DICK'S Sporting Goods (DKS) 8-K Dick’s Sporting Goods Reports Third Quarter Results – Exceeds Guidance

EXHIBIT 99.1

PRESS RELEASE

Dick’s Sporting Goods Reports Third Quarter Results – Exceeds Guidance

PITTSBURGH, Pa., November 18, 2004 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended October 30, 2004. Results include the operating results for the recently purchased Galyan’s for the third quarter of 2004 but not for 2003 as Galyan’s was acquired in July 2004.

Third Quarter Results

The Company reported net income for the third quarter ended October 30, 2004, excluding merger integration and store closing costs, of $2.9 million, or $0.05 per diluted share as compared to earnings guidance provided on August 17, 2004 of $0.03 — $0.04 per diluted share before merger costs.

Including merger integration and store closing costs, the Company reported a net loss for the third quarter ended October 30, 2004 of $1.8 million or $(0.04) per diluted share as compared to net income of $4.7 million, and earnings per share of $0.09 per diluted share for the third quarter ended November 1, 2003.

Total sales for the quarter increased 60% over last year to $541.0 million due to a comparable store sales increase of 1.5%, the opening of new stores and the inclusion of Galyan’s operations in this year’s quarterly results. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the first half of 2005.

As noted in our press release dated July 29, 2004, the Company acquired 100% of the issued and outstanding common stock of Galyan’s Trading Company, Inc. for $16.75 per share in cash. The Consolidated Statements of Operations for the 13 weeks ended October 30, 2004 reflect the results of the combined company for the entire 13 weeks whereas the results for the 39 weeks ended October 30, 2004 reflect the results of Dick’s Sporting Goods on a stand-alone basis from February 1, 2004 to July 28, 2004 and the combined company from the acquisition date of July 29, 2004 to October 30, 2004. Prior year results include Dick’s Sporting Goods, Inc. on a stand-alone basis.

“Dick’s associates rose to another challenge as strong performance was posted while opening 14 new stores and making good progress on the conversion of Galyan’s which was purchased only 3 months ago” said Edward W. Stack, Chairman and CEO. “We have re-signed 16 former Galyan’s stores as Dick’s Sporting Goods to begin leveraging advertising in overlap markets and we have begun to synchronize the assortments”, he added.

Galyan’s Conversion

5

The Company announced its intention to close nine stores in conjunction with the conversion, six Dick’s stores (one of which closes in 2005) and three Galyan’s stores. In addition, two Dick’s stores closed during the third quarter, one due to its being replaced by a new store which opened last year and the second due to performance.

The Company also announced it expects total merger integration and store closing costs of approximately $70 million pre-tax to be incurred of which $7.7 million was incurred in the third quarter. The Company estimates future merger costs of $35 million in the fourth quarter of 2004, $17 million in 2005 with the balance in 2006 and beyond which relates to future lease payments on closed stores. Merger integration and store closing costs include the expense of closing stores, advertising the re-branding of Galyan’s stores, duplicative costs, recruiting and system conversion costs.

Third Quarter Store Openings and Closings

During the third quarter, the Company opened 14 new stores and closed two stores, bringing the year-to-date net new store openings to 22 (including one Galyan’s store). The new stores that opened included two stores opened as Dick’s Sporting Goods stores that had previously been planned to open as Galyan’s stores. One store, in Algonquin, IL in the Chicago market, opened as a Galyan’s store. This store will be converted along with the other Chicago stores in 2005.

The stores that opened in the third quarter include: Enfield and Meriden, CT (the 4^th and 5^th stores in Hartford); Bangor, ME; Pottstown, PA (the 13^th store in the Philadelphia/Southern New Jersey market); our 2^nd store in Fort Wayne, IN; Lafayette, IN; Algonquin, IL (the 7^th store in Chicago); our 7^th store in Charlotte, NC; two stores in Madison, WI; Carmel, IN (our 5^th store in Indianapolis); Westlake, OH and North Olmsted, OH (the 7^th and 8^th stores in Cleveland) and Muskegon, MI. Two Dick’s stores were closed, one in Philadelphia, PA and another in Cleveland, OH.

As of October 30, 2004, Dick’s Sporting Goods, Inc. operated 233 stores, with approximately 13.4 million square feet, in 32 states.

