DICK'S Sporting Goods (DKS) 8-K Results of Operations and Financial Condition

Exhibit 99.1

     

PRESS RELEASE

Dick’s Sporting Goods Reports Third Quarter Results: EPS Increases 60%, 2.9% Comp Sales Increase

PITTSBURGH, Pa., November 15, 2005 — Dick’s Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the third quarter ended October 29, 2005.

Third Quarter Results

For the third quarter ended October 29, 2005, net income increased 56% to $4.2 million and diluted earnings per share increased 60% to $0.08, as compared to prior year net income of $2.7 million and earnings per share of $0.05, excluding merger integration and store closing costs. Net income increased $6.2 million, to $4.2 million and diluted earnings per share increased $0.12, to $0.08, as compared to the prior year net loss of $2.0 million, and loss per share of $(0.04), including merger integration and store closing costs.

Net sales for the quarter increased 8%, to $582.7 million. Comparable store sales increased 2.9%. The former Galyan’s stores will be included in the comparable store base beginning in the second quarter of fiscal 2006.

During the third quarter, the Company opened 16 stores, relocated three stores and remodeled one store, which completes the new store openings for the year. The stores that opened in the third quarter include: Natick, MA; Plymouth, MA; Taunton, MA; Leominster, MA; Concord, NH; Keene, NH; Rutland, VT; Webster, NY; Butler, PA; Columbus, OH; Lexington, KY; Morgantown, WV; Charlotte, NC; Charleston, SC; Loveland, CO and Larkridge, CO. Three of the 16 new stores were the two-level prototype (Lexington, KY; Charlotte, NC and Natick, MA). The relocated stores were in Cleveland, OH; Clarksville, IN and Plainfield, IN.

As of October 29, 2005, the Company operated 255 stores, with approximately 14.7 million square feet, in 34 states.

“We are pleased to report a solid third quarter as measured by a 2.9% comparable store sales increase and earnings improvement at the high end of our guidance. This was all accomplished during a busy quarter when we opened 16 stores and relocated three stores,” said Edward W. Stack, Chairman and CEO.

Year-to-Date Results

For the 39 weeks ended October 29, 2005, net income, excluding merger integration and store closing costs and gain on sale of investment, increased 115% to $40.5 million, and diluted earnings per share increased 108% to $0.75, as compared to prior year proforma, combined company net income of $18.8 million, and diluted earnings per share of $0.36, excluding merger integration and store closing costs.

For the 39 weeks ended October 29, 2005, net income, including merger integration and store closing costs and gain on sale of investment, increased 35% to $19.0 million, and diluted earnings per share increased 30% to $0.35 as compared to prior year proforma, combined company net income of $14.1 million, and diluted earnings per share of $0.27, including merger integration and store closing costs.

Net sales for the 39 weeks ended October 29, 2005 increased 34% to $1,775.5 as compared to prior year GAAP net sales of $1,321.4. Comparable store sales increased 2.1%.

2005 Outlook

The Company’s current outlook for 2005 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

Full Year 2005

• We continue to anticipate reporting diluted earnings per share of $1.70-1.75. This represents an approximate 48% increase over proforma, combined company earnings per share for the full year 2004 of $1.17, excluding merger integration and store closing costs and gain on sale of investment. Including merger integration and store closing costs, earnings guidance is $1.27-1.32 per share. Guidance is based on an estimated 54 million shares outstanding.

• Comparable store sales are expected to increase approximately 2%. The converted Galyan’s stores will be included in the comparable store base in the second quarter of fiscal 2006.

• Our 2005 full-year EPS guidance excludes the impact of expensing stock options as the SEC has amended the compliance date for SFAS 123R. We are planning to implement the provisions of SFAS 123R beginning in fiscal 2006, the estimated impact of which is an after-tax expense of $0.27 per share.

Fourth Quarter 2005

• Based on an estimated 54 million shares outstanding, the Company anticipates reporting an approximate 20% increase in earnings per diluted share to $0.95-$1.00 per share, from fourth quarter 2004 earnings per diluted share of $0.81, excluding merger integration and store closing costs and gain on sale of investment.

• Comparable store sales are expected to increase approximately 1-2%.

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 22300087. 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 29, 2005 as filed with the Securities and Exchange Commission on March 31, 2005, ones associated with

combining businesses and/or with assimilating acquired companies, and the fact that lease liabilities associated with store closures due 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.

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 29, 2005 the Company operated 255 stores in 34 states primarily throughout the Eastern half of the U.S.

