Dick's Sporting Goods 2011 Annual Report Download - page 60

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Changes in cash and cash equivalents are as follows:
Fiscal Year Ended
January 28, January 29, January 30,
2012 2011 2010
Net cash provided by operating activities $ 410,421 $ 389,967 $ 401,329
Net cash used in investing activities (199,616) (161,135) (108,629)
Net cash (used in) provided by financing activities (22,451) 91,591 (142,034)
Effect of exchange rate changes on cash (4) 18 108
Net increase in cash and cash equivalents $ 188,350 $ 320,441 $ 150,774
Operating Activities
Cash flow from operations is seasonal in our business. Typically, we use cash flow from operations to
increase inventory in advance of peak selling seasons, with the pre-Christmas inventory increase being
the largest. In the fourth quarter, inventory levels are reduced in connection with Christmas sales and
this inventory reduction, combined with proportionately higher net income, typically produces
significant positive cash flow.
Operating activities consist primarily of net income, adjusted for certain non-cash items and changes in
operating assets and liabilities. Adjustments to net income for non-cash items include depreciation and
amortization, deferred income taxes, stock-based compensation expense, tax benefits on stock options
as well as non-cash gains and losses on the disposal of the Company’s assets. Changes in operating
assets and liabilities primarily reflect changes in inventories, accounts payable, income taxes payable/
receivable as well as other working capital changes.
Cash provided by operating activities increased $20.5 million in fiscal 2011 to $410.4 million. The
increase in cash provided by operating activities is due primarily to an $81.8 million increase in net
income, partially offset by decreases in operating assets and liabilities of $60.5 million and a
$0.8 million decrease in non-cash items. The decrease in operating assets and liabilities year-over-year
is primarily due to the following:
Inventories increased $117.0 million, partially offset by an increase in accounts payable of
$76.2 million. Inventory per square foot increased 6.2% resulting from higher levels of
outerwear and cold weather merchandise due to an unseasonably warm winter season as
well as the earlier receipt of spring merchandise and investments in e-commerce inventory
levels.
Changes in accrued expenses decreased $45.4 million compared to last year. The
Company recognized a $10.8 million litigation settlement charge in fiscal 2010 that
contributed to the increase in accrued expenses in fiscal 2010 and the decrease in fiscal
2011 upon the actual funding of the settlement. See Part I, Item 3. ‘‘Legal Proceedings’’
of this report for additional information. Additionally, fiscal 2010 reflected higher
employee-related liabilities, which were subsequently paid in fiscal 2011.
Changes in income taxes payable/receivable for fiscal 2011 improved operating cash flows
by $43.1 million compared to the same period in fiscal 2010. Income tax payments in 2011
were favorably impacted by the timing of estimated deductions for qualified capital
expenditures; however the Company anticipates making a $30.7 million extension payment
related to 2011 during the first quarter of fiscal 2012.
38 Dick’s Sporting Goods, Inc. 2011 Annual Report