primarily
to lower merchandise margins and higher shipping expenses, partially offset by occupancy leverage.
•
In fiscal 2014, the Company:
• Opened 46 new Dick's Sporting Goods stores, one new Golf Galaxy store and eight new Field & Stream stores.
The Company also relocated five Dick's Sporting Goods stores and two Golf Galaxy stores, remodeled five Dick's
Sporting Goods stores and closed one Dick's Sporting Goods store and two Golf Galaxy stores.
• Declared and paid aggregate cash dividends of $0.50 per share of common stock and Class B common stock.
• Repurchased approximately 4.3 million shares of common stock for $200.0 million.
•
Purchased the intellectual property rights to the Field & Stream mark in product categories that were not
otherwise owned by the Company, including men's, women's and children's casual apparel, for $26.3 million.
• Ended the period with no outstanding borrowings under our revolving senior secured credit facility (the "Credit
Agreement").
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25
Results of Operations
The following table presents for the periods indicated selected items in the Consolidated Statements of Income as a percentage
of the Company's net sales, as well as the basis point change in percentage of net sales from the prior year:
2014
Fiscal Year
2013
2012 (A)
Basis Point
Increase /
(Decrease) in
Percentage of Net
Sales from Prior
Year
2014 - 2013
100.00%
100.00%
100.00%
N/A
Basis Point
Increase /
(Decrease) in
Percentage of Net
Sales from Prior
Year
2013 - 2012 (A)
N/A
69.38
30.62
22.04
0.45
8.13
—
0.05
(0.08)
8.16
3.11
68.71
31.29
22.31
0.34
8.64
—
0.05
(0.20)
8.79
3.36
68.52
31.48
22.23
0.28
8.97
0.55
0.10
(0.08)
8.39
3.41
67
(67)
(27)
11
(51)
—
—
12
(63)
(25)
(38)
19
(19)
8
6
(33)
(55)
(5)
(12)
40
(5)
45
Net sales (1)
Cost of goods sold, including
occupancy and distribution
costs (2)
Gross profit
Selling, general and administrative
expenses (3)
Pre-opening expenses (4)
Income from operations
Impairment of available-for-sale
investments (5)
Interest expense (6)
Other income (7)
Income before income taxes
Provision for income taxes
Net income
5.05%
5.43%
4.98%
(A) Column does not add due to rounding.
(1) Revenue from retail sales is recognized at the point of sale, net of sales tax. Revenue from eCommerce sales is
recognized upon shipment of merchandise. Service-related revenue is recognized as the services are performed. A
provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the
period that the related sales are recorded. Revenue from gift cards and returned merchandise credits (collectively the
"cards") are deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income
from unredeemed cards is recognized on the Consolidated Statements of Income within selling, general and
administrative expenses at the point at which redemption becomes remote. The Company performs an evaluation of
the aging of the unredeemed cards, based on the elapsed time from the date of original issuance, to determine when
redemption becomes remote.
(2) Cost of goods sold includes the cost of merchandise, vendor allowances, inventory shrinkage and obsolescence,
freight, distribution, shipping and store occupancy costs. The Company defines merchandise margin as net sales less
the cost of merchandise sold. The cost of merchandise includes product costs paid to the vendor, including items such
as purchase discounts and vendor chargebacks, as well as inventory write-downs for the lower of cost or market. Store
occupancy costs include rent, common area maintenance charges, real estate and other asset-based taxes, store
maintenance, utilities, depreciation, fixture lease expenses and certain insurance expenses. The cost of merchandise for
the 52 weeks ended January 31, 2015 includes a $2.4 million write-down of golf-related inventory relating to the
Company's golf restructuring.
26
26
(3) Selling, general and administrative expenses include store and field support payroll and fringe benefits, advertising,
bank card charges, information systems, marketing, legal, accounting, other store expenses and all expenses associated
with operating the Company's corporate headquarters. Selling, general and administrative expenses for the 52 weeks
ended January 31, 2015 includes a $14.4 million gain on sale of a Gulfstream G650 corporate aircraft in addition to
asset impairment and severance charges relating to the Company's golf restructuring of $14.3 million and $3.7 million,
respectively. Selling, general and administrative expenses for the 52 weeks ended February 1, 2014 included $7.9
million relating to a non-cash impairment charge to reduce the carrying value of a Gulfstream G450 corporate aircraft
held for sale to fair market value.
(4) Pre-opening expenses consist primarily of rent, marketing, payroll and recruiting costs incurred prior to a new or
relocated store opening which are expensed as incurred.
(5)
(6)
(7)
Impairment of available-for-sale investments reflects the Company's impairment of its investment in JJB Sports.
Interest expense for the 53 weeks ended February 2, 2013 included rent payments under the Company's financing lease
obligation for its corporate headquarters building, which the Company purchased on May 7, 2012.
Includes investment income recognized to reflect changes in deferred compensation plan investment values with a
corresponding charge to selling, general and administrative costs for the same amount. During the 52 weeks ended
February 1, 2014, other income included $4.3 million related to the partial recovery of its previously impaired
investment in JJB Sports.
Fiscal 2014 (52 weeks) Compared to Fiscal 2013 (52 weeks)
Net Income
The Company reported net income for the year ended January 31, 2015 of $344.2 million, or $2.84 per diluted share, as
compared to net income of $337.6 million, or $2.69 per diluted share, in fiscal 2013. Fiscal 2014 net income includes $8.7
million, net of tax, or $0.07 per diluted share, related to a gain on the sale of a Gulfstream G650 corporate aircraft and charges
totaling $12.2 million, net of tax, or $0.10 per diluted share, related to the Company's golf restructuring. Fiscal 2013 net income
included $4.3 million, net of tax, or $0.03 per diluted share, related to the partial recovery from the Company's previously
impaired investment in JJB Sports and $4.7 million, net of tax, or $0.04 per diluted share, related to a non-cash impairment
charge to reduce the carrying value of a Gulfstream G450 corporate aircraft held for sale to fair market value.
Net Sales
Net sales increased 10% to $6,814.5 million in fiscal 2014 from $6,213.2 million in fiscal 2013 due primarily to a 2.4%
increase in consolidated same store sales and the growth of our store network. The 2.4% increase in consolidated same store
sales contributed $146.4 million of the increase in net sales for fiscal 2014. The remaining $454.9 million increase in the
Company's noncomparable sales is primarily attributable to new stores. The 2.4% increase in consolidated same store sales
consisted of a 3.1% increase at Dick's Sporting Goods and a 9.2% decrease at Golf Galaxy. eCommerce sales penetration was
9.2% of total sales during the current period compared to 7.9% of total sales during fiscal 2013, representing an approximate
increase of 28% in eCommerce sales across both Dick's Sporting Goods and Golf Galaxy.
The increase in consolidated same store sales was primarily driven by increases across most of our apparel, hardlines and
footwear categories, with the exception of the golf and hunting businesses. The same store sales increase at Dick's Sporting
Goods was driven by an increase in sales per transaction of approximately 1.9% and an increase in transactions of
approximately 1.2%. Based upon our fiscal 2014 sales mix, every 1% change in consolidated same store sales, which consists
of both brick and mortar and eCommerce sales, would impact earnings before income taxes for fiscal 2014 by approximately
$20.6 million.
Store Count
During fiscal 2014, the Company opened 46 new Dick's Sporting Goods stores, one new Golf Galaxy store and eight new Field
& Stream stores. Additionally, the Company relocated five Dick's Sporting Goods stores and two Golf Galaxy stores,
remodeled five Dick's Sporting Goods stores, and closed one Dick's Sporting Goods store and two Golf Galaxy stores. As of
January 31, 2015, the Company operated 603 Dick's Sporting Goods stores in 46 states, 78 Golf Galaxy stores in 29 states, 10
27
27
Field & Stream stores in five states and three True Runner stores in three states, totaling approximately 34.2 million square feet
on a consolidated basis.
Income from Operations
Income from operations increased $17.3 million to $554.1 million in fiscal 2014 from $536.8 million in fiscal 2013.
Gross profit increased 7% to $2,086.7 million in fiscal 2014 from $1,944.0 million in fiscal 2013, but decreased as a percentage
of net sales by 67 basis points compared to fiscal 2013. The decline in the gross profit rate was driven by a decrease in
merchandise margin of 58 basis points and an increase in shipping expenses of 17 basis points in fiscal 2014 compared to fiscal
2013. During fiscal 2014, the decrease in merchandise margin was primarily driven by higher promotional activity, partially
offset by changes in sales mix to higher margin categories, as discussed above. The increase in shipping expenses during fiscal
2014 was the result of the growth and increased penetration of eCommerce sales as compared to the Company's total net sales.
The decline in the gross profit rate was partially offset by leverage in occupancy costs, which decreased 10 basis points as a
percentage of net sales. Though overall occupancy costs increased $62.3 million from fiscal 2013, these costs decreased as a
percentage of net sales as occupancy costs increased at a lower rate than the 10% increase in net sales during fiscal 2014. Every
10 basis point change in merchandise margin would impact earnings before income taxes for fiscal 2014 by approximately $6.8
million.
Selling, general and administrative expenses increased approximately 8% to $1,502.1 million in fiscal 2014 from $1,386.3
million in fiscal 2013, but decreased as a percentage of net sales by 27 basis points. Fiscal 2014 includes (i) a pre-tax gain on
the sale of a Gulfstream G650 corporate aircraft of $14.4 million, (ii) severance charges totaling $3.7 million and (iii) non-cash
impairment charges totaling $14.3 million related to the Company's golf restructuring. Fiscal 2013 included a $7.9 million non-
cash impairment charge to reduce the carrying value of a Gulfstream G450 corporate aircraft held for sale to fair market value.
Apart from the enumerated items, the year over year change in selling, general and administrative expenses as a percentage of
net sales is due primarily to lower administrative payroll and related benefit costs, which increased in fiscal 2014 by $6.1
million from fiscal 2013 but decreased as a percentage of net sales by 20 basis points.
Pre-opening expenses increased to $30.5 million in fiscal 2014 from $20.8 million in fiscal 2013. Pre-opening expenses in any
period fluctuate depending on the timing and number of store openings and relocations. During fiscal 2014, the Company
opened 46 new Dick's Sporting Goods stores, one new Golf Galaxy store and eight new Field & Stream stores. Additionally, the
Company relocated five Dick's Sporting Goods stores and two Golf Galaxy stores in the current year. During fiscal 2013, the
Company opened 40 new Dick's Sporting Goods stores, one new Golf Galaxy store, two new Field & Stream stores and one
new True Runner store and relocated one Dick's Sporting Goods store and repositioned one Golf Galaxy store.
Income Taxes
The Company's effective tax rate was 38.1% for fiscal 2014 as compared to 38.2% for fiscal 2013.
Fiscal 2013 (52 weeks) Compared to Fiscal 2012 (53 weeks)
Net Income
The Company reported net income for the year ended February 1, 2014 of $337.6 million, or $2.69 per diluted share, as
compared to net income of $290.7 million, or $2.31 per diluted share, in fiscal 2012. Fiscal 2013 net income included $4.3
million, net of tax, or $0.03 per diluted share, related to the partial recovery from the Company's previously impaired
investment in JJB Sports and $4.7 million, net of tax, or $0.04 per diluted share, related to a non-cash impairment charge to
reduce the carrying value of a Gulfstream G450 corporate aircraft held for sale to fair market value. Fiscal 2012 net income
included a charge of $27.6 million, net of tax, or $0.22 per diluted share, related to the Company's impairment of its investment
in JJB Sports. Additionally, fiscal 2012 included approximately $0.03 per diluted share for the 53rd week.
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28
Net Sales
Net sales increased 6% to $6,213.2 million in fiscal 2013 from $5,836.1 million in fiscal 2012 due primarily to a 1.9% increase
in consolidated same store sales and the growth of our store network. The 1.9% increase in consolidated same store sales on a
52-week to 52-week basis contributed $104.9 million of the increase in revenue for fiscal 2013. The remaining $272.2 million
increase in the Company's noncomparable sales was primarily attributable to new stores, partially offset by the inclusion of the
53rd week of sales in fiscal 2012. Sales during the 53rd week of fiscal 2012 totaled approximately $74 million. The 1.9%
consolidated same store sales increase consisted of a 2.4% increase at Dick's Sporting Goods and a 7.1% decrease at Golf
Galaxy. eCommerce sales penetration was 7.9% of total sales during fiscal 2013 compared to 5.3% of total sales during the 53
weeks ended February 2, 2013, representing an approximate increase of 59% in eCommerce sales across both Dick's Sporting
Goods and Golf Galaxy.
The increase in consolidated same store sales was broad based, with larger increases in athletic apparel, athletic footwear and
outdoor apparel and cold weather accessories, partially offset by declines in the golf, fitness and outdoor equipment categories.
The same store sales increase at Dick's Sporting Goods was driven by an increase in sales per transaction of approximately
1.8% and an increase in transactions of approximately 0.6%. Based upon our fiscal 2013 sales mix, every 1% change in
consolidated same store sales, which consists of both brick and mortar and eCommerce sales, would have impacted earnings
before income taxes for fiscal 2013 by approximately $18.9 million.
Store Count
During fiscal 2013, the Company opened 40 new Dick's Sporting Goods stores, one new Golf Galaxy store, two new Field &
Stream stores and one new True Runner store. Additionally, the Company relocated one Dick's Sporting Goods store,
repositioned one Golf Galaxy store and closed three underperforming Golf Galaxy stores. As of February 1, 2014, the Company
operated 558 Dick's Sporting Goods stores in 46 states, 79 Golf Galaxy stores in 29 states, two Field & Stream stores in two
states and three True Runner stores in three states, totaling approximately 31.6 million square feet on a consolidated basis.
Income from Operations
Income from operations increased $13.1 million to $536.8 million in fiscal 2013 from $523.7 million in fiscal 2012.
Gross profit increased 6% to $1,944.0 million in fiscal 2013 from $1,837.2 million in fiscal 2012, but decreased as a percentage
of net sales by 19 basis points compared to fiscal 2012. Occupancy costs increased $62.8 million from fiscal 2012, and
increased as a percentage of net sales by 34 basis points. Our occupancy costs are generally fixed in nature and are largely
influenced by new store openings. As a percentage of net sales, occupancy costs increased at a higher rate than the 6% increase
in net sales during the fiscal year and were unfavorably affected by 13 basis points due to the inclusion of sales from the 53rd
week in fiscal 2012. Shipping expenses increased as a percentage of sales by 27 basis points due to the growth in eCommerce
sales relative to the sales growth at our brick and mortar stores. The decrease in gross profit as a percentage of net sales was
partially offset by merchandise margin expansion. Merchandise margins, which represent margins earned above the cost of the
product, excluding certain other items included in cost of goods sold (vendor allowances, inventory shrinkage, freight,
distribution, shipping and store occupancy costs), increased as percentage of sales by 35 basis points, due to changes in sales
mix as discussed above. Every 10 basis point change in merchandise margin would have impacted earnings before income taxes
for the current period by approximately $5.8 million.
Selling, general and administrative expenses increased approximately 7% to $1,386.3 million in fiscal 2013 from $1,297.4
million in fiscal 2012, and increased as a percentage of net sales by 8 basis points primarily due to increases in selling, general
and administrative expenses that do not correlate with the net sales increase for the period. Payroll and related benefit costs
increased $30.6 million in our administrative functions to support planned future growth initiatives. The Company also
recorded a $7.9 million non-cash impairment charge to reduce the carrying value of a Gulfstream G450 corporate aircraft held
for sale to fair market value. The increase in selling, general and administrative expenses was partially offset by lower incentive
compensation during the 52 weeks ended February 1, 2014 due to the Company's results in comparison to the pre-determined
performance targets and a contribution to the Dick's Sporting Goods Foundation during the 53 weeks ended February 2, 2013.