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
Dennis Magulick, Director, Investor Relations
724-273-3400
investors@dcsg.com

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

	13 Weeks Ended					39 Weeks Ended
	October 29,		October 30,			October 29,			October 30,
	2005		2004			2005			2004
Net sales	$	582,665	$	541,009		$	1,775,480		$	1,321,351
Cost of goods sold, including occupancy and distribution costs		429,211		402,758			1,295,638			961,178
GROSS PROFIT		153,454		138,251			479,842			360,173
Selling, general and administrative expenses		136,564		124,832			392,282			292,863
Pre-opening expenses		6,022		5,483			10,259			11,195
Merger integration and store closing costs		—		7,742			37,790			7,793
INCOME FROM OPERATIONS		10,868		194			39,511			48,322
Gain on sale of investment		—		—			(1,844	)		—
Interest expense, net		3,896		3,455			9,771			5,057
Other income		—		—			—			(1,000	)
INCOME (LOSS) BEFORE INCOME TAXES		6,972		(3,261	)		31,584			44,265
Provision (benefit) for income taxes		2,789		(1,305	)		12,634			17,705
NET INCOME (LOSS)	$	4,183	$	(1,956	)	$	18,950		$	26,560
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.08	$	(0.04	)	$	0.38		$	0.56
Diluted	$	0.08	$	(0.04	)	$	0.35		$	0.50
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic		50,120		48,251			49,652			47,755
Diluted		53,947		48,251			53,917			52,731

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

	October 29,		October 30,		January 29,
	2005		2004		2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	32,009	$	28,810	$	18,886
Accounts receivable, net		55,366		47,940		30,611
Income taxes receivable		5,637		16,606		7,202
Inventories, net		674,877		625,043		457,618
Prepaid expenses and other current assets		14,236		15,085		8,772
Deferred income taxes		12,411		95		7,966
Total current assets		794,536		733,579		531,055
Property and equipment, net		363,113		333,229		349,098
Construction in progress - leased facilities		5,524		12,113		15,233
Goodwill		157,500		181,314		157,245
Other assets		42,863		36,074		32,417
TOTAL ASSETS	$	1,363,536	$	1,296,309	$	1,085,048
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	332,446	$	319,623	$	211,685
Accrued expenses		138,744		137,977		141,465
Deferred revenue and other liabilities		39,556		32,257		48,882
Current portion of other long-term debt and capital leases		560		1,824		635
Total current liabilities		511,306		491,681		402,667
LONG-TERM LIABILITIES:
Senior convertible notes		172,500		172,500		172,500
Revolving credit borrowings		202,570		260,216		76,094
Other long-term debt and capital leases		8,356		8,125		8,775
Non-cash obligations for construction in progress - leased facilities		5,524		12,113		15,233
Deferred revenue and other liabilities		105,957		85,102		96,112
Total long-term liabilities		494,907		538,056		368,714
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
Preferred stock		—		—		—
Common stock		364		344		348
Class B common stock		138		140		140
Additional paid-in capital		206,280		174,042		181,321
Retained earnings		148,812		87,517		129,862
Accumulated other comprehensive income		1,729		4,529		1,996
Total stockholders’ equity		357,323		266,572		313,667
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,363,536	$	1,296,309	$	1,085,048

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

	39 Weeks Ended
	October 29,			October 30,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,950		$	26,560
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		36,542			24,280
Deferred income taxes		(13,983	)		(337	)
Tax benefit from exercise of stock options		14,193			12,098
Gain on sale of non-cash investment		(1,844	)		—
Other non-cash items		1,841			—
Changes in assets and liabilities:
Accounts receivable		(17,449	)		(28,381	)
Inventories		(217,051	)		(214,339	)
Prepaid expenses and other assets		(4,940	)		(11,830	)
Accounts payable		96,778			94,268
Accrued expenses		7,348			(2,338	)
Income taxes payable		—			2,014
Deferred construction allowances		3,623			25,407
Deferred revenue and other liabilities		3,608			(12,187	)
Net cash provided by operating activities		(72,384	)		(84,785	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(93,716	)		(75,515	)
Proceeds from sale-leaseback transactions		18,070			30,031
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		1,922			—
Increase in recoverable costs from developed properties		(662	)		(7,102	)
Net cash used in investing activities		(74,386	)		(403,968	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes		—			172,500
Revolving credit borrowings, net		126,476			260,216
Payments on other long-term debt and capital leases		(345	)		(396	)
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		2,135			1,763
Proceeds from exercise of stock options		6,804			3,545
Increase in bank overdraft		24,823			12,747
Net cash provided by financing activities		159,893			423,889
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		13,123			(64,864	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		18,886			93,674
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	32,009		$	28,810
Supplemental non-cash investing and financing activities:
Construction in progress-leased facilities	$	(9,709	)	$	1,186
Accrued property and equipment	$	(10,286	)	$	—

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

(In thousands, except per share data)