Year-to-date Results

Net income for the 39 weeks ended October 30, 2004 was $27.0 million, or $0.51 per diluted share as compared to net income of $26.8 million, or $0.54 per diluted share for the 39 weeks ended November 1, 2003.

Excluding merger integration and store closing costs of $4.7 million after tax, net income for the 39 weeks ended October 30, 2004 was $31.7 million, or $0.60 per diluted share.

Total sales for the 39 weeks ended October 30, 2004 increased 33% to $1,321.4 million. Comparable store sales increased 3.0%. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the first half of 2005.

Earnings Guidance

Full Year 2004

• Based on an estimated 53 million diluted shares outstanding, the Company anticipates reporting EPS for the full year of $1.37 – 1.39 per diluted share excluding merger integration and store closing costs. Most recent guidance had been $1.35 – 1.37. The Company anticipates reporting $0.89 – 0.91 per diluted share including merger integration and store closing costs. This compares to full year 2003 EPS of $1.05.

• Comparable store sales are expected to be approximately 2-3%. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the first half of 2005.

• The Company now expects to open 29 new stores this year while closing 10 stores (seven Dick’s stores and three Galyan’s).

Full Year 2005

• Earnings per share is anticipated to be in the range of $1.79 – 1.84 for the full year of 2005 excluding merger integration and store closing costs. Including these merger costs, earnings per share is anticipated to be in the range of $1.60 — 1.65.

• Beginning in fiscal 2005, the Company anticipates there will be approximately $20 million of annualized cost savings and merchandise buying improvements that will result from the acquisition of Galyan’s.

• The Company expects to open at least 20 new stores in 2005, an increase from earlier guidance.

Fourth Quarter 2004

• Based on an estimated 53 million diluted shares outstanding, the Company anticipates EPS for the fourth quarter of $0.77 – 0.78 per diluted share excluding merger integration and store closing costs of $35 million. The Company anticipates reporting $0.37 – 0.38 per diluted share including merger integration and store closing costs. This compares to fourth quarter 2003 EPS of $0.50.

• Comparable store sales are expected to increase 1 – 2%. Galyan’s stores will not be included in the comparable store base until 13 months after the completion of the re-branding and re-merchandising effort expected to occur by the end of the first half of 2005.

• The Company expects to open five new stores in the fourth quarter, all of which have opened, and close eight of the nine stores described earlier in this release.

Conference Call Info

The Company will be hosting a conference call today at 10:00 am Eastern time to discuss the third quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software.

For those who cannot listen to the live broadcast, the webcast will be archived on the Company’s web site for approximately 30 days. In addition, a dial-in replay will be available shortly after the call. To listen, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 20807652. The dial-in replay will be available for 30 days following the live call.

Forward Looking Statements and Merger Integration and Store Closing Cost Estimates

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “guidance,” “estimate,” “intend,” “predict,” and “continue” or similar words. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in the Company’s Annual Report on Form 10-K for the year ended January 31, 2004 as filed with the Securities and Exchange Commission on April 8, 2004, ones associated with combining businesses and achieving expected savings and synergies (including annualized cost savings and merchandise buying improvements) and/or with assimilating acquired companies and ones associated with the fact that merger integration and store closing costs related to the Galyan’s acquisition are difficult to predict with a level of certainty and may be greater than expected. The Company disclaims any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

     The prior period EPS numbers presented in this press release have been adjusted to give effect to the two-for-one stock split, in the form of a stock dividend, which became effective on April 5, 2004 to our stockholders of record on March 19, 2004.

About Dick’s Sporting Goods, Inc.

Pittsburgh-based Dick’s Sporting Goods, Inc. 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 October 30, 2004, the Company operated 233 stores in 32 states primarily throughout the Eastern half of the U.S. under the Dick’s Sporting Goods and Galyan’s names.

Dick’s Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).