29
29
Pre-opening expenses increased to $20.8 million in fiscal 2013 from $16.1 million in fiscal 2012. Pre-opening expenses in any
period fluctuate depending on the timing and number of store openings and relocations. During fiscal 2013, the Company
opened 40 new Dick's Sporting Goods stores, one new Golf Galaxy store, two new Field & Stream stores and one new True
Runner store. Additionally, the Company relocated one Dick's Sporting Goods store and repositioned one Golf Galaxy store in
the current year. During fiscal 2012, the Company opened 38 new Dick's Sporting Goods stores and two new True Runner
stores, relocated five Dick's Sporting Goods stores and repositioned one Golf Galaxy store.
Impairment of Available-for-Sale Investments
Impairment of available-for-sale investments was $32.4 million in fiscal 2012 resulting from the full impairment of the
Company's investment in JJB Sports, as further described in Note 15 to the Consolidated Financial Statements.
Interest Expense
Interest expense totaled $2.9 million for fiscal 2013 compared to $6.0 million for fiscal 2012. Interest expense for fiscal 2012
included $2.9 million related to rent payments under the Company's financing lease for its corporate headquarters building. The
decrease in interest expense year over year reflects the Company's purchase of its corporate headquarters building on May 7,
2012.
Other Income
Other income was $12.2 million for fiscal 2013 compared to $4.6 million for fiscal 2012. The Company recognizes investment
income to reflect changes in the investment value of assets held in its deferred compensation plans with a corresponding charge
to selling, general and administrative costs for the same amount. The Company recognized investment income totaling $6.0
million in fiscal 2013 compared to $3.2 million for fiscal 2012 due to an overall improvement in the equity markets, which
impacted the deferred compensation plan investment values. During fiscal 2013, the Company recorded $4.3 million related to
the partial recovery of the Company's investment in JJB Sports, which it had previously fully impaired.
Income Taxes
The Company's effective tax rate was 38.2% for fiscal 2013 as compared to 40.7% for fiscal 2012. During fiscal 2012, the
Company determined that a valuation allowance totaling $7.9 million was required for a portion of the deferred tax asset related
to a $32.4 million net capital loss carryforward resulting from the impairment of its investment in JJB Sports, as the Company
did not believe that it was more likely than not that the Company would generate sufficient capital gains in future periods to
recognize that portion of the expected net capital loss. During fiscal 2013, the Company determined that it would recover $4.3
million of its investment in JJB Sports. There was no related tax expense, as the Company reversed a portion of the deferred tax
valuation allowance it recorded during fiscal 2012 for net capital loss carryforwards it did not expect to realize at that time.
Liquidity and Capital Resources
Overview
The Company's liquidity and capital needs have generally been met by cash from operating activities and the Company's
revolving credit facility. Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to
increase inventory in advance of peak selling seasons, with the pre-holiday inventory increase being the largest. In the fourth
quarter, inventory levels are reduced in connection with holiday sales and this inventory reduction, combined with
proportionately higher net income, typically produces significant positive cash flow.
Net cash provided by operating activities for fiscal 2014 was $606.0 million compared to $403.9 million for fiscal 2013. Net
cash from operating, investing and financing activities are discussed further below.
The Company has a $500 million revolving credit facility, including up to $100 million in the form of letters of credit, in the
event further liquidity is needed. Under the Credit Agreement, subject to the satisfaction of certain conditions, the Company
may request an increase of up to $250 million in borrowing availability.
The Credit Agreement, which matures on December 5, 2016, is secured by a first priority security interest in certain property
and assets, including receivables, inventory, deposit accounts and other personal property of the Company and is guaranteed by
the Company's domestic subsidiaries.
30
30
The annual interest rates applicable to loans under the Credit Agreement are, at the Company's option, a base rate or an adjusted
LIBOR rate plus, in each case, an applicable margin percentage. The applicable margin percentage for base rate loans is 0.20%
to 0.50% and for adjusted LIBOR rate loans is 1.20% to 1.50%, depending on the borrowing availability of the Company.
The Credit Agreement contains certain covenants that limit the Company's ability to, among other things: incur or guarantee
additional indebtedness; pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt;
make certain investments; sell assets; and consolidate, merge or transfer all or substantially all of the Company's assets. In
addition, the Credit Agreement contains a covenant that requires the Company to maintain a minimum adjusted availability of
7.5% of its borrowing base. As of January 31, 2015, the Company was in compliance with the terms of the Credit Agreement.
The Company generally utilizes its Credit Agreement for working capital needs based primarily on the seasonal nature of its
operating cash flows, with the Company's peak borrowings occurring during its third quarter as the Company increases
inventory in advance of the holiday selling season.
Funds drawn on our Credit Agreement during fiscal 2014 totaled $1,401.8 million over the course of 105 days. These
borrowings were repaid in full and there were no outstanding borrowings under the Credit Agreement as of January 31, 2015.
The maximum daily amount outstanding at any point in time during fiscal 2014 was $323.2 million.
Funds drawn on our Credit Agreement during fiscal 2013 totaled $926.0 million over the course of 83 days. These borrowings
were repaid in full and there were no outstanding borrowings under the Credit Agreement as of February 1, 2014. The
maximum daily amount outstanding at any point in time during fiscal 2013 was $197.9 million.
The Company ended fiscal 2014 with $221.7 million in cash and cash equivalents as compared to $181.7 million at the end of
fiscal 2013. As of January 31, 2015 and February 1, 2014, total remaining borrowing capacity, after subtracting letters of credit,
was $486.0 million and $487.0 million, respectively.
The Company intends to allocate capital to invest in its future growth, specifically the development of its omni-channel
platform and specialty store concepts, as well as to return capital to stockholders through dividends and share repurchases.
Capital expenditures – Normal capital requirements primarily relate to the development of our omni-channel platform,
including new and existing Dick's Sporting Goods stores and eCommerce technology investments. The Company also plans to
invest in its specialty store concepts and improve its supply chain and corporate information technology infrastructure. The
Company has a capital appropriations committee that approves all capital expenditures in excess of certain amounts, and groups
and prioritizes all capital projects among required, discretionary and strategic categories.
Share repurchases – On March 7, 2013, the Company's Board of Directors authorized a five-year share repurchase program of
up to $1 billion of the Company's common stock. During fiscal 2014, the Company repurchased 4.3 million shares of its
common stock for $200.0 million. During fiscal 2013, the Company repurchased 4.8 million shares of its common stock
for $255.6 million. Any future share repurchase programs are subject to the final determination of our Board of Directors, and
will be dependent upon future earnings, cash flows, financial requirements and other factors.
Dividends – During the fiscal year ended January 31, 2015, the Company paid $61.3 million of dividends to its stockholders.
The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such
future dividends are subject to the final determination of our Board of Directors, and will be dependent upon future earnings,
cash flows, financial requirements and other factors.
The Company currently believes that cash flows generated by operations and funds available under its Credit Agreement will be
sufficient to satisfy our current capital requirements through fiscal 2015. Other investment opportunities, such as potential
strategic acquisitions, share repurchases, investments or store expansion rates in excess of those presently planned, may require
additional funding.
31
31
Changes in cash and cash equivalents are as follows:
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Operating Activities
January 31,
2015
Fiscal Year Ended
February 1,
2014
February 2,
2013
$
$
605,978
(305,020)
(260,913)
(97)
39,948
$
$
403,870
(339,175)
(228,090)
(88)
$
(163,483) $
438,284
(324,354)
(503,112)
(6)
(389,188)
Operating activities consist primarily of net income, adjusted for certain non-cash items and changes in operating assets and
liabilities. Adjustments to net income for non-cash items include depreciation and amortization, deferred income taxes, stock-
based compensation expense and tax benefits on stock options, as well as non-cash gains and losses on the disposal of the
Company's assets. Changes in operating assets and liabilities primarily reflect changes in inventories, accounts payable and
income taxes payable / receivable, as well as other working capital changes.
Cash provided by operating activities increased $202.1 million in fiscal 2014 to $606.0 million. The increase in cash provided
by operating activities is due primarily to an increase in cash flows provided by changes in operating assets and liabilities. The
increase in operating assets and liabilities year-over-year is primarily due to the following:
• Changes in deferred construction allowances increased operating cash flows by $53.9 million compared to last year
due primarily to an increase in the number of self-developed stores where tenant allowances are provided by landlords.
• Changes in income taxes payable / receivable for fiscal 2014 increased operating cash flows by $45.8 million
compared to the same period in fiscal 2013. Income tax payments in 2014 were favorably impacted by the timing of
deductions related to qualified capital expenditures.
• Cash flows provided by changes in inventory and accounts payable increased $46.8 million compared to fiscal 2013,
primarily attributable to the timing of inventory receipts.
• Changes in accrued expenses increased $23.3 million compared to last year, primarily due to higher incentive
compensation accruals at the end of fiscal 2012 that were subsequently paid in fiscal 2013.
Investing Activities
Cash used in investing activities for fiscal 2014 decreased by $34.2 million to $305.0 million from fiscal 2013. During fiscal
2014, the Company received $73.4 million of proceeds from the sale of a Gulfstream G650 corporate aircraft, compared to
$11.0 million received from the sale of a Gulfstream G200 corporate aircraft during fiscal 2013. Deposits and purchases of
other assets decreased $34.0 million compared to last year. Last year included $48.8 million of payments related to the
acquisition of corporate aircraft, while this year includes the Company's $26.3 million acquisition of intellectual property rights
to the Field & Stream mark in product categories that were not otherwise owned by the Company. These reductions in investing
activity cash outflows were partially offset by a $63.3 million increase in gross capital expenditures during fiscal 2014
compared to fiscal 2013, which reflects a higher number of self-developed stores opened by the Company in fiscal 2014.
Financing Activities
Cash used in financing activities consists primarily of the Company's capital return initiatives, including its share repurchase
program and cash dividend payments, and cash flows generated from stock option exercises. Cash used in financing activities
for fiscal 2014 totaled $260.9 million compared to $228.1 million in fiscal 2013. The increase in cash used primarily reflects
changes in our bank overdraft balance between years and lower cash flows from stock option exercises during fiscal 2014.
These increases were partially offset by lower share repurchases in fiscal 2014.
32
32
Contractual Obligations and Commercial Commitments
The Company is party to many contractual obligations that involve commitments to make payments to third parties in the
ordinary course of business. The following table provides summary information concerning our future contractual obligations
(within the scope of Item 303(a)(5) of Regulation S-K) as of January 31, 2015 (in thousands):
Payments Due by Period
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
Contractual obligations:
Capital lease obligations (see Note 7)
$
5,994
$
Other long-term debt
Interest payments (see Note 7)
Operating lease obligations (see
Note 8) (a)
Unrecognized tax benefits (b)
Purchase and other commitments (see
Note 14) (c)
456
3,213
429
108
595
$
1,001
$
1,320
$
239
1,047
109
827
3,244
—
744
3,503,893
3,643
505,519
3,643
981,276
780,751
1,236,347
—
—
—
280,968
63,997
87,714
88,496
40,761
Total contractual obligations
$
3,798,167
$
574,291
$
1,071,277
$
871,503
$
1,281,096
(a) Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses.
(b) Excludes $6,501 of accrued liability for unrecognized tax benefits as we cannot reasonably estimate the timing of
settlement. These payments include interest and penalties.
(c) The Company's purchase obligations relate primarily to marketing commitments, including naming rights, licenses for
trademarks, corporate aircraft, and technology-related and other ordinary course commitments. In the ordinary course
of business, the Company enters into many contractual commitments, including purchase orders and commitments for
products or services, but generally, such commitments represent annual or cancellable commitments. The amount of
purchase obligations shown is based on multi-year non-cancellable contracts outstanding at the end of fiscal 2014.
The Note references in the table above are to the Notes to the Consolidated Financial Statements included in Item 8 herein.
The following table summarizes the Company's other commercial commitments, including both on and off-balance sheet
arrangements, in effect at January 31, 2015 (in thousands):
Other commercial commitments:
Documentary letters of credit
Standby letters of credit
Total other commercial commitments
Total
Less than
1 year
$
$
— $
14,031
14,031
$
—
14,031
14,031
The Company expects to fund these commitments primarily with operating cash flows generated in the normal course of
business.
Off-Balance Sheet Arrangements
The majority of our contractual obligations relate to operating leases for our stores. Future scheduled lease payments under non-
cancellable operating leases as of January 31, 2015 are described under the heading "Operating lease obligations" in the table
above.
33
33
Critical Accounting Policies and Use of Estimates
The Company's significant accounting policies are described in Note 1 of the Consolidated Financial Statements, which were
prepared in accordance with accounting principles generally accepted in the United States of America. Critical accounting
policies are those that the Company believes are both most important to the portrayal of the Company's financial condition and
results of operations, and require the Company's most difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of
those policies may result in materially different amounts being reported under different conditions or using different
assumptions.
The Company considers the following policies to be the most critical in understanding the judgments that are involved in
preparing its consolidated financial statements.
Inventory Valuation
The Company values inventory using the lower of weighted average cost or market method. Market price is generally based on
the selling price expectations of the merchandise. The Company regularly reviews inventories to determine if the carrying value
of the inventory exceeds market value and the Company records a reserve to reduce the carrying value to its market price, as
necessary. Changes in customer merchandise preference, consumer spending, weather patterns, economic conditions or
business trends could cause the Company's inventory to be exposed to obsolescence or slow moving merchandise.
Shrink expense is accrued as a percentage of merchandise sales based on historical shrink trends. The Company performs
physical inventories at its stores and distribution centers throughout the year. The reserve for shrink represents an estimate for
shrink for each of the Company's locations since the last physical inventory date through the reporting date. Estimates by
location and in the aggregate are impacted by internal and external factors and may vary significantly from actual results.
Vendor Allowances
Vendor allowances include allowances, rebates and cooperative advertising funds received from vendors. These funds are
determined for each fiscal year and the majority are based on various quantitative contract terms. Amounts expected to be
received from vendors relating to the purchase of merchandise inventories are treated as a reduction of inventory and reduce
cost of goods sold as the merchandise is sold. Amounts that represent a reimbursement of costs incurred, such as advertising,
are recorded as a reduction to the related expense in the period that the related expense is incurred. The Company records an
estimate of earned allowances based on the latest projected purchase volumes and advertising forecasts. On an annual basis at
the end of the year, the Company confirms earned allowances with vendors to ensure the amounts are recorded in accordance
with the terms of the contract.
Goodwill and Intangible Assets
Goodwill, indefinite-lived and other finite-lived intangible assets are reviewed for impairment on an annual basis, or whenever
circumstances indicate that a decline in value may have occurred. Our evaluation for impairment requires accounting judgments
and financial estimates in determining the fair value of the reporting unit. If these judgments or estimates change in the future,
we may be required to record impairment charges for these assets.
The goodwill impairment test is a two-step impairment test. In the first step, the Company compares the fair value of each
reporting unit to its carrying value. The Company determines the fair value of its reporting units using a combination of a
discounted cash flow and a market value approach. The Company's estimates may differ from actual results due to, among other
things, economic conditions, changes to its business models, or changes in operating performance. Significant differences
between these estimates and actual results could result in future impairment charges and could materially affect the Company's
future financial results. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that
reporting unit, goodwill is not impaired and the Company is not required to perform further testing. If the carrying value of the
net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company must perform the second
step in order to determine the implied fair value of the reporting unit's goodwill and compare it to the carrying value of the
reporting unit's goodwill. The activities in the second step include valuing the tangible and intangible assets and liabilities of the
impaired reporting unit based on their fair value and determining the fair value of the impaired reporting unit's goodwill based
upon the residual of the aggregate identified tangible and intangible assets and liabilities. As of January 31, 2015, the Company
had no reporting unit(s) at risk for goodwill impairment.