										Proforma (1)
	39 Weeks Ended									39 Weeks Ended
	October 29, 2005									October 30, 2004
				Merger			Results excluding
				Integration and			Merger
				Store Closing			Integration and			Dick’s			Galyan’s
	GAAP			Costs and			Store Closing Costs			Sporting			Trading
	Results			Investment Gain			and Investment Gain			Goods, Inc.			Company, Inc.			Consolidated
Net sales	$	1,775,480		$	—		$	1,775,480		$	1,321,351		$	339,244		$	1,660,595
Cost of goods sold, including occupancy and distribution costs		1,295,638			—			1,295,638			961,178			260,357			1,221,535
GROSS PROFIT		479,842			—			479,842			360,173			78,887			439,060
% to sales								27.03	%								26.44	%
Selling, general and administrative expenses		392,282			—			392,282			292,863			91,602			384,465
Pre-opening expenses		10,259			—			10,259			11,195			2,277			13,472
Merger integration and store closing costs		37,790			(37,790	)		—			7,793			—			7,793
INCOME (LOSS) FROM OPERATIONS		39,511			37,790			77,301			48,322			(14,992	)		33,330
% to sales								4.35	%								2.01	%
Gain on sale of investment		(1,844	)		1,844			—			—			—			—
Interest expense, net		9,771			—			9,771			5,057			5,764			10,821
Other income		—			—			—			(1,000	)		—			(1,000	)
INCOME (LOSS) BEFORE INCOME TAXES		31,584			35,946			67,530			44,265			(20,756	)		23,509
Provision (benefit) for income taxes		12,634			14,378			27,012			17,705			(8,303	)		9,402
NET INCOME	$	18,950		$	21,568		$	40,518		$	26,560		$	(12,453	)	$	14,107
EARNINGS PER COMMON SHARE:
Basic	$	0.38					$	0.82		$	0.56					$	0.30
Diluted	$	0.35					$	0.75		$	0.50					$	0.27
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		49,652						49,652			47,755						47,755
Diluted		53,917						53,917			52,731						52,731

(1) The unaudited proforma results present information as if Galyan’s had been acquired at the beginning of each period presented. The proforma 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 $3.9 million, 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 proforma amounts did not reflect any benefits from economies achieved from combining the operations. The proforma 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.

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

	Fiscal 2005										YTD Q3 Fiscal 2004
	Q1			Q2		Q3		Total			Dick's			Galyan's		Total
Beginning stores		234			236		239		234			163			43		206
New		7			3		16		26			24			5		29
Closed		(5	)		—		—		(5	)		(2	)		—		(2	)
Ending stores		236			239		255		255			185			48		233
Relocated stores		—			1		3		4			3			—		3
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
Q4 2004		9.4		4.1		13.5
Q1 2005						13.6
Q2 2005						13.8
Q3 2005						14.7

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 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.

EBITDA¹
(in thousands)

	13 Weeks Ended					39 Weeks Ended
	October 29, 2005		October 30, 2004 /1			October 29, 2005/1			October 30, 2004 /1
Net income (loss)	$	4,183	$	(1,956	)		18,950		$	26,560
Provision (benefit) for income taxes		2,789		(1,305	)		12,634			17,705
Interest expense, net		3,896		3,455			9,771			5,057
Depreciation and amortization		12,218		15,787			36,542			24,280
Depreciation and amortization (merger integration)		—		(2,714	)		(869	)		(2,714	)
Total merger integration and store closing costs		—		7,742			37,790			7,793
EBITDA	$	23,086	$	21,009		$	114,818		$	78,681

/ 1 Presents EBITDA adjusted for merger integration and store closing costs. 

Adjusted net income and earnings per share reconciliation

The Company believes the use of adjusted net income, and adjusted earnings per share for the periods below
provides a further understanding 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 and the gain on sale of investment.
The reconciliation of adjusted net income, and adjusted earnings per share to the most directly
comparable GAAP financial information is presented below.
(in thousands, except per share data):

							Proforma/2												Proforma/2
	13 Weeks Ended						39 Weeks Ended						52 Weeks Ended						52 Weeks Ended
	October 30, 2004						October 30, 2004						January 29, 2005						January 29, 2005
				Per						Per						Per						Per
	Amounts			Share			Amounts			Share/3			Amounts			Share			Amounts			Share
Reported net income (loss) (GAAP)	$	(1,956	)	$	(0.04	)	$	26,560		$	0.50		$	68,905		$	1.30		$	68,905		$	1.30
Add: Merger integration and store closing costs, after tax		4,645			0.10			4,675			0.09			12,202			0.23			12,202			0.23
Less: Gain on sale of investment, after tax		—			—			—			—			(6,589	)		(0.12	)		(6,589	)		(0.12	)
Less: Galyan’s net loss		—			—			(12,453	)		(0.24	)		—			—			(12,453	)		(0.24	)
Add: Impact of share differential due to net loss (use of basic vs. fully-diluted shares)		—			(0.01	)		—			—			—			—			—			—
Adjusted net income	$	2,689		$	0.05		$	18,782		$	0.36		$	74,518		$	1.41		$	62,065		$	1.17

/2	Proforma includes the operations of Galyan’s as if it had been acquired at the beginning of fiscal 2004.
/3	Column does not add due to rounding

EPS Guidance

The EPS guidance for fiscal 2005 excludes merger integration and store closing costs. The following table sets forth a reconciliation of guidance net income per share to adjusted net income per share excluding merger integration and store closing costs, after tax:

	52 Weeks Ended
	January 28, 2006
Guidance net income per share	$	1.27 - 1.32
Guidance merger integration and store closing costs per share		0.43
Guidance adjusted net income per share excluding merger integration and store closing costs	$	1.70 - 1.75