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Form 10-Q
DICKS SPORTING GOODS INC - DKS
Filed: November 21, 2016 (period: October 29, 2016)
Quarterly report with a continuing view of a company's financial position
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user
assumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot be
limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
10-Q - 10-Q
PART I.
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CONTROLS AND PROCEDURES
PART II.
ITEM 1.
LEGAL PROCEEDINGS
ITEM 1A. RISK FACTORS
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 6.
EXHIBITS
SIGNATURES
INDEX TO EXHIBITS
EX-10.1 (EXHIBIT 10.1)
EX-10.2 (EXHIBIT 10.2)
EX-10.3 (EXHIBIT 10.3)
EX-31.1 (EXHIBIT 31.1)
EX-31.2 (EXHIBIT 31.2)
EX-32.1 (EXHIBIT 32.1)
EX-32.2 (EXHIBIT 32.2)
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended October 29, 2016
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
to
.
Commission File No. 001-31463
DICK'S SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
16-1241537
(I.R.S. Employer
Identification No.)
345 Court Street, Coraopolis, Pennsylvania 15108
(Address of Principal Executive Offices)
(724) 273-3400
(Registrant's Telephone Number, including Area Code)
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 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 Exchange Act.
Large accelerated filer 
Accelerated filer 
Non-accelerated filer 
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
The number of shares of common stock, par value $0.01 per share, and Class B common stock, par value $0.01 per share, outstanding
as of November 16, 2016, was 87,936,102 and 24,710,870, respectively.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
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Table of Contents
INDEX TO FORM 10-Q
Page Number
PART I. FINANCIAL INFORMATION
3
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
3
12
22
22
PART II. OTHER INFORMATION
22
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
22
23
23
23
SIGNATURES
24
INDEX TO EXHIBITS
25
2
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(Amounts in thousands, except per share data)
13 Weeks Ended
October 29,
2016
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) expense
INCOME BEFORE INCOME TAXES
Provision for income taxes
NET INCOME
1,810,347
39 Weeks Ended
October 31,
2015
$
1,642,627
October 29,
2016
$
5,438,548
October 31,
2015
$
5,030,914
1,257,504
1,154,251
3,792,529
3,519,993
552,843
488,376
1,646,019
1,510,921
459,782
395,015
1,300,071
1,151,686
19,304
16,280
34,309
31,836
73,757
77,081
311,639
327,399
1,265
1,076
4,014
2,550
(3,778)
1,185
(7,775)
76,270
74,820
315,400
325,661
27,356
27,605
118,192
124,262
(812)
$
48,914
$
47,215
$
197,208
$
201,399
Basic
$
0.44
$
0.41
$
1.77
$
1.73
Diluted
$
0.44
$
0.41
$
1.75
$
1.71
EARNINGS PER COMMON SHARE:
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic
110,607
114,978
111,328
116,101
Diluted
111,826
116,506
112,407
117,739
Cash dividends declared per share
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
$
0.15125
$
0.13750
$
0.45375
$
0.41250
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
See accompanying notes to unaudited consolidated financial statements.
3
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
(Dollars in thousands)
13 Weeks Ended
October 29,
2016
NET INCOME
$
48,914
39 Weeks Ended
October 31,
2015
$
47,215
October 29,
2016
$
197,208
October 31,
2015
$
201,399
OTHER COMPREHENSIVE (LOSS) INCOME:
Foreign currency translation adjustment, net of
tax
(22)
(16)
32
(52)
TOTAL OTHER COMPREHENSIVE (LOSS)
INCOME
(22)
(16)
32
(52)
COMPREHENSIVE INCOME
$
48,892
$
47,199
$
197,240
$
201,347
See accompanying notes to unaudited consolidated financial statements.
4
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
October 29,
2016
January 30,
2016
October 31,
2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
85,408
$
118,936
$
73,799
Accounts receivable, net
121,189
61,395
96,406
Income taxes receivable
32,583
5,432
8,719
2,092,402
1,527,187
1,997,105
112,523
99,740
107,755
2,444,105
1,812,690
2,283,784
1,492,274
1,347,885
1,341,166
Intangible assets, net
137,155
109,440
109,827
Goodwill
Other assets:
200,594
200,594
200,594
5,345
6,165
20,066
102,733
82,562
73,912
108,078
88,727
93,978
Inventories, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Deferred income taxes
Other
Total other assets
TOTAL ASSETS
$
4,382,206
$
3,559,336
$
4,029,349
$
1,031,587
$
677,864
$
941,973
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses
375,553
289,001
345,052
Deferred revenue and other liabilities
146,585
184,386
133,593
—
39,835
—
615
589
575
1,554,340
1,191,675
1,421,193
260,900
—
342,400
Other long-term debt and leasing obligations
4,861
5,324
5,477
Deferred income taxes
8,252
6,454
—
Income taxes payable
Current portion of other long-term debt and leasing obligations
Total current liabilities
LONG-TERM LIABILITIES:
Revolving credit borrowings
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Deferred revenue and other liabilities
683,988
566,696
536,973
958,001
578,474
884,850
Common stock
860
869
883
Class B common stock
247
249
249
1,114,622
1,063,705
1,053,748
1,882,934
(147)
(1,128,651)
1,737,214
(179)
(1,012,671)
1,623,962
(125)
(955,411)
1,869,865
1,789,187
1,723,306
Total long-term liabilities
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total stockholders' equity
$
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
4,382,206
$
3,559,336
$
4,029,349
See accompanying notes to unaudited consolidated financial statements.
5
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(Dollars in thousands)
Accumulated
Common Stock
Shares
BALANCE,
January 30,
2016
Exchange of
Class B
common
stock for
common
stock
Exercise of
stock
options
Restricted
stock
vested
Minimum tax
withholdin
g
requireme
nts
Net income
Stock-based
compensat
ion
86,850,630
Dollars
$
869
Class B
Additional
Common Stock
Paid-In
Retained
Comprehensive
Treasury
Capital
Earnings
Loss
Stock
Shares
24,900,870
Dollars
$
249
(190,000)
$
Other
1,063,705
$ 1,737,214
—
—
—
—
—
24,938
—
—
—
24,950
—
(2)
$
(179)
Total
$ (1,012,671)
$ 1,789,187
190,000
2
1,212,423
12
—
—
428,673
4
—
—
(4)
—
—
—
(146,643)
(1)
—
—
(6,908)
—
—
—
—
—
—
—
—
197,208
—
—
197,208
(6,909)
—
—
—
—
24,746
—
—
—
24,746
Total tax
benefit
from
exercise of
stock
options
—
—
—
—
8,145
—
—
—
8,145
Foreign
currency
translation
adjustment
, net of
taxes of
$19
—
—
—
—
—
—
32
—
32
(26)
—
—
—
—
—
—
—
—
—
860
24,710,870
Purchase of
shares for
treasury
(2,580,954)
Cash
dividends
declared
BALANCE,
October 29,
2016
—
85,954,129
$
$
247
$
1,114,622
—
(51,488)
$ 1,882,934
$
(147)
(115,980)
—
$ (1,128,651)
(116,006)
(51,488)
$ 1,869,865
See accompanying notes to unaudited consolidated financial statements.
6
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
39 Weeks Ended
October 29,
2016
October 31,
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
197,208
$
201,399
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
Deferred income taxes
149,131
136,683
2,618
(11,112)
Stock-based compensation
24,746
21,687
Excess tax benefit from exercise of stock options
(8,620)
(6,308)
Other non-cash items
541
442
Changes in assets and liabilities:
Accounts receivable
Inventories
(38,002)
(22,556)
(565,215)
(606,338)
Prepaid expenses and other assets
(10,931)
(18,685)
Accounts payable
342,369
324,832
Accrued expenses
67,986
38,817
Income taxes payable / receivable
(58,841)
(36,424)
Deferred construction allowances
114,158
118,647
Deferred revenue and other liabilities
(32,686)
(25,215)
184,462
115,869
(307,302)
(273,962)
(41,946)
(2,406)
(349,248)
(276,368)
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
Deposits and purchases of other assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Revolving credit borrowings
1,738,200
Revolving credit repayments
(1,477,300)
(676,700)
(437)
(398)
—
—
24,950
18,668
8,620
6,309
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
Increase in bank overdraft
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
1,019,100
(6,909)
(7,703)
(116,006)
(300,000)
(51,246)
(49,235)
11,354
2,630
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Net cash provided by financing activities
131,226
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
12,671
32
(52)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(33,528)
(147,880)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
118,936
221,679
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
85,408
$
73,799
Accrued property and equipment
$
60,309
$
65,707
Cash paid for interest
$
3,038
$
1,761
Cash paid for income taxes
$
179,930
$
170,752
Supplemental disclosure of cash flow information:
See accompanying notes to unaudited consolidated financial statements.
7
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Dick's Sporting Goods, Inc. (together with its subsidiaries, referred to as "the Company", "we", "us" and "our" unless specified
otherwise) is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports
equipment, apparel, footwear and accessories through a blend of dedicated associates, in-store services and unique specialty
shop-in-shops. The Company also owns and operates Golf Galaxy, Field & Stream and other specialty concept stores, Dick's Team
Sports HQ as well as eCommerce websites at www.DICKS.com, www.golfgalaxy.com, www.fieldandstreamshop.com and
www.caliastudio.com. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies,
any reference to "year" is to the Company's fiscal year.
The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements for Quarterly
Reports on Form 10-Q and do not include all the disclosures normally required in annual consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The interim consolidated
financial statements are unaudited and have been prepared on the same basis as the annual audited consolidated financial
statements. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the interim financial information. This unaudited interim financial
information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended January 30, 2016 as filed with the Securities and Exchange Commission
on March 25, 2016. Operating results for the 13 and 39 weeks ended October 29, 2016 are not necessarily indicative of the results that
may be expected for the fiscal year ending January 28, 2017 or any other period.
