Dick's Sporting Goods 2008 Annual Report Download - page 33

Cash provided by operating activities decreased by $103.0 million in 2008 to $159.8 million, as compared to $262.8 million in fi scal 2007.
The $35.1 million net loss in 2008 included non-cash impairment charges of $164.3 million attributable to the impairment of Golf Galaxy’s
goodwill and other intangible assets and impairment charges of $29.1 million in connection with certain underperforming stores.
The remaining decrease in cash provided by operating activities was due primarily to changes in income taxes payable and accounts
payable, partially offset by changes in inventory levels.
Changes in Assets and Liabilities The primary factors contributing to the decrease in the change in assets and liabilities were the
changes in income taxes payable and accounts payable, partially offset by a decrease in the change in inventory.
The decrease in the change in income taxes payable was primarily due to the timing of estimated tax payments, including the larger
federal extension tax payment made in fi scal 2008 relating to fi scal 2007 than in previous years. Estimated tax payments made
during 2008 were signifi cantly larger than estimated payments made during 2007 due to the impact previous stock option exercises
had on reducing 2007 estimated tax payments. The change in accounts payable and inventory is primarily due to a decrease in the
procurement of merchandise in the Company’s planned efforts to bring inventory levels closer to the sales trends in the fourth
quarter of fi scal 2008. The Company believes that maintaining inventory levels in a manner consistent with sales trends will help
preserve capital and stabilize gross margins in fi scal 2009.
Investing Activities
Cash used in investing activities decreased by $291.1 million, to $144.2 million as fi scal 2007 refl ected payments for the purchase
of Golf Galaxy of $222.2 million, net of $4.9 million cash acquired, and Chick’s of $69.2 million. Gross capital expenditures used
$191.4 million and sale-leaseback transactions generated proceeds of $44.9 million.
Purchases of property and equipment were $191.4 million in fi scal 2008, $172.4 million in fi scal 2007 and $163.0 million in fi scal
2006. Capital expenditures in fi scal 2008 relate primarily to the opening of new stores, information systems and administrative
and distribution facilities. The Company generated proceeds from the sale and leaseback of property and equipment totaling
$44.9 million, $28.4 million and $32.5 million in fi scal 2008, 2007 and 2006, respectively.
During 2008, we opened 43 Dick’s stores, ten Golf Galaxy stores, relocated one Dick’s store and converted one Chick’s Sporting
Goods store to a Dick’s Sporting Goods store, compared to opening 46 Dick’s and 16 Golf Galaxy stores and the relocation of one store
during 2007. Sale-leaseback transactions covering store fi xtures, 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 2008, 2007
and 2006.
Financing Activities
Cash provided by fi nancing activities typically consists of proceeds from construction allowances received prior to the completion
of construction for stores where the Company is deemed the owner during the construction period, payments on the Company’s debt
obligations and capital leases, bank overdraft activity and transactions in the Company’s common stock and the excess tax benefi t
from stock-based compensation. As stock option grants are exercised, the Company will continue to receive proceeds and a tax
deduction; however, the amounts and the timing cannot be predicted.
Cash provided by fi nancing activities decreased by $77.7 million to $9.0 million in fi scal 2008, as compared to $86.7 million in fi scal
2007. The decrease in cash provided by fi nancing activities is primarily attributable to lower proceeds received from the exercise of
stock options and lower excess tax benefi ts from stock-based compensation arrangements.
On July 27, 2007, the Company entered into a Fourth Amendment to its Credit Agreement that, among other things, extended the
maturity of the Credit Agreement from July 2008 to July 2012, increased the potential Aggregate Revolving Credit Commitment, as
defi ned in the Credit Agreement, from $350 million to a potential commitment of $450 million and reduced certain applicable interest
rates and fees charged under the Credit Agreement.
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT 31