Dick's Sporting Goods 2003 Annual Report Download - page 31

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account agreements, and a trademark security agreement) by interests in substantially all of the Company’s personal
property excluding store and distribution center equipment and fixtures, including the pledge of the stock of our wholly
owned subsidiary, American Sports Licensing, Inc. As of January 31, 2004, the Company was in compliance with the
terms of the senior secured revolving credit facility.
On February 18, 2004, the Company completed a private offering of $172.5 million issue price of senior unsecured
convertible notes due in 2024 (“convertible notes”) in transactions pursuant to Rule 144A under the Securities
Act of 1933, as amended. Net proceeds to the Company of $145.7 million are after the net cost of a five-year
convertible bond hedge and a five-year separate warrant transaction. The hedge and warrant transactions effectively
increase the conversion premium associated with the senior convertible notes during the term of these transactions
from 40% to 100%, or from $39.31 to $56.16 per share, thereby reducing the potential dilutive effect upon conversion.
Cash requirements in 2004, other than normal operating expenses, are expected to consist primarily of capital
expenditures related to the addition of new stores. The Company plans to open 25 new stores during 2004.
The Company also anticipates incurring additional expenditures for remodeling or relocating certain existing stores
and enhancing its information technology assets as well as other infrastructure improvements. While there can be
no assurance that current expectations will be realized, the Company expects net capital expenditures in 2004 to
be approximately $30.0 million.
The Company believes that existing cash flows generated from operations, funds available under our senior secured
revolving credit facility and proceeds from our convertible notes will be sufficient to satisfy our capital requirements
through 2004. Other new business opportunities or store expansion rates substantially in excess of those presently
planned may require additional funding.
CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
The only off-balance sheet contractual obligations and commercial commitments as of January 31, 2004 relate to
operating lease obligations and letters of credit. The Company has excluded these items from the balance sheet in
accordance with generally accepted accounting principles.
The following table summarizes the Company’s material contractual obligations, including both on- and off-balance
sheet arrangements in effect at January 31, 2004, and the timing and effect that such commitments are expected to
have on the Company’s liquidity and capital requirements in future periods:
Less Than More Than
Payments Due by Period Total 1 Year 1-3 Years 3-5 Years 5 Years
(Dollars in thousands)
Contractual obligations:
Long-term debt $ 1,159 $ 175 $ 277 $ 94 $ 613
Capital lease obligations 2,757 330 417 161 1,849
Operating lease obligations 1,598,009 118,898 250,589 241,262 987,260
Total contractual obligations $1,601,925 $119,403 $ 251,283 $ 241,517 $ 989,722
The following table summarizes the Company’s other commercial commitments, including both on- and off-balance
sheet arrangements, in effect at January 31, 2004:
Less Than
Total 1 Year
(Dollars in thousands)
Other commercial commitments:
Documentary letters of credit $ 5,491 $ 5,491
Standby letters of credit 7,360 7,360
Total other commercial commitments $ 12,851 $ 12,851
The Company expects to fund these commitments primarily with operating cash flows generated in the normal course
of business.