Recently Issued Accounting Pronouncements
Income Taxes
In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16, "
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ". This update requires the income tax consequences
of intra-entity transfers of assets other than inventory to be recognized when the intra-entity transfer occurs rather than deferring
recognition of income tax consequences until the transfer was made with an outside party. ASU 2016-16 is effective for annual
reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning
of the interim or annual reporting period. A modified retrospective approach should be applied. The Company does not expect that the
adoption of this guidance will have a significant impact on the Company's Consolidated Financial Statements.
Statement of Cash Flows
In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and
Cash Payments (a consensus of the Emerging Issues Task Force) ". This update addresses eight specific cash flow issues with the
objective of reducing the existing diversity in practice for certain aspects under Topic 230. ASU 2016-15 is effective for annual
reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning
of the interim or annual reporting period. If early adopted, an entity must adopt all of the amendments during the same period. The
Company does not expect that the adoption of this guidance will have a significant impact on the Company's Consolidated Financial
Statements.
Stock Compensation
In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting ". This update simplifies several aspects of the accounting for share-based payment transactions,
including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of
cash flows. ASU 2016-09 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016,
with early application permitted. If early adopted, an entity must adopt all of the amendments during the same period. The Company is
currently evaluating the impact of the adoption of ASU 2016-09 on the Company's Consolidated Financial Statements.
8
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Leases
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This update requires an entity to recognize lease assets and
lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective
for annual reporting periods, and interim periods therein, beginning after December 15, 2018, with early application permitted. A
modified retrospective approach is required. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the
Company's Consolidated Financial Statements.
Measurement of Inventory
In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory". This update requires an entity that
determines the cost of inventory by methods other than last-in, first-out (LIFO) and the retail inventory method (RIM) to measure
inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for annual reporting periods, and interim periods
therein, beginning after December 15, 2016. Prospective application is required. Early application is permitted as of the beginning of
the interim or annual reporting period. The Company does not expect that the adoption of this guidance will have a significant impact
on the Company's Consolidated Financial Statements.
Contracts with Customers
In May 2014, the FASB issued 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. In August 2015, the FASB subsequently issued ASU 2015-14, " Revenue from Contracts with
Customers - Deferral of the Effective Date ", which approved a one year deferral of ASU 2014-09 for annual reporting periods
beginning after December 15, 2017, including interim periods within that reporting period.
In March 2016 and April 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers - Principal versus Agent
Considerations (Reporting Revenue Gross versus Net) ", and ASU 2016-10, " Revenue from Contracts with Customers - Identifying
Performance Obligations and Licensing ", respectively, which further clarify the guidance related to those specific topics within ASU
2014-09. In May 2016, the FASB issued ASU 2016-12, " Revenue from Contracts with Customers - Narrow Scope Improvements and
Practical Expedients ", to reduce the risk of diversity in practice for certain aspects in ASU 2014-09, including collectibility, noncash
consideration, presentation of sales tax and transition. These updates permit the use of either the retrospective or cumulative effect
transition method. Early application is permitted as of the original effective date for annual reporting periods beginning after
December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating which
transition approach it will utilize and the impact these standards will have on the Company's Consolidated Financial Statements upon
adoption.
Reclassifications
Certain reclassifications have been made to prior year amounts for the period ended October 31, 2015 within the Consolidated Balance
Sheets to conform to current year presentation.
2. Store Closings
The calculation of accrued store closing and relocation reserves 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 store closing and relocation reserves are evaluated each quarter.
9
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table summarizes the activity in fiscal 2016 and 2015 (in thousands):
39 Weeks Ended
October 29,
2016
Accrued store closing and relocation reserves, beginning of period
$
11,702
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
$
October 31,
2015
$
12,785
3,039
(4,121)
(697)
3,451
(3,427)
(115)
9,923
(4,623)
12,694
(4,577)
5,300
$
8,117
3. Earnings Per Common Share
Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during
the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock
outstanding, plus the effect of dilutive potential common shares outstanding during the period, using the treasury stock method.
Dilutive potential common shares are stock-based awards, which include outstanding stock options, restricted stock and warrants.
The computations for basic and diluted earnings per common share are as follows (in thousands, except per share data):
13 Weeks Ended
October 29,
2016
Net income
$
Weighted average common shares outstanding basic
Dilutive effect of stock-based awards
Weighted average common shares outstanding diluted
48,914
39 Weeks Ended
October 31,
2015
$
47,215
October 29,
2016
$
197,208
October 31,
2015
$
201,399
110,607
114,978
111,328
116,101
1,219
1,528
1,079
1,638
111,826
116,506
112,407
117,739
Earnings per common share - basic
$
0.44
$
0.41
$
1.77
$
1.73
Earnings per common share - diluted
$
0.44
$
0.41
$
1.75
$
1.71
Anti-dilutive stock-based awards excluded from
diluted calculation
921
1,405
2,129
1,181
4. Fair Value Measurements
Accounting Standard Codification ("ASC") 820, "Fair Value Measurement and Disclosures", outlines a valuation framework and
creates a fair value hierarchy for assets and liabilities as follows:
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Level Observable inputs such as quoted prices in active
1:
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.
10
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Assets measured at fair value on a recurring basis as of October 29, 2016 and January 30, 2016 are set forth in the table below (in
thousands):
Level 1
October 29,
2016
Description
Assets:
Deferred compensation plan assets held in trust (1)
Total assets
(1)
January 30,
2016
$
63,190
$
53,040
$
63,190
$
53,040
Consists of investments in various mutual funds made by eligible individuals as part of the Company's deferred compensation
plans.
The fair value of cash and cash equivalents, accounts receivable, accounts payable, revolving credit borrowings and certain other
liabilities approximated book value due to the short-term nature of these instruments at both October 29, 2016 and January 30, 2016.
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 within the fair value hierarchy during the 39 weeks ended October 29, 2016 or the fiscal year ended January 30,
2016. Additionally, the Company did not hold any Level 2 or Level 3 assets or liabilities during the 39 weeks ended October 29, 2016
or the fiscal year ended January 30, 2016.
5. Intangible Assets
On July 20, 2016, the Company purchased intellectual property assets of The Sports Authority ("TSA") along with the right to acquire
31 TSA store leases, for $18.2 million, net of lease sale proceeds. The Company retained 22 of these store leases. The TSA intellectual
property assets, which include the name "The Sports Authority", TSA's domain names, TSA's owned trademarks and customer
information, and lease designation rights are finite-lived intangible assets and will be amortized over each asset's designated useful
life.
6. Subsequent Events
On November 2, 2016, the Company completed its purchase for certain assets of Golfsmith International Holdings, Inc. ("Golfsmith"),
including intellectual property and rights to acquire store leases, together with inventory for 30 stores. The purchase price was
approximately $43 million, of which $32 million is related to inventory. Intellectual property includes the name "Golfsmith", as well
as Golfsmith's domain names, owned trademarks and customer information.
On November 10, 2016, the Company's Board of Directors authorized and declared a quarterly cash dividend in the amount of
$0.15125 per share of common stock and Class B common stock payable on December 30, 2016 to stockholders of record as of the
close of business on December 9, 2016.
11
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 Quarterly Report on Form 10-Q 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
include statements regarding, among other things, our expectations and growth strategies, including our plans to open new stores and
relocate existing stores, develop our own eCommerce platform, and grow our private brand business; our efforts to increase profit
margins and return on invested capital; the potential benefit and integration of strategic acquisitions; projections of our future
profitability, results of operations, financial condition, growth, market opportunities, competition, capital expenditures, including
continuing to invest in the improvement of our supply chain and corporate information technology infrastructure and beginning
construction of our fifth distribution facility in fiscal 2016, and other expectations and targets for future periods; plans to return capital
to stockholders through dividends and share repurchases; and outstanding borrowing in future periods.
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 2016 and beyond to differ materially from those expressed or implied in any
forward-looking statements included in this Quarterly Report on Form 10-Q or otherwise made by our management:
▪ The dependence of our business 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 the transition to our eCommerce platform producing the anticipated benefits within the expected
time-frame or at all;
▪
Our pursuit of strategic investments or acquisitions, including the timing and costs of such investments and acquisitions and
the integration of acquired businesses and / or companies being more difficult, time-consuming, or costly than expected;
▪
Unauthorized disclosure of sensitive or confidential customer
information;
▪
Risks associated with our private brand offerings and new retail concept
stores;
▪
Disruption of or other problems with the services provided by our current 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;
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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▪
Risks and costs relating to changing laws and regulations affecting our business, including consumer products, firearms and
ammunition, data protection and privacy;
▪
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 or foreign political instability;
▪
Litigation risks for which we may not have sufficient insurance or other
coverage;
12
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
▪
Product costs being adversely affected by foreign trade issues, currency exchange rate fluctuations, increasing prices for raw
materials, political instability or other reasons;
▪
Our ability to attract, train, engage and retain qualified leaders and associates and the loss of Mr. Edward Stack as our
Chairman and Chief Executive Officer;
▪
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;
▪
Disruption at our distribution
facilities;
▪
Wage increases, which could adversely affect our financial
results;
▪
Performance of professional sports teams, professional team lockouts or strikes, retirement or scandal involving sports
superstars;
▪
Weather-related disruptions and the seasonality of our business, as well as the current geographic concentration of Dick's
Sporting Goods stores;
▪
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; and
▪
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 in other reports or filings filed or furnished by us with the
Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended January 30, 2016, filed on
March 25, 2016. 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 Quarterly Report on Form 10-Q
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.
OVERVIEW
The Company 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 other specialty concept stores, Dick's Team
Sports HQ as well as eCommerce websites at www.DICKS.com, www.golfgalaxy.com, www.fieldandstreamshop.com and
www.caliastudio.com. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies,
any reference to "year" is to the Company's fiscal year.
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, the integration of eCommerce with its brick and mortar stores, positive consolidated same store
sales, which include the Company's eCommerce business, and its strong gross profit margins. For example, in the last five years the
Company has grown from 474 Dick's Sporting Goods stores as of October 29, 2011 to 676 Dick's Sporting Goods stores as of
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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October 29, 2016. Additionally, the Company's eCommerce sales penetration to total net sales has increased from 2.6% to 9.1% for
the year-to-date period ended October 29, 2011 and October 29, 2016, respectively.