34
34
Intangible assets that have been determined to have indefinite lives are also not subject to amortization and are reviewed at least
annually for potential impairment, or more frequently as mentioned above. The fair value of the Company's intangible assets
are estimated and compared to their carrying value. The Company estimates the fair value of these intangible assets based on an
income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party
would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on
a number of factors, including estimates of future sales growth and trends, royalty rates in the category of intellectual property,
discount rates and other variables. If actual results are not consistent with our estimates and assumptions used in estimating fair
value, the Company may be exposed to losses that could be material. The Company does not believe there is reasonable
likelihood that there will be a material change in the estimates or assumptions used to calculate fair value.
The Company recognizes an impairment charge when the estimated fair value of the intangible asset is less than the carrying
value.
Impairment of Long-Lived Assets and Closed Store Reserves
The Company reviews long-lived assets whenever events and circumstances indicate that the carrying value of these assets may
not be recoverable based on estimated undiscounted future cash flows. Assets are reviewed at the lowest level for which cash
flows can be identified, which is the store level. The Company uses an income approach to determine the fair value of
individual store locations, which requires discounting projected future cash flows over its remaining lease term. When
determining the stream of projected future cash flows associated with an individual store location, the Company makes
assumptions, incorporating local market conditions, about key store variables including sales growth rates, gross margin and
controllable expenses, such as store payroll. An impairment loss is recognized when the carrying amount of the store location is
not recoverable and exceeds its fair value.
Based on an analysis of current and future store performance, management periodically evaluates the need to close
underperforming stores. Reserves are established when the Company ceases to use the location for the present value of any
remaining operating lease obligations, net of estimated sublease income. If the timing or amount of actual sublease income
differs from estimated amounts, this could result in an increase or decrease in the related reserves.
Self-Insurance
The Company is self-insured for certain losses related to health, workers' compensation and general liability insurance,
although we maintain stop-loss coverage with third-party insurers to limit our liability exposure. Liabilities associated with
these losses are estimated in part by considering historical claims experience, industry factors, severity factors and other
actuarial assumptions.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with fair value recognition provisions, under which the
Company uses the Black-Scholes option-pricing model, which requires the input of assumptions. These assumptions include
estimating the length of time employees will retain their vested stock options before exercising them ("expected term"), the
estimated volatility of the Company's common stock price over the expected term and the expected dividend yield. In addition,
we estimate the number of awards that will ultimately not complete their vesting requirements ("forfeitures") and recognize
expense for those stock awards expected to vest. Changes in the assumptions can materially affect the estimate of fair value of
stock-based compensation and consequently, the related amount recognized on the Consolidated Statements of Income.
Uncertain Tax Positions
The Company only recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities. The application of income tax law is inherently complex. Laws and
regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective
assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws
and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts
recognized on the Consolidated Balance Sheets and Statements of Income.
35
35
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The Company maintains a revolving credit facility to support potential liquidity and capital needs. Our interest rate under the
Credit Agreement is benchmarked to, at the Company's option, a base rate or an adjusted LIBOR rate plus, in each case, an
applicable margin percentage. There were no outstanding borrowings under the Credit Agreement as of January 31, 2015 and
February 1, 2014.
The Company holds highly liquid instruments purchased with a maturity of three months or less at the date of purchase that are
classified as cash equivalents. The Company had cash equivalent investments at January 31, 2015 and February 1, 2014 totaling
$89.0 million and $91.9 million, respectively. As these investments are short-term in nature, changes in interest rates generally
would not have a material impact on the valuation of these investments. During fiscal 2014 and 2013, a hypothetical 10%
increase or decrease in interest rates would not have materially affected the Consolidated Financial Statements.
Impact of Inflation
Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our operating results.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a
high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and
selling, general and administrative expenses as a percentage of net sales if the selling prices of our products do not increase
with inflation.
Seasonality and Quarterly Results
The Company's business is subject to seasonal fluctuations. Significant portions of the Company's net sales and profits are
realized during the fourth quarter of the Company's fiscal year, which is due in part to the holiday selling season and in part to
sales of cold weather sporting goods and apparel. Any decrease in fiscal fourth quarter sales, whether because of a slow holiday
selling season, unseasonable weather conditions or otherwise, could have a material adverse effect on our business, financial
condition and operating results for the entire fiscal year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required to be filed hereunder are set forth on pages 44 through 67 of this Annual Report on Form 10-
K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company carried out an evaluation, under the supervision and with the participation of the Company's management,
including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that, as of January 31, 2015, the Company's disclosure controls and procedures were effective in ensuring that
material information relating to the Company, including its consolidated subsidiaries, required to be disclosed by the Company
in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms, and that it is accumulated and communicated
to management, including our principal executive and financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
36
36
Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting
for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal
control over financial reporting includes: maintaining records that in reasonable detail accurately and fairly reflect our
transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial
statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with
management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company
assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of
its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a
misstatement of our financial statements would be prevented or detected.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework and criteria established in Internal Control — Integrated Framework (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls,
evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this
evaluation. Based on this evaluation, management concluded that the Company's internal control over financial reporting was
effective as of January 31, 2015.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on the Company's
internal control over financial reporting included on the following page of this document.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting during the quarter ended January 31, 2015
that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial
reporting.
Inherent Limitations of Control Systems
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the
circumvention or overriding of the controls and procedures. Additionally, judgments in decision-making can be faulty and
breakdowns can occur because of simple error or mistake. An effective control system can provide only reasonable, not
absolute, assurance that the control objectives of the system are adequately met. Accordingly, our management, including our
Chief Executive Officer and Chief Financial Officer, does not expect that our control system can prevent or detect all error or
fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to
the risks that, over time, controls may become inadequate because of changes in an entity's operating environment or
deterioration in the degree of compliance with policies and procedures.
37
37
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Dick's Sporting Goods, Inc.
Pittsburgh, Pennsylvania
We have audited the internal control over financial reporting of Dick's Sporting Goods, Inc. and subsidiaries (the "Company")
as of January 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's
principal executive and principal financial officers, or persons performing similar functions, and effected by the company's
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely
basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
January 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated financial statements as of and for the year ended January 31, 2015 of the Company and our report dated March 27,
2015 expressed an unqualified opinion on those financial statements.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
March 27, 2015
38
38
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
(a) Directors of the Company
Information relative to Directors of the Company is set forth under the section entitled "Item 1 - Election of Directors" in
the Company's definitive Proxy Statement for the 2015 Annual Meeting of Stockholders ("2015 Proxy Statement") and is
incorporated herein by reference.
(b) Executive Officers of the Company
Information with respect to Executive Officers of the Company is set forth in Part I, Item 1.
(c) Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the
section entitled "Stock Ownership" in the 2015 Proxy Statement and is incorporated herein by reference.
(d) The Company has adopted a code of ethics entitled "The Rules of the Game: The Dick's Sporting Goods Code of Ethics
and Business Conduct" (the "Code of Conduct") that applies to all of its employees, including Executive Officers, and the
Board of Directors, the complete text of which is available through the Investor Relations section of the Company's website
at www.DICKS.com/investors. If the Company makes any amendments to the Code of Conduct other than technical,
administrative, or other non-substantive amendments, or grants any waivers, including implicit waivers, from a provision
of the Code of Conduct applicable to the Company's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions, the Company will disclose the nature of the
amendment or waiver, its effective date and to whom it applies on its website or in a Current Report on Form 8-K filed
with the SEC. The Company's website does not form a part of this Annual Report on Form 10-K.
(e) Information on our audit committee and audit committee financial expert is set forth under the section entitled "Corporate
Governance" in the 2015 Proxy Statement and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the information under the sections entitled
"Executive Compensation", "Compensation Tables", "Corporate Governance" and "Item 1 - Election of Directors" in the
Company's 2015 Proxy Statement. The information under the caption "Executive Compensation - Compensation Committee
Report" shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by
reference into a future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the
Company specifically incorporates the information by reference.
39
39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS
Part of the information required by this Item is incorporated herein by reference to the information under the caption "Stock
Ownership" in the Company's 2015 Proxy Statement. The following table summarizes information, as of January 31, 2015
relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock
units or other rights to acquire shares may be granted from time to time:
Equity Compensation Plan Information
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
(c)
4,197,096 (2) $
32.57
10,862,360 (3)
—
4,197,096
—
10,862,360
Plan Category
Equity compensation plans approved
by security holders (1)
Equity compensation plans not
approved by security holders
Total
(1) Represents outstanding awards pursuant to the Company's 2002 Amended and Restated Stock and Incentive Plan,
2012 Stock and Incentive Plan and Golf Galaxy, Inc. 2004 Stock Incentive Plan.
(2) Upon adoption of the Company's 2012 Stock and Incentive Plan, the common stock available under the 2002
Amended and Restated Stock and Incentive Plan, Golf Galaxy, Inc. 1996 Stock Option and Incentive Plan and Golf
Galaxy, Inc. 2004 Stock Incentive Plan became available for issuance under the 2012 Stock and Incentive Plan.
Represents shares of common stock. Shares of Class B Common Stock are not generally authorized for issuance under
the 2012 Stock and Incentive Plan.
(3) Any shares of common stock that are subject to any award (e.g. options, stock appreciation rights, restricted stock,
restricted stock units or performance stock) pursuant to the 2012 Stock and Incentive Plan will count against the
aggregate number of shares of common stock that may be issued as one share for every share issued.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is incorporated herein by reference to the information under the caption "Certain
Relationships and Transactions with Related Persons" and "Election of Directors - How does the Board determine which
directors are considered independent?" in the Company's 2015 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated herein by reference to the information under the caption "Ratification of
Independent Registered Public Accounting Firm – Audit and Non-Audit Fees and Independent Public Accountants" in the
Company's 2015 Proxy Statement.
40
40
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements. The Consolidated Financial Statements required to be filed hereunder are listed in the Index to
Consolidated Financial Statements on page 42 of this Annual Report on Form 10-K.
(2) Financial Statement Schedule. The consolidated financial statement schedule to be filed hereunder is included on page 70
of this Annual Report on Form 10-K. Other schedules have not been included because they are not applicable or because
the information is included elsewhere in this report.
(3) Exhibits. The Exhibits listed in the Index to Exhibits, which appears on pages 71 to 73 and is incorporated herein by
reference, are filed as part of this Annual Report on Form 10-K. Certain Exhibits are incorporated by reference from
documents previously filed by the Company with the SEC pursuant to Rule 12b-32 under the Securities Exchange Act of
1934, as amended.
41
41
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the Fiscal Years Ended January 31, 2015, February 1, 2014 and February 2,
2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended January 31, 2015, February 1, 2014
and February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of January 31, 2015 and February 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Stockholders' Equity for the Fiscal Years Ended January 31, 2015, February
1, 2014 and February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Fiscal Years Ended January 31, 2015, February 1, 2014 and
February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
43
44
45
46
47
48
Notes to Consolidated Financial Statements for the Fiscal Years Ended January 31, 2015, February 1, 2014 and
February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49 - 67
42
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Dick's Sporting Goods, Inc.
Pittsburgh, Pennsylvania
We have audited the accompanying consolidated balance sheets of Dick's Sporting Goods, Inc. and subsidiaries (the
"Company") as of January 31, 2015 and February 1, 2014, and the related consolidated statements of income, comprehensive
income, changes in stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2015. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Dick's
Sporting Goods, Inc. and subsidiaries as of January 31, 2015 and February 1, 2014, and the results of their operations and their
cash flows for each of the three years in the period ended January 31, 2015, in conformity with accounting principles generally
accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
Company's internal control over financial reporting as of January 31, 2015, based on the criteria established in Internal Control
- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 27, 2015 expressed an unqualified opinion on the Company's internal control over financial reporting.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
March 27, 2015
43
43
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
Fiscal Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
Net sales
$
6,814,479
$
6,213,173
$
Cost of goods sold, including occupancy and distribution costs
GROSS PROFIT
Selling, general and administrative expenses
Pre-opening expenses
INCOME FROM OPERATIONS
Impairment of available-for-sale investments
Interest expense
Other income
INCOME BEFORE INCOME TAXES
Provision for income taxes
NET INCOME
EARNINGS PER COMMON SHARE:
Basic
Diluted
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic
Diluted
See accompanying notes to consolidated financial statements.
4,727,813
2,086,666
1,502,089
30,518
554,059
—
3,215
(5,170)
556,014
211,816
344,198
2.89
2.84
119,244
121,238
$
$
$
4,269,223
1,943,950
1,386,315
20,823
536,812
—
2,929
(12,224)
546,107
208,509
337,598
2.75
2.69
122,878
125,628
$
$
$
$
$
$
5,836,119
3,998,956
1,837,163
1,297,413
16,076
523,674
32,370
6,034
(4,555)
489,825
199,116
290,709
2.39
2.31
121,629
125,995
44
44
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
NET INCOME
OTHER COMPREHENSIVE LOSS:
Unrealized loss on securities available-for-sale, net of tax
Reclassification adjustment for impairment of securities available-for-sale, net of tax
Foreign currency translation adjustment, net of tax
TOTAL OTHER COMPREHENSIVE LOSS
COMPREHENSIVE INCOME
See accompanying notes to consolidated financial statements.
Fiscal Year Ended
January 31,
2015
February 1,
2014
February 2,
2013
$
344,198
$
337,598
$
290,709
—
—
(97)
(97)
—
—
(88)
(88)
(27,636)
27,636
(6)
(6)
$
344,101
$
337,510
$
290,703
45
45
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, net
Income taxes receivable
Inventories, net
Prepaid expenses and other current assets
Deferred income taxes
Total current assets
PROPERTY AND EQUIPMENT, NET
INTANGIBLE ASSETS, NET
GOODWILL
OTHER ASSETS:
Deferred income taxes
Other
Total other assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses
Deferred revenue and other liabilities
Income taxes payable
Current portion of other long-term debt and leasing obligations
Total current liabilities
LONG-TERM LIABILITIES:
Other long-term debt and leasing obligations
Deferred income taxes
Deferred revenue and other liabilities
Total long-term liabilities
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.01 per share, authorized shares 5,000,000; none issued and outstanding
Common stock, par value $0.01 per share, authorized shares 200,000,000; issued shares 106,414,288 and
104,945,366 at January 31, 2015 and February 1, 2014, respectively; outstanding shares 93,205,708 and
96,065,661 at January 31, 2015 and February 1, 2014, respectively
Class B common stock, par value, $0.01 per share, authorized shares 40,000,000; issued and outstanding shares
24,900,870 at January 31, 2015 and February 1, 2014, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income
Treasury stock, at cost, 13,208,580 and 8,879,705 at January 31, 2015 and February 1, 2014, respectively
Total stockholders' equity
January 31,
2015
February 1,
2014
$
221,679
$
80,292
14,293
181,731
60,779
7,275
1,390,767
1,232,065
91,767
51,586
1,850,384
1,203,382
110,162
200,594
1,862
69,814
71,676
99,386
38,835
1,620,071
1,084,529
98,255
200,594
2,477
65,561
68,038
$
$
3,436,198
$
3,071,487
614,511
$
283,828
172,259
47,698
537
562,439
265,040
154,384
19,825
899
1,118,833
1,002,587
5,913
44,494
434,733
485,140
—
932
249
1,015,404
1,471,182
(73)
(655,469)
1,832,225
6,476
38,617
331,628
376,721
—
961
249
958,943
1,187,514
24
(455,512)
1,692,179
3,071,487
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
3,436,198
$
See accompanying notes to consolidated financial statements.