Contact:

Michael F. Hines, EVP – Chief Financial Officer or
Jeffrey R. Hennion, SVP – Strategic Planning
724-273-3400
investors@dcsg.com

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
(In thousands, except per share data)

	13 Weeks Ended					39 Weeks Ended
	October 30,			November 1,		October 30,		November 1,
	2004			2003		2004		2003
Net sales	$	541,009		$	338,164	$	1,321,351	$	996,413
Cost of goods sold, including occupancy and distribution costs		402,848			249,325		961,431		728,179
GROSS PROFIT		138,161			88,839		359,920		268,234
Selling, general and administrative expenses		124,832			80,210		292,863		219,295
Pre-opening expenses		5,101			2,594		10,200		6,212
Merger integration and store closing costs		7,742			—		7,793		—
INCOME FROM OPERATIONS		486			6,035		49,064		42,727
Gain on sale of investment		—			2,324		—		3,536
Interest expense, net		3,455			504		5,057		1,545
Other income		—			—		1,000		—
INCOME (LOSS) BEFORE INCOME TAXES		(2,969	)		7,855		45,007		44,718
(Benefit) Provision for income taxes		(1,188	)		3,142		18,003		17,887
NET INCOME (LOSS)	$	(1,781	)	$	4,713	$	27,004	$	26,831
EARNINGS PER COMMON SHARE:
Basic	$	(0.04	)	$	0.10	$	0.57	$	0.61
Diluted	$	(0.04	)	$	0.09	$	0.51	$	0.54
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		48,251			46,430		47,755		44,062
Diluted		48,251			51,168		52,731		49,854

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS — UNAUDITED
(Dollars in thousands)

	October 30,		November 1,		January 31,
	2004		2003		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	28,810	$	14,694	$	93,674
Accounts receivable, net		47,940		24,801		10,185
Income tax receivable		16,606		1,025		232
Inventories, net		625,043		370,356		254,360
Prepaid expenses and other current assets		15,085		6,306		5,222
Deferred income taxes		95		12,836		1,021
Total current assets		733,579		430,018		364,694
Property and equipment, net		266,795		86,340		100,965
Construction in progress — leased facilities		12,113		10,767		10,927
Goodwill		181,314		—		—
Other assets		34,386		22,177		21,945
TOTAL ASSETS	$	1,228,187	$	549,302	$	498,531
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	319,623	$	175,561	$	118,383
Accrued expenses		137,977		62,200		72,090
Deferred revenue and other liabilities		32,257		25,434		37,037
Current portion of other long-term debt and capital leases		1,824		479		505
Total current liabilities		491,681		263,674		228,015
LONG-TERM LIABILITIES:
Senior convertible notes		172,500		—		—
Revolving credit borrowings		260,216		50,141		—
Other long-term debt and capital leases		8,125		3,561		3,411
Non-cash obligations for construction in progress — leased facilities		12,113		10,767		10,927
Deferred revenue and other liabilities		14,449		13,019		13,197
Total long-term liabilities		467,403		77,488		27,535
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock		—		—		—
Common stock		344		324		331
Class B common stock		140		142		141
Additional paid-in capital		174,042		167,311		175,748
Retained earnings		90,048		37,056		63,044
Accumulated other comprehensive income		4,529		3,307		3,717
Total stockholders’ equity		269,103		208,140		242,981
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,228,187	$	549,302	$	498,531

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(Dollars in thousands)

	39 Weeks Ended
	October 30,			November 1,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	27,004		$	26,831
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		24,280			12,993
Deferred income taxes		(40	)		(4,053	)
Tax benefit from exercise of stock options		12,098			23,594
Gain on sale of investment		—			(3,536	)
Other non-cash items		—			2,067
Changes in assets and liabilities:
Accounts receivable		(28,381	)		(7,472	)
Inventories		(214,339	)		(136,859	)
Prepaid expenses and other assets		(11,830	)		538
Accounts payable		94,268			43,530
Accrued expenses		(2,338	)		2,961
Income taxes payable		2,014			(12,763	)
Deferred revenue and other liabilities		(14,075	)		2,681
Net cash used in operating activities		(111,339	)		(49,488	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(48,961	)		(32,562	)
Proceeds from sale-leaseback transactions		30,031			12,100
Payment for the purchase of Galyan’s, net of $17,931 cash acquired		(351,382	)		—
Purchase of held-to-maturity securities		(57,942	)		—
Proceeds from sale of held-to-maturity securities		57,942			—
Proceeds from sale of available-for-sale investment		—			4,150
Increase in recoverable costs from developed properties		(7,102	)		(1,963	)
Net cash used in investing activities		(377,414	)		(18,275	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes		172,500			—
Revolving credit borrowings, net		260,216			50,141
(Payments) borrowings on other long-term debt and capital leases		(396	)		463
Payment for purchase of bond hedge		(33,120	)		—
Proceeds from issuance of warrant		12,420			—
Transaction costs for convertible notes		(5,786	)		—
Proceeds from sale of common stock under employee stock purchase plan		1,763			1,342
Proceeds from exercise of stock options		3,545			12,385
Increase in bank overdraft		12,747			6,823
Transaction costs related to initial public offering		—			183
Net cash provided by financing activities		423,889			71,337
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(64,864	)		3,574
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		93,674			11,120
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	28,810		$	14,694
Supplemental non-cash investing and financing activities:
Construction in progress — leased facilities	$	1,186		$	10,767