13
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
In recent 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 the stores and eCommerce websites. On average, approximately 80% of the Company's eCommerce sales are generated within
brick and mortar store trade areas.
The Company's senior management focuses on certain key indicators to monitor the Company's performance including:
▪ Consolidated same store sales performance – Our management considers same store sales, which consists of both brick and
mortar and eCommerce 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. A store is included in the same store sales calculation during
the same fiscal period that it commences its 14 th 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
during the fiscal period that it commences its 14 th full month of operations at the new location. See further discussion of our
consolidated same store sales in the "Results of Operations and Other Selected Data" 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 and in part to sales of cold weather sporting goods and apparel. See further
discussion of the Company's cash flows in the "Liquidity and Capital Resources and Changes in Financial Condition" section
herein.
▪
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.
CRITICAL ACCOUNTING POLICIES
As discussed in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's
Annual Report on Form 10-K for the fiscal year ended January 30, 2016, filed with the Securities and Exchange Commission on
March 25, 2016, the Company considers its policies on inventory valuation, vendor allowances, goodwill and intangible assets,
impairment of long-lived assets and closed store reserves, self-insurance reserves, stock-based compensation and uncertain tax
positions to be the most critical in understanding the judgments that are involved in preparing the Company's consolidated financial
statements. There have been no changes in the Company's critical accounting policies during the quarter ended October 29, 2016.
RESULTS OF OPERATIONS AND OTHER SELECTED DATA
Executive Summary
▪
Earnings per diluted share of $0.44 in the current quarter increased compared to earnings per diluted share of $0.41 during
the third quarter of 2015.
▪
Net income in the current quarter includes $4.7 million, net of tax, or $0.04 per diluted share, of costs incurred by the
Company to convert 22 The Sports Authority ("TSA") stores to Dick's Sporting Goods stores.
▪
Net income in the third quarter of 2015 included $4.7 million, net of tax, or $0.04 per diluted share, related to a litigation
settlement charge.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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14
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
▪
Net sales increased 10% to $1.8 billion in the current quarter compared to the third quarter of 2015, due primarily to the
growth of our store network and a 5.2% increase in consolidated same store sales.
▪
eCommerce sales penetration in the current quarter increased to 9.6% of total net sales compared to 8.0% in the third quarter
of 2015.
▪
Gross profit increased to 30.54% as a percentage of net sales in the current quarter from 29.73% during the third quarter of
2015.
▪
Selling, general and administrative expenses increased 16% to $459.8 million in the current quarter compared to the third
quarter of 2015.
▪
Other income increased to $3.8 million in the current quarter compared to $1.2 million of expense during the third quarter of
2015. The Company recorded a $2.9 million benefit related to a multi-year sales tax refund in the current quarter.
▪
In the third quarter of 2016, the
Company:
▪
Declared and paid a quarterly cash dividend in the amount of $0.15125 per share of common stock and Class B common
stock.
▪ Repurchased approximately 0.2 million shares of common stock for $9.0
million.
▪
The following table summarizes store openings and closings for the periods
indicated:
39 Weeks Ended
October 29, 2016
Dick's Sporting
Goods
Specialty Store
Concepts (1)
39 Weeks Ended
October 31, 2015
Dick's Sporting
Goods
Total
Specialty Store
Concepts (1)
Total
Beginning stores
644
97
741
603
91
694
Q1 New stores
3
2
5
9
1
10
Q2 New stores
5
—
5
7
1
8
Q3 New stores
27
9
36
27
9
36
679
108
787
646
102
748
3
2
5
1
3
4
676
106
782
645
99
744
9
—
9
6
1
7
Ending stores
Closed stores
Ending stores
Relocated stores
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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(1)
Includes the Company's Golf Galaxy, Field & Stream and other specialty concept stores. In some markets we operate adjacent
stores on the same property with a pass-through for customers. We refer to this format as a "combo store" and include combo
store openings within both the Dick's Sporting Goods and specialty store concept reconciliations, as applicable. As of October 29,
2016, the Company operated 74 Golf Galaxy stores and 27 Field & Stream stores.
15
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
The following tables present for the periods indicated selected items in the unaudited Consolidated Statements of Income as a
percentage of the Company's net sales, as well as the basis point change in the percentage of net sales from the prior year's period. In
addition, other data is provided to facilitate a further understanding of our business. These tables should be read in conjunction with
Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying unaudited
Consolidated Financial Statements and related notes thereto.
13 Weeks Ended
October 29,
2016
Net sales (1)
October 31,
2015
Basis Point
Increase /
(Decrease) in
Percentage of Net
Sales from Prior
Year 2015-2016
100.00%
100.00%
N/A
Cost of goods sold, including occupancy and distribution costs (2)
69.46
70.27
(81)
Gross profit
30.54
29.73
81
Selling, general and administrative expenses (3)
25.40
24.05
135
Pre-opening expenses (4)
1.07
0.99
8
Income from operations
4.07
4.69
(62)
Interest expense
0.07
0.07
—
(0.21)
0.07
(28)
Income before income taxes
4.21
4.55
(34)
Provision for income taxes
Net income
1.51
2.70%
1.68
2.87%
(17)
(17)
Other Data:
Consolidated same store sales increase
5.2%
0.4%
Number of stores at end of period (5)
782
744
38,788,672
36,775,761
Other (income) expense
Total square feet at end of period(5)
39 Weeks Ended
October 29,
2016(A)
Net sales (1)
October 31,
2015(A)
Basis Point
Increase /
(Decrease) in
Percentage of Net
Sales from Prior
Year 2015-2016
(A)
100.00%
100.00%
N/A
Cost of goods sold, including occupancy and distribution costs (2)
69.73
69.97
(24)
Gross profit
30.27
30.03
24
Selling, general and administrative expenses (3)
23.90
22.89
101
0.63
0.63
—
Pre-opening expenses (4)
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Income from operations
5.73
6.51
(78)
0.07
(0.14)
0.05
(0.02)
2
(12)
Income before income taxes
5.80
6.47
(67)
Provision for income taxes
2.17
2.47
(30)
Net income
3.63%
4.00%
(37)
Other Data:
Consolidated same store sales increase
2.9%
0.9%
Number of stores at end of period (5)
782
744
Total square feet at end of period (5)
38,788,672
36,775,761
Interest expense
Other income
(A)
Column does not add due to
rounding.
16
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
(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") is deferred and recognized upon the
redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized on the unaudited
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 (inclusive of vendor allowances, inventory shrinkage and inventory
write-downs for the lower of cost or market); freight; distribution; shipping; and store occupancy costs. The Company defines
merchandise margin as net sales less the cost of merchandise sold. 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.
(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.
(4)
Pre-opening expenses, which consist primarily of rent, marketing, payroll and recruiting costs, are expensed as incurred. Rent is
recognized within pre-opening expense from the date of building turnover to the Company through the date of store opening.
(5)
Includes Dick's Sporting Goods, Golf Galaxy, Field & Stream and other specialty concept stores.
13 Weeks Ended October 29, 2016 Compared to the 13 Weeks Ended October 31, 2015
Net Sales
Net sales increased 10% in the current quarter to $1.8 billion from $1.6 billion for the quarter ended October 31, 2015, due primarily
to the growth of our store network and a 5.2% increase in consolidated same store sales. The 5.2% increase in consolidated same store
sales contributed $80.6 million of the increase in net sales for the quarter ended October 29, 2016. The remaining $87.1 million
increase in net sales was attributable to new stores. The 5.2% increase in consolidated same store sales consisted of a 5.5% increase at
Dick's Sporting Goods and a 3.3% decrease at Golf Galaxy. eCommerce sales penetration increased to 9.6% of total net sales during
the current quarter compared to 8.0% of total net sales during the quarter ended October 31, 2015, representing an approximate
increase of 33% in eCommerce sales.
The increase in consolidated same store sales was driven by broad-based increases across our hardlines, apparel and footwear
categories, most notably the outdoor business and licensed apparel, which benefited from favorable teams participating in the Major
League Baseball playoffs in the current quarter. These gains were partially offset by declines in sales of cold-weather merchandise due
to unseasonably warm temperatures later in the quarter. The same store sales increase at Dick's Sporting Goods was driven by an
increase in transactions of approximately 4.2% and an increase in sales per transaction of approximately 1.3%.
Income from Operations
Income from operations decreased to $73.8 million in the current quarter from $77.1 million for the quarter ended October 31, 2015.
Gross profit increased 13% to $552.8 million in the current quarter from $488.4 million for the quarter ended October 31, 2015, and
increased as a percentage of net sales by 81 basis points compared to the same period last year. Merchandise margins and occupancy
costs improved during the quarter and were partially offset by increased shipping expenses. Merchandise margins were favorably
impacted by lower promotional activity in the current quarter. Occupancy costs increased $17.7 million in the current quarter from the
quarter ended October 31, 2015. Our occupancy costs, which after the cost of merchandise represent our largest expense within cost of
goods sold, are generally fixed in nature and fluctuate based on the number of stores that we operate. As a percentage of net sales,
occupancy costs increased at a lower rate than the 10% increase in net sales during the current quarter. The increase in shipping
expenses during the current quarter was primarily due to the growth and increased penetration of eCommerce sales as compared to the
Company's total net sales.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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17
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
Selling, general and administrative expenses increased 16% to $459.8 million in the current quarter from $395.0 million for the
quarter ended October 31, 2015, and increased as a percentage of net sales by 135 basis points. The current quarter includes costs
incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $6.5 million. The quarter ended October 31,
2015 included a litigation settlement charge of $7.9 million. Apart from the enumerated items, selling, general and administrative
expenses increased as a percentage of net sales by 147 basis points, due primarily to higher administrative, payroll, incentive
compensation and benefit costs, investments in our Olympics marketing campaign and higher store payroll costs as the Company
continued to invest to enhance the shopping experience within its stores compared to the same period last year.
