Dick's Sporting Goods 2003 Annual Report Download - page 48

dks 03ar 46
Common Stock, Class B Common Stock and Preferred Stock During fiscal 2002, the Company amended its
corporate charter to, among other things, provide for the authorization of the issuance of up to 100,000,000 shares
of common stock, 20,000,000 shares of Class B common stock, and 5,000,000 shares of preferred stock. Upon
completion of the Company’s initial public offering in fiscal 2002, the Company has two classes of common stock, the
existing common stock and a new class of Class B common stock. The holders of common stock generally have rights
identical to holders of Class B common stock, except that holders of common stock are entitled to one vote per share
and holders of Class B common stock are entitled to ten votes per share. A related party and relatives of the related
party hold all of the Class B common stock. These shares can only be held by members of this group and are not
publicly tradeable. Class B common stock can be converted to common stock at the holder’s option.
As of January 29, 2000, the Company had 12,516,766 shares of preferred stock authorized and 9,396,612 shares issued.
All series of preferred stock were convertible into shares of common stock at the option of the holder. In preference to
Series B preferred shares, series A, C, D, E, F and G preferred stock, which were redeemable for cash at certain fixed
dates, were entitled to cumulative annual dividends, as defined. The Consolidated Balance Sheets as of January 31, 2004
and February 1, 2003 include $63,897,000 of accretion on previously outstanding redeemable preferred stock to its
redemption value through a charge to accumulated deficit from fiscal 1992 to fiscal 2000. Because of the redemption
feature on such series, series A, C, D, E, F and G preferred stock were not classified within stockholders’ equity.
In fiscal 2000, the preferred shareholders elected to convert all outstanding preferred shares to common stock resulting
in the conversion of 18,793,224 shares of preferred stock to 50,502,324 shares of common stock. The Company
repurchased approximately 60% of the common stock from the former preferred shareholders for cash of $44,809,000
and promissory notes totaling $13,751,000 which accrued interest at 7% annually. The Company repaid the promissory
notes on September 9, 2001.
Note Receivable for Common Stock During fiscal 2001, stock options representing 5,724,748 shares were exercised
in exchange for a note receivable due from a related party. The note receivable was repaid during fiscal 2002.
8. INCOME TAXES
The components of the provision for income taxes from continuing operations are as follows:
Fiscal Year 2003 2002 2001
(Dollars in thousands)
Current:
Federal $21,543 $25,403 $ 11,940
State 3,696 4,854 800
25,239 30,257 12,740
Deferred:
Federal 8,731 (4,319) 2,333
State 1,242 (429) 575
9,973 (4,748) 2,908
Total provision $35,212 $25,509 $ 15,648
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for
the following periods:
Fiscal Year 2003 2002 2001
Federal statutory rate 35.0% 35.0% 35.0%
State tax, net of federal benefit 5.0 5.0 5.0
Effective income tax rate 40.0% 40.0% 40.0%
Components of deferred tax assets (liabilities) consist of the following as of the fiscal periods ended:
2003 2002
(Dollars in thousands)
Property and equipment $ 144 $ 2,932
Inventories (10,251) (677)
Other accrued expenses not currently deductible for tax purposes 12,087 10,520
Deferred rent 3,748 3,434
Total deferred taxes $ 5,728 $ 16,209