46
46
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
Common Stock
Class B
Common Stock
Shares
Dollars
Shares
Dollars
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
BALANCE, January 28, 2012
96,373,002
$
964
24,960,870
$
250
$ 699,766
$
932,871
$
118
$
(1,224) $ 1,632,745
Purchase of shares for treasury
(4,023,900)
Cash dividends declared, $2.50 per
common share
—
BALANCE, February 2, 2013
98,104,692
$
981
24,900,870
$
249
$ 874,236
$
911,704
$
112
$ (199,958) $ 1,587,324
(311,876)
—
—
(311,876)
Exchange of Class B common stock
for common stock
Exercise of stock options
Restricted stock vested
Minimum tax withholding
requirements
Net income
Stock-based compensation
Total tax benefit from exercise of
stock options
Foreign currency translation
adjustment, net of taxes of $4
Unrealized loss on securities
available-for-sale, net of taxes
of $4,734
Reclassification adjustment for
impairment of securities available-
for-sale, net of taxes of $4,734
—
78,231
(3)
(5,517)
—
—
—
—
—
290,709
60,000
5,431,053
381,128
1
54
3
(116,591)
(1)
—
—
—
—
—
—
—
—
—
—
—
—
(40)
—
(60,000)
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
32,181
69,578
—
—
—
—
—
Exercise of stock options
Restricted stock vested
Minimum tax withholding
requirements
Net income
Stock-based compensation
Total tax benefit from exercise of
stock options
Foreign currency translation
adjustment, net of taxes of $51
2,154,201
913,759
(281,786)
—
—
—
—
22
9
(3)
—
—
—
—
Purchase of shares for treasury
(4,825,205)
(48)
Cash dividends declared, $0.50 per
common share
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
43,460
(9)
(13,165)
—
—
—
—
337,598
27,119
27,302
—
—
—
—
—
—
—
(61,788)
BALANCE, February 1, 2014
96,065,661
$
961
24,900,870
$
249
$ 958,943
$ 1,187,514
$
Exercise of stock options
Restricted stock vested
Minimum tax withholding
requirements
Net income
Stock-based compensation
Total tax benefit from exercise of
stock options
Foreign currency translation
adjustment, net of taxes of $57
1,175,540
433,249
(139,867)
—
—
—
—
Purchase of shares for treasury
(4,328,875)
Cash dividends declared, $0.50 per
common share
—
11
4
(1)
—
—
—
—
(43)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
26,110
(4)
(7,792)
—
—
—
—
344,198
26,275
11,872
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(6)
(27,636)
27,636
—
—
—
—
—
—
—
—
—
—
—
78,285
—
(5,518)
290,709
32,181
69,578
(6)
(27,636)
27,636
— (198,734)
(198,774)
—
—
—
—
—
—
(88)
—
—
—
—
—
—
—
43,482
—
(13,168)
337,598
27,119
27,302
(88)
— (255,554)
(255,602)
—
24
—
—
—
—
—
—
(97)
—
(61,788)
$ (455,512) $ 1,692,179
—
—
—
—
—
—
—
26,121
—
(7,793)
344,198
26,275
11,872
(97)
— (199,957)
(200,000)
BALANCE, January 31, 2015
93,205,708
$
932
24,900,870
$
249
$ 1,015,404
$ 1,471,182
$
(73) $ (655,469) $ 1,832,225
See accompanying notes to consolidated financial statements.
47
47
(60,530)
—
—
(60,530)
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
January 31,
2015
Fiscal Year Ended
February 1,
2014
February 2,
2013
$
344,198
$
337,598
$
290,709
Depreciation and amortization
Impairment of available-for-sale investments
Deferred income taxes
Stock-based compensation
Excess tax benefit from exercise of stock options
Gain on sale of asset
Other non-cash items
Changes in assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Income taxes payable / receivable
Deferred construction allowances
Deferred revenue and other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
Purchase of JJB Sports convertible notes and equity securities
Proceeds from sale of other assets
Proceeds from sale-leaseback transactions
Deposits and purchases of other assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings
Revolving credit repayments
Payments on other long-term debt and leasing obligations
Construction allowance receipts
Proceeds from exercise of stock options
Excess tax benefit from exercise of stock options
Minimum tax withholding requirements
Cash paid for treasury stock
Cash dividends paid to stockholders
(Decrease) increase in bank overdraft
Net cash used in financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
Supplemental disclosure of cash flow information:
Accrued property and equipment
Accrued deposits and purchases of other assets
Cash paid during the year for interest
Cash paid during the year for income taxes
See accompanying notes to consolidated financial statements.
$
$
$
$
$
48
48
179,431
—
(6,259)
26,275
(11,953)
(14,428)
576
1,797
(158,702)
(11,004)
81,330
16,158
32,476
101,630
24,453
605,978
154,928
—
24,563
27,119
(26,906)
—
581
(9,690)
(135,879)
(7,717)
11,684
(7,117)
(13,357)
47,760
303
403,870
(349,007)
(285,668)
—
74,534
—
(30,547)
(305,020)
1,401,800
(1,401,800)
(925)
—
26,121
12,204
(7,793)
(200,000)
(61,262)
(29,258)
(260,913)
(97)
39,948
181,731
221,679
42,900
$
$
—
11,000
—
(64,507)
(339,175)
926,000
(926,000)
(8,984)
—
43,482
27,106
(13,168)
(255,602)
(64,432)
43,508
(228,090)
(88)
(163,483)
345,214
181,731
40,745
$
$
— $
2,631
186,790
$
$
— $
2,255
206,397
$
$
125,096
32,370
(2,362)
32,181
(59,903)
—
372
(4,328)
(81,189)
(8,693)
(13,588)
(5,576)
92,352
28,691
12,152
438,284
(219,026)
(31,986)
—
3,406
(76,748)
(324,354)
—
—
(145,322)
—
78,285
64,767
(5,518)
(198,774)
(306,972)
10,422
(503,112)
(6)
(389,188)
734,402
345,214
23,772
15,000
5,352
117,387
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Operations – 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 in a specialty store environment. The Company also owns and
operates Golf Galaxy, Field & Stream and True Runner specialty stores.
Fiscal Year – The Company's fiscal year ends on the Saturday closest to the end of January. Fiscal years 2014, 2013 and 2012
ended on January 31, 2015, February 1, 2014 and February 2, 2013, respectively. All fiscal years presented include 52 weeks of
operations except fiscal 2012, which included 53 weeks.
Principles of Consolidation – The Consolidated Financial Statements include Dick's Sporting Goods, Inc. and its wholly-
owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications – Certain reclassifications have been made to prior year amounts within the Consolidated Statement of Cash
Flows to conform to current year presentation.
Use of Estimates in the Preparation of Financial Statements – The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents – Cash and cash equivalents consist of cash on hand and all highly liquid instruments purchased
with a maturity of three months or less at the date of purchase. Cash equivalents are considered Level 1 investments and totaled
$89.0 million and $91.9 million at January 31, 2015 and February 1, 2014, respectively. Interest income from cash equivalents
was $0.1 million, $0.2 million and $1.0 million for fiscal 2014, 2013 and 2012, respectively.
Cash Management – The Company's cash management system provides for the reimbursement of all major bank disbursement
accounts on a daily basis. Accounts payable at January 31, 2015 and February 1, 2014 include $105.9 million and $135.2
million, respectively, of checks drawn in excess of cash balances not yet presented for payment.
Accounts Receivable – Accounts receivable consist principally of amounts receivable from vendors and landlords. The
allowance for doubtful accounts totaled $2.7 million and $3.1 million as of January 31, 2015 and February 1, 2014,
respectively.
Inventories – Inventories are stated at the lower of weighted average cost or market. Inventory costs consist of the direct cost of
merchandise including freight. Inventories are net of shrinkage, obsolescence, other valuation accounts and vendor allowances
totaling $100.2 million and $82.6 million at January 31, 2015 and February 1, 2014, respectively.
Property and Equipment – Property and equipment are recorded at cost and include capitalized leases. For financial reporting
purposes, depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Buildings
Leasehold improvements
Furniture, fixtures and equipment
40 years
10-25 years
3-7 years
For leasehold improvements and property and equipment under capital lease agreements, depreciation and amortization are
calculated using the straight-line method over the shorter of the estimated useful lives of the assets or the lease term. Leasehold
improvements made significantly after the initial lease term are depreciated over the shorter of their estimated useful lives or
the remaining lease term, including renewal periods, if reasonably assured. Depreciation expense was $159.1 million, $151.5
million and $123.3 million for fiscal 2014, 2013 and 2012, respectively.
Renewals and betterments are capitalized and repairs and maintenance are expensed as incurred.
49
49
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Impairment of Long-Lived Assets and Closed Store Reserves – The Company evaluates its long-lived assets to assess whether
the carrying values have been impaired whenever events and circumstances indicate that the carrying value of these assets may
not be recoverable based on estimated undiscounted future cash flows. An impairment loss is recognized when the estimated
undiscounted cash flows expected to result from the use of the asset plus eventual net proceeds expected from disposition of the
asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the
asset is reduced to its estimated fair value as determined based on quoted market prices or through the use of other valuation
techniques.
The Company recognizes a liability for costs associated with closed or relocated premises when the Company ceases to use the
location. The calculation of accrued lease termination and other costs primarily includes future minimum lease payments,
maintenance costs and taxes from the date of closure or relocation to the end of the remaining lease term, net of contractual or
estimated sublease income. The liability is discounted using a credit-adjusted risk-free rate of interest. The assumptions used in
the calculation of the accrued lease termination and other costs are evaluated on a quarterly basis.
Goodwill – Goodwill represents the excess of acquisition cost over the fair value of the net assets of acquired entities. The
Company assesses the carrying value of goodwill annually or whenever circumstances indicate that a decline in value may have
occurred.
The goodwill impairment test is a two-step impairment test. In the first step, the Company compares the fair value of each
reporting unit to its carrying value. The Company determines the fair value of its reporting units using a combination of a
discounted cash flow and a market value approach. If the fair value of the reporting unit exceeds the carrying value of the net
assets assigned to that reporting unit, goodwill is not impaired and the Company is not required to perform further testing. If the
carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company
must perform the second step in order to determine the implied fair value of the reporting unit's goodwill and compare it to the
carrying value of the reporting unit's goodwill. If the carrying value of goodwill exceeds the implied estimated fair value, an
impairment charge to current operations is recorded to reduce the carrying value to the implied estimated fair value. A reporting
unit is the operating segment, or a business unit one level below that operating segment, for which discrete financial
information is prepared and regularly reviewed by management.
Intangible Assets – Intangible assets consist primarily of trademarks and acquired trade names with indefinite lives, which are
tested for impairment annually or whenever circumstances indicate that a decline in value may have occurred. The Company
estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. The
Company's finite-lived intangible assets consist primarily of favorable lease assets and other acquisition related assets. Finite-
lived intangible assets are amortized over their estimated useful economic lives and are reviewed for impairment when factors
indicate that an impairment may have occurred. The Company recognizes an impairment charge when the estimated fair value
of the intangible asset is less than the carrying value.
Self-Insurance – The Company is self-insured for certain losses related to health, workers' compensation and general liability
insurance, although we maintain stop-loss coverage with third-party insurers to limit our liability exposure. Liabilities
associated with these losses are estimated in part by considering historical claims experience, industry factors, severity factors
and other actuarial assumptions.
Pre-opening Expenses – Pre-opening expenses, which consist primarily of rent, marketing, payroll and recruiting costs, are
expensed as incurred.
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, plus the effect of dilutive potential common shares outstanding during the period,
using the treasury stock method. Dilutive potential common shares include outstanding stock options, restricted stock and
warrants.
Stock-Based Compensation – The Company has the ability to grant restricted shares of common stock, restricted stock units
and stock options to purchase common stock under the Dick's Sporting Goods, Inc. 2012 Stock and Incentive Plan. The
Company records stock-based compensation expenses based on the fair value of stock awards at the grant date and recognizes
the expense over the related service period.
50
50
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Income Taxes – The Company utilizes the asset and liability method of accounting for income taxes and provides deferred
income taxes for temporary differences between the amounts reported for assets and liabilities for financial statement purposes
and for income tax reporting purposes, using enacted tax rates in effect in the years in which the differences are expected to
reverse. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the relevant taxing authorities, based on the technical merits of the position. The
tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit
that will more likely than not be realized upon ultimate settlement. Interest and penalties related to income tax matters are
recognized in income tax expense.
Revenue Recognition – Revenue from retail sales is recognized at the point of sale, net of sales tax. Revenue from eCommerce
sales is recognized upon shipment of merchandise. Service-related revenue is recognized as the services are performed. A
provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that
the related sales are recorded. Revenue from gift cards and returned merchandise credits (collectively the "cards") are deferred
and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is
recognized on the Consolidated Statements of Income within selling, general and administrative expenses at the point at which
redemption becomes remote. The Company performs an evaluation of the aging of the unredeemed cards, based on the elapsed
time from the date of original issuance, to determine when redemption becomes remote.
Cost of Goods Sold – Cost of goods sold includes the cost of merchandise, vendor allowances, inventory shrinkage and
obsolescence, freight, distribution, shipping and store occupancy costs. Store occupancy costs include rent, common area
maintenance charges, real estate and other asset-based taxes, general maintenance, utilities, depreciation, fixture lease expenses
and certain insurance expenses.
Selling, General and Administrative Expenses – Selling, general and administrative expenses include store and field support
payroll and fringe benefits, advertising, bank card charges, information systems, marketing, legal, accounting, other store
expenses and all expenses associated with operating the Company's corporate headquarters.
Advertising Costs – Production costs of advertising and the costs to run the advertisements are expensed the first time the
advertisement takes place. Advertising expense, net of cooperative advertising, was $248.7 million, $223.9 million and $201.0
million for fiscal 2014, 2013 and 2012, respectively.
Vendor Allowances – Vendor allowances include allowances, rebates and cooperative advertising funds received from vendors.
These funds are determined for each fiscal year and the majority are based on various quantitative contract terms. Amounts
expected to be received from vendors relating to the purchase of merchandise inventories are recognized as a reduction of cost
of goods sold as the merchandise is sold. Amounts that represent a reimbursement of costs incurred, such as advertising, are
recorded as a reduction to the related expense in the period that the related expense is incurred. The Company records an
estimate of earned allowances based on the latest projected purchase volumes and advertising forecasts. On an annual basis at
the end of the fiscal year, the Company confirms earned allowances with vendors to determine that the amounts are recorded in
accordance with the terms of the contract.
Segment Information – The Company is a specialty omni-channel retailer that offers a broad range of products in its specialty
retail stores primarily in the eastern United States. Given the economic characteristics of the store formats, the similar nature of
the products sold, the type of customer and method of distribution, the Company's operating segments are aggregated within
one reportable segment. The following table sets forth the approximate amount of net sales attributable to hardlines, apparel and
footwear for the periods presented (in millions):
Hardlines
Apparel
Footwear
Other
Total net sales
2014
Fiscal Year
2013
2012
$
$
2,992
$
2,763
$
2,461
1,316
45
2,184
1,222
44
6,814
$
6,213
$
2,755
1,929
1,115
37
5,836
51
51
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Construction Allowances – All of the Company's store locations are leased. The Company may receive reimbursement from a
landlord for some of the cost of the structure, subject to satisfactory fulfillment of applicable lease provisions. These
reimbursements may be referred to as tenant allowances, construction allowances or landlord reimbursements ("construction
allowances").