Pre-opening expenses increased to $19.3 million in the current quarter from $16.3 million for the quarter ended October 31, 2015.
Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current
quarter includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $1.1 million.
Pre-opening rent expenses for our self-developed store sites will generally exceed those for sites built to our specifications by our
landlords as we commence recognition of rent expense when we take possession of a site.
Other (Income) Expense
Other income increased to $3.8 million in the current quarter compared to $1.2 million of expense for the quarter ended October 31,
2015. The Company recognizes investment income / expense to reflect changes in deferred compensation plan investment values with
a corresponding charge / reduction to selling, general and administrative costs for the same amount. The Company recognized
investment income totaling $0.8 million in the current quarter compared to an investment loss of $2.2 million for the quarter ended
October 31, 2015, primarily driven by an overall improvement in the equity markets, which impacted the deferred compensation plan
investment values. Additionally, during the current quarter, the Company recorded a $2.9 million benefit from a multi-year sales tax
refund.
Income Taxes
The Company's effective tax rate decreased to 35.9% for the current quarter from 36.9% for the quarter ended October 31, 2015
primarily due to the partial reversal of a valuation allowance as a result of realizing capital gains in the current quarter.
39 Weeks Ended October 29, 2016 Compared to the 39 Weeks Ended October 31, 2015
Net Sales
Net sales increased 8% in the current period to $5.4 billion from $5.0 billion for the period ended October 31, 2015, due primarily to
the growth of our store network and a 2.9% increase in consolidated same store sales. The 2.9% increase in consolidated same store
sales contributed $137.5 million of the increase in net sales for the period ended October 29, 2016. The remaining $270.1 million
increase in net sales was attributable to new stores. The 2.9% increase in consolidated same store sales consisted of a 3.0% increase at
Dick's Sporting Goods and a 2.2% decrease at Golf Galaxy. eCommerce sales penetration was 9.1% of total net sales during the
current period compared to 7.9% of total net sales during the period ended October 31, 2015, representing an approximate increase of
24% in eCommerce sales.
The increase in consolidated same store sales was driven by broad-based increases across our hardlines, apparel and footwear
categories. The same store sales increase at Dick's Sporting Goods was driven by an increase in transactions of approximately 1.8%
and an increase in sales per transaction of approximately 1.2%.
Income from Operations
Income from operations decreased to $311.6 million in the current period from $327.4 million for the period ended October 31, 2015.
Gross profit increased 9% to $1,646.0 million for the current period from $1,510.9 million for the period ended October 31, 2015, and
increased as a percentage of net sales by 24 basis points compared to the same period last year. Merchandise margins and occupancy
costs improved during the period and were partially offset by increased shipping expenses. Occupancy costs increased $47.4 million in
the current period from the period ended October 31, 2015. Our occupancy costs, which after the cost of merchandise represent our
largest expense within cost of goods sold, are generally fixed in nature and fluctuate based on the number of stores that we operate. As
a percentage of net sales, occupancy costs increased at a lower rate than the 8% increase in net sales during the current period. The
increase in shipping expenses during the current period was primarily due to the growth and increased penetration of eCommerce sales
as compared to the Company's total net sales.
18
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
Selling, general and administrative expenses increased 13% to $1,300.1 million in the current period from $1,151.7 million for the
period ended October 31, 2015, and increased as a percentage of net sales by 101 basis points. The current period includes costs
incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $6.5 million. The period ended October 31,
2015 included a litigation settlement charge of $7.9 million. Apart from the enumerated items, selling, general and administrative
expenses increased as a percentage of net sales by 105 basis points, due primarily to higher administrative, payroll, incentive
compensation and benefit costs and higher store payroll costs as the Company continued to invest to enhance the shopping experience
within its stores compared to the same period last year.
Pre-opening expenses increased to $34.3 million in the current period from $31.8 million for the period ended October 31, 2015.
Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current
period includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $1.1 million.
Pre-opening rent expenses for our self-developed store sites will generally exceed those for sites built to our specifications by our
landlords as we commence recognition of rent expense when we take possession of a site.
Other Income
Other income increased to $7.8 million in the current period compared to $0.8 million of income for the period ended October 31,
2015. The Company recognizes investment income / expense to reflect changes in deferred compensation plan investment values with
a corresponding charge / reduction to selling, general and administrative costs for the same amount. The Company recognized
investment income totaling $4.6 million in the current period compared to an investment loss of $0.4 million for the period ended
October 31, 2015, primarily driven by an overall improvement in the equity markets, which impacted the deferred compensation plan
investment values. Additionally, during the current period, the Company recorded a $2.9 million benefit from a multi-year sales tax
refund.
Income Taxes
The Company's effective tax rate decreased to 37.5% for the current period from 38.2% for the same period last year primarily due to
the partial reversal of a valuation allowance as a result of realizing capital gains in the current period.
LIQUIDITY AND CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION
Overview
The Company's liquidity and capital needs have generally been met by cash from operating activities with additional liquidity from 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 sales during the holiday season and this inventory reduction, combined
with proportionately higher net income, typically produces significant positive cash flow.
The Company has a $1 billion revolving senior secured credit facility, including up to $150 million in the form of letters of credit, (the
"Credit Agreement") 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 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.
Liquidity information for the periods ended (dollars in thousands):
October 29,
2016
Funds drawn on Credit Agreement
$
Number of days with outstanding balance on Credit Agreement
1,738,200
October 31,
2015
$
163 days
Maximum daily amount outstanding under Credit Agreement
$
298,700
1,019,100
94 days
$
342,400
19
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
In the table above, the increase in funds drawn on our Credit Agreement during the 39 weeks ended October 29, 2016 compared to the
same period in fiscal 2015 was driven by continued capital return to stockholders and investments in the Company's growth.
Liquidity information as of (dollars in thousands):
October 29,
2016
October 31,
2015
Outstanding borrowings under Credit Agreement
$
260,900
$
342,400
Cash and cash equivalents
$
85,408
$
73,799
Remaining borrowing capacity under Credit Agreement
$
724,469
$
643,569
Outstanding letters of credit under Credit Agreement
$
14,631
$
14,031
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 – We expect capital expenditures to be approximately $275 million on a net basis, which includes tenant
allowances provided by landlords, and approximately $450 million on a gross basis in fiscal 2016. Normal capital requirements
primarily relate to the development of our omni-channel platform, including investments in new and existing stores and eCommerce
technology. The Company also plans to continue to invest in the improvement of its supply chain and corporate information
technology infrastructure. We plan to open 49 new stores and begin construction of our 5 th distribution facility in fiscal 2016. We
expect our new stores, as well as investments in our existing stores, to represent the majority of our total capital expenditures during
fiscal 2016. 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. Since the beginning of 2013, we have repurchased $928.9 million of common stock and
have $71.1 million remaining under this authorization. On March 16, 2016, the Company's Board of Directors authorized an
additional five-year share repurchase program of up to $1 billion of the Company's common stock. During the 39 weeks ended
October 29, 2016, the Company repurchased approximately 2.6 million shares of its common stock for $116.0 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 39 weeks ended October 29, 2016, the Company paid $51.2 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 authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial
requirements and other factors.
The Company currently believes cash flows generated by operations and funds available under its Credit Agreement will be sufficient
to satisfy capital requirements, including planned capital expenditures, share repurchases and quarterly dividend payments to its
stockholders through fiscal 2016. The Company may require additional funding should the Company pursue strategic acquisitions or
undertake share repurchases, other investments or store expansion rates in excess of those presently planned.
Changes in cash and cash equivalents are as follows (in thousands):
39 Weeks Ended
October 29,
2016
Net cash provided by operating activities
Net cash used in investing activities
$
Net cash provided by financing activities
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
$
131,226
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
184,462
(349,248)
October 31,
2015
12,671
32
$
(33,528)
115,869
(276,368)
(52)
$
(147,880)
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20
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
Operating Activities
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 $68.6 million for the 39 weeks ended October 29, 2016 compared to the same period
last year. The increase in cash provided by operating activities was due primarily to a $45.8 million increase in operating assets and
liabilities and a $27.0 million increase in non-cash items, partially offset by a $4.2 million decrease in net income period-over-period.
The increase in operating assets and liabilities was due primarily to the following:
▪ Changes in inventory and accounts payable increased operating cash flows by $58.7 million compared to the prior year,
primarily due to timing of inventory receipts.
▪
Changes in accrued expenses increased operating cash flows by $29.2 million compared to the prior year, primarily due to
lower incentive compensation accruals in fiscal 2015 that were subsequently paid during the first quarter of fiscal 2016,
compared to those balances accrued at the end of fiscal 2014 and subsequently paid during the first quarter of fiscal 2015.
▪
Changes in accounts receivable decreased operating cash flows by $15.4 million compared to the prior year, primarily due to
timing of collections associated with vendor funded store initiatives.
Investing Activities
Cash used in investing activities increased $72.9 million for the 39 weeks ended October 29, 2016 compared to the same period last
year primarily due to a $39.5 million increase in deposits and other assets coupled with a $33.4 million increase in gross capital
expenditures. The increase in deposits and other assets was primarily driven by the Company's acquisition of TSA intellectual
property and lease designation rights in the current period as well as Affinity Sports, a sports management technology company. The
increase in gross capital expenditures was primarily driven by incremental investments related to the Company's full-service footwear
store initiative.
Financing Activities
Cash provided by 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 provided by financing activities for
the 39 weeks ended October 29, 2016 totaled $131.2 million compared to $12.7 million for the comparable period of the prior year.
The Company repurchased $184.0 million fewer shares which was partially offset by lower net Credit Agreement borrowings during
the period ended October 29, 2016 compared to the prior year period.
Events Subsequent to Quarter-end
On November 2, 2016, the Company completed its purchase of certain assets of Golfsmith International Holdings, Inc. ("Golfsmith"),
including intellectual property and rights to acquire store leases, together with inventory for 30 stores. The purchase price was
approximately $43 million, of which $32 million is related to inventory. Intellectual property includes the name "Golfsmith", as well
as Golfsmith's domain names, owned trademarks and customer information.