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except per share data)

										Proforma (1)
	13 Weeks Ended									13 Weeks Ended
	October 30, 2004									November 1, 2003
				Merger			Results excluding
				Integration &			Merger			Dick’s		Galyan’s
	GAAP			Store Closing			Integration & Store			Sporting		Trading
	Results			Costs			Closing Costs			Goods, Inc.		Company, Inc.			Consolidated
Net sales	$	541,009		$	—		$	541,009		$	338,164	$	147,268		$	485,432
Cost of goods sold, including occupancy and distribution costs		402,848			—			402,848			249,325		115,320			364,645
GROSS PROFIT		138,161			—			138,161			88,839		31,948			120,787
% to sales								25.54	%							24.88	%
Selling, general and administrative expenses		124,832			—			124,832			80,210		34,742			114,952
Pre-opening expenses		5,101			—			5,101			2,594		2,674			5,268
Merger integration and store closing costs		7,742			(7,742	)		—			—		—			—
INCOME (LOSS) FROM OPERATIONS		486			7,742			8,228			6,035		(5,468	)		567
% to sales								1.52	%							0.12	%
Gain on sale of investment		—			—			—			2,324		—			2,324
Interest expense, net		3,455			—			3,455			504		2,490			2,994
INCOME (LOSS) BEFORE INCOME TAXES		(2,969	)		7,742			4,773			7,855		(7,958	)		(103	)
(Benefit) Provision for income taxes		(1,188	)		3,097			1,909			3,142		(3,195	)		(53	)
NET (LOSS) INCOME	$	(1,781	)	$	4,645		$	2,864		$	4,713	$	(4,763	)	$	(50	)
EARNINGS PER COMMON SHARE:
Basic	$	(0.04	)	$	0.10		$	0.06		$	0.10				$	(0.00	)
Diluted	$	(0.04	)	$	0.09		$	0.05		$	0.09				$	(0.00	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		48,251			48,251			48,251			46,430					46,430
Diluted		48,251			53,176			53,176			51,168					46,430

(1) The unaudited pro-forma results present information as if Galyan’s had been acquired at the beginning of each period presented. The pro-forma amounts include certain reclassifications to Galyan’s amounts to conform them to the Company’s presentation, and an increase in pre-tax interest expense of $1,876 to reflect the increase in borrowings under the amended credit facility to finance the acquisition as if it had occurred at the beginning of each period presented. The pro-forma amounts do not reflect any benefits from economies which might be achieved from combining the operations. The pro-forma information does not necessarily reflect the actual results that would have occurred had the companies been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies.

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
(In thousands, except per share data)