The Company's accounting for construction allowances differs if the Company is deemed to be the owner of the asset during
the construction period. Some of the Company's leases have a cap on the construction allowance, which places the Company at
risk for cost overruns and causes the Company to be deemed the owner during the construction period. In cases where the
Company is deemed to be the owner during the construction period, a sale and leaseback of the asset occurs when construction
of the asset is complete and the lease term begins, if relevant sale-leaseback accounting criteria are met. Any gain or loss from
the transaction is included within deferred revenue and other liabilities on the Consolidated Balance Sheets and deferred and
amortized as rent expense on a straight-line basis over the term of the lease. The Company reports the amount of cash received
for the construction allowance as construction allowance receipts within the financing activities section of its Consolidated
Statements of Cash Flows when such allowances are received prior to completion of the sale-leaseback transaction. The
Company reports the amount of cash received from construction allowances as proceeds from sale leaseback transactions
within the investing activities section of its Consolidated Statements of Cash Flows when such amounts are received after the
sale-leaseback accounting criteria have been achieved.
In instances where the Company is not deemed to be the owner during the construction period, reimbursement from a landlord
for tenant improvements is classified as an incentive and included within deferred revenue and other liabilities on the
Consolidated Balance Sheets. The deferred rent credit is amortized as rent expense on a straight-line basis over the term of the
lease. Landlord reimbursements from these transactions are included in cash flows from operating activities as a change in
deferred construction allowances.
Leases – Escalating rent payments, rent abatements and rent holidays are considered in the calculation of minimum lease
payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases. The Company
records any difference between the straight-line rent amount and amounts payable under the lease as part of deferred rent within
long-term deferred revenue and other liabilities on the Consolidated Balance Sheets.
Contingent payments based upon sales and future increases determined by inflation related indices cannot be estimated at the
inception of the lease and accordingly, are charged to operations as incurred. The Company records contingent rent within
accrued expenses on the Consolidated Balance Sheets.
Recently Issued Accounting Pronouncement – In May 2014, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers." This update requires an entity to
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. Additionally, the update (1) specifies the
accounting for some costs to obtain or fulfill a contract with a customer and (2) expands disclosure requirements related to
revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that reporting period, and permits the use of either the retrospective
or cumulative effect transition method. Early application is not permitted. The Company is currently evaluating the impact of
the adoption of ASU 2014-09 on the Company’s Consolidated Financial Statements.
2. Goodwill and Other Intangible Assets
At January 31, 2015 and February 1, 2014, the Company reported goodwill of $200.6 million net of accumulated impairment
charges of $111.3 million. There was no change in the carrying value of goodwill during fiscal 2014 or fiscal 2013. No
impairment charges were recorded for goodwill in fiscal 2014, 2013 or 2012.
The Company had indefinite-lived and finite-lived intangible assets of $103.8 million and $6.3 million, respectively, as of
January 31, 2015 and $89.5 million and $8.8 million, respectively, as of February 1, 2014. During fiscal 2014, the Company
recorded a $12.4 million non-cash impairment charge for a trademark and trade name related to the Company's golf
restructuring to reduce the carrying value of the respective assets to their estimated fair value. The impairment charge is
included within selling, general and administrative expenses on the Consolidated Statement of Income. No impairment charges
were recorded for the Company's intangible assets in fiscal 2013 or 2012.
52
52
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
On October 1, 2014, the Company purchased the intellectual property rights to the Field & Stream mark in product categories
that were not otherwise owned by the Company for $26.3 million. The Company previously owned the intellectual property
rights to the Field & Stream mark in the hunt, camp, fish and paddle product categories. These Field & Stream intellectual
property assets are indefinite-lived intangible assets, which are not being amortized.
The components of intangible assets were as follows (in thousands):
2014
2013
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
Trademarks (indefinite-lived)
Trade name (indefinite-lived)
Customer list
Favorable leases and other finite-lived intangible assets
Other indefinite-lived intangible assets
$
87,081
$
— $
68,730
$
11,400
1,200
16,205
5,358
—
(1,200)
(9,882)
—
(11,082) $
15,900
1,200
16,454
4,845
107,129
$
—
—
(1,200)
(7,674)
—
(8,874)
Total intangible assets
$
121,244
$
Amortization expense for the Company's finite-lived intangible assets was $2.5 million, $2.3 million and $2.0 million for fiscal
2014, 2013 and 2012, respectively. The annual estimated amortization expense of the finite-lived intangible assets recorded as
of January 31, 2015 is expected to be as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
3. Store Closings
Estimated
Amortization
Expense
$
$
1,553
1,498
1,273
1,055
554
390
6,323
The following table summarizes the activity of the Company's store closing reserves (in thousands):
Accrued store closing and relocation reserves, beginning of period
$
17,102
$
Expense charged to earnings
Cash payments
Interest accretion and other changes in assumptions
Accrued store closing and relocation reserves, end of period
Less: current portion of accrued store closing and relocation reserves
Long-term portion of accrued store closing and relocation reserves
$
2,149
(6,381)
(85)
12,785
(4,208)
8,577
$
31,785
—
(12,516)
(2,167)
17,102
(5,949)
11,153
2014
2013
The current portion of accrued store closing and relocation reserves is included within accrued expenses and the long-term
portion is included within long-term deferred revenue and other liabilities on the Consolidated Balance Sheets. The related
expense is recorded within selling, general and administrative expenses on the Consolidated Statements of Income.
53
53
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
4. Property and Equipment
Property and equipment are recorded at cost and consist of the following as of the end of the fiscal periods (in thousands):
Buildings and land
Leasehold improvements
Furniture, fixtures and equipment
Total property and equipment
Less: accumulated depreciation and amortization
Net property and equipment
2014
2013
$
220,852
$
1,069,868
1,048,887
2,339,607
(1,136,225)
1,203,382
$
$
220,295
895,798
943,532
2,059,625
(975,096)
1,084,529
The amounts above include construction in progress of $113.4 million and $101.1 million for fiscal 2014 and 2013,
respectively.
5. Accrued Expenses
Accrued expenses consist of the following as of the end of the fiscal periods (in thousands):
Accrued payroll, withholdings and benefits
Accrued real estate taxes, utilities and other occupancy
Accrued property and equipment
Accrued sales tax
Other accrued expenses
Total accrued expenses
6. Deferred Revenue and Other Liabilities
2014
2013
$
98,327
$
54,200
43,666
26,153
61,482
99,619
60,178
41,036
21,800
42,407
$
283,828
$
265,040
Deferred revenue and other liabilities consist of the following as of the end of the fiscal periods (in thousands):
Current:
Deferred gift card revenue
Deferred construction allowances
Other
Total current
Long-term:
Deferred rent, including pre-opening rent
Deferred construction allowances
Other
Total long-term
2014
2013
$
$
$
$
151,791
$
138,513
1,686
18,782
172,259
80,130
278,391
76,212
$
$
1,439
14,432
154,384
70,713
181,148
79,767
434,733
$
331,628
54
54
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
7. Debt
The Company's outstanding debt consists of the following as of the end of the fiscal periods (in thousands):
Revolving line of credit
Capital leases
Other debt
Total debt
Less: current portion
Total long-term debt
2014
2013
— $
5,994
456
6,450
(537)
5,913
$
—
6,818
557
7,375
(899)
6,476
$
$
Revolving Credit Agreement – On December 5, 2011, the Company entered into a five-year credit agreement with Wells Fargo
Bank, National Association (the "Credit Agreement"), which replaced the Company's then existing credit facility that was
terminated. The Credit Agreement provides for a $500 million revolving credit facility, including up to $100 million in the form
of letters of credit and allows the Company, subject to the satisfaction of certain conditions, to request an increase of up to $250
million in borrowing availability to the extent that existing or new lenders agree to provide such additional revolving
commitments.
The Credit Agreement, which matures on December 5, 2016, is secured by a first priority security interest in certain property
and assets, including receivables, inventory, deposit accounts and other personal property of the Company, and is guaranteed by
the Company's domestic subsidiaries.
The annual interest rates applicable to loans under the Credit Agreement are, at the Company's option, a base rate or an adjusted
LIBOR rate plus, in each case, an applicable margin percentage. The applicable margin percentage for base rate loans is 0.20%
to 0.50% and for adjusted LIBOR rate loans is 1.20% to 1.50%, depending on the borrowing availability of the Company.
The Credit Agreement contains certain covenants that limit the ability of the Company to, among other things: incur or
guarantee additional indebtedness; pay distributions on, redeem or repurchase capital stock or redeem or repurchase
subordinated debt; make certain investments; sell assets; and consolidate, merge or transfer all or substantially all of the
Company's assets. In addition, the Credit Agreement contains a covenant that requires the Company to maintain a minimum
adjusted availability of 7.5% of its borrowing base. As of January 31, 2015, the Company was in compliance with the terms of
the credit agreement.
There were no borrowings under the Credit Agreement as of January 31, 2015 and February 1, 2014, respectively. As of
January 31, 2015, the Company had outstanding letters of credit and total borrowing capacity under the Credit Agreement of
$14.0 million and $486.0 million, respectively. The Company had $13.0 million of outstanding letters of credit and $487.0
million of total borrowing capacity as of February 1, 2014.
Capital Lease Obligations – The gross and net carrying values of assets under capital leases were $7.3 million and $0.8 million,
respectively, as of January 31, 2015, and $30.3 million and $16.3 million, respectively, as of February 1, 2014. The Company
also leases two buildings from an entity that is a related party to its Chairman and Chief Executive Officer, under a capital lease
entered into May 1, 1986 that expires in April 2021.
55
55
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Scheduled lease payments under capital lease obligations as of January 31, 2015 are as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Subtotal
Less: amounts representing interest
Present value of net scheduled lease payments
Less: amounts due in one year
Total long-term capital leases
8. Operating Leases
$
$
1,024
1,024
1,024
1,044
1,103
3,988
9,207
(3,213)
5,994
(429)
5,565
The Company leases substantially all of its stores, three distribution centers and equipment under non-cancellable operating
leases that expire at various dates through 2030. Initial lease terms are generally for 10 to 15 years and most store leases contain
multiple five-year renewal options and rent escalation provisions. The lease agreements provide primarily for the payment of
minimum annual rentals, costs of utilities, property taxes, maintenance, common areas and insurance, and in some cases,
contingent rent stated as a percentage of gross sales over certain base amounts. Rent expense under these operating leases
totaled approximately $441.5 million, $411.5 million and $388.3 million for fiscal 2014, 2013 and 2012, respectively. The
Company entered into sale-leaseback transactions related to store fixtures, buildings and equipment that resulted in cash
receipts of $3.4 million for fiscal 2012.
Scheduled lease payments due under non-cancellable operating leases as of January 31, 2015 are as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
$
$
505,519
511,223
470,053
416,897
363,854
1,236,347
3,503,893
The Company has subleases related to certain of its operating lease agreements. The Company recognized sublease rental
income of $0.6 million, $0.7 million and $0.9 million in fiscal 2014, 2013 and 2012, respectively.
9. Stockholders' Equity
Common Stock, Class B Common Stock and Preferred Stock – The Company's Amended and Restated Certificate of
Incorporation authorizes the issuance of 200,000,000 shares of common stock, par value $0.01 per share, and the issuance of
40,000,000 shares of Class B common stock, par value $0.01 per share. In addition, the Company's Amended and Restated
Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock.
Holders of common stock generally have rights identical to holders of Class B common stock, except that holders of common
stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share. A related party,
relatives of the related party and trusts held by them hold all of the Class B common stock. These shares can only be held by
members of this group and are not publicly tradable. Each share of Class B common stock can be converted at any time into
one share of common stock at the holder's option.
56
56
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Dividends per Common Share – The Company declared and paid cash dividends of $0.50, $0.50 and $2.50 per share of
common stock and Class B common stock during fiscal 2014, 2013 and 2012, respectively. Fiscal 2012 included a special cash
dividend of $2.00 per share of common stock and Class B common stock.
Treasury Stock – On March 7, 2013, the Company's Board of Directors authorized a five-year share repurchase program of up
to $1 billion of the Company's common stock. During fiscal 2014, the Company repurchased 4.3 million shares of its common
stock for $200.0 million. During fiscal 2013, the Company repurchased 4.8 million shares of its common stock for $255.6
million.
10. Stock-Based Compensation and Employee Stock Plans
The Company has the ability to grant restricted shares of common stock, restricted stock units and options to purchase common
stock under the Dick's Sporting Goods, Inc. 2012 Stock and Incentive Plan (the "Plan"). As of January 31, 2015, shares of
common stock available for future issuance pursuant to the Plan were 10,862,360 shares.
The following represents total stock-based compensation recognized in the Consolidated Statements of Income for the fiscal
years presented (in thousands):
Stock option expense
Restricted stock expense
Total stock-based compensation expense
Total related tax benefit
2014
2013
2012
$
$
$
7,903
18,372
26,275
9,200
$
$
$
8,263
18,856
27,119
9,230
$
$
$
10,215
21,966
32,181
11,561
Stock Option Plans – Stock options are generally granted on an annual basis, vest 25% per year over four years and have a
seven-year maximum term.
The fair value of each stock option granted is estimated on the grant date using the Black-Scholes ("Black-Scholes") option
valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to
reflect market conditions and the Company's experience. These options are expensed on a straight-line basis over the vesting
period, which is considered to be the requisite service period. Compensation expense is recognized only for those options
expected to vest, with forfeitures estimated at the date of grant based on the Company's historical experience and future
expectations.
The fair value of stock-based awards to employees is estimated on the date of grant using the Black-Scholes valuation with the
following assumptions:
Black-Scholes Valuation Assumptions
Expected life (years) (1)
Expected volatility (2)
Weighted average volatility
Risk-free interest rate (3)
Expected dividend yield
Weighted average grant date fair value
Employee Stock Option Plans
2013
2014
2012
5.23
31.97% - 44.48%
36.28%
5.33
36.10% - 47.86%
46.71%
5.70
44.52% - 49.38%
47.25%
1.44% - 2.39%
0.73% - 1.73%
0.59% - 1.57%
0.90% - 1.13%
0.98% - 1.04%
0.98% - 1.25%
$
17.31
$
18.31
$
19.24
(1) The expected term of the options represents the estimated period of time until exercise and is based on historical
experience of similar awards giving consideration to the contractual terms, vesting schedules and expectations of
future employee behavior.
(2) Expected volatility is based on the historical volatility of the Company's common stock over a timeframe consistent
with the expected life of the stock options.
57
57
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(3) The risk-free interest rate is based on the implied yield available on U.S. Treasury constant maturity interest rates
whose term is consistent with the expected life of the stock options.
The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market
conditions and experience.