On November 10, 2016, the Company's Board of Directors authorized and declared a quarterly cash dividend in the amount of
$0.15125 per share of common stock and Class B common stock payable on December 30, 2016 to stockholders of record as of the
close of business on December 9, 2016.
21
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
Off-Balance Sheet Arrangements
The Company's off-balance sheet arrangements as of October 29, 2016 primarily relate to store operating leases and purchase
obligations for marketing commitments, including naming rights, licenses for trademarks, corporate aircraft and technology-related
and other commitments. The Company has excluded these items from the unaudited Consolidated Balance Sheets in accordance with
generally accepted accounting principles. The Company does not believe that any of these arrangements have, or are reasonably likely
to have, a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or
resources.
Contractual Obligations and Other 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. For a description of the Company's contractual obligations and other commercial commitments as of January 30,
2016, see the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2016, filed with the Securities and
Exchange Commission on March 25, 2016. During the current quarter, there were no material changes with respect to these
contractual obligations and other commercial commitments outside the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk exposures from those reported in the Company's Annual Report on
Form 10-K for the fiscal year ended January 30, 2016 filed with the Securities and Exchange Commission on March 25, 2016.
ITEM 4. CONTROLS AND PROCEDURES
During the quarter, 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. Based upon that evaluation, the Company's management, including the Chief Executive Officer and the Chief Financial
Officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this
Quarterly Report on Form 10-Q, October 29, 2016.
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 errors or mistakes. 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 errors 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.
During the third quarter of fiscal 2016, the Company implemented an updated version of its pre-existing enterprise resource planning
("ERP") system associated with business and financial processes. This implementation resulted in changes to the Company's internal
control over financial reporting. The Company has taken steps to implement appropriate internal control over financial reporting
during this period of change and will continue to evaluate the design and operating effectiveness of internal control over financial
reporting during subsequent periods.
Other than the aforementioned ERP system implementation, there were no changes in the Company's internal control over financial
reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Dick's Sporting Goods, Inc. and its subsidiaries are involved in various proceedings that are incidental to the normal course of their
businesses. As of the date of this Quarterly Report on Form 10-Q, 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.
22
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
ITEM 1A. RISK FACTORS
For a discussion of risk factors affecting the Company refer to Part I, Item 1A. "Risk Factors" of the Company's Annual Report on
Form 10-K for the year ended January 30, 2016, filed with the Securities and Exchange Commission on March 25, 2016. The
discussion of risk factors sets forth the material risks that could affect the Company's financial condition and operations.
Reference is also made to Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations –
Forward-Looking Statements" of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth repurchases of our common stock during the third quarter of 2016:
Total Number of
Shares Purchased
(a)
Period
July 31, 2016 to August 27, 2016
Dollar Value of Shares
That May Yet be
Purchased Under the
Plans or Programs
174,980
$
51.53
174,726
$
1,071,115,531
4,154
$
59.03
—
$
1,071,115,531
567
$
55.93
—
$
1,071,115,531
179,701
$
51.72
174,726
August 28, 2016 to October 1, 2016
October 2, 2016 to October 29,
2016
Total
Average Price
Paid Per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (b)
(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. On March 16, 2016, the Company's Board of Directors authorized an additional
five-year share repurchase program of up to $1 billion of the Company's common stock. The Company will continue to purchase
under the 2013 program until it is exhausted or expired.
ITEM 6. EXHIBITS
The Exhibits listed in the Index to Exhibits, which appears on page 25 and is incorporated herein by reference, are filed or furnished
(as noted) as part of this Quarterly Report on Form 10-Q.
23
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form
10-Q to be signed on November 21, 2016 on its behalf by the undersigned, thereunto duly authorized.
DICK'S SPORTING GOODS, INC.
By:
/s/ EDWARD W. STACK
Edward W. Stack
Chairman and Chief Executive Officer
By:
/s/ LEE J. BELITSKY
Lee J. Belitsky
Executive Vice President – Chief Financial Officer
(principal financial and accounting officer)
24
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Table of Contents
INDEX TO EXHIBITS
Exhibit Number
Description of Exhibit
Method of Filing
10.1
Separation Agreement and General Release between
the Company and Teri L. List-Stoll
10.2
Offer Letter between the Company and Holly R. Tyson, Filed herewith
Chief Human Resources Officer
10.3
Offer Letter between the Company and Lee J. Belitsky,
Executive Vice President - Chief Financial Officer
Filed herewith
31.1
Certification of Edward W. Stack, Chairman and Chief
Executive Officer, dated as of November 21, 2016 and
made pursuant to Rule 13a-14 of the Securities
Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
Filed herewith
31.2
Certification of Lee J. Belitsky, Executive Vice
President - Chief Financial Officer, dated as of
November 21, 2016 and made pursuant to Rule 13a-14
of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Filed herewith
32.1
Certification of Edward W. Stack, Chairman and Chief
Executive Officer, dated as of November 21, 2016 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
32.2
Certification of Lee J. Belitsky, Executive Vice
President - Chief Financial Officer, dated as of
November 21, 2016 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
101.INS
XBRL Instance Document
Filed herewith
101.SCH
XBRL Taxonomy Extension Schema Document
Filed herewith
101.CAL
XBRL Taxonomy Calculation Linkbase Document
Filed herewith
101.DEF
XBRL Taxonomy Definition Linkbase Document
Filed herewith
101.LAB
XBRL Taxonomy Label Linkbase Document
Filed herewith
101.PRE
XBRL Taxonomy Presentation Linkbase Document
Filed herewith
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
Filed herewith
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25
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Exhibit 10.1
SEPARATION AGREEMENT AND GENERAL RELEASE
DICK’S SPORTING GOODS, INC. (“Employer”) and TERI LIST-STOLL (“ Employee ”), enter into this Separation
Agreement and General Release (this “ Agreement ”).
WHEREAS, Employee was employed by Employer as Executive Vice President - Chief Financial Officer;
WHEREAS, Employer terminated Employee’s employment effective September 1, 2016 (the “ Termination Date ”); and,
WHEREAS, Employer is willing to provide to Employee, subject to the terms of this Agreement certain severance in
exchange for Employee providing a release of claims and other commitments.
NOW THEREFORE, and in consideration of the mutual promises contained herein, the receipt and adequacy of which are
hereby acknowledged, Employer and Employee agree as follows:
1.Definitions.
a.“Company” means: Employer and any entity that controls, is under common control with or
is controlled by Employer, which includes without limitation Golf Galaxy, LLC.
b.“Releasees” means: the Company; the present or former directors, members, officers,
shareholders, employees, affiliates, agents and advisors (including attorneys) of each entity constituting the
Company; and the current or former trustees or administrators of any pension or other benefit plan applicable to
the employees or former employees of any of the entities constituting the Company.
2.Termination of Employment.
a.Employer timely paid or will timely pay Employee in accordance with its normal payroll and
other procedures (or as otherwise required by law) for Employee’s work through the Termination Date, less all
required tax withholdings and other deductions. Employee will receive this payment regardless of whether
Employee signs or revokes this Agreement.
b.If Employee was enrolled in Employer’s medical benefit plans, Employee’s coverage under
such plans shall cease as of September 30, 2016. As of the Termination Date, all of Employee’s other fringe
benefits shall cease.
3.Effective Date. This Agreement shall not become effective in any respect until the Revocation Period as set
forth in Section 22(f) has expired without notice of revocation. In the absence of Employee’s revocation of this Agreement,
the eighth day after Employee’s execution of this Agreement shall be the “ Effective Date ” of this Agreement.
4.Existing Agreement. The parties previously entered into a Non-Compete and Confidentiality Agreement dated
August 1, 2015 (the “ Non-Compete Agreement ”) relating to, among other things, confidentiality obligations and
non-compete and non-solicitation restrictions applicable to Employee. The parties acknowledge and agree that from and
after the Effective Date, the Non-Compete Agreement shall be superseded in its entirety by this Agreement.
5.Severance Payments, Bonus and Conditions.
a.In lieu of the severance otherwise set forth in the Non-Compete Agreement, which would
total $57,692.32, Employer agrees to pay Employee severance in the aggregate amount of $767,000.00 (the “
Severance ”). The Severance shall be payable as follows:
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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(i) $750,000 of the Severance shall be payable in 26 installments of $28,846.16 each. These Severance installments
shall be paid every two weeks beginning on Employer’s first regular pay date after the Effective Date.
(ii $17,000.00 of the Severance shall be paid in a single lump sum payment on the first regular pay date after the
) Effective Date.
b.If Employer achieves its performance targets for company-wide metrics for Fiscal Year 2016
of at least the target level for payout for Fiscal Year 2016, Employer shall pay Employee a pro-rated portion of the
target performance incentive bonus award for Employee’s salary grade under Employer’s Performance Incentive
Plan for Fiscal Year 2016. Payment of the performance incentive bonus award will be based on Employer’s
audited financial statements for Fiscal Year 2016 and is subject to Employer’s Board of Directors’ approval of
such financial results. For clarification, Employee will be entitled to the pro-rata portion of such bonus (pro rata
calculation based on the portion of the fiscal year completed as of the Termination Date) at the target level so long
as the target threshold for Company performance was achieved; however Employee shall not be entitled to
performance incentive bonus above the target level even if
c.company-wide metrics exceed the target level. Subject to the foregoing, such payment shall
be made to Employee at a time determined by Employer in the ordinary course of business but no later than
seventy (70) days after the last day of Fiscal Year 2016.
d.If Employee accepts or has accepted a position, engagement or other relationship with a third
party pursuant to which Employee receives or will receive compensation, then Employee shall promptly disclose
in writing to Employer such fact and the nature and extent of such compensation. Employer's obligation to pay or
to continue paying the Severance hereunder shall cease upon the start of Employee in a position, engagement or
other relationship with expected gross compensation during the first 12 months of at least $750,000.00, measured
as base salary plus any guaranteed and/or sign-on cash bonus which is payable in the first year of employment.
e.If Employer's obligation to pay or to continue paying the Severance ceases pursuant to
Section 5(c), any partially accrued and unpaid Severance shall be prorated based on the date Employer's obligation
ceases and such prorated amount shall be paid to Employee on Employer's next regular pay date.
f.Employee received a discretionary bonus of $115,000 on or about April 2016 (the “Incentive
Bonus”) which was issued with the condition that Employee would be required to repay Employer a pro rata
amount of the Incentive Bonus if Employee’s employment terminated within two years of the payment of the
Incentive Bonus. Subject to Employee’s execution of this Agreement and adherence to the promises made herein,
Employer agrees to forgive Employee’s obligation to repay to Employer the Incentive Bonus.
g.Employer will pay Employee Employee’s unused vacation (73.22 hours as of the
Termination Date) in the amount of $26,400 payable on the first regularly scheduled pay date after the Effective
Date.
h.The severance payments and benefits shall be subject to any applicable federal, state or local
income and employment tax withholding, reporting or other requirements. Employee acknowledges and
understands that the amounts paid to Employee will be reported to the United States Internal Revenue Service and
other appropriate taxing agencies in accordance with all federal, state and local tax reporting requirements.
