Dick's Sporting Goods 2009 Annual Report Download - page 47

Results of Operations
The following table presents for the periods indicated selected items in the Consolidated Statements of Operations as a
percentage of the Company’s net sales, as well as the basis point change in percentage of net sales from the prior year’s period:
2009 2008
A
2007
A
Basis Point
Increase /
(Decrease) in
Percentage of
Net Sales
from Prior Year
2008-2009
A
Basis Point
Increase /
(Decrease) in
Percentage of
Net Sales
from Prior Year
2007-2008
A
Fiscal Year
(As adjusted,
see Note 1)
(As adjusted,
see Note 1)
Net sales (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00% 100.00% 100.00% N/A N/A
Cost of goods sold, including occupancy and
distribution costs (2) . . . . . . . . . . . . . . . . . . . . . . . . 72.42 71.33 70.22 109 111
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.58 28.67 29.78 (109) (111)
Selling, general and administrative expenses (3) . . . . . 22.03 22.47 22.38 (44) 9
Impairment of goodwill and other intangible assets (4). . — 3.98 — (398) 398
Impairment of store assets (5) . . . . . . . . . . . . . . . . . . — 0.70 — (70) 70
Merger and integration costs (6). . . . . . . . . . . . . . . . . 0.23 0.38 — (15) 38
Pre-opening expenses (7). . . . . . . . . . . . . . . . . . . . . . 0.21 0.39 0.48 (18) (9)
Income from operations . . . . . . . . . . . . . . . . . . . . . . . 5.11 0.74 6.91 437 (617)
Gain on sale of asset (8). . . . . . . . . . . . . . . . . . . . . . . — (0.06) — 6 (6)
Interest expense, net (9) . . . . . . . . . . . . . . . . . . . . . . 0.05 0.46 0.48 (41) (2)
Income before income taxes. . . . . . . . . . . . . . . . . . . . 5.06 0.33 6.43 473 (610)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . 1.99 1.30 2.56 69 (126)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.07% —0.97% 3.87% 404 (484)
A: Column does not add due to rounding
(1) Revenue from retail sales is recognized at the point of sale, net of sales tax. A provision for anticipated merchandise returns
is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. Revenue from gift
cards and returned merchandise credits (collectively the “cards”) are deferred and recognized upon the redemption of the
cards. These cards have no expiration date. Income from unredeemed cards is recognized in the Consolidated Statements of
Operations in 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 is remote.
(2) Cost of goods sold includes the cost of merchandise, inventory shrinkage and obsolescence, freight, distribution and store
occupancy costs. Store occupancy costs include rent, common area maintenance charges, real estate and other asset based
taxes, store 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 oper-
ating the Company’s corporate headquarters.
(4) Attributable to the impairment of Golf Galaxy’s goodwill and other intangible assets.
(5) Impairment of store assets in connection with certain underperforming Dick’s Sporting Goods, Golf Galaxy and Chick’s Sport-
ing Goods stores.
(6) Merger and integration costs primarily include duplicative administrative costs, management and advertising expenses asso-
ciated with the conversions from Chick’s stores to Dick’s stores and severance and system conversion costs related to the
operational consolidation of Golf Galaxy and Chick’s with the company’s pre-existing business.
(7) Pre-opening expenses consist primarily of rent, marketing, payroll and recruiting costs incurred prior to a new store opening.
(8) Gain on sale of asset resulted from the Company exercising a buy-out option on an aircraft lease and subsequently selling
the aircraft.
(9) Interest expense, net, results primarily from interest on our senior convertible notes and Credit Agreement borrowings par-
tially offset by interest income.
Dick’s Sporting Goods, Inc. ¬2009 Annual Report 45