The stock option activity from January 28, 2012 through January 31, 2015 is presented in the following table:
Outstanding, January 28, 2012
Granted
Exercised
Forfeited / Expired
Outstanding, February 2, 2013
Granted
Exercised
Forfeited / Expired
Outstanding, February 1, 2014
Granted
Exercised
Forfeited / Expired
Outstanding, January 31, 2015
Exercisable, January 31, 2015
Vested and expected to vest, January 31, 2015
Shares
Subject to
Options
11,658,089
$
581,665
(5,431,053)
(99,977)
6,708,724
682,344
(2,154,201)
(282,820)
4,954,047
559,722
(1,175,540)
(256,931)
4,081,298
2,874,454
3,962,463
$
$
$
$
$
Weighted
Average
Exercise
Price per
Share
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value (in
thousands)
18.60
48.35
14.38
25.48
24.50
47.31
20.18
41.57
28.55
53.78
22.22
44.42
32.83
25.84
32.27
3.45
$
262,995
3.60
$
157,380
3.19
$
118,784
3.00
2.05
2.92
$
$
$
78,432
74,210
78,172
The aggregate intrinsic value reported in the table above is based on the Company's closing stock prices for the last business
day of the period indicated. The total intrinsic value for stock options exercised during 2014, 2013 and 2012 was $34.3 million,
$67.2 million and $186.5 million, respectively. The total fair value of options vested during 2014, 2013 and 2012 was $8.2
million, $14.9 million and $7.1 million, respectively. The nonvested stock option activity for the year ended January 31, 2015 is
presented in the following table:
Nonvested, February 1, 2014
Granted
Vested
Forfeited
Nonvested, January 31, 2015
Shares
Subject to
Options
Weighted
Average
Grant Date
Fair Value
1,336,590
559,722
(484,356)
(205,112)
1,206,844
$
$
17.90
17.31
17.02
17.17
18.10
As of January 31, 2015, unrecognized stock-based compensation expense related to nonvested stock options was approximately
$13.2 million, net of estimated forfeitures, which is expected to be recognized over a weighted average period of approximately
2.31 years.
The Company issues new shares of common stock upon exercise of stock options.
58
58
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Additional information regarding options outstanding as of January 31, 2015 is as follows:
Range of
Exercise Prices
$12.44 - $18.95
$19.71 - $28.23
$33.13 - $48.60
$49.26 - $57.59
$12.44 - $57.59
Options Outstanding
Weighted
Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise
Price
Shares
1,170,980
1,140,891
1,202,870
566,557
4,081,298
1.10
2.09
4.31
5.96
3.00
$
$
15.57
27.30
44.83
54.16
32.83
Options Exercisable
Weighted
Average
Exercise
Price
15.57
27.30
43.89
51.36
25.84
Shares
1,170,980
$
1,140,891
532,285
30,298
2,874,454
$
Restricted Stock – The Company issues shares of restricted stock to eligible employees, which are subject to forfeiture until the
end of an applicable vesting period. The awards generally vest on the third anniversary of the date of grant, subject to the
employee's continuing employment as of that date.
The restricted stock activity from January 28, 2012 through January 31, 2015 is presented in the following table:
Nonvested, January 28, 2012
Granted
Vested
Forfeited
Nonvested, February 2, 2013
Granted
Vested
Forfeited
Nonvested, February 1, 2014
Granted
Vested
Forfeited
Nonvested, January 31, 2015
Weighted
Average
Grant Date
Fair Value
28.16
48.55
15.09
32.76
35.48
46.85
27.46
39.93
45.93
53.36
39.99
48.40
48.67
Shares
2,090,433
$
542,221
(381,278)
(159,281)
2,092,095
1,806,949
(913,769)
(553,621)
2,431,654
593,841
(433,249)
(406,127)
2,186,119
$
$
$
As of January 31, 2015, total unrecognized stock-based compensation expense related to nonvested shares of restricted stock,
net of estimated forfeitures, was approximately $23.3 million before income taxes, which is expected to be recognized over a
weighted average period of approximately 1.99 years.
During 2013, the Company issued a special grant of 1,185,793 shares of performance-based restricted stock in support of the
Company's five-year strategic plan. The Company issued an additional 118,095 shares of performance-based restricted stock
during 2014. As of January 31, 2015, nonvested restricted stock outstanding included 862,655 shares of these performance-
based awards, which vest at the end of a five-year period based upon the achievement of certain pre-established financial
performance metrics at the end of the performance period, with an opportunity for earlier vesting if the target metrics are
achieved at the end of any fiscal year within the performance period. As of January 31, 2015, these awards were not deemed
probable of achieving the pre-established financial performance metrics.
59
59
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
11. Income Taxes
The components of the provision for income taxes are as follows for the fiscal periods ended (in thousands):
Current:
Federal
State
Deferred:
Federal
State
Total provision
2014
2013
2012
$
$
187,735
30,340
218,075
(5,740)
(519)
(6,259)
211,816
$
$
156,177
27,769
183,946
23,499
1,064
24,563
208,509
$
$
174,049
27,429
201,478
(1,734)
(628)
(2,362)
199,116
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the
following periods:
Federal statutory rate
State tax, net of federal benefit
Valuation allowance
Other permanent items
Effective income tax rate
2014
2013
2012
35.0%
3.1%
—%
—%
38.1%
35.0 %
3.5 %
(0.4)%
0.1 %
38.2 %
35.0%
3.6%
1.6%
0.5%
40.7%
60
60
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Components of deferred tax assets (liabilities) consist of the following as of the fiscal periods ended (in thousands):
Inventory
Store closing expense
Stock-based compensation
Capital loss carryforward
Employee benefits
Other accrued expenses not currently deductible for tax purposes
Deferred rent
Insurance
Gift cards
Deferred revenue currently taxable
Non income-based tax reserves
Uncertain income tax positions
Valuation allowance
Other
Total deferred tax assets
Property and equipment
Inventory
Intangibles
Other
Total deferred tax liabilities
Net deferred tax asset
2014
2013
$
42,163
$
4,984
25,913
5,608
34,167
5,520
31,234
2,432
13,691
4,837
8,174
3,524
(5,608)
77
176,716
(134,057)
(27,386)
(6,319)
—
(167,762)
8,954
$
$
35,531
6,674
26,692
6,242
33,156
4,631
27,609
2,352
11,531
4,404
7,098
3,112
(6,242)
—
162,790
(118,854)
(30,342)
(10,875)
(24)
(160,095)
2,695
In 2014, of the $9.0 million net deferred tax asset, $51.6 million is included within current assets, $1.9 million is included
within other long-term assets and $44.5 million is included within other long-term liabilities on the Consolidated Balance
Sheets. In 2013, of the $2.7 million net deferred tax asset, $38.8 million was included within current assets, $2.5 million was
included within other long-term assets and $38.6 million was included within other long-term liabilities on the Consolidated
Balance Sheets.
The Company determined that a valuation allowance of $7.9 million was required for a portion of the deferred tax asset
recorded in fiscal 2012 relating to a $32.4 million net capital loss carryforward resulting from the impairment of its investment
in JJB Sports, plc ("JJB Sports"). 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 impaired. There was no related tax expense for this recovery 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. The Company has
received, and may receive in future periods, additional immaterial recoveries related to its investment in JJB Sports.
As of January 31, 2015, the total liability for uncertain tax positions, including related interest and penalties, was approximately
$10.1 million.
61
61
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table represents a reconciliation of the Company's total balance of unrecognized tax benefits, excluding interest
and penalties (in thousands):
Beginning of fiscal year
Increases as a result of tax positions taken in a prior period
Decreases as a result of tax positions taken in a prior period
Increases as a result of tax positions taken in the current period
Decreases as a result of settlements during the current period
Reductions as a result of a lapse of statute of limitations during the
current period
End of fiscal year
2014
2013
2012
$
7,507
$
10,670
$
18,692
124
—
1,057
(312)
—
1,651
(2,240)
985
(3,559)
—
$
8,376
$
7,507
$
1,816
(4,370)
1,740
(6,405)
(803)
10,670
The balance at January 31, 2015 includes $5.4 million of unrecognized tax benefits that would impact our effective tax rate if
recognized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.
As of January 31, 2015, the liability for uncertain tax positions includes $1.8 million for the accrual of interest and penalties.
During fiscal 2014, 2013 and 2012, the Company recorded $0.3 million, $0.9 million and $0.8 million, respectively, for the
accrual of interest and penalties in the Consolidated Statements of Income. The Company has federal, state and local
examinations currently ongoing. It is possible that these examinations may be resolved within 12 months. Due to the potential
for resolution of these examinations, and the expiration of various statutes of limitation, it is reasonably possible that $3.6
million of the Company's gross unrecognized tax benefits and interest at January 31, 2015 could be recognized within the next
12 months. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the
Consolidated Statements of Income during fiscal 2015.
The Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP"). As part of the
CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return.
The IRS has completed examinations of 2013 and all prior tax years. The Company is no longer subject to examination in any
of its major state jurisdictions for years prior to 2007.
12. Earnings per Common Share
The computations for basic and diluted earnings per common share are as follows (in thousands, except per share data):
Fiscal Year Ended
2013
2012
2014
Earnings per common share - Basic:
Net income
Weighted average common shares outstanding - basic
Earnings per common share
Earnings per common share - Diluted:
Net income
Weighted average common shares outstanding - basic
Dilutive effect of stock-based awards
Weighted average common shares outstanding - diluted
Earnings per common share
$
$
$
$
$
$
$
344,198
119,244
2.89
344,198
119,244
1,994
121,238
$
$
$
337,598
122,878
2.75
337,598
122,878
2,750
125,628
2.84
$
2.69
$
Anti-dilutive stock-based awards excluded from diluted calculation
1,334
899
290,709
121,629
2.39
290,709
121,629
4,366
125,995
2.31
768
62
62
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
13. Retirement Savings Plans
The Company's retirement savings plan, established pursuant to Section 401(k) of the Internal Revenue Code, covers regular
status full-time hourly and salaried employees as of their date of hire and part-time regular employees who have worked 1,000
hours or more in a year. Employees must be 21 years of age to participate. Under the terms of the retirement savings plan, the
Company may make a discretionary matching contribution equal to a percentage of each participant's contribution, up to 10%
of the participant's compensation. The Company's discretionary matching contribution percentage is typically 50%. Total
employer contributions recorded under the plan, net of forfeitures, was $6.1 million, $6.4 million and $5.3 million for fiscal
2014, 2013 and 2012, respectively.
The Company also has non-qualified deferred compensation plans for highly compensated employees whose contributions are
limited under qualified defined contribution plans. Amounts contributed and deferred under the deferred compensation plans
are credited or charged with the performance of investment options offered under the plans and elected by the participants. In
the event of bankruptcy, the assets of these plans are available to satisfy the claims of general creditors. The liability for
compensation deferred under the Company's plans was $52.2 million and $49.4 million as of January 31, 2015 and February 1,
2014, respectively, and is included within long-term liabilities on the Consolidated Balance Sheets. Total employer
contributions recorded under these plans, net of forfeitures, was $1.5 million, $1.0 million and $0.9 million for fiscal 2014,
2013 and 2012, respectively.
14. Commitments and Contingencies
Marketing and Naming Rights Commitments
Within the ordinary course of business, the Company enters into contractual commitments in order to promote the Company's
brand and products, including media and naming rights extending through 2026. The aggregate payments under these
commitments were $52.1 million, $29.0 million and $25.8 million during fiscal 2014, 2013 and 2012, respectively. The
aggregate amount of future minimum payments at January 31, 2015 is as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
$
37,534
34,549
3,090
3,176
3,266
20,409
$
102,024
63
63
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Licenses for Trademarks
Within the ordinary course of business, the Company enters into licensing agreements for the exclusive or preferential rights to
use certain trademarks extending through 2020. Under specific agreements, the Company is obligated to pay annual guaranteed
minimum royalties. Also, the Company is required to pay additional royalties when the royalties that are based on qualified
purchases or retail sales (dependent upon the agreement) exceed the guaranteed minimum. The aggregate payments under these
commitments were $16.4 million, $16.8 million and $17.8 million during fiscal 2014, 2013 and 2012, respectively. The
aggregate amount of future minimum payments at January 31, 2015 is as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
Other
$
18,157
19,214
21,052
21,202
21,352
20,352
$
121,329
The Company also has other non-cancellable contractual commitments, including corporate aircraft and technology-related
commitments extending through 2019. The aggregate payments under these commitments were $8.7 million, $43.9 million and
$9.6 million during fiscal 2014, 2013 and 2012, respectively. The aggregate amount of future minimum payments at January
31, 2015 is as follows (in thousands):
Fiscal Year
2015
2016
2017
2018
2019
Thereafter
Total
$
8,306
8,815
994
35,000
4,500
—
$
57,615
The Company is involved in legal proceedings incidental to the normal conduct of its business. Although the outcome of any
pending legal proceedings cannot be predicted with certainty, management believes that adequate insurance coverage is
maintained and that the ultimate resolution of these matters will not have a material adverse effect on the Company's liquidity,
financial position or results of operations.
15. Investment in JJB Sports
On April 27, 2012, the Company invested an aggregate of £20 million in JJB Sports, a retail sports company based in the
United Kingdom, consisting of junior secured convertible notes ("Convertible Notes") in the principal amount of £18.75 million
and 12.5 million ordinary shares ("Ordinary Shares") of JJB Sports for £1.25 million, for a total cash outlay of $32.0 million.
The Company classified its investments in JJB Sports as available-for-sale investments, which were recorded at fair value. As
of July 28, 2012, the Company recorded an other-than-temporary impairment charge of $30.4 million on the Convertible Notes
and $2.0 million on the Ordinary Shares within the Consolidated Statements of Income, fully impairing the carrying value of its
investment as of July 28, 2012.
64
64
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company's initial fair value of its investment in the Convertible Notes was determined using a binomial lattice model with
Level 2 inputs, including JJB Sports' stock price, the expected stock price volatility, the interest rate on the Convertible Notes,
the risk-free interest rate based upon appropriate government yield curves and option-adjusted spreads for comparable
securities. Due to the use of discounted expected future cash flows to derive the fair value of the Convertible Notes, the
Company reclassified its investment as a Level 3 investment during the fiscal quarter ended July 28, 2012 (see Note 16).
During the first quarter of 2013, the Company recorded $4.3 million related to the partial recovery of its previously impaired
investment in JJB Sports. The Company has received, and may receive in future periods, additional immaterial recoveries.
16. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (an exit price). ASC 820, "Fair Value Measurement and Disclosures",
outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair
value measurements and the related disclosures and prioritizes the inputs used in measuring fair value 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.
Assets measured at fair value on a recurring basis as of January 31, 2015 and February 1, 2014 are set forth in the table below:
Description
As of January 31, 2015
Assets:
Deferred compensation plan assets held in trust (1)
Total assets
As of February 1, 2014
Assets:
Deferred compensation plan assets held in trust (1)
Total assets
Level 1
Level 2
Level 3
$
$
$
$
52,193
52,193
49,351
49,351
$
$
$
$
— $
— $
— $
— $
—
—
—
—
(1) Consists of investments in various mutual funds made by eligible individuals as part of the Company's deferred
compensation plan (See Note 13).
The fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated
book value due to the short-term nature of these instruments at both January 31, 2015 and February 1, 2014.
The Company uses quoted prices in active markets to determine the fair value of the aforementioned assets determined to be
Level 1 instruments. The Company's policy for recognition of transfers between levels of the fair value hierarchy is to
recognize any transfer at the end of the fiscal quarter in which the determination to transfer was made. The Company did not
transfer any assets or liabilities among the levels of the fair value hierarchy during the fiscal year ended January 31, 2015 and
February 1, 2014. Additionally, the Company did not hold any Level 3 financial assets or liabilities as of January 31, 2015 and
February 1, 2014.
65
65
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table provides a reconciliation of the beginning and ending balances of assets measured at fair value on a
recurring basis using Level 3 inputs (in thousands):
Beginning balance, January 28, 2012
Transfers in (see Note 15)
Total realized losses included in net income
Ending balance, February 2, 2013
2012
—
32,370
(32,370)
—
$
$
Realized losses are included within impairment of available-for-sale investments on the Consolidated Statements of Income.