Employee further agrees that Employee shall be responsible for Employee’s tax liabilities associated with such
payments and that Employee shall indemnify, defend and hold Company harmless with respect to any tax liability
or penalty relating to the payments or the matters encompassed herein.
6.General Release and Waiver of Claims.
a.Employee irrevocably and unconditionally releases, acquits and forever discharges Releasees
of and from any and all charges, complaints, claims, causes of action, suits and debts, of whatever nature, related
in any way to Employee’s employment by any Releasee or termination thereof, occurring or accruing on or before
the date Employee executes this Agreement, whether known or unknown, asserted or unasserted, that Employee
now has, may have, or claims to have against Company or any of the other Releasees. This includes any and all
such claims or causes of action that Employee could make on Employee’s own behalf, but also those that may or
could be brought by any person or entity on Employee’s behalf.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
b.The release and waiver set forth in Section 6(a) includes, but is not limited to, any claims
arising under any federal, state or local statutes, regulations, ordinances or common laws, specifically including,
but not limited to (and in each case as it may have been amended): the Age Discrimination in Employment Act (“
ADEA ”); the Older Workers’ Benefit Protection Act; the Civil Rights Act of 1964; the Civil Rights Act of 1991;
the Family and Medical Leave Act; Sections 1981 through 1988 of Title 42 of the United States Code; the
Employee Retirement Income Security Act of 1974; the Americans with Disabilities Act of 1990; the
Occupational Safety and Health Act; the Equal Pay Act of 1963; the Consolidated Omnibus Budget Reconciliation
Act of 1985; the Health Insurance Portability and Accountability Act of 1996; Section 503 of the Rehabilitation
Act of 1973; and any common law claims, including but not limited to those alleging wrongful discharge,
intentional or negligent infliction of emotional distress, breach of contract, promissory or equitable estoppel,
discrimination, defamation, invasion of privacy, negligence, breach of duty and/or claims for attorney’s fees,
punitive, compensatory and liquidated damages, expenses or costs.
c.Notwithstanding Sections 6(a) and (b), the release set forth therein does not and is not
intended to (i) release any claims that cannot be released by law, such as claims for workers compensation
benefits, or (ii) preclude Employee from seeking a judicial determination of the validity of the release of
Employee’s rights under the ADEA.
d.Notwithstanding Sections 6(a) and (b), nothing in this Agreement prohibits or prevents
Employee from filing a charge with or participating, testifying, or assisting in any investigation, hearing,
whistleblower proceeding or other proceeding before any federal, state, or local government agency (e.g.
EEOC, NLRB, SEC., etc.), nor does anything in this Agreement preclude, prohibit, or otherwise limit, in
any way, Employee’s rights and abilities to contact, communicate with, report matters to, or otherwise
participate in any whistleblower program administered by any such agencies. However, to the maximum
extent permitted by law, Employee agrees that if such a charge is filed or an administrative claim is made,
Employee shall not be entitled to recover any individual monetary relief or other individual remedies;
provided the foregoing does not prohibit Employee from seeking and obtaining a whistleblower award from
the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934, as
amended.
e.Notwithstanding Sections 6(a) and (b), the release, waiver and other provisions of this
Agreement do not diminish or otherwise adversely impact any vested benefits to which Employee might be
entitled pursuant to any employee benefit plan maintained by Employer.
7.Termination of Employment; No Re-Hire. As of the Termination Date, Employee’s employment relationship
with Employer shall be permanently and irrevocably severed, and Employee forever waives any and all claims or right to
reinstatement or future employment with the Company. Employee agrees that Employee shall not at any time seek or accept
future employment with the Company in any capacity.
8.Return of Company Materials and Property. All documents and other property that relate to the business of the
Company are the exclusive property of the Company, even if Employee authored or created them. Employee represents that
Employee has returned to Employer any and all such documents and property, including, but not limited to, electronic and
paper documents, software, equipment (including, but not limited to, mobile devices, computers and computer-related
items), and all other materials or other things (including, but not limited to, identification and keys), as well as any copies, in
whatever form.
9.Cooperation.
a.At the Company’s request, Employee shall be reasonably available to the Company and
cooperate with the Company with respect to the investigation, defense or prosecution of matters that relate to any
threatened, present or future claims or proceedings that involve the Company or the other Releasees and about
which Employee reasonably may have knowledge. Employee acknowledges that providing such cooperation may
include, without limitation, meeting with attorneys and other Company representatives to prepare for depositions
or testimony and giving depositions and testimony. Employer shall pay Employee’s reasonable costs and expenses
incurred in connection with Employee’s performance of Employee’s obligations under this Section 9 at the request
of the Company.
b.Employee will promptly complete and return any director and officer questionnaire or
provide similar information, and execute any certifications, as may be requested by Employer in connection with
legal and regulatory requirements, including the requirements of the federal securities laws and the relevant
national stock exchange, and Employer’s controls and procedures.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
10.Confidentiality; Assignment of Inventions.
a.Except as expressly permitted by Employer in writing or required by law, Employee shall not
at any time disclose to any person or entity or use for Employee’s own benefit or for the benefit of any person or
entity other than the Company, any proprietary or confidential information disclosed to, obtained by or developed
by Employee during Employee’s employment by the Company. For purposes of this Agreement, the term
“proprietary or confidential information” shall include, but not be limited to, any and all information in whatever
form, whether written, electronically stored, orally transmitted or memorized pertaining to: any trade secret;
trademark, patent, copyright or other intellectual property right; confidential or non-public information (including,
but not limited to, any materials or information the Company designates as being proprietary or confidential);
knowledge or data, whether of a technical or commercial nature; sales or production records or data; long and
short term goals; sales or production records or data; license arrangements and terms; confidential matters
concerning private brand offerings; records; ledgers; business correspondence; memoranda and other records
databases; programs; sales and marketing plans; research and development plans; product or service pricing and
pricing policies; business development plans; Inventions (as defined in Section 10(c)); financial statements, plans,
performance or other financial information; tax information; managerial and operational policies; ideas; plans;
methods; practices and procedures; proprietary software; personnel information and files; vendor and supply
arrangements, pricing and lists; marketing strategies; customer lists and records; and all other confidential or
proprietary business information related to the conduct or strategy of the business of the Company.
b.Employee is aware of the restrictions imposed by federal and state securities laws on a
person possessing material, non-public information. Employee further acknowledges that the disclosure of any
material, non-public information to another person who would or does conduct trades in any securities while in
possession of any material, non-public information is a violation of law, which could subject Employee and
persons to whom the information was disclosed to civil and criminal penalties under the securities laws of the
United States.
c.Any and all inventions, products, discoveries, improvements, processes, formulae,
manufacturing methods or techniques, designs, devices, apparatuses, practices, content, creative works of
authorship, computer programs or databases or styles, whether or not patentable or copyrightable (collectively
referred to as “ Inventions ”) made, developed or created by Employee, alone or in conjunction with others,
during regular hours of work or otherwise, during Employee’s term of employment by Employer, that may be
directly or indirectly useful in or related to the business of, or tests being carried out by, the Company, are the
exclusive property of the Company. Employee hereby assigns all Inventions to the Company and will, upon
Employer’s request, whether before or after the Termination Date, execute all documents necessary or advisable in
the opinion of Employer or its counsel to direct issuance of any type of intellectual property right to the Company
with respect to Inventions that are the exclusive property of the Company under this Section 10(c) or to vest in the
Company title to such Inventions. The expense of securing any such intellectual property right shall be borne by
Employer. Employee will keep confidential and will hold for the Company’s sole benefit any Invention that is to
be the Company’s exclusive property under this Section 10(c) for which no intellectual property right is issued.
d.If Employee is compelled by applicable law or governmental regulation or compulsory legal
process to disclose “proprietary or confidential information,” as defined in Section 10(a), Employee must notify
Employer in advance and in writing, as soon as Employee is aware that disclosure is or may be required or
appropriate, of the nature of any such proposed disclosure and the persons or entities to which such disclosure is
proposed to be made, so that Employer has the opportunity to take such action as it deems necessary to protect its
“proprietary or confidential information” as defined in Section 10(a).