	Proforma (1)											Proforma (1)
	39 Weeks Ended											39 Weeks Ended
	October 30, 2004											November 1, 2003
	As Reported (2)		Q1 and Q2 (2)			Merger
	Dick’s		Galyan’s			Integration &						Dick’s		Galyan’s
	Sporting		Trading			Store Closing						Sporting		Trading
	Goods, Inc.		Company, Inc.			Costs			Consolidated			Goods, Inc.		Company, Inc.			Consolidated
Net sales	$	1,321,351	$	339,244		$	—		$	1,660,595		$	996,413	$	439,577		$	1,435,990
Cost of goods sold, including occupancy and distribution costs		961,431		260,357			—			1,221,788			728,179		338,938			1,067,117
GROSS PROFIT		359,920		78,887			—			438,807			268,234		100,639			368,873
% to sales										26.42	%							25.69	%
Selling, general and administrative expenses		292,863		91,602			—			384,465			219,295		104,870			324,165
Pre-opening expenses		10,200		2,277			—			12,477			6,212		4,689			10,901
Merger integration and store closing costs		7,793		—			(7,793	)		—			—		—			—
INCOME (LOSS) FROM OPERATIONS		49,064		(14,992	)		7,793			41,865			42,727		(8,920	)		33,807
% to sales										2.52	%							2.35	%
Gain on sale of investment		—		—			—			—			3,536		—			3,536
Interest expense, net		5,057		5,764			—			10,821			1,545		7,617			9,162
Other income		1,000		—			—			1,000			—		—			—
INCOME (LOSS) BEFORE TAXES		45,007		(20,756	)		7,793			32,044			44,718		(16,537	)		28,181
Provision (benefit) for income taxes		18,003		(8,303	)		3,118			12,818			17,887		(6,627	)		11,260
NET INCOME (LOSS)	$	27,004	$	(12,453	)	$	4,675		$	19,226		$	26,831	$	(9,910	)	$	16,921
EARNINGS PER COMMON SHARE:
Basic	$	0.57				$	0.10		$	0.40		$	0.61				$	0.38
Diluted	$	0.51				$	0.09		$	0.36		$	0.54				$	0.34
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		47,755					47,755			47,755			44,062					44,062
Diluted		52,731					52,731			52,731			49,854					49,854

(1) The unaudited pro-forma results present information as if Galyan’s had been acquired at the beginning of each period presented. The pro-forma amounts include certain reclassifications to Galyan’s amounts to conform them to the Company’s presentation, and an increase in pre-tax interest expense of $3,868 and $5,869 for the 39 weeks ended October 30, 2004 and the 39 weeks ended November 1, 2003, respectively, to reflect the increase in borrowings under the amended credit facility to finance the acquisition as if it had occurred at the beginning of each period presented. The pro-forma amounts do not reflect any benefits from economies which might be achieved from combining the operations. The pro-forma information does not necessarily reflect the actual results that would have occurred had the companies been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies.

(2) The As Reported amounts reflect the GAAP amounts which include the results of Dick’s Sporting Goods for the 39 weeks ended October 30, 2004 plus the results of Galyan’s since the July 29, 2004 acquisition date. The Q1 and Q2 Galyan’s results exclude the operations of Galyan’s from July 29, 2004 to July 31, 2004 as these amounts are included in the Dick’s As Reported amount. The net sales and net income excluded from the Q1 and Q2 Galyan’s results were $6,837 and $127, respectively.

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated.

	13 Weeks Ended								13 Weeks Ended
	October 30, 2004								November 1, 2003
	Dick’s			Galyan’s		Total			Dick’s		Galyan’s		Total
Beginning stores		173			48		221			151		38		189
New		13			1		14			11		5		16
Closed		(2	)		—		(2	)		—		—		—
Ending stores		184			49		233			162		43		205

	39 Weeks Ended									39 Weeks Ended
	October 30, 2004									November 1, 2003
	Dick’s			Galyan’s			Total			Dick’s		Galyan’s		Total
Beginning stores		163			43			206			141		34		175
New *		23			6	*		29	*		21		9		30
Closed		(2	)		—			(2	)		—		—		—
Ending stores		184			49			233			162		43		205

* 39 Weeks Ended October 30, 2004 includes 5 stores opened by Galyan’s prior to Dick’s acquisition

Stores Opened Year-to-Date:

Dick’s new	23
Dick’s closed	(2	)
Galyan’s new — opened post acquisition	1
Total	22

Square Footage:
(in millions)

	Dick’s		Galyan’s		Total
Q2 2003		7.3		3.3		10.6
Q3 2003		7.9		3.8		11.7
Q4 2003		7.9		3.8		11.7
Q1 2004		8.3		4.1		12.4
Q2 2004		8.5		4.2		12.7
Q3 2004		9.2		4.2		13.4

Regulation G Reconciliations

The following table sets forth the calculation of EBITDA, which is non-GAAP financial information, and reconciles EBITDA to the most directly comparable GAAP information. EBITDA for the 13 and 39 weeks ended October 30, 2004 and the last 12 months ended October 30, 2004 was $16.3 million, $74.3 million and $122.5 million, respectively. EBITDA, excluding merger integration and store closing costs related to the acquisition of Galyan’s on July 29, 2004, for the 13 and 39 weeks ended October 30, 2004 and the last 12 months ended October 30, 2004 was $24.0 million, $82.1 million and $130.3 million, respectively.

EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, and capital investments.

EBITDA
(Dollars in thousands)

							Results excluding
	13 Weeks			Merger			merger
	Ended October 30,			integration and			integration and
	2004			store closing costs			store closing costs
Net (loss) income	$	(1,781	)	$	(4,645	)	$	2,864
(Benefit) provision for income taxes		(1,188	)		(3,097	)		1,909
Interest expense, net		3,455			—			3,455
Depreciation and amortization		15,787			—			15,787
EBITDA	$	16,273		$	(7,742	)	$	24,015

						Results excluding
	39 Weeks		Merger			merger
	Ended October 30,		integration and			integration and
	2004		store closing costs			store closing costs
Net income	$	27,004	$	(4,675	)	$	31,679
Provision for income taxes		18,003		(3,118	)		21,121
Interest expense, net		5,057		—			5,057
Depreciation and amortization		24,280		—			24,280
EBITDA	$	74,344	$	(7,793	)	$	82,137

						Results excluding
	Last 12 Months		Merger			merger
	Ended October 30,		integration and			integration and
	2004		store closing costs			store closing costs
Net income	$	52,992	$	(4,675	)	$	57,667
Provision for income taxes		35,328		(3,118	)		38,446
Interest expense, net		5,343		—			5,343
Depreciation and amortization		28,841		—			28,841
EBITDA	$	122,504	$	(7,793	)	$	130,297

The Company believes the use of adjusted net income, adjusted diluted earnings per share and adjusted operating income for the 13 and 39 weeks ended October 30, 2004 provides a further understanding as compared to the net income, operating income and diluted earnings per share for the 13 and 39 weeks ended November 1, 2003 due to the merger integration and store closing costs incurred during the current year related to the acquisition of Galyan’s on July 29, 2004. The reconciliation of adjusted net income, adjusted diluted earnings per share and adjusted operating income to the most directly comparable GAAP financial information is presented below.

(in millions, except per share data):

Adjusted net income reconciliation

	13 Weeks Ended			39 Weeks Ended
	October 30,			October 30,
	2004			2004
Net (loss) income (GAAP)	$	(1.8	)	$	27.0
Merger integration and store closing costs, after tax		(4.7	)		(4.7	)
Adjusted net income	$	2.9		$	31.7
Diluted shares		53.2			52.7
Adjusted diluted earnings per share	$	0.05		$	0.60

Adjusted operating income reconciliation

	13 Weeks Ended
	October 30,
	2004
Operating income (GAAP)	$	0.5
Merger integration and store closing costs		(7.7	)
Adjusted operating income	$	8.2

Net Income and EPS Guidance

The earnings guidance for the 13 and 52 weeks ended January 29, 2005 and fiscal 2005 exclude merger integration and store closing costs and the corresponding tax benefit. The following table sets forth a reconciliation of GAAP net income and diluted earnings per share to pro forma net income and pro forma diluted earnings per share excluding merger integration and store closing costs after tax. (in millions, except per share data):

	13 Weeks Ended		52 Weeks Ended
	January 29,		January 29,
	2005		2005
Guidance net income (GAAP)	$	19.8 - 20.3	$	47.0 - 48.1
Guidance merger integration and store closing costs, after tax	$	21.0	$	25.6
Guidance adjusted net income excluding merger integration and store closing costs, after tax	$	40.8 - 41.3	$	72.6 - 73.7

	13 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	January 29,		January 29,		January 28,
	2005		2005		2006
Guidance net income per share (GAAP)	$	0.37 - 0.38	$	0.89 - 0.91	$	1.60 - 1.65
Guidance merger integration and store closing costs, after tax per share	$	0.40	$	0.48	$	0.19
Guidance adjusted net income per share excluding merger integration and store closing costs, after tax	$	0.77 - 0.78	$	1.37 - 1.39	$	1.79 - 1.84