17. Related Party Transaction
On July 17, 2013, the Company entered into a purchase agreement (the "Purchase Agreement") with SP Aviation, LLC, an
entity 50% owned by its Chairman and Chief Executive Officer. Pursuant to the Purchase Agreement, the Company sold a
Gulfstream G200 corporate aircraft to SP Aviation, LLC for $11.0 million, paid in cash, representing the Company's carrying
value of the asset at the time of sale. The transaction was approved pursuant to the Company's Related Party Transaction Policy.
18. Quarterly Financial Information (Unaudited)
Summarized quarterly financial information for fiscal 2014 and 2013 is as follows (in thousands, except earnings per share
data):
Net sales
Gross profit (1)
Income from operations (1)
Net income
Earnings per common share:
Basic (1)
Diluted (1)
Fiscal 2014
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
1,438,908
$
1,688,890
$
1,526,675
$
2,160,006
440,883
112,088
69,984 (2)
502,556
111,562
69,467 (3)
451,972
79,930
49,211
691,256
250,480
155,536
$
$
0.58
0.57
$
$
0.58
0.57
$
$
0.42
0.41
$
$
1.32
1.30
Weighted average common shares outstanding:
Basic
Diluted
121,138
123,360
119,950
121,840
118,142
120,002
117,745
119,749
66
66
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Net sales
Gross profit
Income from operations (1)
Net income (1)
Earnings per common share:
Basic
Diluted (1)
Fiscal 2013
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
1,333,701
$
411,654
97,617
64,821 (4)
1,531,431
479,330
137,095
84,163 (5)
$
1,400,623
$
1,947,418
424,899
79,053
49,977
628,067
223,048
138,638
$
$
0.53
0.52
$
$
0.68
0.67
$
$
0.41
0.40
$
$
1.13
1.11
Weighted average common shares outstanding:
Basic
Diluted
122,702
125,862
122,901
125,593
123,221
125,842
122,687
125,214
(1) Quarterly results for fiscal 2014 and 2013 do not add to full year results due to rounding.
(2)
(3)
(4)
(5)
Includes gain on sale of a Gulfstream G650 corporate aircraft of $8.7 million.
Includes golf restructuring charges of $12.2 million.
Includes the partial recovery of a previously impaired asset of $4.3 million.
Includes asset impairment charge of $4.7 million.
19. Subsequent Event
On February 18, 2015, our Board of Directors declared a quarterly cash dividend in the amount of $0.1375 per share of
common stock and Class B common stock payable on March 31, 2015 to stockholders of record as of the close of business on
March 13, 2015.
67
67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
DICK'S SPORTING GOODS, INC.
(Registrant)
By: /s/ ANDRÉ J. HAWAUX
André J. Hawaux
Executive Vice President – Chief Operating Officer / Chief Financial Officer
Date: March 27, 2015
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date indicated.
SIGNATURE
/s/ EDWARD W. STACK
Edward W. Stack
CAPACITY
Chairman, Chief Executive Officer and Director
DATE
March 27, 2015
/s/ ANDRÉ J. HAWAUX
André J. Hawaux
Executive Vice President – Chief Operating Officer /
Chief Financial Officer (principal financial officer)
March 27, 2015
/s/ JOSEPH R. OLIVER
Joseph R. Oliver
Senior Vice President – Chief Accounting Officer
(principal accounting officer)
/s/ MARK J. BARRENECHEA
Mark J. Barrenechea
Director
/s/ VINCENT C. BYRD
Vincent C. Byrd
Director
/s/ EMANUEL CHIRICO
Emanuel Chirico
Director
/s/ WILLIAM J. COLOMBO
William J. Colombo
Vice Chairman and Director
/s/ JACQUALYN A. FOUSE
Jacqualyn A. Fouse
Director
/s/ LAWRENCE J. SCHORR
Lawrence J. Schorr
Director
/s/ LARRY D. STONE
Larry D. Stone
Director
/s/ ALLEN WEISS
Allen Weiss
Director
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
March 27, 2015
68
68
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Dick's Sporting Goods, Inc.
Pittsburgh, Pennsylvania
We have audited the consolidated financial statements of Dick's Sporting Goods, Inc. and subsidiaries (the "Company") as of
January 31, 2015 and February 1, 2014, and for each of the three years in the period ended January 31, 2015, and the
Company's internal control over financial reporting as of January 31, 2015, and have issued our reports thereon dated March 27,
2015; such consolidated financial statements and reports are included in this Annual Report on Form 10-K. Our audits also
included the consolidated financial statement schedule of the Company listed in Item 15. This consolidated financial statement
schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
March 27, 2015
69
69
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Deductions
Balance at
End of Period
(3,400)
(4,377)
(324,799)
—
(2,479)
(4,625)
(356,420)
(1,700)
(6,450)
(5,137)
(407,123)
(634)
$
17,972
2,738
4,382
7,942
$
20,113
3,109
4,406
6,242
$
32,297
2,684
5,829
5,608
Fiscal 2012
Inventory reserve
Allowance for doubtful accounts
Reserve for sales returns
Allowance for deferred tax assets
Fiscal 2013
$
15,621
$
5,751
$
2,444
3,871
—
4,671
325,310
7,942
$
4,620
4,996
356,444
—
Inventory reserve
$
17,972
$
Allowance for doubtful accounts
Reserve for sales returns
Allowance for deferred tax assets
Fiscal 2014
2,738
4,382
7,942
Inventory reserve
$
20,113
$
18,634
$
Allowance for doubtful accounts
Reserve for sales returns
Allowance for deferred tax assets
3,109
4,406
6,242
4,712
408,546
—
70
70
Index to Exhibits
Exhibit Number
3.1
Description
Amended and Restated Certificate of Incorporation
Method of Filing
Incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-8,
File No. 333-100656, filed on October 21, 2002
Amendment to the Amended and Restated
Certificate of Incorporation, dated as of June 10,
2004
Incorporated by reference to Exhibit 3.1 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on September 9, 2004
Form of Agreement entered into between
Registrant and various executive officers, which
sets forth form of severance
Incorporated by reference to Exhibit 10.10 to the
Registrant's Statement on Form S-1, File
No. 333-96587, filed on July 17, 2002
Amended and Restated Bylaws (adopted June 6,
2012)
Form of Stock Certificate
10.1
Associate Savings and Retirement Plan
Form of Option Award entered into between
Registrant and various executive officers, directors
and employees under Registrant's Amended and
Restated 2002 Stock and Incentive Plan
Amended and Restated Lease Agreement,
originally dated February 4, 1999, for distribution
center located in Smithton, Pennsylvania, effective
as of May 5, 2004, between Lippman &
Lippman, L.P., Martin and Donnabeth Lippman
and Registrant
Amended and Restated Lease Agreement
originally dated August 31, 1999, for distribution
center located in Plainfield, Indiana, effective as of
November 30, 2005, between CP Gal
Plainfield, LLC and Registrant
10.6
Registrant's Supplemental Smart Savings Plan
10.7
Golf Galaxy, Inc. 2004 Stock Incentive Plan
First Amendment to Registrant's Supplemental
Smart Savings Plan
Incorporated by reference to Exhibit 3.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on June 11, 2012
Incorporated by reference to Exhibit 4.1 to the
Registrant's Statement on Form S-1, File
No. 333-96587, filed on July 17, 2002
Incorporated by reference to Exhibit 10.1 to the
Registrant's Statement on Form S-1, File
No. 333-96587, filed on July 17, 2002
Incorporated by reference to Exhibit 10.9 to the
Registrant's Form 10-K, File No. 001-31463, filed
on April 8, 2004
Incorporated by reference to Exhibit 10.5 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on September 9, 2004
Incorporated by reference to Exhibit 10.22 to
Registrant's Form 10-K, File No. 001-31463, filed
on March 23, 2006
Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on July 6, 2006
Incorporated by reference to Exhibit 4.2 to the
Registrant's Statement on Form S-8, File
No. 333-140713, filed on February 14, 2007
Incorporated by reference to Exhibit 10.7 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on June 6, 2007
Registrant's Amended and Restated Officers'
Supplemental Savings Plan, dated December 12,
2007
Incorporated by reference to Exhibit 10.35 to the
Registrant's Form 10-K, File No. 001-31463, filed
on March 27, 2008
First Amendment to Registrant's Amended and
Restated Officers' Supplemental Savings Plan,
dated March 27, 2008
Incorporated by reference to Exhibit 10.36 to the
Registrant's Form 10-K, File No. 001-31463, filed
on March 27, 2008
Registrant's Amended and Restated 2002 Stock
and Incentive Plan
Golf Galaxy, Inc. Amended and Restated 2004
Stock Incentive Plan
Amendment to Golf Galaxy, Inc.'s Amended and
Restated 1996 Stock Option and Incentive Plan
Incorporated by reference to Annex A to the
Registrant's Schedule 14A, File No. 001-31463,
filed on April 21, 2010
Incorporated by reference to Exhibit 4.2 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on May 22, 2008
Incorporated by reference to Exhibit 4.4 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on May 22, 2008
71
71
3.2
3.3
4.2
10.2
10.3
10.4
10.5
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.22
10.23
10.24
10.25
10.26
21
23.1
31.1
31.2
Second Amendment to Registrant's Supplemental
Smart Savings Plan
Third Amendment to Registrant's Supplemental
Smart Savings Plan
Incorporated by reference to Exhibit 10.1 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on May 22, 2008
Incorporated by reference to Exhibit 10.2 to the
Registrant's Form 10-Q, File No. 001-31463, filed
on May 22, 2008
Second Amendment to Registrant's Amended and
Restated Officers' Supplemental Savings Plan,
dated as of December 4, 2008
Incorporated by reference to Exhibit 10.46 to the
Registrant's Form 10-K, File No. 001-31463, filed
on March 20, 2009
Form of Restricted Stock Award Agreement
granted under Registrant's Amended and Restated
2002 Stock and Incentive Plan
Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on November 15, 2011
Aircraft Charter Agreement, dated December 19,
2011 between Registrant and Corporate Air, LLC
Credit Agreement, dated as of December 5, 2011,
among Registrant, the guarantors named therein,
Wells Fargo Bank, National Association, as
administrative agent, collateral agent, letter of
credit issuer and swing line lender, the lenders
party thereto, PNC Bank, National Association, as
syndication agent, Bank of America, N.A.,
JPMorgan Chase Bank, N.A. and U.S. Bank,
National Association, as co-documentation agents,
and Wells Fargo Capital Finance, LLC and PNC
Capital Markets, LLC, as joint lead arrangers and
joint book managers.
Lease Agreement originally dated June 25, 2007,
for distribution center located in East Point,
Georgia, between Duke Realty Limited Partnership
and Registrant, as amended, supplemented or
modified as of March 16, 2012
Form of Restricted Stock Award Agreement
granted under Registrant's 2012 Stock and
Incentive Plan
Form of Stock Option Award Agreement granted
under Registrant's 2012 Stock and Incentive Plan
Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on December 22, 2011
Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on December 6, 2011
Incorporated by reference to Exhibit 10.31 to the
Registrant's Annual Report on Form 10-K, File
No. 001-31463, filed on March 16, 2012
Incorporated by reference to Exhibit 10.1 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on June 11, 2012
Incorporated by reference to Exhibit 10.2 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on June 11, 2012
Incorporated by reference to Exhibit 10.3 to the
Registrant's Current Report on Form 8-K, File
No. 001-31463, filed on June 11, 2012
Form of Long-Term Performance Based Restricted
Stock Award Agreement granted under the
Registrant's 2012 Stock and Incentive Plan
Incorporated by reference to Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q, File
No. 001-31463, filed on May 31, 2013
Retention and Consulting Agreement between the
Company and John G. Duken, Executive Vice
President, Global Merchandising
Retention and Consulting Agreement between the
Company and Joseph H. Schmidt, President and
Chief Operating Officer
Subsidiaries
Consent of Deloitte & Touche LLP
Certification of Edward W. Stack, Chairman and
Chief Executive Officer, dated as of March 27,
2015 and made pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended
Certification of André J. Hawaux, Executive Vice
President – Chief Operating Officer / Chief
Financial Officer, dated as of March 27, 2015 and
made pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
Filed herewith
10.21
Registrant's 2012 Stock and Incentive Plan
72
72
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
Certification of Edward W. Stack, Chairman and
Chief Executive Officer, dated as of March 27,
2015 and made pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as
adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Certification of André J. Hawaux, Executive Vice
President – Chief Operating Officer / Chief
Financial Officer, dated as of March 27, 2015 and
made pursuant to Section 1350, Chapter 63 of Title
18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Furnished herewith
Furnished herewith
XBRL Instance Document
Filed herewith
XBRL Taxonomy Extension Schema Document
Filed herewith
XBRL Taxonomy Calculation Linkbase Document
Filed herewith
XBRL Taxonomy Definition Linkbase Document
Filed herewith
XBRL Taxonomy Label Linkbase Document
XBRL Taxonomy Presentation Linkbase
Document
Filed herewith
Filed herewith
Attached as Exhibits 101 to this report are the following financial statements from the Company's Annual Report on Form 10-K
for the year ended January 31, 2015 formatted in XBRL ("eXtensible Business Reporting Language"): (i) the Consolidated
Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets,
(iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and
(vi) related notes to these Consolidated Financial Statements.
73
73
SUBSIDIARIES
American Sports Licensing, Inc., a Delaware corporation (f/k/a Dick's Asset Management)
Exhibit 21
Dick's Sporting Goods International, Limited, a Hong Kong corporation
Dick's International Sourcing Holdings Limited, a Hong Kong corporation
Dick's International Sourcing Group, a People's Republic of China Trust
DIH I Limited, a Hong Kong corporation
DIH II Limited, a Hong Kong corporation
DSG of Virginia, LLC, a Virginia limited liability company
Galyan's Trading Company, LLC, an Indiana limited liability company
Galyan's of Virginia, Inc., a Virginia corporation
Galyan's Nevada, Inc., a Nevada corporation
Golf Galaxy, LLC, a Minnesota limited liability company
Golf Galaxy GolfWorks, Inc., an Ohio corporation
Criterion Golf Technology, Inc., a Canada corporation
Chick's Sporting Goods, LLC, a California limited liability company
Blue Sombrero, LLC, a Georgia limited liability company
DSG Finance, LLC, a Delaware limited liability company
DCSG Ventures, LLC, a Delaware limited liability company
74
74
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-182120, 333-102385, 333-100656 and
333-140713 on Forms S-8 of our reports dated March 27, 2015 relating to the financial statements and financial statement
schedule of Dick's Sporting Goods, Inc. and subsidiaries and the effectiveness of Dick's Sporting Goods, Inc. and subsidiaries'
internal control over financial reporting, appearing in this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. and
subsidiaries for the year ended January 31, 2015.