11.Confidentiality of Agreement.
a.Employee agrees that the existence, negotiation, terms and conditions of this Agreement are
confidential. Except as expressly permitted by Employer in writing, and except for disclosures to Employee’s legal
and financial advisors and members of Employee’s immediate family, each of whom shall first agree to the same
confidentiality restrictions, Employee shall not disclose to any person or entity, this Agreement, the existence or
nature hereof, or the terms or conditions set forth herein, or the circumstances surrounding Employee’s separation
from Employer, and Employee shall take reasonable steps necessary or appropriate to cause the members of
Employee’s family and Employee’s advisors to abide by such disclosure restriction.
b.Notwithstanding the foregoing, this Agreement does not prohibit Employee from (i)
providing truthful testimony in response to compulsory legal process, (ii) participating or assisting in any
investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory jurisdiction
or (iii) making truthful statements in connection with any claim permitted to be brought by Employee under this
Agreement.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
12.Non-Disparagement. Employee shall not make any disparaging or negative comments, whether oral or
written, about the Company or any other Releasees and shall take reasonable steps necessary or appropriate to cause the
members of Employee’s family and Employee’s advisors to abide by such disclosure restriction. Company agrees that it
shall instruct its Senior Executives not to make any disparaging or negative comments, whether oral or written, about
Employee. For purposes of this provision, a “Senior Executive” shall mean any individual at the level of Senior Vice
President or above employed by the Company as of the Effective Date of this Agreement. This provision does not prohibit
Employee or Company from (i) providing truthful testimony in response to compulsory legal process, (ii) participating or
assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory
jurisdiction or (iii) making truthful statements in connection with any claim brought by Company or permitted to be brought
by Employee under this Agreement.
13.Covenants Regarding Competition and Employees.
a.For a period of eighteen (18) consecutive months following the Termination Date (the
"Restrictive Period"), Employee specifically agrees that Employee shall not:
i.Directly or indirectly, own, manage, control, aid, assist, participate in, be
a consultant to, render services for, accept a position with, be employed by, or otherwise be involved in
any manner with the ownership, management, operation or control of any Sporting Goods Provider (as
defined below) that conducts operations anywhere within the United States and/or in any other country
in which the Company conducts retail operations or has plans to conduct retail operations within 18
months following the Termination Date (the " Restricted Area "); or,
ii.Induce, solicit or assist in any way in encouraging, directly or indirectly,
any person who is a Company employee to terminate such employment relationship, otherwise assist in
the recruitment of a Company employee to accept employment or an engagement with another entity or
hire or otherwise retain the services of a Company employee. For purposes of this Section, a Company
employee means any person who is a Company employee at any time during the period commencing 3
months prior to the Termination Date and ending on the last day of the Restrictive Period.
b.The term "Sporting Goods Provider" means any of the following:
i.Any entity listed on Appendix A, regardless of whether such entity falls
within the other categories listed in this definition;
ii.Any entity that sells direct to consumers through 15 or more stores and
has a total product mix of more than 50% Sporting Goods as measured either by product count or by
sales; for purposes of this definition " Sporting Goods " includes each of the following: (A) hard or soft
line sporting goods and equipment (including, without limitation, team sports goods and equipment,
bicycles and exercise equipment); (B) sports or athletic footwear or apparel; (C) hunting, fishing,
camping or outdoor apparel, gear, accessories, equipment or other products (including, without
limitation, long guns/hunting rifles and ammunition); and (D) golf clubs, golf equipment, golf apparel,
golf accessories or golf services;
iii.Any entity that sells direct to consumers through the Internet and/or
catalogs, and has a total product mix of more than 50% Sporting Goods as measured either by product
count or by sales;
iv.Any entity that employs or retains Employee to perform services
materially related to Sporting Goods and has aggregate sales to consumers through any combination of
stores, the Internet and/or catalogs in excess of $500 million per year;
v.Any entity (A) from or to which the Company licenses a brand for the
purpose of manufacturing and/or distributing products or (B) that supplies products to the Company if
the Company's sales of such entity's products are in excess of $20 million per fiscal year (as measured in
the Company's most recently completed full fiscal year as of the Termination Date);
vi.Any brokerage firm or similar entity that, within the 1-year period prior
to the Termination Date, has represented or otherwise provided real estate brokerage or similar services
to the Company or, to employee's knowledge after due inquiry, to any entity covered by clause (i) or (ii)
above; or
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
vii.With respect to each entity identified above in clauses (i) through (vi),
(A) its successors and assigns (whether by sale, merger, consolidation, name change, or otherwise), (B)
any entity that controls, is under common control with or is controlled by such entity and (C) any
division, affiliate, subsidiary or franchisee of any such entity or of any entity covered by the immediately
foregoing clauses (A) and (B); further, for purposes of any sales determinations or store counts required
by this definition, the sales and stores of the entities covered by the immediately foregoing clauses (A),
(B) and (C) shall be aggregated with those of the entities identified above in clauses (i) through (vi).
c.Employee acknowledges that the Restricted Area is reasonable because of the Company's
business, its customers and the products that it sells, where it sells them and how it sells them, including without
limitation that the Company's sales are not limited by state boundaries, the Company competes with entities
offering products for sale via the Internet and catalog, and the Company conducts or intends to conduct retail
operations throughout the United States and in the future expects to conduct retail operations in additional
jurisdictions. If a court of competent jurisdiction determines that one or more of the provisions of this Section 13 is
so broad as to be unenforceable, then such provision shall be deemed to be reduced in scope or length, as the case
may be, to the extent required to make this Section 13 enforceable. If Employee violates the provisions of this
Section 13 (as written or as so reduced in scope), the Restrictive Period shall be extended by that number of days
that equals the aggregate number of days of Employee's violation of this Section 13.
d.Nothing herein shall prohibit Employee from being a passive owner of not more than 2% of
the outstanding stock of any class of a corporation that is publicly traded.
14.Breach by Employee.
a.Both parties hereto recognize that the obligations of Employee under this Agreement are
special, unique and of extraordinary character and if Employee hereafter fails to comply with the restrictions and
obligations imposed upon Employee under this Agreement, the Company will not have an adequate remedy at law.
It is agreed that under such circumstances, the Company, in addition to any other rights that it may have, shall be
entitled to injunctive relief to enforce any such restrictions and obligations without the necessity of the Company
to post a bond, and that in the event any actual proceedings are brought in equity to enforce any such restriction or
obligation, Employee shall not raise as a defense that there is an adequate remedy at law. In the event that the
Company obtains an injunction, order, decree or other relief, in law or in equity, Employee shall be responsible for
reimbursing the Company all costs associated with obtaining the relief, including reasonable attorneys’ fees, and
expenses and costs of suit. Nothing in this Agreement shall be construed to prohibit the Company from pursuing
any other available remedies for any such failure or threatened failure, including without limitation recovery of
damages from Employee.
b.Employee will provide Employer with such information as Employer may from time to time
reasonably request to determine Employee’s compliance with this Agreement. Employee authorizes Employer or
its agents to contact Employee’s future employers (excluding solely board of director positions) to determine
Employee’s compliance with this Agreement or to communicate the contents of this Agreement to such
employers. Employee releases the Company and the other Releasees from all liability for any damage arising from
any such contacts or communications. The foregoing is in addition to, but not in lieu of, any and all rights the
Company may have at law or in equity in the event of a breach of this Agreement by Employee.
c.If Employee breaches or threatens to breach any provision of this Agreement, all obligations
of the Company hereunder, including without limitation the obligation to pay the Severance, shall cease
immediately.
15.Non-Admission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of the
consideration for the release described herein shall be deemed at any time as an admission by either party, or evidence of
any liability or unlawful conduct of any kind.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
16.Governing Law; Personal Jurisdiction; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of law.
Employee irrevocably submits to the personal and exclusive jurisdiction of the United States District Court for the Western
District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in any action or proceeding
arising out of, or relating to, this Agreement or related to Employee’s employment with or termination from Employer
(whether such action arises under contract, tort, equity or otherwise). Employee irrevocably waives any objection that
Employee now or hereafter may have to the laying of venue or personal jurisdiction of any such action or proceeding
brought in such courts. Jurisdiction and venue of all such causes of action shall be exclusively vested in the United States
District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania.
Employee irrevocably waives Employee’s right to object to or challenge the above selected forum on the basis of
inconvenience or unfairness under 28 U.S.C. § 1404, 42 Pa. C.S. § 5322 or similar state or federal statutes.
17.Internal Revenue Code Section 409A Compliance.
a.For purposes of Section 409A of the Internal Revenue Code, each severance benefit payment
shall be treated as a separate payment. Each payment under this Agreement is intended to be excepted from
Section 409A to the maximum extent provided under Section 409A as follows: (i) each payment that is scheduled
to be made on or before March 15th of the calendar year following the calendar year containing the Termination
Date (or, if later, the 15th day of the third month following the end of the Company's first taxable year in which
the right to the payment is no longer subject to a substantial risk of forfeiture) is intended to be excepted under the
short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4); and (ii) each payment that is not
otherwise excepted under the short-term deferral exception is intended to be excepted under the involuntary pay
exception as specified in Treas. Reg. § 1.409A-1(b)(9)(iii). The Employee shall have no right to designate the date
of any payment under this Agreement.
b.With respect to payments subject to Section 409A (and not excepted therefrom), if any, it is
intended that each payment is paid on a permissible distribution event and at a specified time consistent with
Section 409A. The Company reserves the right to accelerate and/or defer any payment to the extent permitted and
consistent with Section 409A. Notwithstanding any provision of this Agreement to the contrary, to the extent that a
payment hereunder is subject to Section 409A (and not excepted therefrom) and payable on account of a
termination of employment, such payment shall be delayed for a period of six months after the date of termination
(or, if earlier, the death of the Employee) if the Employee is a "specified employee" (as defined in Section 409A
and determined in accordance with the procedures established by the Company). Any payment that would
otherwise have been due or owing during such six-month period will be paid immediately following the end of the
six-month period in the month following the month containing the six (6)-month anniversary of the date of
termination.
c.The offer set forth in this Agreement shall expire 21 days after the Termination Date. If
Employee does not execute and return this Agreement to Employer within such 21-day period, Employee’s
submission of the signed Agreement to Employer following the expiration of the 21-day period for acceptance
shall be of no force and effect.
