Dick's Sporting Goods 2010 Annual Report Download - page 47

(2) Selling, general and administrative expenses for fiscal 2010 include $16.4 million relating to future lease obligations and
asset impairment charges resulting from the closure of 12 underperforming Golf Galaxy stores and $10.8 million relating to
litigation settlement costs.
(3) In fiscal 2008, the Company recorded non-cash impairment charges of $164.3 million attributable to the impairment of Golf
Galaxy’s goodwill and other intangible assets. The Company also recorded non-cash impairment charges of $29.1 million in
connection with certain underperforming Dick’s Sporting Goods, Golf Galaxy and Chick’s Sporting Goods stores.
(4) Gain on sale of asset resulted from the Company exercising a buy-out option on an aircraft lease and subsequently selling
the aircraft.
(5) Interest expense includes $10.6 million in fiscal 2010 relating to rent payments pursuant to the Company’s financing lease
obligation for its corporate headquarters, which the Company began occupying in January 2010.
(6) Earnings per common share data reflect the impact of a two-for-one stock split that occurred in October 2007.
(7) Same store sales begin at the commencement of a store’s 14th full month of operations after its grand opening. Same store
sales reflect only stores that opened at least 13 months prior to the beginning of the period noted. Stores that were closed
or relocated during the period noted have been excluded from same store sales. Each relocated store is returned to the
comparable store base after its 14th full month of operations. The Company’s e-commerce business is included in the same
store sales calculation beginning in fiscal 2010. Golf Galaxy stores were included in the full year same store sales calcula-
tion beginning in fiscal 2009.
(8) Store count and square footage amounts include Golf Galaxy stores and stores acquired as part of the Company’s acquisition
of Chick’s for fiscal 2010, 2009, 2008 and 2007.
(9) Calculated using net sales and gross square footage of all stores open at both the beginning and the end of the period.
Gross square footage includes the storage, receiving and office space that generally occupies approximately 17% of total
store space in our Dick’s stores.
(10) Calculated as cost of goods sold divided by the average monthly ending inventories of the last 13 months.
(11) Defined as current assets less current liabilities.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with Item 6, “Selected Financial Data” and our consolidated
financial statements and related notes appearing elsewhere in this report. This Annual Report on Form 10-K contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” and Part I,
Item 1A. “Risk Factors”.
Overview
Dick’s is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment,
apparel and footwear in a specialty store environment. As of January 29, 2011 we operated 444 Dick’s stores and 81 Golf Galaxy
stores with approximately 25.9 million square feet in 43 states, the majority of which are located throughout the eastern half of
the United States.
Effective February 1, 2009, the Company amended its e-commerce agreement and began recording e-commerce revenue on a
gross basis as the principal party in the transactions, compared to its prior recording of these revenues on a net basis pursuant
to Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 605-45, Overall Considerations of Reporting
Revenue Gross as a Principal versus Net as an Agent.
The primary factors that historically influenced the Company’s profitability and success have been its growth in the number of
stores and selling square footage, positive same store sales and its strong gross profit margins. In the last five years, the
Company has grown from 255 stores as of the end of fiscal 2005 to 525 stores as of the end of fiscal 2010, reflecting both organic
growth and acquisitions. The Company continues to expand its presence through the opening of new stores, although its rate of
growth has decreased from the rate of growth experienced in earlier years, reflecting recent economic conditions.
In order to monitor the Company’s success, the Company’s senior management monitors certain key performance indicators,
including:
•Consolidated same store sales performance — Fiscal 2010 consolidated same store sales increased 7.4% compared to a
1.4% decrease in fiscal 2009. The consolidated same store sales calculation for fiscal 2010 includes Dick’s Sporting Goods
stores, Golf Galaxy and the Company’s e-commerce business. The calculation for fiscal 2009 included Dick’s Sporting Goods
stores and Golf Galaxy stores only. The Company believes that its ability to consistently deliver increases in consolidated
Dick’s Sporting Goods, Inc. ¬2010 Annual Report 27