Exhibit 23.1
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
March 27, 2015
75
75
Exhibit 31.1
CERTIFICATIONS
I, Edward W. Stack, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ EDWARD W. STACK
Edward W. Stack
Chairman and Chief Executive Officer
Date: March 27, 2015
76
76
Exhibit 31.2
CERTIFICATIONS
I, André J. Hawaux, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
/s/ ANDRÉ J. HAWAUX
André J. Hawaux
Executive Vice President – Chief Operating Officer / Chief Financial Officer
Date: March 27, 2015
77
77
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "Company") for the period ended
January 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward W. Stack,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ EDWARD W. STACK
Edward W. Stack
Chairman and Chief Executive Officer
Date: March 27, 2015
78
78
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "Company") for the period ended
January 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, André J. Hawaux,
Chief Operating Officer / Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ ANDRÉ J. HAWAUX
André J. Hawaux
Executive Vice President – Chief Operating Officer / Chief Financial Officer
Date: March 27, 2015
79
79
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”),
the Company believes that certain non-GAAP financial information provides users of the Company’s financial information with
additional useful information in evaluating operating performance between reporting periods. These measures should be viewed
as supplementing, and not as an alternative or substitute for, the Company’s financial results prepared in accordance with GAAP.
The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by
other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be
comparable to similar measures provided by other companies. The Company has provided reconciliations below for EBITDA
(Adjusted), ROIC (Adjusted), net income and earnings per share adjusted to exclude certain events and fiscal 2012 net sales
adjusted for the 53rd week. All fiscal years presented include 52 weeks of operations except fiscal 2012, which includes 53 weeks.
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, capital investments,
and certain non-recurring, infrequent or unusual items.
2014
2014
Adjusted
2013
2013
Adjusted
2012
2012
Adjusted
(Dollars in thousands)
$
Net income
Provision for income taxes
Interest expense
Depreciation and amortization
EBITDA
$
GAAP EBITDA % increase over prior year
Adjusted EBITDA % increase over prior year
344,198 $
211,816
3,215
179,431
738,660 $
347,760 $
214,191
3,215
165,109
730,275 $
337,598 $
208,509
2,929
154,928
703,964 $
337,985 $
211,661
2,929
147,047
699,622 $
290,709 $
199,116
6,034
125,096
620,955 $
318,345
203,850
6,034
125,096
653,325
5%
4%
13%
7%
EBITDA Fiscal 2014 (Adjusted) 1
Net income
Provision for income taxes
Interest expense
Depreciation and amortization
EBITDA
Fiscal 2014
344,198
211,816
3,215
179,431
738,660
$
$
$
$
Less:
Gain on sale
of asset
(8,657)
(5,771)
-
-
(14,428)
$
$
Add: Golf
restructuring
charges
12,219
8,146
-
(14,322)
6,043
1 Presents EBITDA adjusted for a gain on sale of asset and golf restructuring charges.
Results adjusted for
gain on sale of
asset and golf
$
restructuring charges
347,760
214,191
3,215
165,109
730,275
$
EBITDA Fiscal 2013 (Adjusted) 2
Net income
Provision for income taxes
Interest expense
Depreciation and amortization
EBITDA
$
$
Fiscal 2013
337,598
208,509
2,929
154,928
703,964
$
$
(4,342) $
-
-
-
(4,342) $
Less:
Recovery of previously
impaired asset
Add: Asset
impairment charge
Results adjusted for
recovery of previously
impaired asset and asset
impairment charge
337,985
211,661
2,929
147,047
699,622
4,729 $
3,152
-
(7,881)
- $
2 Presents EBITDA adjusted for the recovery of a previously impaired asset and an asset impairment charge.
EBITDA Fiscal 2012 (Adjusted) 3
Net income
Provision for income taxes
Interest expense
Depreciation and amortization
EBITDA
$
$
3 Presents EBITDA adjusted for an impairment of available-for-sale investments.
80 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
Add:
Impairment of available-
for-sale investments
Results adjusted for
impairment of available-
for-sale investments
318,345
203,850
6,034
125,096
653,325
27,636 $
4,734
-
-
32,370 $
Fiscal 2012
290,709 $
199,116
6,034
125,096
620,955 $
RETURN ON INVESTED CAPITAL (ROIC)
(Dollars in thousands)
Net income
Merger and integration costs, after tax
Golf Galaxy store closing costs, after tax
Litigation settlement charge, after tax
Gain on sale of investment, after tax
Impairment of available-for-sale
investments, after tax
Recovery of previously
impaired asset, after tax
Asset impairment charge, after tax
Gain on sale of asset, after tax
Golf restructuring charges, after tax
Adjusted net income
Net income for ROIC calculation
Interest expense, after tax
Rent expense, net, after tax
Net income for ROIC after
adjustments (numerator)
Total stockholders’ equity
Total debt including capital and
financing lease obligations
Operating leases capitalized at
8x annual rent expense
Total debt and operating leases capitalized
at 8x annual rent expense
2014
2013
2012
2011
2010
2009
$
344,198 $
337,598 $
290,709 $
263,906 $
182,077 $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,289)
(8,738)
-
9,826
6,493
-
135,359
6,068
-
-
-
27,636
-
-
-
-
-
(8,657)
12,219
347,760
347,760
1,929
264,874
(4,342)
4,729
-
-
337,985
337,985
1,757
246,896
-
-
-
-
318,345
318,345
3,620
233,010
-
-
-
-
253,879
253,879
8,321
216,201
-
-
-
-
198,396
198,396
8,410
208,411
-
-
-
-
141,427
141,427
2,726
203,984
$
614,563 $
586,638 $
554,975 $
478,401 $
415,217 $
348,137
$ 1,832,225 $ 1,692,179 $ 1,587,324 $ 1,632,745 $ 1,363,581 $ 1,083,227
6,450
7,375
16,275
159,022
140,841
142,243
3,531,656
3,291,953
3,106,794
2,882,682
2,778,812
2,719,789
3,538,106
3,299,328
3,123,069
3,041,704
2,919,653
2,862,032
Total capital (total stockholders’ equity
+ total debt and operating leases
capitalized at 8x annual rent expense)
Average total capital (denominator) 1
ROIC (Adjusted)
ROIC using GAAP amounts 2
5,370,331
4,991,507
$ 5,180,919 $ 4,850,950
12.1%
12.1%
11.9%
11.8%
4,674,449
4,710,393
3,945,259
$ 4,692,421 $ 4,478,841 $ 4,114,246 $ 3,787,111
9.2%
9.0%
10.7%
10.9%
11.8%
11.2%
10.1%
9.7%
4,283,234
1 Average total capital is calculated as the sum of the current and prior year ending total capital divided by two.
2 ROIC using GAAP amounts was derived as the quotient of GAAP Net income for ROIC not adjusted (numerator) and average total capital.
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 81
NON-GA AP NET INCOME AND EARNINGS PER SHARE RECONCILIATION
Year Ended January 31, 2015
(In thousands, except per share data)
Net sales
Cost of goods sold, including occupancy and distribution costs
Gross Profit
Selling, general and administrative expenses
Pre-opening expenses
Income From Operations
Interest expense
Other income
Income Before Income Taxes
Provision for income taxes
Net Income
Earnings Per Common Share:
Basic
Diluted
Weighted Average Common Shares Outstanding:
Basic
Diluted
As Reported
Gain on Sale
of Asset1
Golf
Restructuring
Charges2
Non-GAAP
Total
$ 6,814,479 $
4,727,813
2,086,666
1,502,089
30,518
554,059
3,215
(5,170)
- $
-
-
14,428
-
(14,428)
-
-
556,014
211,816
344,198 $
(14,428)
(5,771)
(8,657) $
(2,405)
2,405
(17,960)
- $ 6,814,479
4,725,408
2,089,071
1,498,557
30,518
559,996
3,215
(5,170)
561,951
214,191
347,760
-
20,365
-
-
20,365
8,146
12,219 $
2.89
2.84
119,244
121,238
$
$
2.92
2.87
119,244
121,238
$
$
$
1 During the first quarter of 2014, the Company recorded a pre-tax $14.4 million gain on sale of a Gulfstream G650 corporate aircraft.
The provision for income taxes was calculated at 40%, which approximates the Company’s blended tax rate.
2 During the second quarter of 2014, the Company recorded pre-tax restructuring charges of $20.4 million including a $14.3 million non-
cash impairment of trademarks and store assets, severance charges of $3.7 million resulting from the elimination of specific staff in the
golf area of its DICK’S stores and consolidation of DICK’S golf and Golf Galaxy corporate and administrative functions, and a $2.4 million
write-down of excess golf inventories. The provision for income taxes was calculated at 40%, which approximates the Company’s
blended tax rate.
82 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
NON-GA AP NET INCOME AND EARNINGS PER SHARE RECONCILIATION
Year Ended February 1, 2014
(In thousands, except per share data)
Net sales
Cost of goods sold, including occupancy and distribution costs
Gross Profit
Selling, general and administrative expenses
Pre-opening expenses
Income From Operations
Interest expense
Other income
Income Before Income Taxes
Provision for income taxes
Net Income
Earnings Per Common Share:
Basic
Diluted
Weighted Average Common Shares Outstanding:
Basic
Diluted
Recovery
of Previously
Impaired Asset1
Asset
Impairment
Charge2
Non-GAAP
Total
As Reported
$ 6,213,173 $
4,269,223
1,943,950
1,386,315
20,823
536,812
2,929
(12,224)
546,107
208,509
337,598 $
$
- $
-
-
-
-
-
-
4,342
(4,342)
-
(4,342) $
(7,881)
- $ 6,213,173
4,269,223
-
1,943,950
-
1,378,434
20,823
544,693
2,929
(7,882)
549,646
211,661
337,985
-
7,881
-
-
7,881
3,152
4,729 $
$
$
2.75
2.69
122,878
125,628
$
$
2.75
2.69
122,878
125,628
1 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 was 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.
2 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 Gulfstream G450 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.
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 83
NON-GA AP NET INCOME AND EARNINGS PER SHARE RECONCILIATION
Year Ended February 2, 2013
(In thousands, except per share data)
Net sales
Cost of goods sold, including occupancy and distribution costs
Gross Profit
Selling, general and administrative expenses
Pre-opening expenses
Income From Operations
Impairment of available-for-sale investments
Interest expense
Other income
Income Before Income Taxes
Provision for income taxes
Net Income
Earnings Per Common Share:
Basic
Diluted
Weighted Average Common Shares Outstanding:
Basic
Diluted
As Reported
Impairment of
Investments 1
Non-GAAP
Total
$ 5,836,119 $
3,998,956
1,837,163
1,297,413
16,076
523,674
32,370
6,034
(4,555)
489,825
199,116
290,709 $
2.39
2.31
121,629
125,995
$
$
$
- $ 5,836,119
3,998,956
-
1,837,163
-
1,297,413
-
16,076
-
523,674
-
-
6,034
(4,555)
522,195
203,850
318,345
(32,370)
-
-
32,370
4,734
27,636 $
$
$
2.62
2.53
121,629
125,995
1 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 did not expect to realize at the time of the impairment.
FISCAL 2012 NET SALES ADJUSTED FOR THE 53 RD WEEK
Net sales adjusted for the extra week during the 14 and 53 weeks ended February 2, 2013 are presented below to illustrate the impact
of the extra week on reported net sales in comparison to reported results for the 13 and 52 weeks ended February 1, 2014.
Year Ended February 2, 2013
(Dollars in thousands)
Net sales
Less: 53rd week net sales
Adjusted Net Sales
14 Weeks
Ended
53 Weeks
Ended
$ 1,805,302 $ 5,836,119
(74,445)
$ 1,730,857 $ 5,761,674
(74,445)
84 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares the performance of the Company’s common stock with the performance of the Standard &
Poor’s 500 Composite Stock Price Index (the “S&P 500”) and the S&P Specialty Retail Index for the periods indicated below.
The graph assumes that $100 was invested on January 29, 2010 in the Company’s common stock, the S&P 500 and the
S&P Specialty Retail Index and that all dividends were reinvested.
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The stock performance graph is not necessarily indicative of future performance.
DICK’S SPORTING GOODS // 2014 ANNUAL REPORT // 85
Non-GAAP Financial Measures
For any non-GAAP financial measures used in this report,
see pages 80 to 84 or a presentation of the most directly
comparable GAAP financial measure and a quantitative
reconciliation to that GAAP financial measure.
Annual Meeting
June 3, 2015 at 1:30 p.m.
Hyatt Regency
1111 Airport Boulevard
Pittsburgh, PA 15231
Form 10-K
A Form 10-K is available without charge online at
investors.DICKS.com, by emailing a request to
investors@dcsg.com, or through www.sec.gov.
It is also available upon request to:
Investor Relations
345 Court Street
Coraopolis, PA 15108
724-273-3400
CORPORATE AND STOCKHOLDER INFORMATION
Corporate Office
345 Court Street
Coraopolis, PA 15108
724-273-3400
DICK’S Sporting Goods Website
www.DICKS.com
Transfer Agent and Registrar
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
One PPG Place
Suite 2600
Pittsburgh, PA 15222
Common Stock
The shares of DICK’S Sporting Goods, Inc. common stock are
listed and traded on the New York Stock Exchange (NYSE),
under the symbol “DKS.” The shares of the Company’s Class
B common stock are neither listed nor traded on any stock
exchange or other market.
The number of holders of record of shares of the Company’s
common stock and Class B common stock as of April 6, 2015
was 271 and 25, respectively.
Quarterly Stock Price Range
Set forth below, for the applicable periods indicated, are the
high and low closing sales prices per share of the Company’s
common stock as reported by the NYSE.
2014 Fiscal Quarter Ended
May 3, 2014
August 2, 2014
November 1, 2014
January 31, 2015
2013 Fiscal Quarter Ended
May 4, 2013
August 3, 2013
November 2, 2013
February 1, 2014
High
57.26
53.16
46.37
55.65
High
50.98
53.20
53.90
58.58
$
$
$
$
$
$
$
$
Low
$ 50.17
$ 42.12
$ 41.90
$ 43.97
Low
$ 45.11
$ 49.25
$ 46.24
$ 50.88
86 // DICK’S SPORTING GOODS // 2014 ANNUAL REPORT
BOARD OF DIRECTORS
Edward W. Stack
Director since 1984
Chairman & Chief
Executive Officer
DICK’S Sporting Goods, Inc.
William J. Colombo
Director since 2002
Vice Chairman
DICK’S Sporting Goods, Inc.
Mark J. Barrenechea
Director since 2014
President & Chief
Executive Officer
OpenText Corp.
Vincent C. Byrd
Director since 2013
Vice Chairman
J. M. Smucker Company
Emanuel Chirico
Director since 2003
Chairman & Chief
Executive Officer
PVH Corp.
Jacqualyn A. Fouse
Director since 2010
President – Global
Hematology and Oncology
Celgene Corp.
Lawrence J. Schorr
Director since 1985
Lead Director
Chief Executive Officer
SIMONA AMERICA GROUP,
SIMONA AG
Larry D. Stone
Director since 2007
Retired President &
Chief Operating Officer
Lowe’s Companies, Inc.
Allen R. Weiss
Director since 2011
Retired President of
Worldwide Operations
Walt Disney Parks and
Resorts
EXECUTIVE OFFICERS
Edward W. Stack
Chairman & Chief Executive
Officer
Michele B. Willoughby
Executive Vice President—
eCommerce & Supply Chain
Joseph R. Oliver
Senior Vice President—
Chief Accounting Officer
André J. Hawaux
Executive Vice President—
Chief Operating Officer /
Chief Financial Officer
Lee J. Belitsky
Executive Vice President—
Product Development and
Planning, Allocations &
Replenishment
John E. Hayes III
Senior Vice President—
General Counsel & Secretary
Deborah M. Victorelli
Senior Vice President—
Human Resources
Lauren R. Hobart
Senior Vice President—
Chief Marketing Officer
DESIGN: MIZRAHI, INC. WWW.MIZRAHIONLINE.COM
DICK’S SPORTING GOODS, INC.
345 Court Street Coraopolis, PA 15108 724-273-3400 www.DICKS.com