18.Jury Trial Waiver. In consideration of this Agreement, and the consideration provided under it,
Employee irrevocably and unconditionally agrees not to elect a trial by jury and knowingly, intelligently and
voluntarily waives all rights Employee has or may have had, but for this Agreement, to trial by jury in any
proceeding, dispute, controversy or claim arising from or related to this Agreement or related to Employee’s
employment with or termination from the Employer (including any claim arising under any provision of state,
federal, common or local law), and Employee agrees to try any such claims brought by him/her in a court or tribunal
without use of a jury.
19.Severability. If any provision of this Agreement is conclusively determined by a final judgment not subject to
appeal to be prohibited or unenforceable in any jurisdiction, such provision shall be ineffective to the extent of such
prohibition or unenforceability without affecting, impairing or invalidating the remaining provisions hereof or the
enforceability thereof in such jurisdiction or the validity or enforceability of any provision hereof in any other jurisdiction.
20.Binding Effect; Non-Assignability. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. The rights
and obligations of Employee under this Agreement are personal to Employee and may not be assigned, transferred or
delegated by Employee to any other person or entity. This Agreement shall be assignable by Employer, whether by
operation of law or otherwise.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
21.Entire Agreement; Amendment. This Agreement sets forth the entire agreement between the parties hereto,
and, unless otherwise specified, fully supersedes any prior agreements or understandings between the parties including,
without limitation, the Non-Compete Agreement. This Agreement may not be modified, altered or changed except in writing
and signed by both parties wherein specific reference is made to this Agreement.
22.Reasonable Opportunity to Review, Acceptance and Revocation, and Other Acknowledgments.
a.Employee acknowledges that Employee has carefully read and fully understands the
provisions of this Agreement, that Employee has had a full and fair opportunity to consider the terms of this
Agreement (including the release and waiver of claims set forth herein) for a reasonable period of time, and that
Employee’s acceptance of the terms of this Agreement is both knowing and voluntary.
b.Employee acknowledges that, except for the wages to be paid to Employee regardless of
whether Employee signs this Agreement, as described in Section 2, and the Severance to be paid under this
Agreement, as defined in Section 5.a., Company does not owe Employee any other wages, compensation, or
benefits of any kind or nature.
c.Employee represents and acknowledges that (i) Employer has provided Employee with all
leave to which Employee was entitled and, to the best of Employee’s knowledge, Employee is not suffering from
any work-related injuries; and (ii) the Severance described in this Agreement are things that Employee is not
entitled to receive in the absence of this Agreement. Employee represents and acknowledges that in executing this
Agreement, Employee does not rely and has not relied upon any representation or statement made by Company or
by any of the other Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise,
except any representation or statement expressly set forth herein.
d.Employee is hereby advised to consult with a lawyer of Employee’s choosing, and Employee
hereby acknowledges that Employee understands that right and has had an opportunity to consult with a lawyer of
Employee’s choosing regarding Employee’s lawful remedies and rights as well as the meaning and significance of
the terms of this Agreement.
e.Employee has been given twenty-one (21) days to consider the terms of this Agreement
before signing this Agreement. If Employee executes this Agreement prior to the expiration of the 21-day period,
Employee acknowledges that Employee does so solely because Employee already fully and carefully considered
this Agreement before signing it. If the terms or form of this Agreement are revised or modified prior to the
expiration of such 21-day period, such revision or modification shall not restart that 21-day period.
f.Employee may revoke this Agreement, including without limitation the release and waiver of
claims under the Age Discrimination in Employment Act, by delivering a written revocation to Deborah Victorelli,
Vice President of Human Resources, Dick’s Sporting Goods, Inc., 345 Court Street, Coraopolis, PA 15108, within
seven (7) days after executing this Agreement (the “ Revocation Period ”).
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS.
The parties, agreeing to be legally bound hereby, knowingly and voluntarily sign this Agreement.
TERI L. LIST-STOLL
DICK’S SPORTING GOODS, INC.
/s/ TERI L. LIST-STOLL
/s/ HOLLY R. TYSON
Holly R. Tyson
Chief Human Resources Officer
Date: September 1, 2016
Date: August 31, 2016
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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Exhibit 10.2
www.DicksSportingGoods.com
345 Court Street · Coraopolis, PA 15108
Main Phone: 724-273-3400
June 15, 2016
Holly Tyson
210 South Mooreland Road
Richmond, VA 23229
Dear Holly:
It is our great pleasure to inform you that you have been selected to be a member of the DICK’S Sporting Goods Team. At DICK’S
we continually search for the finest candidates who share our passion for sports and our belief that sports make people better. Like the
most successful athletes, our professionals are driven, skilled, passionate and committed, and we believe you are someone who
exhibits these same valuable traits, day in and day out, both personally and professionally.
Enclosed is important information about our organization, your individual position, compensation and benefits. Please review the
attached materials and contact me at 724-273-3220 with any questions. The major provisions of your offer are as follows:
Position: Your position is Chief Human Resources Officer. This position is based in our Store Support Center, and you will report to
me. We look forward to having you begin employment on August 3, 2016.
Base Pay: Your bi-weekly rate of pay will be $17,307.69 annualized to $450,000. DICK’S Sporting Goods associates are paid every
other Friday, one week in arrears (one week behind the most current workweek you’ve completed). The workweek starts on Sunday
and runs through Saturday.
Sign-on Bonus: You will receive a one-time sign-on bonus of $150,000 to be paid with your first paycheck. All applicable federal,
state and local taxes will be withheld from this payment.
Annual Incentive: For fiscal year 2016, your target incentive award is 50% of your eligible earnings. The award can range from 0%
to 100%, based on company and individual performance. Your next opportunity for a prorated incentive award will be in the Spring of
2017 based on fiscal year 2016 results. You will be guaranteed a minimum incentive payment of $112,500 for fiscal year 2016, to be
paid in the Spring of 2017. For fiscal year 2017, your target incentive award is 60% of your eligible earnings. The award can range
from 0% to 120%, based on company and individual performance.
Sign-on Equity: You will receive a sign-on equity grant valued at $610,000 consisting of a stock option grant valued at $366,000 that
will vest at 25% each year over a four year period, and a restricted stock grant valued at $244,000 that will cliff vest after three years.
Annual Equity: Your target equity award is $500,000. The award can range from $0 to $750,000 based on company and individual
performance. Your next opportunity for an annual equity grant will be in the Spring of 2017.
Long-term Incentive Plan: You are eligible to participate in our existing DICK’S Sporting Goods long-term incentive plan (LTIP).
Additional plan details will be provided during your orientation.
Relocation: You are eligible to participate in our relocation program. A copy of the relocation policy is enclosed.
Health & Welfare Benefits: As a full-time salaried associate, after 30 days of continuous full-time service, you are eligible to
participate in the full range of benefits, including medical, prescription, vision, dental, life and disability insurances, as well as
retirement plans. Additional information on the benefit plans can be found at www.benefityourliferesources.com.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Paid Time Off: Your vacation time will accrue on a bi-weekly basis up to a total of 160 hours on an annual basis (the equivalent of 20
eight-hour days) starting with your hire date. Three personal days are awarded at the beginning of each calendar year and are prorated
over the course of the year for new hires. Based on your hire date, you will be awarded two personal days for use in 2016. In addition,
the Store Support Center observes seven paid holidays each year.
Terms: This offer is contingent upon a satisfactory background check. You will receive a separate email with a link directing you to
our screening process. DICK’S is an at-will employer, which means that either you or DICK’s are free to end the employment
relationship at any time, with or without notice or cause. All compensation and benefit plans are governed by their respective plan
documents.
In addition, the following documents are enclosed and need to be executed prior to your start date. Please review, sign and forward to
my attention.
•
Non-Compete
Agreement
•
Sign-on Bonus
Agreement
•
Relocation
Agreement
On your first day of employment, you will be required to provide documentation indicating that you are legally eligible for
employment in the United States. A list of acceptable forms of identification is enclosed. If you decide to accept our offer, please
bring the appropriate identification with you on your first day of employment.
We hope that you’ll accept our offer of employment by signing and returning this letter to me.
Once again, we’d like to congratulate you on your offer. Please let me know if I can be of any help to you between now and your first
day of employment. We look forward to welcoming you to the DICK’s team and building a future of success together.
Sincerely,
/s/ EDWARD W. STACK
Edward W. Stack
Chairman & Chief Executive Officer
I accept the above offer of employment:
/s/ HOLLY R. TYSON
Signature
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
June 20, 2016
Date
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Exhibit 10.3
www.DicksSportingGoods.com
345 Court Street · Coraopolis, PA 15108
Main Phone: 724-273-3400
September 27, 2016
Dear Lee:
Congratulations! I am delighted to offer you the position of Executive Vice President, Chief Financial Officer reporting to me. The
major provisions of your offer are as follows:
Position: Your position is Executive Vice President, Chief Financial Officer with an effective date of September 27, 2016.
Base Pay: Your bi-weekly rate of pay will be $25,000.00, annualized to $650,000.
Annual Incentive: Your target incentive award remains at 75% of your eligible earnings. The award can range from 0% to 150%
based on company and individual performance.
Annual Equity: Your target equity award remains $900,000. The award can range from $0 to $1,350,000 based on company and
individual performance.
Health & Welfare Benefits andPaid Time Off: Your benefits and vacation time will remain the same.
Once again, we’d like to congratulate you on your promotion.
Sincerely,
/s/ ANDRÉ J. HAWAUX
André J. Hawaux
Executive Vice President, Chief Operating Officer
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Exhibit 31.1
CERTIFICATIONS
I, Edward W. Stack, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
Date: November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Exhibit 31.2
CERTIFICATIONS
I, Lee J. Belitsky, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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/ LEE J. BELITSKY
Date: November 21, 2016
Lee J. Belitsky
Executive Vice President – Chief Financial Officer
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "Company") for the period ended
October 29, 2016, 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
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
Date: November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "Company") for the period ended
October 29, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lee J. Belitsky, 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/ LEE J. BELITSKY
Date: November 21, 2016
Lee J. Belitsky
Executive Vice President – Chief Financial Officer
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.
Source: DICKS SPORTING GOODS INC, 10-Q, November 21, 2016
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The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any
use of this information, except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.