Dick's Sporting Goods 2005 Annual Report Download - page 30

Cash provided by operating activities increased by $61.7 million in 2005 to $169.5 million, which consists primarily of higher
net income of $4.1 million and an increase in the change in assets and liabilities of $53.7 million.
Changes in Assets and Liabilities The primary factors contributing to the increase in the change in assets and liabilities were
the change in accounts receivable, accounts payable and income taxes payable, partially offset by an increase in the change
in inventory.
The change in accounts receivable was primarily as result of the decrease in the income tax receivable due to the net operating
losses acquired as a result of the Galyan’s transaction. The increase in the change in accounts payable is primarily due to the
increase in holiday receipts remaining in accounts payable as compared to the prior year along with an increase in inventory
in-transit at year-end 2006 compared to 2005. The increase in the change in income taxes payable was primarily related to the
usage of the net operating losses in the current year as noted above. Partially offsetting these cash inflows is the increase in
inventory which is primarily due to the increase in inventory in-transit.
The cash flows from operating the Company’s stores is a significant source of liquidity, and will continue to be used in 2006
primarily to purchase inventory, make capital improvements and open new stores. All of the Company’s revenues are realized
at the point-of-sale in the stores.
Investing Activities
Cash used in investing activities decreased by $321.1 million in 2005 to $93.7 million due primarily to the acquisition of
Galyan’s in 2004, which cost $369.6 million. Net capital expenditures increased $23.9 million due to an increase in capital
expenditures of $7.1 million and a decrease in sale-leaseback proceeds of $16.8 million. We use cash in investing activities to
build new stores and remodel or relocate existing stores. Furthermore, net cash used in investing activities includes purchases
of information technology assets and expenditures for distribution facilities and corporate headquarters. The following table
presents the major categories of capital expenditure activities:
January 28, January 29, January 31,
Fiscal Year Ended 2006 2005 2004
New, relocated and remodeled stores $ 43,911 $ 72,542 $ 43,753
Future stores 10,580 1,402 6,922
Existing stores 25,502 5,719 6,642
Information systems 19,288 12,400 8,860
Administration and distribution 12,721 12,881 887
$ 112,002 $ 104,944 $ 67,064
During 2005, we opened 26 stores and relocated four stores compared to opening 29 stores and relocation of three stores
during 2004. Sale-leaseback transactions covering store fixtures, buildings and information technology assets also have the
effect of returning to the Company cash previously invested in these assets. There were no building sale-leasebacks during
2005. During 2004, we completed four building sale-leaseback transactions that generated proceeds of $21.7 million, of which
$15.2 million of the capital expenditures were incurred in 2003.
The decrease in new, relocated and remodeled stores capital expenditures is primarily due to a decrease in the number of
stores with construction allowances in 2005 and last year’s conversion of the Galyan’s stores to Dick’s stores. The increase
in future store capital spend is due primarily to the greater number of stores expected to open in 2006. Existing store capital
spend increased as a result of exterior sign conversions for the former Galyan’s stores along with updated information
technology assets in the existing stores as we continue to upgrade our infrastructure and technology.
The Company also generated $1.9 million in proceeds from the sale of a portion of the Company’s non-cash investment in
its third-party Internet commerce service provider during 2005 as compared to $12.0 million in proceeds during 2004.
dick’s sporting goods, inc. 2005 annual report
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